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 thirty-nine weeks ended September 28, 1996
  
  (  ) 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                           6,185,551
            (Title of Class)                        (No. of Shares Outstanding
                                                      at September 28, 1996
  
                   INDEX OF EXHIBITS IS LOCATED ON PAGE 10 OF 11.
  
                                    Page 1 of 11
  
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
  
  
                                        INDEX
  
  
                                                                              Page
  
  PART I.       FINANCIAL INFORMATION
  
  Item 1.       Financial Statements
  
                Consolidated Condensed Balance Sheets
                September 28, 1996 and December 30, 1995.......................3
  
                Consolidated Condensed Statements of Operations
                Thirteen Weeks and Thirty-nine Weeks Ended
                September 28, 1996 and September 30, 1995......................4
  
                Consolidated Condensed Statements of Cash Flows
                Thirty-nine Weeks Ended September 28, 1996 and
                September 30, 1995.............................................5
  
                Notes to Consolidated Condensed Financial Statements.........6-7
  
  Item 2.       Management's Discussion and Analysis of Financial
                Condition and Results of Operations..........................8-9
  
  
  PART II.      OTHER INFORMATION
  
  Item 6.       Exhibits and Reports on Form 8-K..............................10
  
  Signature...................................................................11
  
  
                                    Page 2 of 11
  
  <PAGE>
  
  PART I.       FINANCIAL INFORMATION
  Item 1.       Financial Statements
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED BALANCE SHEETS
                                     (unaudited)
  
  <TABLE>
  <CAPTION>
                                                        September 28, 1996  December 30, 1995
  <S>                                                     <C>                 <C>         
  Current assets:
       Cash                                                $    110,838        $     85,104
       Accounts and notes receivable, net of
         allowance for doubtful accounts                     20,830,826          18,630,903
       Inventories:
         Raw materials                                        1,773,084           2,202,682
         Work in progress                                       580,181             593,416
         Finished goods                                       1,033,187             467,184
                                                           ------------        ------------
                                                              3,386,452           3,263,282
       Deferred income taxes, prepayments and other           2,475,743           3,349,314
                                                           ------------        ------------
         Total current assets                                26,803,859          25,328,603
                                                           ------------        ------------
  Property, plant and equipment:                            135,140,727         126,870,388
       Less accumulated depreciation                         96,636,250          91,230,770
                                                           ------------        ------------
                                                             38,504,477          35,639,618
                                                           ------------        ------------
  Long-term receivables                                      10,399,701          11,074,974
                                                           ------------        ------------
  Deferred income taxes                                       9,720,541           9,720,541
                                                           ------------        ------------
  Miscellaneous assets and deferred charges                   3,278,650           3,539,247
                                                           ------------        ------------
  Total assets                                             $ 88,707,228        $ 85,302,983
                                                           ============        ============
  Current liabilities:
       Current portion of long-term debt                   $    127,720        $    127,720
       Current obligations under capital leases                 577,379             513,159
       Notes payable, banks                                   1,400,000             700,000
       Accounts payable                                       5,559,245           4,699,747
       Accrued liabilities                                    6,770,264           5,344,162
                                                           ------------        ------------
          Total current liabilities                          14,434,608          11,384,788
                                                           ------------        ------------
  Long-term debt, less current portion                        5,267,152           4,576,385
                                                           ------------        ------------
  Long-term obligations under capital leases,
       less current portion                                   1,290,169           1,653,134
                                                           ------------        ------------
  Accrued pensions and other liabilities                     11,225,233          13,129,760
                                                           ------------        ------------
  Postretirement benefits other than pensions                18,952,833          18,620,763
                                                           ------------        ------------
  Shareholders' equity:
       Common stock                                           3,644,544           3,644,544
       Capital in excess of par value of stock               29,670,521          29,662,330
       Retained earnings                                     20,936,301          19,425,849
                                                           ------------        ------------
                                                             54,251,366          52,732,723
       Less:
       Treasury stock, at cost                               16,363,340          16,364,757
       Management Stock Purchase Plan
         receivables and deferrals                              350,793             429,813
                                                           ------------        ------------
                                                             37,537,233          35,938,153
                                                           ------------        ------------
  Total liabilities and shareholders' equity               $ 88,707,228        $ 85,302,983
                                                           ============        ============
  </TABLE>
  
                  See accompanying notes to consolidated condensed
                               financial statements.
  
                                    Page 3 of 11
  
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                     (unaudited)
  
  
  <TABLE>
  <CAPTION>
                                          For the Thirteen Weeks Ended         For the Thirty-nine Weeks Ended
                                        Sept. 28, 1996    Sept. 30, 1995      Sept. 28, 1996    Sept. 30, 1995
  
  <S>                                   <C>                <C>                <C>                <C>          
  Net Sales                             $  36,021,652      $  33,653,747      $ 109,714,528      $ 107,374,202
                                        -------------      -------------      -------------      -------------
  
  Costs and expenses:
       Cost of sales                       22,332,536         21,815,368         68,484,501         67,984,916
  
       Depreciation                         1,838,336          1,850,586          5,490,835          5,560,518
  
       Selling, general and
          administrative                   10,472,900          9,532,556         30,068,214         28,426,247
  
       Severance charge                            --                 --                 --            950,000
  
       Interest expense                       134,564            131,219            362,138            450,286
  
       Other income, net                     (446,541)          (920,722)        (1,355,853)        (2,757,391)
                                        -------------      -------------      -------------      -------------
  
                                           34,331,795         32,409,007        103,049,835        100,614,576
                                        -------------      -------------      -------------      -------------
  
  Income before provision
       for income taxes                     1,689,857          1,244,740          6,664,693          6,759,626
                                        -------------      -------------      -------------      -------------
  
  Provision for income taxes:
       Current and deferred                  (637,636)          (419,797)        (2,556,349)        (2,736,961)
  
       Decrease in deferred
          tax asset due to
           change in tax rate                      --           (550,868)                --           (550,868)
                                        -------------      -------------      -------------      -------------
  
  Total provision for income taxes           (637,636)          (970,665)        (2,556,349)        (3,287,829)
                                        -------------      -------------      -------------      -------------
  
  
  Net income                            $   1,052,221      $     274,075      $   4,108,344      $   3,471,797
                                        =============      =============      =============      =============
  
  
  Average common shares outstanding         6,185,551          6,160,102          6,177,032          6,149,346
  
  
  
  Per share of common stock:
  
       Net income                       $         .17      $         .04      $         .67      $         .56
                                        =============      =============      =============      =============
  
       Cash dividend                    $         .14      $         .14      $         .42      $         .42
                                        =============      =============      =============      =============
  </TABLE>
  
  
  
                       See accompanying notes to consolidated
                          condensed financial statements.
  
                                    Page 4 of 11
  
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                     (unaudited)
  
  <TABLE>
  <CAPTION>
                                                              For the Thirty-nine Weeks Ended
                                                             Sept. 28, 1996    Sept. 30, 1995
  <S>                                                          <C>              <C>        
  Cash flows from (used for) operating activities
       Net income                                              $ 4,108,344      $ 3,471,797
       Adjustments to reconcile net income to net
        cash provided by operating activities:
           Depreciation                                          5,490,835        5,560,518
           Amortization                                             52,431           39,906
           Deferred taxes                                               --        1,426,287
           Other                                                (1,327,972)        (216,796)
       Changes in assets and liabilities
        affecting operations                                       836,077       (2,601,787)
                                                               -----------      -----------
  
       Net cash from operating activities                        9,159,715        7,679,925
                                                               -----------      -----------
  
  Cash flows from (used for) investing activities
       Proceeds from owner/operator's loan repayments            3,203,559        2,461,108
       Purchase of property, plant and equipment                (8,271,305)      (3,247,329)
       Loans to owner/operators                                 (2,539,257)      (2,871,526)
       Proceeds from sale of property, plant and equipment              --           36,836
       Other                                                        63,280          (49,492)
                                                               -----------      -----------
  
       Net cash used for investing activities                   (7,543,723)      (3,670,403)
                                                               -----------      -----------
  
  Cash flows from (used for) financing activities
       Additional long-term debt                                 5,000,000               --
       Dividends paid                                           (2,597,892)      (2,577,148)
       Payment of long-term debt                                (4,692,366)      (1,343,505)
       Net increase in short-term debt                             700,000               --
                                                               -----------      -----------
  
       Net cash used for financing activities                   (1,590,258)      (3,920,653)
                                                               -----------      -----------
  
       Net increase in cash                                         25,734           88,869
  
       Cash, beginning of year                                      85,104          147,251
                                                               -----------      -----------
  
       Cash, end of period                                     $   110,838      $   236,120
                                                               ===========      ===========
  
       Supplemental Cash Flow Information:
       Cash paid during the period for:
           Interest                                            $   343,217      $   427,695
                                                               ===========      ===========
           Income taxes                                        $ 2,221,142      $ 3,731,877
                                                               ===========      ===========
  </TABLE>
  
  
                  See accompanying notes to consolidated condensed
                               financial statements.
  
                                    Page 5 of 11
  
  <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 of a 160,000 square foot
       manufacturing facility in Oxford, Chester County, Pennsylvania for
       $4,000,000. The company is now in the process of planning for and acquiring
       the production lines that will be placed in the facility. It is expected
       that production at this facility will begin during the first quarter of
       1997.
  
  2.   Purchase of Subsidiary
       On August 29, 1995, the company acquired all of the outstanding shares of
       capital stock of Dutch Mill Baking Company, Inc. (Dutch Mill) in exchange
       for 45,948 shares of the company's common stock valued at $649,000. Dutch
       Mill, based in Wyckoff, New Jersey, produces donuts, muffins and cakes
       under a variety of labels and operates principally in the New York
       metropolitan area. The acquisition was accounted for as a purchase and,
       accordingly, the net assets and results of operations of Dutch Mill are
       included in the company's consolidated financial statements since the date
       of acquisition. The excess of the total acquisition cost over the fair
       value of net assets acquired of approximately $288,000 is being amortized
       on a straight line basis over fifteen years. The pro forma results, had the
       acquisition occurred at the beginning of fiscal year 1995, would not have
       had a significant impact on the company's consolidated results of
       operations.
  
  3.   Severance Charge
       In the second quarter of 1995, the company incurred severance costs of
       $950,000 resulting in a charge to net income of $550,000 or $.09 per share
       after related tax benefit. The severance charge resulted from changes in
       certain management positions during the second quarter of 1995.
  
  4.   Decrease in Net Deferred Tax Assets Due to Change in Tax Rate 
       In the third quarter of 1995, under the provisions of Statement of
       Financial Accounting Standards No. 109 - "Accounting for Income Taxes", the
       company was required to record a noncash charge to net income of $550,868
       or $.09 per share. This charge resulted from a remeasuring of the company's
       deferred tax asset and liability accounts as a result of a decrease in the
       Pennsylvania Corporate Net Income Tax rate from 11.99% to 9.99%,
       retroactive to January 1, 1995.
  
  5.   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 September 28, 1996, and December 30, 1995 and
       the results of its operations for the thirteen and thirty-nine weeks ended
       September 28, 1996 and September 30, 1995 and cash flows for the
       thirty-nine weeks ended September 28, 1996 and September 30, 1995. These
       unaudited consolidated condensed financial statements should be read in
       conjunction with the consolidated financial statements and footnotes
       thereto in the company's 1995 Annual Report to Shareholders. In addition,
       the results of operations for the thirty-nine weeks ended September 28,
       1996 are not necessarily indicative of the results to be expected for the
       full year.
  
  
                                    Page 6 of 11
  <PAGE>
  
       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 thirty-nine weeks ended September 28,
       1996 and September 30, 1995, the difference between the actual expenses
       incurred and the expenses charged to operations was not significant.
  
  6.   Earnings Per Share
       Per share amounts are based on the weighted average number of common shares
       and equivalent shares outstanding during the quarter and year to date.
  
                                    Page 7 of 11
  
  <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 third quarter of 1996, the company realized consolidated net income of
  $1,052,221 or $.17 per share versus $274,075 or $.04 per share for the third
  quarter of 1995. Included in the 1995 results was a noncash charge to net income
  of $550,868 or $.09 per share. This charge resulted from a remeasuring of the
  company's deferred tax asset and liability accounts in accordance with SFAS No.
  109 due to a 2% decrease in the Pennsylvania Corporate Net Income Tax rate,
  retroactive to January 1, 1995. Further impacting the company's 1995
  consolidated operating results was the amortization of the gain on the sale of
  the company's distribution routes which increased net income by $254,000 or $.04
  per share. On a comparable operating basis, excluding the effects of the
  adjustment for the tax rate change and the amortization of the route gain,
  operating earnings were $571,000 or $.09 per share in the third quarter of 1995.
  Therefore, third quarter 1996 operating results of $1,052,000 or $.17 per share
  represent increases of 84% and 89%, respectively, over third quarter 1995
  operating results.
  
  For the thirty-nine weeks ended September 28, 1996, the company realized
  consolidated net income of $4,108,344 or $.67 per share versus $3,471,797 or
  $.56 per share for the comparable period in 1995. Year to date 1995 results were
  impacted by a severance charge of $950,000 resulting in an after-tax charge to
  net income of $550,000 or $.09 per share. On a comparable operating basis,
  excluding the effects of the tax rate change, the year to date amortization of
  the route gain and the effect of the severance charge, the comparable operating
  results for the thirty-nine weeks ended September 28, 1995 were $3,810,000 or
  $.62 per share.
  
  Consolidated net sales for the third quarter of 1996 were $36,021,652 versus
  $33,653,747 for the comparable period in 1995, representing an increase of 7%.
  The third quarter's higher sales were due to excellent market conditions, a well
  planned promotional schedule, continued acceptance of the fourth quarter 1995
  price increase and the inclusion of Dutch Mill's sales. Dutch Mill's net sales
  were responsible for 1.6% of the sales increase as the 1995 third quarter
  included only five weeks of sales activity versus thirteen weeks for the third
  quarter of 1996.
  
  Cost of sales in the third quarter of 1996 decreased as a percentage of sales
  compared to the third quarter of 1995. The resulting improved gross margin is
  primarily due to the effect of price increases.
  
  The decrease in other income, net for the third quarter of 1996 was primarily
  the result of the amortization of the gain on the sale of the company's
  distribution routes being completed in the fourth quarter of 1995.
  
  The effective tax rates on consolidated net income for the quarters ended
  September 28, 1996 and September 30, 1995 were 37.7% and 33.7%, respectively,
  excluding the effect of the $550,868 charge for remeasuring the company's
  deferred tax asset and liability accounts in the third quarter of 1995. These
  rates compare to a federal statutory rate of 34% and the differences between the
  effective rates and the statutory rate is due to state income taxes. The charge
  for $550,868, which increased the tax provision in the third quarter of 1995,
  was made in accordance with SFAS No. 109 as noted above.
  
  
                                    Page 8 of 11
  
  <PAGE>
  
  Financial Condition
  
  The company has consistently demonstrated the ability to generate sufficient
  cash for working capital 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 thirty-nine weeks ended September 28, 1996, net cash from operating
  activities increased by $1,479,790 to $9,159,715 from $7,679,925 for the
  comparable period in 1995. Net cash from operating activities increased over
  1995 as a result of $637,000 in additional net income and increases in accounts
  payable and accrued insurance that were partially offset by reductions in
  accrued pensions.
  
  Net cash used for investing activities for the thirty-nine weeks ended September
  28, 1996 increased by $3,873,320 from the comparable period in 1995 principally
  due to the purchase of the Oxford facility and orders for the equipment to make
  it operational. Net cash used for financing activities decreased by $2,330,000
  relative to the same period in 1995. This decrease is primarily the result of
  additional borrowings.
  
  For the remainder of 1996, the company anticipates that cash flow from
  operations, along with the continued availability of bank lines of credit,
  revolving credit agreements and other long-term financing, will provide
  sufficient cash to meet operating and financing requirements.
  
                                    Page 9 of 11
  
  <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 September 28,
                   1996.
  
            (c)    Other Matters - Effective September 24, 1996, the company's
                   common stock began trading on the New York Stock Exchange.
                   Previously the company's common stock had been traded on
                   the American Stock Exchange.
  
  
                                    Exhibit Index
  
                        Exhibit 27 - Financial Data Schedule
  
                                    Page 10 of 11
  
  <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)
  
  
  
  
  
  
  
       November 8, 1996                         /s/ John M. Pettine
  ----------------------------       --------------------------------------------
            (Date)                                 JOHN M. PETTINE
                                                  VICE PRESIDENT AND
                                               CHIEF FINANCIAL OFFICER
                                     (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
  
                                    Page 11 of 11
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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 thirty-nine weeks ended September 28, 1996
  
  (  ) 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                           6,185,551
            (Title of Class)                        (No. of Shares Outstanding
                                                      at September 28, 1996
  
                   INDEX OF EXHIBITS IS LOCATED ON PAGE 10 OF 11.
  
                                    Page 1 of 11
  TASTY BAKING COMPANY AND SUBSIDIARIES
  
                                        INDEX
  
                                                                              Page
  
  PART I.       FINANCIAL INFORMATION
  
  Item 1.       Financial Statements
  
                Consolidated Condensed Balance Sheets
                September 28, 1996 and December 30, 1995.......................3
  
                Consolidated Condensed Statements of Operations
                Thirteen Weeks and Thirty-nine Weeks Ended
                September 28, 1996 and September 30, 1995......................4
  
                Consolidated Condensed Statements of Cash Flows
                Thirty-nine Weeks Ended September 28, 1996 and
                September 30, 1995.............................................5
  
                Notes to Consolidated Condensed Financial Statements.........6-7
  
  Item 2.       Management's Discussion and Analysis of Financial
                Condition and Results of Operations..........................8-9
  
  PART II.      OTHER INFORMATION
  
  Item 6.       Exhibits and Reports on Form 8-K..............................10
  
  Signature...................................................................11
  
                                    Page 2 of 11
  PART I.       FINANCIAL INFORMATION
  Item 1.       Financial Statements
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED BALANCE SHEETS
                                     (unaudited)
  September 28, 1996  December 30, 1995
  Current assets:
       Cash                                                $    110,838        $     85,104
       Accounts and notes receivable, net of
         allowance for doubtful accounts                     20,830,826          18,630,903
       Inventories:
         Raw materials                                        1,773,084           2,202,682
         Work in progress                                       580,181             593,416
         Finished goods                                       1,033,187             467,184
                                                           ------------        ------------
                                                              3,386,452           3,263,282
       Deferred income taxes, prepayments and other           2,475,743           3,349,314
                                                           ------------        ------------
         Total current assets                                26,803,859          25,328,603
                                                           ------------        ------------
  Property, plant and equipment:                            135,140,727         126,870,388
       Less accumulated depreciation                         96,636,250          91,230,770
                                                           ------------        ------------
                                                             38,504,477          35,639,618
                                                           ------------        ------------
  Long-term receivables                                      10,399,701          11,074,974
                                                           ------------        ------------
  Deferred income taxes                                       9,720,541           9,720,541
                                                           ------------        ------------
  Miscellaneous assets and deferred charges                   3,278,650           3,539,247
                                                           ------------        ------------
  Total assets                                             $ 88,707,228        $ 85,302,983
                                                           ============        ============
  Current liabilities:
       Current portion of long-term debt                   $    127,720        $    127,720
       Current obligations under capital leases                 577,379             513,159
       Notes payable, banks                                   1,400,000             700,000
       Accounts payable                                       5,559,245           4,699,747
       Accrued liabilities                                    6,770,264           5,344,162
                                                           ------------        ------------
          Total current liabilities                          14,434,608          11,384,788
                                                           ------------        ------------
  Long-term debt, less current portion                        5,267,152           4,576,385
                                                           ------------        ------------
  Long-term obligations under capital leases,
       less current portion                                   1,290,169           1,653,134
                                                           ------------        ------------
  Accrued pensions and other liabilities                     11,225,233          13,129,760
                                                           ------------        ------------
  Postretirement benefits other than pensions                18,952,833          18,620,763
                                                           ------------        ------------
  Shareholders' equity:
       Common stock                                           3,644,544           3,644,544
       Capital in excess of par value of stock               29,670,521          29,662,330
       Retained earnings                                     20,936,301          19,425,849
                                                           ------------        ------------
                                                             54,251,366          52,732,723
       Less:
       Treasury stock, at cost                               16,363,340          16,364,757
       Management Stock Purchase Plan
         receivables and deferrals                              350,793             429,813
                                                           ------------        ------------
                                                             37,537,233          35,938,153
                                                           ------------        ------------
  Total liabilities and shareholders' equity               $ 88,707,228        $ 85,302,983
                                                           ============        ============
  See accompanying notes to consolidated condensed
                               financial statements.
  
                                    Page 3 of 11
  TASTY BAKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                     (unaudited)
  For the Thirteen Weeks Ended         For the Thirty-nine Weeks Ended
                                        Sept. 28, 1996    Sept. 30, 1995      Sept. 28, 1996    Sept. 30, 1995
  Net Sales                             $  36,021,652      $  33,653,747      $ 109,714,528      $ 107,374,202
                                        -------------      -------------      -------------      -------------
  
  Costs and expenses:
       Cost of sales                       22,332,536         21,815,368         68,484,501         67,984,916
  
       Depreciation                         1,838,336          1,850,586          5,490,835          5,560,518
  
       Selling, general and
          administrative                   10,472,900          9,532,556         30,068,214         28,426,247
  
       Severance charge                            --                 --                 --            950,000
  
       Interest expense                       134,564            131,219            362,138            450,286
  
       Other income, net                     (446,541)          (920,722)        (1,355,853)        (2,757,391)
                                        -------------      -------------      -------------      -------------
  
                                           34,331,795         32,409,007        103,049,835        100,614,576
                                        -------------      -------------      -------------      -------------
  
  Income before provision
       for income taxes                     1,689,857          1,244,740          6,664,693          6,759,626
                                        -------------      -------------      -------------      -------------
  
  Provision for income taxes:
       Current and deferred                  (637,636)          (419,797)        (2,556,349)        (2,736,961)
  
       Decrease in deferred
          tax asset due to
           change in tax rate                      --           (550,868)                --           (550,868)
                                        -------------      -------------      -------------      -------------
  
  Total provision for income taxes           (637,636)          (970,665)        (2,556,349)        (3,287,829)
                                        -------------      -------------      -------------      -------------
  
  Net income                            $   1,052,221      $     274,075      $   4,108,344      $   3,471,797
                                        =============      =============      =============      =============
  
  Average common shares outstanding         6,185,551          6,160,102          6,177,032          6,149,346
  
  Per share of common stock:
  
       Net income                       $         .17      $         .04      $         .67      $         .56
                                        =============      =============      =============      =============
  
       Cash dividend                    $         .14      $         .14      $         .42      $         .42
                                        =============      =============      =============      =============
  See accompanying notes to consolidated
                          condensed financial statements.
  
                                    Page 4 of 11
  TASTY BAKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                     (unaudited)
  For the Thirty-nine Weeks Ended
                                                             Sept. 28, 1996    Sept. 30, 1995
  Cash flows from (used for) operating activities
       Net income                                              $ 4,108,344      $ 3,471,797
       Adjustments to reconcile net income to net
        cash provided by operating activities:
           Depreciation                                          5,490,835        5,560,518
           Amortization                                             52,431           39,906
           Deferred taxes                                               --        1,426,287
           Other                                                (1,327,972)        (216,796)
       Changes in assets and liabilities
        affecting operations                                       836,077       (2,601,787)
                                                               -----------      -----------
  
       Net cash from operating activities                        9,159,715        7,679,925
                                                               -----------      -----------
  
  Cash flows from (used for) investing activities
       Proceeds from owner/operator's loan repayments            3,203,559        2,461,108
       Purchase of property, plant and equipment                (8,271,305)      (3,247,329)
       Loans to owner/operators                                 (2,539,257)      (2,871,526)
       Proceeds from sale of property, plant and equipment              --           36,836
       Other                                                        63,280          (49,492)
                                                               -----------      -----------
  
       Net cash used for investing activities                   (7,543,723)      (3,670,403)
                                                               -----------      -----------
  
  Cash flows from (used for) financing activities
       Additional long-term debt                                 5,000,000               --
       Dividends paid                                           (2,597,892)      (2,577,148)
       Payment of long-term debt                                (4,692,366)      (1,343,505)
       Net increase in short-term debt                             700,000               --
                                                               -----------      -----------
  
       Net cash used for financing activities                   (1,590,258)      (3,920,653)
                                                               -----------      -----------
  
       Net increase in cash                                         25,734           88,869
  
       Cash, beginning of year                                      85,104          147,251
                                                               -----------      -----------
  
       Cash, end of period                                     $   110,838      $   236,120
                                                               ===========      ===========
  
       Supplemental Cash Flow Information:
       Cash paid during the period for:
           Interest                                            $   343,217      $   427,695
                                                               ===========      ===========
           Income taxes                                        $ 2,221,142      $ 3,731,877
                                                               ===========      ===========
  See accompanying notes to consolidated condensed
                               financial statements.
  
                                    Page 5 of 11
  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 of a 160,000 square foot
       manufacturing facility in Oxford, Chester County, Pennsylvania for
       $4,000,000. The company is now in the process of planning for and acquiring
       the production lines that will be placed in the facility. It is expected
       that production at this facility will begin during the first quarter of
       1997.
  
  2.   Purchase of Subsidiary
       On August 29, 1995, the company acquired all of the outstanding shares of
       capital stock of Dutch Mill Baking Company, Inc. (Dutch Mill) in exchange
       for 45,948 shares of the company's common stock valued at $649,000. Dutch
       Mill, based in Wyckoff, New Jersey, produces donuts, muffins and cakes
       under a variety of labels and operates principally in the New York
       metropolitan area. The acquisition was accounted for as a purchase and,
       accordingly, the net assets and results of operations of Dutch Mill are
       included in the company's consolidated financial statements since the date
       of acquisition. The excess of the total acquisition cost over the fair
       value of net assets acquired of approximately $288,000 is being amortized
       on a straight line basis over fifteen years. The pro forma results, had the
       acquisition occurred at the beginning of fiscal year 1995, would not have
       had a significant impact on the company's consolidated results of
       operations.
  
  3.   Severance Charge
       In the second quarter of 1995, the company incurred severance costs of
       $950,000 resulting in a charge to net income of $550,000 or $.09 per share
       after related tax benefit. The severance charge resulted from changes in
       certain management positions during the second quarter of 1995.
  
  4.   Decrease in Net Deferred Tax Assets Due to Change in Tax Rate 
       In the third quarter of 1995, under the provisions of Statement of
       Financial Accounting Standards No. 109 - "Accounting for Income Taxes", the
       company was required to record a noncash charge to net income of $550,868
       or $.09 per share. This charge resulted from a remeasuring of the company's
       deferred tax asset and liability accounts as a result of a decrease in the
       Pennsylvania Corporate Net Income Tax rate from 11.99% to 9.99%,
       retroactive to January 1, 1995.
  
  5.   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 September 28, 1996, and December 30, 1995 and
       the results of its operations for the thirteen and thirty-nine weeks ended
       September 28, 1996 and September 30, 1995 and cash flows for the
       thirty-nine weeks ended September 28, 1996 and September 30, 1995. These
       unaudited consolidated condensed financial statements should be read in
       conjunction with the consolidated financial statements and footnotes
       thereto in the company's 1995 Annual Report to Shareholders. In addition,
       the results of operations for the thirty-nine weeks ended September 28,
       1996 are not necessarily indicative of the results to be expected for the
       full year.
  
                                    Page 6 of 11
  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 thirty-nine weeks ended September 28,
       1996 and September 30, 1995, the difference between the actual expenses
       incurred and the expenses charged to operations was not significant.
  
  6.   Earnings Per Share
       Per share amounts are based on the weighted average number of common shares
       and equivalent shares outstanding during the quarter and year to date.
  
                                    Page 7 of 11
  TASTY BAKING COMPANY AND SUBSIDIARIES
  
  Item 2.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations
  
  Results of Operations
  
  For the third quarter of 1996, the company realized consolidated net income of
  $1,052,221 or $.17 per share versus $274,075 or $.04 per share for the third
  quarter of 1995. Included in the 1995 results was a noncash charge to net income
  of $550,868 or $.09 per share. This charge resulted from a remeasuring of the
  company's deferred tax asset and liability accounts in accordance with SFAS No.
  109 due to a 2% decrease in the Pennsylvania Corporate Net Income Tax rate,
  retroactive to January 1, 1995. Further impacting the company's 1995
  consolidated operating results was the amortization of the gain on the sale of
  the company's distribution routes which increased net income by $254,000 or $.04
  per share. On a comparable operating basis, excluding the effects of the
  adjustment for the tax rate change and the amortization of the route gain,
  operating earnings were $571,000 or $.09 per share in the third quarter of 1995.
  Therefore, third quarter 1996 operating results of $1,052,000 or $.17 per share
  represent increases of 84% and 89%, respectively, over third quarter 1995
  operating results.
  
  For the thirty-nine weeks ended September 28, 1996, the company realized
  consolidated net income of $4,108,344 or $.67 per share versus $3,471,797 or
  $.56 per share for the comparable period in 1995. Year to date 1995 results were
  impacted by a severance charge of $950,000 resulting in an after-tax charge to
  net income of $550,000 or $.09 per share. On a comparable operating basis,
  excluding the effects of the tax rate change, the year to date amortization of
  the route gain and the effect of the severance charge, the comparable operating
  results for the thirty-nine weeks ended September 28, 1995 were $3,810,000 or
  $.62 per share.
  
  Consolidated net sales for the third quarter of 1996 were $36,021,652 versus
  $33,653,747 for the comparable period in 1995, representing an increase of 7%.
  The third quarter's higher sales were due to excellent market conditions, a well
  planned promotional schedule, continued acceptance of the fourth quarter 1995
  price increase and the inclusion of Dutch Mill's sales. Dutch Mill's net sales
  were responsible for 1.6% of the sales increase as the 1995 third quarter
  included only five weeks of sales activity versus thirteen weeks for the third
  quarter of 1996.
  
  Cost of sales in the third quarter of 1996 decreased as a percentage of sales
  compared to the third quarter of 1995. The resulting improved gross margin is
  primarily due to the effect of price increases.
  
  The decrease in other income, net for the third quarter of 1996 was primarily
  the result of the amortization of the gain on the sale of the company's
  distribution routes being completed in the fourth quarter of 1995.
  
  The effective tax rates on consolidated net income for the quarters ended
  September 28, 1996 and September 30, 1995 were 37.7% and 33.7%, respectively,
  excluding the effect of the $550,868 charge for remeasuring the company's
  deferred tax asset and liability accounts in the third quarter of 1995. These
  rates compare to a federal statutory rate of 34% and the differences between the
  effective rates and the statutory rate is due to state income taxes. The charge
  for $550,868, which increased the tax provision in the third quarter of 1995,
  was made in accordance with SFAS No. 109 as noted above.
  
                                    Page 8 of 11
  Financial Condition
  
  The company has consistently demonstrated the ability to generate sufficient
  cash for working capital 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 thirty-nine weeks ended September 28, 1996, net cash from operating
  activities increased by $1,479,790 to $9,159,715 from $7,679,925 for the
  comparable period in 1995. Net cash from operating activities increased over
  1995 as a result of $637,000 in additional net income and increases in accounts
  payable and accrued insurance that were partially offset by reductions in
  accrued pensions.
  
  Net cash used for investing activities for the thirty-nine weeks ended September
  28, 1996 increased by $3,873,320 from the comparable period in 1995 principally
  due to the purchase of the Oxford facility and orders for the equipment to make
  it operational. Net cash used for financing activities decreased by $2,330,000
  relative to the same period in 1995. This decrease is primarily the result of
  additional borrowings.
  
  For the remainder of 1996, the company anticipates that cash flow from
  operations, along with the continued availability of bank lines of credit,
  revolving credit agreements and other long-term financing, will provide
  sufficient cash to meet operating and financing requirements.
  
                                    Page 9 of 11
  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 September 28,
                   1996.
  
            (c)    Other Matters - Effective September 24, 1996, the company's
                   common stock began trading on the New York Stock Exchange.
                   Previously the company's common stock had been traded on
                   the American Stock Exchange.
  
                                    Exhibit Index
  
                        Exhibit 27 - Financial Data Schedule
  
                                    Page 10 of 11
  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)
  
       November 8, 1996                         /s/ John M. Pettine
  ----------------------------       --------------------------------------------
            (Date)                                 JOHN M. PETTINE
                                                  VICE PRESIDENT AND
                                               CHIEF FINANCIAL OFFICER
                                     (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
  
                                    Page 11 of 11