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 twenty-six weeks ended June 27, 1998
  
  ( )  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                           7,812,908
            (Title of Class)                        (No. of Shares Outstanding
                                                         at August 7, 1998)
  
                    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
            June 27, 1998 and December 27, 1997............................... 3
  
            Consolidated Statements of Operations
            Thirteen weeks and Twenty-six weeks
            ended June 27, 1998 and June 28, 1997 ............................ 4
  
            Consolidated Condensed Statements of Cash Flows
            Twenty-six Weeks Ended June 27, 1998 and June 28, 1997............ 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 4.   Submission of Matters to a Vote of Security Holders .............. 9
  
  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>
  ----------------------------------------------------------------------------------------
                                                        June 27, 1998    December 27, 1997
  ----------------------------------------------------------------------------------------
  <S>                                                    <C>              <C>         
  Current assets:
        Cash                                             $    728,696     $    748,117
        Accounts and notes receivable, net of
          allowance for doubtful accounts                  21,333,133       18,661,411
        Inventories:
             Raw materials                                  2,078,567        1,940,423
             Work in progress                                 635,743          580,362
             Finished goods                                   561,354          775,417
                                                         -----------------------------
                                                            3,275,664        3,296,202
        Deferred income taxes, prepayments and other        3,261,935        2,241,587
                                                         -----------------------------
             Total current assets                          28,599,428       24,947,317
                                                         -----------------------------
  Property, plant and equipment:                          154,323,606      149,709,346
        Less accumulated depreciation                     107,899,344      105,501,230
                                                         -----------------------------
                                                           46,424,262       44,208,116
                                                         -----------------------------
  Long-term receivables                                    11,355,107       11,233,128
                                                         -----------------------------
  Deferred income taxes                                    11,059,696       11,059,696
                                                         -----------------------------
  Spare parts inventory and miscellaneous assets            3,290,061        2,871,121
                                                         -----------------------------
  Total assets                                           $100,728,554     $ 94,319,378
                                                         =============================
  Current liabilities:
        Current portion of long-term debt                $     29,354     $     29,354
        Current obligations under capital leases              434,918          543,962
        Notes payable, banks                                  950,000          900,000
        Accounts payable                                    5,226,566        4,345,944
        Accrued liabilities                                 7,243,115        8,644,300
                                                         -----------------------------
           Total current liabilities                       13,883,953       14,463,560
                                                         -----------------------------
  Long-term debt, less current portion                     12,258,669        7,773,053
                                                         -----------------------------
  Long-term obligations under capital leases,
        less current portion                                  420,628          587,156
                                                         -----------------------------
  Accrued pensions and other liabilities                   12,826,307       11,771,540
                                                         -----------------------------
  Postretirement benefits other than pensions              18,790,097       18,129,226
                                                         -----------------------------
  Shareholders' equity:
        Common stock                                        4,558,243        4,558,243
        Capital in excess of par value of stock            29,414,797       29,337,938
        Retained earnings                                  25,570,586       24,788,276
                                                         -----------------------------
                                                           59,543,626       58,684,457
        Less:
        Treasury stock, at cost                            16,479,745       16,738,364
        Management Stock Purchase Plan
             receivables and deferrals                        514,981          351,250
                                                         -----------------------------
                                                           42,548,900       41,594,843
                                                         -----------------------------
  Total liabilities and shareholders' equity             $100,728,554     $ 94,319,378
                                                         =============================
  </TABLE>
  
       See accompanying notes to consolidated condensed financial statements.
  
                                       3 of 10
  <PAGE>
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                     (unaudited)
  <TABLE>
  <CAPTION>
  --------------------------------------------------------------------------------------------------------------
                                           For the Thirteen Weeks Ended         For the Twenty-six Weeks Ended
                                         June 27, 1998      June 28, 1997      June 27, 1998      June 28, 1997
  --------------------------------------------------------------------------------------------------------------
  <S>                                    <C>                <C>                <C>                <C>          
  Gross Sales                            $  56,933,408      $  57,652,342      $ 114,094,160      $ 113,285,582
  Less discounts and allowances            (18,572,369)       (18,678,237)       (37,412,653)       (36,856,731)
                                         ----------------------------------------------------------------------
  Net Sales                                 38,361,039         38,974,105         76,681,507         76,428,851
                                         ----------------------------------------------------------------------
  Costs and expenses:
       Cost of sales                        24,307,090         23,610,742         48,132,069         46,782,850
  
       Depreciation                          1,589,016          1,860,066          3,340,394          3,555,493
  
       Selling, general and
          administrative                    11,167,403         10,327,675         21,638,420         20,559,255
       Interest expense                        178,308            158,045            319,551            285,635
  
       Other income, net                      (357,356)          (415,287)          (708,720)          (811,714)
                                         ----------------------------------------------------------------------
                                            36,884,461         35,541,241         72,721,714         70,371,519
                                         ----------------------------------------------------------------------
  Income before provision for
       income taxes                          1,476,578          3,432,864          3,959,793          6,057,332
  
  Provision for income taxes                   462,887          1,326,230          1,305,000          2,336,905
                                         ----------------------------------------------------------------------
  Net income                             $   1,013,691      $   2,106,634      $   2,654,793      $   3,720,427
                                         ======================================================================
  
  Average common shares outstanding:
            Basic                            7,806,554          7,761,182          7,799,103          7,752,276
            Diluted                          7,985,349          7,855,889          7,975,274          7,826,300
  Per share of common stock:
       Net income:  Basic                $        0.13      $        0.27      $        0.34      $        0.48
                                         ======================================================================
                    Diluted              $        0.13      $        0.27      $        0.33      $        0.48
                                         ======================================================================
       Cash dividend                     $        0.12      $       0.112      $        0.24      $       0.224
                                         ======================================================================
  </TABLE>
  
       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 Twenty-six Weeks Ended
                                                         June 27, 1998    June 28, 1997
  -------------------------------------------------------------------------------------
  <S>                                                     <C>              <C>        
  Cash flows from (used for) operating activities
       Net income                                         $ 2,654,793      $ 3,720,427
       Adjustments to reconcile net income to net
        cash provided by operating activities:
           Depreciation                                     3,340,394        3,555,493
           Amortization                                        88,673           63,707
           Other                                            1,709,908        1,620,436
       Changes in assets and liabilities
        affecting operations                               (4,192,095)      (2,552,172)
                                                          ----------------------------
       Net cash from operating activities                   3,601,673        6,407,891
                                                          ----------------------------
  Cash flows from (used for) investing activities
       Purchase of property, plant and equipment           (6,002,255)      (5,788,833)
       Proceeds from owner/operators' loan repayments       1,732,127        1,838,209
       Loans to owner/operators                            (1,852,111)      (3,505,018)
       Other                                                   (8,566)          32,400
                                                          ----------------------------
       Net cash used for investing activities              (6,130,805)      (7,423,242)
                                                          ----------------------------
  Cash flows from (used for) financing activities
       Additional long-term debt                            5,500,000        2,000,000
       Proceeds from sale of common stock                     122,150          181,181
       Dividends paid                                      (1,872,483)      (1,736,529)
       Payment of long-term debt                           (1,289,956)      (1,337,013)
       Net increase in short-term debt                         50,000        1,850,000
                                                          ----------------------------
       Net cash from financing activities                   2,509,711          957,639
                                                          ----------------------------
       Net decrease in cash                                   (19,421)         (57,712)
       Cash, beginning of year                                748,117          233,366
                                                          ----------------------------
       Cash, end of period                                $   728,696      $   175,654
                                                          ============================
       Supplemental Cash Flow Information:
       Cash paid during the period for:
           Interest                                       $   345,733      $   228,036
                                                          ============================
           Income taxes                                   $ 1,247,575      $ 3,470,240
                                                          ============================
  </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.   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 June 27, 1998 and  December  27, 1997 and the
       results of its operations for the thirteen and twenty-six  weeks ended June
       27,  1998 and June 28, 1997 and cash flows for the  twenty-six  weeks ended
       June 27, 1998 and June 28, 1997.  These  unaudited  consolidated  condensed
       financial  statements  should be read in conjunction  with the consolidated
       financial  statements  and footnotes  thereto in the company's  1997 Annual
       Report to  Shareholders.  In addition,  the results of  operations  for the
       twenty-six weeks ended June 27, 1998 are not necessarily  indicative of the
       results to be expected for the full year.
  
       Certain  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 twenty-six  weeks ended June 27, 1998 and June 28, 1997, the difference
       between the actual expenses incurred and the expenses charged to operations
       was not significant.
  
  2.   Net Income Per Common Share
       ---------------------------
       Net income per common share is  calculated  according  to the  Statement of
       Financial  Accounting  Standards  No.  128 -  "Earnings  Per  Share"  which
       requires  companies to present  basic and diluted  earnings per share.  Net
       income per common share - Basic is based on the weighted  average number of
       common shares  outstanding  during the year.  Net income per common share -
       Diluted  is based on the  weighted  average  number  of common  shares  and
       dilutive potential common shares outstanding during the year. The company's
       dilutive  potential  common  shares  outstanding  during  the  year  result
       entirely from dilutive stock options.
  
                                      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 second  quarter of 1998,  the company  realized net income of $1,013,691
  versus $2,106,634 for the second quarter of 1997. Net income per share decreased
  to $.13 from $.27 per share for the comparable quarter of 1997.
  
  For the twenty-six weeks ended June 27, 1998, the company realized net income of
  $2,654,793  versus  $3,720,427 for the twenty-six weeks ended June 28, 1997. Net
  income per share decreased to $.34 from $.48 per share for the comparable period
  in 1997.
  
  For the second quarter,  gross sales decreased 1.2% to $56,933,408,  compared to
  $57,652,342 last year. Gross sales, less discounts and allowances  resulted in a
  net sales decrease of 1.6% to $38,361,039  compared to $38,974,105 reported last
  year.  However,  our unit sales remained stable. The decrease in gross sales was
  the result of price  reductions  on  certain  product  lines and  changes in our
  promotion  schedule.   As  part  of  the  company's  strategic  plan  to  expand
  geographically,  we had  anticipated new sales volume in national sales and also
  in products  produced in our Oxford plant. As a result, we decided to reduce our
  promotion  schedule  from the usual  three  weeks per  quarter  to two.  We also
  decided to take price  reductions on certain  product  lines to stabilize  their
  sales.  While we were  successful in bringing  stability to these product lines,
  the  change  in  promotion  schedule,  along  with the lack of  anticipated  new
  national sales volume, resulted in lower gross sales. The difference between the
  decreases of 1.2% in gross sales and 1.6% in net sales  resulted  primarily from
  an increase in returns partially offset by lower promotion costs.
  
  Cost of  sales,  as a  percentage  of gross  sales,  was 42.7% and 41.0% for the
  second  quarters of 1998 and 1997,  respectively.  This  increase in the current
  quarter  was due to the  effect of the  temporary  price  reductions  on certain
  product lines as well as costs incurred in conjunction with product  development
  costs at the Oxford facility.
  
  Selling,  general and  administrative  expenses  for the second  quarter of 1998
  increased by $839,728 or 8.1% over the comparable  period in 1997. This increase
  resulted  primarily  from an increase in selling  expenses  associated  with the
  expansion into new geographic regions.  Administrative costs also increased as a
  result  of   payroll   taxes   generated   from  the  IRS   ruling   classifying
  owner/operators   as  statutory   employees  and  costs   associated   with  the
  installation of a new computer system.
  
  Interest  expense  increased  for the second  quarter of 1998  versus the second
  quarter of 1997 as a result of increased average borrowing levels.  The decrease
  in other income, net for the second quarter of 1998 was the result of a decrease
  in rental income.
  
  The  effective  tax rate was 31.3% for the quarter ended June 27, 1998 and 38.6%
  for the quarter ended June 28, 1997 which  compares to a federal  statutory rate
  of 34%. The difference  between the effective rate and the statutory rate in the
  second quarter of 1998 is the result of tax benefits arising from passive income
  and state tax  credits.  The  principal  reason for the  difference  between the
  effective  rate and the  statutory  rate in the  second  quarter of 1997 was the
  effect of state income taxes.
  
                                      7 of 10
  <PAGE>
  Financial Condition
  -------------------
  
  The company has consistently  demonstrated the ability to generate positive 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 twenty-six weeks ended June 27, 1998, net cash from operating activities
  decreased by  $2,806,218 to $3,601,673  from  $6,407,891  for the same period in
  1997. The decrease in net cash from operating  activities was principally due to
  a decrease in net income and the payment  made to the IRS as  settlement  of the
  dispute concerning the payroll taxes for the independent  owner/operators  which
  was accrued in 1997.
  
  Net cash used for investing  activities for the twenty-six  weeks ended June 27,
  1998 decreased by $1,292,437 relative to the same period in 1997 principally due
  to a  decrease  in the  funds  needed to  finance  the net  owner/operator  loan
  activity.  This decrease was partially  offset by an increase in expenditures on
  equipment to upgrade the computer system and production facilities.
  
  Net cash from financing  activities for the twenty-six weeks ended June 27, 1998
  increased  by  $1,552,072  relative to the same  twenty-six  weeks in 1997.  The
  increase is primarily the result of a net increase in long-term  debt  partially
  offset by a decrease in short-term debt relative to the prior year.
  
  For  the  remainder  of  1998  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 4.   Submission of Matters to a Vote of Security Holders
  
       (a)  The Company's  annual  meeting of  stockholders  was held on April 24,
            1998.
  
       (b)  The directors elected at the meeting were:
  
                                                  For        Against      Withheld
  
             Philip J. Baur, Jr.               6,406,748       ---        375,836
             Judith M. von Seldeneck           6,411,195       ---        371,389
  
       Other  directors  whose terms of office  continued after the meeting are as
  follows: Fred C. Aldridge,  Jr., G. Fred DiBona, Jr., John M. Pettine,  James L.
  Everett, III, Nelson G. Harris, and Carl S. Watts.
  
       (c)  Other matters voted upon at the meeting and the results of those votes
            were as follows:
  
                                                   For         Against     Abstain
  
            Approval of the Amendments to the
            Tasty Baking Company Articles of
            Incorporation and By-Laws           3,923,199     1,537,364     55,969
  
  
                                                   For         Against     Abstain
  
            Approval of adoption of the 1997
            Long Term Incentive Stock Option
            Plan                                5,735,043       919,828    127,713
  
  
                                                   For         Against     Abstain
  
            Approval of Coopers & Lybrand
            L.L.P., as independent certified
            public accountants                  6,724,446        29,447     28,689
  
  
  The foregoing  matters are described in detail in the Company's  proxy statement
  dated March 26, 1998.
  
  
  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  twenty-six
  weeks ended June 27, 1998.
  
                                    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)
  
  
  
  
  
  
  
  
     August 7, 1998                                  /S/ John M. Pettine
        (Date)                                         JOHN M. PETTINE
                                                     VICE PRESIDENT AND
                                                  CHIEF FINANCIAL OFFICER
                                      (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
  
  
                                      10 of 10
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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": "98680320"}, "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 twenty-six weeks ended June 27, 1998
  
  ( )  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                           7,812,908
            (Title of Class)                        (No. of Shares Outstanding
                                                         at August 7, 1998)
  
                    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
            June 27, 1998 and December 27, 1997............................... 3
  
            Consolidated Statements of Operations
            Thirteen weeks and Twenty-six weeks
            ended June 27, 1998 and June 28, 1997 ............................ 4
  
            Consolidated Condensed Statements of Cash Flows
            Twenty-six Weeks Ended June 27, 1998 and June 28, 1997............ 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 4.   Submission of Matters to a Vote of Security Holders .............. 9
  
  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)
  ----------------------------------------------------------------------------------------
                                                        June 27, 1998    December 27, 1997
  ----------------------------------------------------------------------------------------
  Current assets:
        Cash                                             $    728,696     $    748,117
        Accounts and notes receivable, net of
          allowance for doubtful accounts                  21,333,133       18,661,411
        Inventories:
             Raw materials                                  2,078,567        1,940,423
             Work in progress                                 635,743          580,362
             Finished goods                                   561,354          775,417
                                                         -----------------------------
                                                            3,275,664        3,296,202
        Deferred income taxes, prepayments and other        3,261,935        2,241,587
                                                         -----------------------------
             Total current assets                          28,599,428       24,947,317
                                                         -----------------------------
  Property, plant and equipment:                          154,323,606      149,709,346
        Less accumulated depreciation                     107,899,344      105,501,230
                                                         -----------------------------
                                                           46,424,262       44,208,116
                                                         -----------------------------
  Long-term receivables                                    11,355,107       11,233,128
                                                         -----------------------------
  Deferred income taxes                                    11,059,696       11,059,696
                                                         -----------------------------
  Spare parts inventory and miscellaneous assets            3,290,061        2,871,121
                                                         -----------------------------
  Total assets                                           $100,728,554     $ 94,319,378
                                                         =============================
  Current liabilities:
        Current portion of long-term debt                $     29,354     $     29,354
        Current obligations under capital leases              434,918          543,962
        Notes payable, banks                                  950,000          900,000
        Accounts payable                                    5,226,566        4,345,944
        Accrued liabilities                                 7,243,115        8,644,300
                                                         -----------------------------
           Total current liabilities                       13,883,953       14,463,560
                                                         -----------------------------
  Long-term debt, less current portion                     12,258,669        7,773,053
                                                         -----------------------------
  Long-term obligations under capital leases,
        less current portion                                  420,628          587,156
                                                         -----------------------------
  Accrued pensions and other liabilities                   12,826,307       11,771,540
                                                         -----------------------------
  Postretirement benefits other than pensions              18,790,097       18,129,226
                                                         -----------------------------
  Shareholders' equity:
        Common stock                                        4,558,243        4,558,243
        Capital in excess of par value of stock            29,414,797       29,337,938
        Retained earnings                                  25,570,586       24,788,276
                                                         -----------------------------
                                                           59,543,626       58,684,457
        Less:
        Treasury stock, at cost                            16,479,745       16,738,364
        Management Stock Purchase Plan
             receivables and deferrals                        514,981          351,250
                                                         -----------------------------
                                                           42,548,900       41,594,843
                                                         -----------------------------
  Total liabilities and shareholders' equity             $100,728,554     $ 94,319,378
                                                         =============================
  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         For the Twenty-six Weeks Ended
                                         June 27, 1998      June 28, 1997      June 27, 1998      June 28, 1997
  --------------------------------------------------------------------------------------------------------------
  Gross Sales                            $  56,933,408      $  57,652,342      $ 114,094,160      $ 113,285,582
  Less discounts and allowances            (18,572,369)       (18,678,237)       (37,412,653)       (36,856,731)
                                         ----------------------------------------------------------------------
  Net Sales                                 38,361,039         38,974,105         76,681,507         76,428,851
                                         ----------------------------------------------------------------------
  Costs and expenses:
       Cost of sales                        24,307,090         23,610,742         48,132,069         46,782,850
  
       Depreciation                          1,589,016          1,860,066          3,340,394          3,555,493
  
       Selling, general and
          administrative                    11,167,403         10,327,675         21,638,420         20,559,255
       Interest expense                        178,308            158,045            319,551            285,635
  
       Other income, net                      (357,356)          (415,287)          (708,720)          (811,714)
                                         ----------------------------------------------------------------------
                                            36,884,461         35,541,241         72,721,714         70,371,519
                                         ----------------------------------------------------------------------
  Income before provision for
       income taxes                          1,476,578          3,432,864          3,959,793          6,057,332
  
  Provision for income taxes                   462,887          1,326,230          1,305,000          2,336,905
                                         ----------------------------------------------------------------------
  Net income                             $   1,013,691      $   2,106,634      $   2,654,793      $   3,720,427
                                         ======================================================================
  
  Average common shares outstanding:
            Basic                            7,806,554          7,761,182          7,799,103          7,752,276
            Diluted                          7,985,349          7,855,889          7,975,274          7,826,300
  Per share of common stock:
       Net income:  Basic                $        0.13      $        0.27      $        0.34      $        0.48
                                         ======================================================================
                    Diluted              $        0.13      $        0.27      $        0.33      $        0.48
                                         ======================================================================
       Cash dividend                     $        0.12      $       0.112      $        0.24      $       0.224
                                         ======================================================================
  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 Twenty-six Weeks Ended
                                                         June 27, 1998    June 28, 1997
  -------------------------------------------------------------------------------------
  Cash flows from (used for) operating activities
       Net income                                         $ 2,654,793      $ 3,720,427
       Adjustments to reconcile net income to net
        cash provided by operating activities:
           Depreciation                                     3,340,394        3,555,493
           Amortization                                        88,673           63,707
           Other                                            1,709,908        1,620,436
       Changes in assets and liabilities
        affecting operations                               (4,192,095)      (2,552,172)
                                                          ----------------------------
       Net cash from operating activities                   3,601,673        6,407,891
                                                          ----------------------------
  Cash flows from (used for) investing activities
       Purchase of property, plant and equipment           (6,002,255)      (5,788,833)
       Proceeds from owner/operators' loan repayments       1,732,127        1,838,209
       Loans to owner/operators                            (1,852,111)      (3,505,018)
       Other                                                   (8,566)          32,400
                                                          ----------------------------
       Net cash used for investing activities              (6,130,805)      (7,423,242)
                                                          ----------------------------
  Cash flows from (used for) financing activities
       Additional long-term debt                            5,500,000        2,000,000
       Proceeds from sale of common stock                     122,150          181,181
       Dividends paid                                      (1,872,483)      (1,736,529)
       Payment of long-term debt                           (1,289,956)      (1,337,013)
       Net increase in short-term debt                         50,000        1,850,000
                                                          ----------------------------
       Net cash from financing activities                   2,509,711          957,639
                                                          ----------------------------
       Net decrease in cash                                   (19,421)         (57,712)
       Cash, beginning of year                                748,117          233,366
                                                          ----------------------------
       Cash, end of period                                $   728,696      $   175,654
                                                          ============================
       Supplemental Cash Flow Information:
       Cash paid during the period for:
           Interest                                       $   345,733      $   228,036
                                                          ============================
           Income taxes                                   $ 1,247,575      $ 3,470,240
                                                          ============================
  See accompanying notes to consolidated condensed financial statements.
  
                                       5 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
                NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
  
  1.   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 June 27, 1998 and  December  27, 1997 and the
       results of its operations for the thirteen and twenty-six  weeks ended June
       27,  1998 and June 28, 1997 and cash flows for the  twenty-six  weeks ended
       June 27, 1998 and June 28, 1997.  These  unaudited  consolidated  condensed
       financial  statements  should be read in conjunction  with the consolidated
       financial  statements  and footnotes  thereto in the company's  1997 Annual
       Report to  Shareholders.  In addition,  the results of  operations  for the
       twenty-six weeks ended June 27, 1998 are not necessarily  indicative of the
       results to be expected for the full year.
  
       Certain  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 twenty-six  weeks ended June 27, 1998 and June 28, 1997, the difference
       between the actual expenses incurred and the expenses charged to operations
       was not significant.
  
  2.   Net Income Per Common Share
       ---------------------------
       Net income per common share is  calculated  according  to the  Statement of
       Financial  Accounting  Standards  No.  128 -  "Earnings  Per  Share"  which
       requires  companies to present  basic and diluted  earnings per share.  Net
       income per common share - Basic is based on the weighted  average number of
       common shares  outstanding  during the year.  Net income per common share -
       Diluted  is based on the  weighted  average  number  of common  shares  and
       dilutive potential common shares outstanding during the year. The company's
       dilutive  potential  common  shares  outstanding  during  the  year  result
       entirely from dilutive stock options.
  
                                      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 second  quarter of 1998,  the company  realized net income of $1,013,691
  versus $2,106,634 for the second quarter of 1997. Net income per share decreased
  to $.13 from $.27 per share for the comparable quarter of 1997.
  
  For the twenty-six weeks ended June 27, 1998, the company realized net income of
  $2,654,793  versus  $3,720,427 for the twenty-six weeks ended June 28, 1997. Net
  income per share decreased to $.34 from $.48 per share for the comparable period
  in 1997.
  
  For the second quarter,  gross sales decreased 1.2% to $56,933,408,  compared to
  $57,652,342 last year. Gross sales, less discounts and allowances  resulted in a
  net sales decrease of 1.6% to $38,361,039  compared to $38,974,105 reported last
  year.  However,  our unit sales remained stable. The decrease in gross sales was
  the result of price  reductions  on  certain  product  lines and  changes in our
  promotion  schedule.   As  part  of  the  company's  strategic  plan  to  expand
  geographically,  we had  anticipated new sales volume in national sales and also
  in products  produced in our Oxford plant. As a result, we decided to reduce our
  promotion  schedule  from the usual  three  weeks per  quarter  to two.  We also
  decided to take price  reductions on certain  product  lines to stabilize  their
  sales.  While we were  successful in bringing  stability to these product lines,
  the  change  in  promotion  schedule,  along  with the lack of  anticipated  new
  national sales volume, resulted in lower gross sales. The difference between the
  decreases of 1.2% in gross sales and 1.6% in net sales  resulted  primarily from
  an increase in returns partially offset by lower promotion costs.
  
  Cost of  sales,  as a  percentage  of gross  sales,  was 42.7% and 41.0% for the
  second  quarters of 1998 and 1997,  respectively.  This  increase in the current
  quarter  was due to the  effect of the  temporary  price  reductions  on certain
  product lines as well as costs incurred in conjunction with product  development
  costs at the Oxford facility.
  
  Selling,  general and  administrative  expenses  for the second  quarter of 1998
  increased by $839,728 or 8.1% over the comparable  period in 1997. This increase
  resulted  primarily  from an increase in selling  expenses  associated  with the
  expansion into new geographic regions.  Administrative costs also increased as a
  result  of   payroll   taxes   generated   from  the  IRS   ruling   classifying
  owner/operators   as  statutory   employees  and  costs   associated   with  the
  installation of a new computer system.
  
  Interest  expense  increased  for the second  quarter of 1998  versus the second
  quarter of 1997 as a result of increased average borrowing levels.  The decrease
  in other income, net for the second quarter of 1998 was the result of a decrease
  in rental income.
  
  The  effective  tax rate was 31.3% for the quarter ended June 27, 1998 and 38.6%
  for the quarter ended June 28, 1997 which  compares to a federal  statutory rate
  of 34%. The difference  between the effective rate and the statutory rate in the
  second quarter of 1998 is the result of tax benefits arising from passive income
  and state tax  credits.  The  principal  reason for the  difference  between the
  effective  rate and the  statutory  rate in the  second  quarter of 1997 was the
  effect of state income taxes.
  
                                      7 of 10
  Financial Condition
  -------------------
  
  The company has consistently  demonstrated the ability to generate positive 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 twenty-six weeks ended June 27, 1998, net cash from operating activities
  decreased by  $2,806,218 to $3,601,673  from  $6,407,891  for the same period in
  1997. The decrease in net cash from operating  activities was principally due to
  a decrease in net income and the payment  made to the IRS as  settlement  of the
  dispute concerning the payroll taxes for the independent  owner/operators  which
  was accrued in 1997.
  
  Net cash used for investing  activities for the twenty-six  weeks ended June 27,
  1998 decreased by $1,292,437 relative to the same period in 1997 principally due
  to a  decrease  in the  funds  needed to  finance  the net  owner/operator  loan
  activity.  This decrease was partially  offset by an increase in expenditures on
  equipment to upgrade the computer system and production facilities.
  
  Net cash from financing  activities for the twenty-six weeks ended June 27, 1998
  increased  by  $1,552,072  relative to the same  twenty-six  weeks in 1997.  The
  increase is primarily the result of a net increase in long-term  debt  partially
  offset by a decrease in short-term debt relative to the prior year.
  
  For  the  remainder  of  1998  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 4.   Submission of Matters to a Vote of Security Holders
  
       (a)  The Company's  annual  meeting of  stockholders  was held on April 24,
            1998.
  
       (b)  The directors elected at the meeting were:
  
                                                  For        Against      Withheld
  
             Philip J. Baur, Jr.               6,406,748       ---        375,836
             Judith M. von Seldeneck           6,411,195       ---        371,389
  
       Other  directors  whose terms of office  continued after the meeting are as
  follows: Fred C. Aldridge,  Jr., G. Fred DiBona, Jr., John M. Pettine,  James L.
  Everett, III, Nelson G. Harris, and Carl S. Watts.
  
       (c)  Other matters voted upon at the meeting and the results of those votes
            were as follows:
  
                                                   For         Against     Abstain
  
            Approval of the Amendments to the
            Tasty Baking Company Articles of
            Incorporation and By-Laws           3,923,199     1,537,364     55,969
  
                                                   For         Against     Abstain
  
            Approval of adoption of the 1997
            Long Term Incentive Stock Option
            Plan                                5,735,043       919,828    127,713
  
                                                   For         Against     Abstain
  
            Approval of Coopers & Lybrand
            L.L.P., as independent certified
            public accountants                  6,724,446        29,447     28,689
  
  The foregoing  matters are described in detail in the Company's  proxy statement
  dated March 26, 1998.
  
  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  twenty-six
  weeks ended June 27, 1998.
  
                                    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)
  
     August 7, 1998                                  /S/ John M. Pettine
        (Date)                                         JOHN M. PETTINE
                                                     VICE PRESIDENT AND
                                                  CHIEF FINANCIAL OFFICER
                                      (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
  
                                      10 of 10