content: SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON D.C. 20549
  
                                      FORM 10-Q
  
  (Mark One)
  
  (X)      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
           EXCHANGE ACT OF 1934
  
           For the thirteen weeks ended March 29, 1997
  
  ( )      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 1-5084
  
                                TASTY BAKING COMPANY
               (Exact name of registrant as specified in its charter)
  
         Pennsylvania                                 23-1145880
  (State of Incorporation)                (IRS Employer Identification Number)
  
             2801 Hunting Park Avenue, Philadelphia, Pennsylvania 19129
                 (Address of Principal Executive Offices) (Zip Code)
  
                                   (215) 221-8500
                (Registrant's Telephone Number, including area code)
  
  Indicate by check mark whether the registrant (1) has filed all reports required
  to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
  the  preceding 12 months (or for such  shorter  period that the  registrant  was
  required  to file  such  reports),  and  (2) has  been  subject  to such  filing
  requirements for the past 90 days.
  
                     Yes X                       No
  
                        APPLICABLE ONLY TO CORPORATE ISSUERS:
  
  Indicate the number of shares  outstanding  of each of the  issuer's  classes of
  common stock, as of the latest practicable date.
  
         Common Stock, par value $.50                      6,206,205
                (Title of Class)                   (No. of Shares Outstanding
                                                         at March 29, 1997)
  
                    INDEX OF EXHIBITS IS LOCATED ON PAGE 9 OF 10.
  
                                       1 of 10
  
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
  
                                        INDEX
  
                                                                             Page
  
  PART I.       FINANCIAL INFORMATION
  
  Item 1.       Financial Statements
  
                Consolidated Condensed Balance Sheets
                March 29, 1997 and December 28, 1996...........................3
  
                Consolidated Statements of Operations
                Thirteen weeks ended March 29, 1997 and March 30, 1996.........4
  
                Consolidated Condensed Statements of Cash Flows
                Thirteen Weeks Ended March 29, 1997 and March 30, 1996.........5
  
                Notes to Consolidated Condensed Financial Statements...........6
  
  Item 2.       Management's Discussion and Analysis of Financial
                Condition and Results of Operations..........................7-8
  
  
  PART II.      OTHER INFORMATION
  
  Item 6.       Exhibits and Reports on Form 8-K...............................9
  
  Signature...................................................................10
  
                                       2 of 10
  
  <PAGE>
  PART I.       FINANCIAL INFORMATION
  Item 1.       Financial Statements
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED BALANCE SHEETS
                                     (unaudited)
  <TABLE>
  <CAPTION>
                                                       March 29, 1997  December 28, 1996
  <S>                                                   <C>              <C>         
  Current assets:
       Cash                                             $    446,529     $    233,366
       Accounts and notes receivable, net of
         allowance for doubtful accounts                  19,776,600       16,962,591
       Inventories:
         Raw materials                                     1,796,309        1,626,877
         Work in progress                                    517,668          563,381
         Finished goods                                      557,228          665,254
                                                        ------------     ------------
                                                           2,871,205        2,855,512
       Deferred income taxes, prepayments and other        2,847,588        2,726,014
                                                        ------------     ------------
         Total current assets                             25,941,922       22,777,483
  
  Property, plant and equipment:                         142,339,596      139,349,055
       Less accumulated depreciation                     100,057,803       98,375,648
  
                                                          42,281,793       40,973,407
  
  Long-term receivables                                   10,888,268       10,288,159
  
  Deferred income taxes                                   10,235,656       10,235,656
  
  Miscellaneous assets and deferred charges                3,068,577        3,153,659
                                                        ------------     ------------
  Total assets                                          $ 92,416,216     $ 87,428,364
                                                        ============     ============
  Current liabilities:
       Current portion of long-term debt                $     27,104     $     58,340
       Current obligations under capital leases              622,514          587,336
       Notes payable, banks                                2,000,000               --
       Accounts payable                                    4,661,688        3,963,610
       Accrued liabilities                                 6,387,643        6,533,612
       Accrued income taxes                                1,385,520        1,474,887
                                                        ------------     ------------
          Total current liabilities                       15,084,469       12,617,785
  
  Long-term debt, less current portion                     6,295,832        5,302,416
  
  Long-term obligations under capital leases,
       less current portion                                  949,984        1,131,118
  
  Accrued pensions and other liabilities                  11,618,528       11,203,178
  
  Postretirement benefits other than pensions             18,605,577       18,267,013
  
  Shareholders' equity:
       Common stock                                        3,646,594        3,644,544
       Capital in excess of par value of stock            29,880,964       29,742,513
       Retained earnings                                  23,011,904       22,265,220
                                                        ------------     ------------
                                                          56,539,462       55,652,277
       Less:
       Treasury stock, at cost                            16,294,356       16,329,055
       Management Stock Purchase Plan
         receivables and deferrals                           383,280          416,368
                                                        ------------     ------------
                                                          39,861,826       38,906,854
                                                        ------------     ------------
  Total liabilities and shareholders' equity            $ 92,416,216     $ 87,428,364
                                                        ============     ============
  </TABLE>
       See accompanying notes to consolidated condensed financial statements.
  
                                       3 of 10
  <PAGE>
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                     (unaudited)
  
                                                 For the Thirteen Weeks Ended
                                              March 29, 1997     March 30, 1996
  
  Net sales                                    $ 37,454,746      $ 35,943,609
                                               ------------      ------------
  
  Costs and expenses:
       Cost of sales                             23,172,108        22,817,332
  
       Depreciation                               1,695,427         1,838,798
  
       Selling, general and administrative       10,231,580         9,631,571
  
       Interest expense                             127,590           128,526
  
       Other income, net                           (396,427)         (453,572)
                                               ------------      ------------
  
                                                 34,830,278        33,962,655
                                               ------------      ------------
  
  Income before provision for income taxes        2,624,468         1,980,954
  
  Provision for income taxes                      1,010,675           761,605
                                               ------------      ------------
  
  Net income                                   $  1,613,793      $  1,219,349
                                               ============      ============
  
  
  Average common shares outstanding               6,249,538         6,184,850
  
  
  Per share of common stock:
  
       Net income                              $        .26      $        .20
                                               ============      ============
  
       Cash dividend                           $        .14      $        .14
                                               ============      ============
  
       See accompanying notes to consolidated condensed financial statements.
  
                                       4 of 10
  <PAGE>
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                     (unaudited)
  <TABLE>
  <CAPTION>
                                                          For the Thirteen Weeks Ended
                                                         March 29, 1997   March 30, 1996
  <S>                                                     <C>              <C>        
  Cash flows from (used for) operating activities
       Net income                                         $ 1,613,793      $ 1,219,349
       Adjustments to reconcile net income to net
        cash provided by operating activities:
           Depreciation                                     1,695,427        1,838,798
           Amortization                                        17,680           12,691
           Other                                              833,997         (184,882)
       Changes in assets and liabilities
        affecting operations                               (2,488,534)        (827,113)
                                                          -----------      -----------
  
       Net cash from operating activities                   1,672,363        2,058,843
                                                          -----------      -----------
  
  Cash flows from (used for) investing activities
       Proceeds from owner/operators' loan repayments       1,082,652        1,065,209
       Purchase of property, plant and equipment           (3,003,813)        (497,334)
       Loans to owner/operators                            (1,686,258)        (838,338)
       Other                                                   17,923           19,392
                                                          -----------      -----------
  
       Net cash used for investing activities              (3,589,496)        (251,071)
                                                          -----------      -----------
  
  Cash flows from (used for) financing activities
       Additional long-term debt                            2,000,000               --
       Proceeds from sale of common stock                     181,181               --
       Dividends paid                                        (867,109)        (865,879)
       Payment of long-term debt                           (1,183,776)        (191,570)
       Net increase (decrease) in short-term debt           2,000,000         (700,000)
                                                          -----------      -----------
  
       Net cash from (used for) financing activities        2,130,296       (1,757,449)
                                                          -----------      -----------
  
       Net increase in cash                                   213,163           50,323
  
       Cash, beginning of year                                233,366           85,104
                                                          -----------      -----------
  
       Cash, end of period                                $   446,529      $   135,427
                                                          ===========      ===========
  
       Supplemental Cash Flow Information:
       Cash paid during the period for:
           Interest                                       $    88,816      $   133,349
                                                          ===========      ===========
           Income taxes                                   $ 1,106,307      $   115,099
                                                          ===========      ===========
  </TABLE>
  
       See accompanying notes to consolidated condensed financial statements.
  
                                       5 of 10
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
  
  1.     Manufacturing Facility
         On July 1, 1996, the company,  through a wholly-owned  subsidiary,  Tasty
         Baking Oxford,  Inc.,  completed the purchase for $4,000,000 of a 160,000
         square   foot   manufacturing   facility  in  Oxford,   Chester   County,
         Pennsylvania.  This  facility  will  enable the  company  to  manufacture
         products that are currently made for it by other  suppliers,  improve its
         operating margins on those products and expand new product offerings. The
         company completed the installation of the first manufacturing line at the
         facility  which  began  making  products  in  January,   1997.  A  second
         manufacturing line is planned for the second quarter of 1997.
  
  2.     Interim Financial Information
         In the opinion of management,  the  accompanying  unaudited  consolidated
         condensed  financial  statements  contain all adjustments  (consisting of
         only normal recurring accruals) necessary to present fairly the financial
         position of the company as of March 29,  1997 and  December  28, 1996 and
         the results of its operations for the thirteen weeks ended March 29, 1997
         and March 30, 1996 and cash flows for the thirteen  weeks ended March 29,
         1997 and March 30, 1996. These unaudited consolidated condensed financial
         statements should be read in conjunction with the consolidated  financial
         statements  and footnotes  thereto in the company's 1996 Annual Report to
         Shareholders.  In addition,  the results of  operations  for the thirteen
         weeks ended March 29, 1997 are not necessarily  indicative of the results
         to be expected for the full year.
  
         Advertising  expenses  and  certain  other  expense  items are charged to
         operations in the year incurred.  However, for interim reporting purposes
         the  expenses  are  charged to  operations  on a pro-rata  basis over the
         company's accounting periods. For the thirteen weeks ended March 29, 1997
         and March 30, 1996, the difference  between the actual expenses  incurred
         and the expenses charged to operations was not significant.
  
  3.     Earnings Per Share
         Per share  amounts  are based on the  weighted  average  number of common
         shares and equivalent shares outstanding during the quarter.
  
                                       6 of 10
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
  
  Item 2.       Management's Discussion and Analysis of Financial Condition
                and Results of Operations
  
  Results of Operations
  
  For the first  quarter of 1997,  the company  realized net income of  $1,613,793
  versus  $1,219,349 for the first quarter of 1996. Net income per share increased
  to $.26 from $.20 per share for the  comparable  quarter of 1996.  These results
  represent increases of 32% and 30%, respectively.
  
  In the first  quarter of 1997,  net sales  increased  4.2% to  $37,454,746  from
  $35,943,609 in the first quarter of 1996.  Gross sales increased 8.3% during the
  comparable  period.  The  increase in gross sales for the first  quarter of 1997
  resulted   primarily  from  price   increases   instituted  by  the  company  of
  approximately  7.6% and unit sales  growth of  approximately  .7% over the first
  quarter of 1996. The difference between the increases of 8.3% in gross sales and
  4.2% in net sales results  primarily from higher  promotion  costs and increased
  commissions.
  
  Cost of sales,  as a percentage of net sales,  was 61.9% and 63.5% for the first
  quarters of 1997 and 1996,  respectively.  This decrease in the current  quarter
  was due to  moderating  commodity  costs  and  continued  improvements  in plant
  operating   efficiencies.   These  cost   reductions  and  the  price  increases
  implemented by the company combined to improve gross margin by 8.8% in 1997.
  
  Selling,  general  and  administrative  expenses  for the first  quarter of 1997
  increased by $600,009 or 6.2% over the comparable  period in 1996. This increase
  resulted primarily from a 2.6% increase in advertising costs and a 2.7% increase
  in  selling  expenses.  Advertising  costs were  higher due to a new  television
  campaign  instituted  in the first  quarter  of 1997.  Higher  selling  expenses
  resulted from the  re-alignment of the company's sales regions,  increased trade
  show costs and consulting fees.
  
  Interest  expense  remained  relatively  unchanged for the first quarter of 1997
  versus the first quarter of 1996 as a result of increased borrowing levels being
  offset by lower interest rates. The decrease in other income,  net for the first
  quarter of 1997 was the result of a decrease in rental income.
  
  The effective  tax rate for each of the quarters  ended March 29, 1997 and March
  30, 1996 was 38.5%,  which  compares  to a federal  statutory  rate of 34%.  The
  principle  reason  for  the  difference  between  the  effective  rates  and the
  statutory  rate in the first  quarter  of 1997 and 1996 was the  effect of state
  income taxes.
  
  In November,  1995, the company received a proposed assessment from the Internal
  Revenue Service (IRS) for employment taxes based on an assertion that during the
  years 1990 through 1994 the company's independent owner/operators were employees
  and not independent contractors. The company has filed a formal Protest with the
  IRS and has held  conferences  with an appeals  officer of the IRS.  The company
  believes that it has good grounds for the defenses which it has asserted and has
  a reasonable  chance for favorable  resolution  on all issues.  At this time the
  company is unable to estimate the possible loss, if any, that may be incurred as
  a result of this  proposed  assessment.  The ultimate  outcome of this  proposed
  assessment  may or may not have a  material  impact on the  company's  financial
  position or results of operations.
  
                                       7 of 10
  <PAGE>
  
  Financial Condition
  
  The company has  consistently  demonstrated  the ability to generate  sufficient
  cash  flow from  operations.  Bank  borrowings,  under  various  lines of credit
  arrangements, are used to supplement cash flow from operations during periods of
  cyclical shortages.
  
  For the thirteen weeks ended March 29, 1997, net cash from operating  activities
  decreased by $386,480 to $1,672,363 from $2,058,843 for the same period in 1996.
  Net cash from  operating  activities  for the  quarter  ended March 29, 1997 was
  negatively  impacted  by an  increase  in  receivables  due to the higher  sales
  volume,  and a  decrease  in  accrued  income  taxes.  These  changes  were only
  partially offset by an increase in net income relative to the comparable quarter
  in 1996.
  
  Net  cash  used  for  investing  activities  increased  by  $3,338,425  from the
  comparable  quarter in 1996  principally  due to an increase in  expenditures on
  equipment  for the new  Oxford  facility.  Net cash  from  financing  activities
  increased by  $3,887,745  relative to the same period in 1996.  This increase is
  primarily the result of a net increase in short and  long-term  debt relative to
  the prior year.
  
  For  the  remainder  of  1997  the  company  anticipates  that  cash  flow  from
  operations,  along with the continued  availability of bank lines of credit, the
  revolving  credit  agreement  and  other  long-term   financing,   will  provide
  sufficient cash to meet operating and financing requirements.
  
                                       8 of 10
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
  
  PART II.      OTHER INFORMATION
  
  Item 6.       Exhibits and Reports on Form 8-K
  
                (a)   Exhibits:  Exhibit 27 - Financial Data Schedule
  
                (b)   Reports on Form 8-K
  
                      The  registrant did not file a report on Form 8-K during the
                      thirteen weeks ended March 29, 1997.
  
                                    Exhibit Index
  
                        Exhibit 27 - Financial Data Schedule
  
                                       9 of 10
  
  <PAGE>
  
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
  
                                      SIGNATURE
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
  
  
  
  
                                           TASTY BAKING COMPANY
                                               (Registrant)
  
            May 8, 1997                    /s/ John M. Pettine
              (Date)                         JOHN M. PETTINE
                                           VICE PRESIDENT AND
                                         CHIEF FINANCIAL OFFICER
                                (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
  
  
  
                                      10 of 10
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 22265}]
metadata_filer: {"company-data": {"conformed-name": "TASTY BAKING CO", "cik": "0000096412", "assigned-sic": "2050", "irs-number": "231145880", "state-of-incorporation": "PA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-05084", "film-number": "97597779"}, "business-address": {"street1": "2801 HUNTING PARK AVE", "city": "PHILADELPHIA", "state": "PA", "zip": "19129", "phone": "2152218500"}, "mail-address": {"street1": "3413 FOX ST", "city": "PHILADELPHIA", "state": "PA", "zip": "19129"}}
text: SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON D.C. 20549
  
                                      FORM 10-Q
  
  (Mark One)
  
  (X)      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
           EXCHANGE ACT OF 1934
  
           For the thirteen weeks ended March 29, 1997
  
  ( )      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 1-5084
  
                                TASTY BAKING COMPANY
               (Exact name of registrant as specified in its charter)
  
         Pennsylvania                                 23-1145880
  (State of Incorporation)                (IRS Employer Identification Number)
  
             2801 Hunting Park Avenue, Philadelphia, Pennsylvania 19129
                 (Address of Principal Executive Offices) (Zip Code)
  
                                   (215) 221-8500
                (Registrant's Telephone Number, including area code)
  
  Indicate by check mark whether the registrant (1) has filed all reports required
  to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
  the  preceding 12 months (or for such  shorter  period that the  registrant  was
  required  to file  such  reports),  and  (2) has  been  subject  to such  filing
  requirements for the past 90 days.
  
                     Yes X                       No
  
                        APPLICABLE ONLY TO CORPORATE ISSUERS:
  
  Indicate the number of shares  outstanding  of each of the  issuer's  classes of
  common stock, as of the latest practicable date.
  
         Common Stock, par value $.50                      6,206,205
                (Title of Class)                   (No. of Shares Outstanding
                                                         at March 29, 1997)
  
                    INDEX OF EXHIBITS IS LOCATED ON PAGE 9 OF 10.
  
                                       1 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
  
                                        INDEX
  
                                                                             Page
  
  PART I.       FINANCIAL INFORMATION
  
  Item 1.       Financial Statements
  
                Consolidated Condensed Balance Sheets
                March 29, 1997 and December 28, 1996...........................3
  
                Consolidated Statements of Operations
                Thirteen weeks ended March 29, 1997 and March 30, 1996.........4
  
                Consolidated Condensed Statements of Cash Flows
                Thirteen Weeks Ended March 29, 1997 and March 30, 1996.........5
  
                Notes to Consolidated Condensed Financial Statements...........6
  
  Item 2.       Management's Discussion and Analysis of Financial
                Condition and Results of Operations..........................7-8
  
  PART II.      OTHER INFORMATION
  
  Item 6.       Exhibits and Reports on Form 8-K...............................9
  
  Signature...................................................................10
  
                                       2 of 10
  PART I.       FINANCIAL INFORMATION
  Item 1.       Financial Statements
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED BALANCE SHEETS
                                     (unaudited)
  March 29, 1997  December 28, 1996
  Current assets:
       Cash                                             $    446,529     $    233,366
       Accounts and notes receivable, net of
         allowance for doubtful accounts                  19,776,600       16,962,591
       Inventories:
         Raw materials                                     1,796,309        1,626,877
         Work in progress                                    517,668          563,381
         Finished goods                                      557,228          665,254
                                                        ------------     ------------
                                                           2,871,205        2,855,512
       Deferred income taxes, prepayments and other        2,847,588        2,726,014
                                                        ------------     ------------
         Total current assets                             25,941,922       22,777,483
  
  Property, plant and equipment:                         142,339,596      139,349,055
       Less accumulated depreciation                     100,057,803       98,375,648
  
                                                          42,281,793       40,973,407
  
  Long-term receivables                                   10,888,268       10,288,159
  
  Deferred income taxes                                   10,235,656       10,235,656
  
  Miscellaneous assets and deferred charges                3,068,577        3,153,659
                                                        ------------     ------------
  Total assets                                          $ 92,416,216     $ 87,428,364
                                                        ============     ============
  Current liabilities:
       Current portion of long-term debt                $     27,104     $     58,340
       Current obligations under capital leases              622,514          587,336
       Notes payable, banks                                2,000,000               --
       Accounts payable                                    4,661,688        3,963,610
       Accrued liabilities                                 6,387,643        6,533,612
       Accrued income taxes                                1,385,520        1,474,887
                                                        ------------     ------------
          Total current liabilities                       15,084,469       12,617,785
  
  Long-term debt, less current portion                     6,295,832        5,302,416
  
  Long-term obligations under capital leases,
       less current portion                                  949,984        1,131,118
  
  Accrued pensions and other liabilities                  11,618,528       11,203,178
  
  Postretirement benefits other than pensions             18,605,577       18,267,013
  
  Shareholders' equity:
       Common stock                                        3,646,594        3,644,544
       Capital in excess of par value of stock            29,880,964       29,742,513
       Retained earnings                                  23,011,904       22,265,220
                                                        ------------     ------------
                                                          56,539,462       55,652,277
       Less:
       Treasury stock, at cost                            16,294,356       16,329,055
       Management Stock Purchase Plan
         receivables and deferrals                           383,280          416,368
                                                        ------------     ------------
                                                          39,861,826       38,906,854
                                                        ------------     ------------
  Total liabilities and shareholders' equity            $ 92,416,216     $ 87,428,364
                                                        ============     ============
  See accompanying notes to consolidated condensed financial statements.
  
                                       3 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                     (unaudited)
  
                                                 For the Thirteen Weeks Ended
                                              March 29, 1997     March 30, 1996
  
  Net sales                                    $ 37,454,746      $ 35,943,609
                                               ------------      ------------
  
  Costs and expenses:
       Cost of sales                             23,172,108        22,817,332
  
       Depreciation                               1,695,427         1,838,798
  
       Selling, general and administrative       10,231,580         9,631,571
  
       Interest expense                             127,590           128,526
  
       Other income, net                           (396,427)         (453,572)
                                               ------------      ------------
  
                                                 34,830,278        33,962,655
                                               ------------      ------------
  
  Income before provision for income taxes        2,624,468         1,980,954
  
  Provision for income taxes                      1,010,675           761,605
                                               ------------      ------------
  
  Net income                                   $  1,613,793      $  1,219,349
                                               ============      ============
  
  Average common shares outstanding               6,249,538         6,184,850
  
  Per share of common stock:
  
       Net income                              $        .26      $        .20
                                               ============      ============
  
       Cash dividend                           $        .14      $        .14
                                               ============      ============
  
       See accompanying notes to consolidated condensed financial statements.
  
                                       4 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                     (unaudited)
  For the Thirteen Weeks Ended
                                                         March 29, 1997   March 30, 1996
  Cash flows from (used for) operating activities
       Net income                                         $ 1,613,793      $ 1,219,349
       Adjustments to reconcile net income to net
        cash provided by operating activities:
           Depreciation                                     1,695,427        1,838,798
           Amortization                                        17,680           12,691
           Other                                              833,997         (184,882)
       Changes in assets and liabilities
        affecting operations                               (2,488,534)        (827,113)
                                                          -----------      -----------
  
       Net cash from operating activities                   1,672,363        2,058,843
                                                          -----------      -----------
  
  Cash flows from (used for) investing activities
       Proceeds from owner/operators' loan repayments       1,082,652        1,065,209
       Purchase of property, plant and equipment           (3,003,813)        (497,334)
       Loans to owner/operators                            (1,686,258)        (838,338)
       Other                                                   17,923           19,392
                                                          -----------      -----------
  
       Net cash used for investing activities              (3,589,496)        (251,071)
                                                          -----------      -----------
  
  Cash flows from (used for) financing activities
       Additional long-term debt                            2,000,000               --
       Proceeds from sale of common stock                     181,181               --
       Dividends paid                                        (867,109)        (865,879)
       Payment of long-term debt                           (1,183,776)        (191,570)
       Net increase (decrease) in short-term debt           2,000,000         (700,000)
                                                          -----------      -----------
  
       Net cash from (used for) financing activities        2,130,296       (1,757,449)
                                                          -----------      -----------
  
       Net increase in cash                                   213,163           50,323
  
       Cash, beginning of year                                233,366           85,104
                                                          -----------      -----------
  
       Cash, end of period                                $   446,529      $   135,427
                                                          ===========      ===========
  
       Supplemental Cash Flow Information:
       Cash paid during the period for:
           Interest                                       $    88,816      $   133,349
                                                          ===========      ===========
           Income taxes                                   $ 1,106,307      $   115,099
                                                          ===========      ===========
  See accompanying notes to consolidated condensed financial statements.
  
                                       5 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
                NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
  
  1.     Manufacturing Facility
         On July 1, 1996, the company,  through a wholly-owned  subsidiary,  Tasty
         Baking Oxford,  Inc.,  completed the purchase for $4,000,000 of a 160,000
         square   foot   manufacturing   facility  in  Oxford,   Chester   County,
         Pennsylvania.  This  facility  will  enable the  company  to  manufacture
         products that are currently made for it by other  suppliers,  improve its
         operating margins on those products and expand new product offerings. The
         company completed the installation of the first manufacturing line at the
         facility  which  began  making  products  in  January,   1997.  A  second
         manufacturing line is planned for the second quarter of 1997.
  
  2.     Interim Financial Information
         In the opinion of management,  the  accompanying  unaudited  consolidated
         condensed  financial  statements  contain all adjustments  (consisting of
         only normal recurring accruals) necessary to present fairly the financial
         position of the company as of March 29,  1997 and  December  28, 1996 and
         the results of its operations for the thirteen weeks ended March 29, 1997
         and March 30, 1996 and cash flows for the thirteen  weeks ended March 29,
         1997 and March 30, 1996. These unaudited consolidated condensed financial
         statements should be read in conjunction with the consolidated  financial
         statements  and footnotes  thereto in the company's 1996 Annual Report to
         Shareholders.  In addition,  the results of  operations  for the thirteen
         weeks ended March 29, 1997 are not necessarily  indicative of the results
         to be expected for the full year.
  
         Advertising  expenses  and  certain  other  expense  items are charged to
         operations in the year incurred.  However, for interim reporting purposes
         the  expenses  are  charged to  operations  on a pro-rata  basis over the
         company's accounting periods. For the thirteen weeks ended March 29, 1997
         and March 30, 1996, the difference  between the actual expenses  incurred
         and the expenses charged to operations was not significant.
  
  3.     Earnings Per Share
         Per share  amounts  are based on the  weighted  average  number of common
         shares and equivalent shares outstanding during the quarter.
  
                                       6 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
  
  Item 2.       Management's Discussion and Analysis of Financial Condition
                and Results of Operations
  
  Results of Operations
  
  For the first  quarter of 1997,  the company  realized net income of  $1,613,793
  versus  $1,219,349 for the first quarter of 1996. Net income per share increased
  to $.26 from $.20 per share for the  comparable  quarter of 1996.  These results
  represent increases of 32% and 30%, respectively.
  
  In the first  quarter of 1997,  net sales  increased  4.2% to  $37,454,746  from
  $35,943,609 in the first quarter of 1996.  Gross sales increased 8.3% during the
  comparable  period.  The  increase in gross sales for the first  quarter of 1997
  resulted   primarily  from  price   increases   instituted  by  the  company  of
  approximately  7.6% and unit sales  growth of  approximately  .7% over the first
  quarter of 1996. The difference between the increases of 8.3% in gross sales and
  4.2% in net sales results  primarily from higher  promotion  costs and increased
  commissions.
  
  Cost of sales,  as a percentage of net sales,  was 61.9% and 63.5% for the first
  quarters of 1997 and 1996,  respectively.  This decrease in the current  quarter
  was due to  moderating  commodity  costs  and  continued  improvements  in plant
  operating   efficiencies.   These  cost   reductions  and  the  price  increases
  implemented by the company combined to improve gross margin by 8.8% in 1997.
  
  Selling,  general  and  administrative  expenses  for the first  quarter of 1997
  increased by $600,009 or 6.2% over the comparable  period in 1996. This increase
  resulted primarily from a 2.6% increase in advertising costs and a 2.7% increase
  in  selling  expenses.  Advertising  costs were  higher due to a new  television
  campaign  instituted  in the first  quarter  of 1997.  Higher  selling  expenses
  resulted from the  re-alignment of the company's sales regions,  increased trade
  show costs and consulting fees.
  
  Interest  expense  remained  relatively  unchanged for the first quarter of 1997
  versus the first quarter of 1996 as a result of increased borrowing levels being
  offset by lower interest rates. The decrease in other income,  net for the first
  quarter of 1997 was the result of a decrease in rental income.
  
  The effective  tax rate for each of the quarters  ended March 29, 1997 and March
  30, 1996 was 38.5%,  which  compares  to a federal  statutory  rate of 34%.  The
  principle  reason  for  the  difference  between  the  effective  rates  and the
  statutory  rate in the first  quarter  of 1997 and 1996 was the  effect of state
  income taxes.
  
  In November,  1995, the company received a proposed assessment from the Internal
  Revenue Service (IRS) for employment taxes based on an assertion that during the
  years 1990 through 1994 the company's independent owner/operators were employees
  and not independent contractors. The company has filed a formal Protest with the
  IRS and has held  conferences  with an appeals  officer of the IRS.  The company
  believes that it has good grounds for the defenses which it has asserted and has
  a reasonable  chance for favorable  resolution  on all issues.  At this time the
  company is unable to estimate the possible loss, if any, that may be incurred as
  a result of this  proposed  assessment.  The ultimate  outcome of this  proposed
  assessment  may or may not have a  material  impact on the  company's  financial
  position or results of operations.
  
                                       7 of 10
  Financial Condition
  
  The company has  consistently  demonstrated  the ability to generate  sufficient
  cash  flow from  operations.  Bank  borrowings,  under  various  lines of credit
  arrangements, are used to supplement cash flow from operations during periods of
  cyclical shortages.
  
  For the thirteen weeks ended March 29, 1997, net cash from operating  activities
  decreased by $386,480 to $1,672,363 from $2,058,843 for the same period in 1996.
  Net cash from  operating  activities  for the  quarter  ended March 29, 1997 was
  negatively  impacted  by an  increase  in  receivables  due to the higher  sales
  volume,  and a  decrease  in  accrued  income  taxes.  These  changes  were only
  partially offset by an increase in net income relative to the comparable quarter
  in 1996.
  
  Net  cash  used  for  investing  activities  increased  by  $3,338,425  from the
  comparable  quarter in 1996  principally  due to an increase in  expenditures on
  equipment  for the new  Oxford  facility.  Net cash  from  financing  activities
  increased by  $3,887,745  relative to the same period in 1996.  This increase is
  primarily the result of a net increase in short and  long-term  debt relative to
  the prior year.
  
  For  the  remainder  of  1997  the  company  anticipates  that  cash  flow  from
  operations,  along with the continued  availability of bank lines of credit, the
  revolving  credit  agreement  and  other  long-term   financing,   will  provide
  sufficient cash to meet operating and financing requirements.
  
                                       8 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
  
  PART II.      OTHER INFORMATION
  
  Item 6.       Exhibits and Reports on Form 8-K
  
                (a)   Exhibits:  Exhibit 27 - Financial Data Schedule
  
                (b)   Reports on Form 8-K
  
                      The  registrant did not file a report on Form 8-K during the
                      thirteen weeks ended March 29, 1997.
  
                                    Exhibit Index
  
                        Exhibit 27 - Financial Data Schedule
  
                                       9 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
  
                                      SIGNATURE
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
                                           TASTY BAKING COMPANY
                                               (Registrant)
  
            May 8, 1997                    /s/ John M. Pettine
              (Date)                         JOHN M. PETTINE
                                           VICE PRESIDENT AND
                                         CHIEF FINANCIAL OFFICER
                                (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
  
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