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 29, 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 June 29, 1996)
  
                    INDEX OF EXHIBITS IS LOCATED ON PAGE 9 OF 10.
  
                                    Page 1 of 10
  
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
  
                                        INDEX
  
                                                                         Page
  PART I.   FINANCIAL INFORMATION
  
  Item 1.   Financial Statements
  
            Consolidated Condensed Balance Sheets June 29, 1996 and
            December 30, 1995.............................................3
  
            Consolidated Condensed Statements of Operations
            Thirteen Weeks and Twenty-six Weeks Ended June 29, 1996
            and July 1, 1995..............................................4
  
            Consolidated Condensed Statements of Cash Flows
            Twenty-six Weeks Ended June 29, 1996 and July 1, 1995.........5
  
            Notes to Consolidated Condensed Financial Statements..........6
  
  Item 2.   Management's Discussion and Analysis of Financial 
            Condition and Results of Operations.........................7-8
  
  
  Part II. OTHER INFORMATION
  
  Item 6. Exhibits and Reports on Form 8-K................................9
  
  Signatures.............................................................10
  
                                    Page 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 29, 1996  December 30, 1995
  Current assets:
  <S>                                                   <C>              <C>         
       Cash                                             $     33,333     $     85,104
       Accounts and notes receivable, net of
         allowance for doubtful accounts                  19,461,158       18,630,903
       Inventories:
         Raw materials                                     1,989,285        2,202,682
         Work in progress                                    603,038          593,416
         Finished goods                                      850,957          467,184
                                                        ------------     ------------
                                                           3,443,280        3,263,282
       Deferred income taxes, prepayments and other        3,124,884        3,349,314
                                                        ------------     ------------
         Total current assets                             26,062,655       25,328,603
                                                        ------------     ------------
  Property, plant and equipment:                         129,340,131      126,870,388
       Less accumulated depreciation                      94,882,403       91,230,770
                                                        ------------     ------------
                                                          34,457,728       35,639,618
                                                        ------------     ------------
  Long-term receivables                                   10,373,694       11,074,974
                                                        ------------     ------------
  Deferred income taxes                                    9,720,541        9,720,541
                                                        ------------     ------------
  Miscellaneous assets and deferred charges                3,453,717        3,539,247
                                                        ------------     ------------
  Total assets                                          $ 84,068,335     $ 85,302,983
                                                        ------------     ------------
  Current liabilities:
       Current portion of long-term debt                $    127,720     $    127,720
       Current obligations under capital leases              538,248          513,159
       Notes payable, banks                                       --          700,000
       Accounts payable                                    3,711,825        4,699,747
       Accrued liabilities                                 5,645,965        5,344,162
                                                        ------------     ------------
          Total current liabilities                       10,023,758       11,384,788
                                                        ------------     ------------
  Long-term debt, less current portion                     3,300,697        4,576,385
                                                        ------------     ------------
  Long-term obligations under capital leases,
       less current portion                                1,372,454        1,653,134
                                                        ------------     ------------
  Accrued pensions and other liabilities                  12,784,696       13,129,760
                                                        ------------     ------------
  Postretirement benefits other than pensions             19,260,912       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                                  20,750,057       19,425,849
                                                        ------------     ------------
                                                          54,065,122       52,732,723
       Less:
       Treasury stock, at cost                            16,363,340       16,364,757
       Management Stock Purchase Plan
         receivables and deferrals                           375,964          429,813
                                                        ------------     ------------
                                                          37,325,818       35,938,153
                                                        ------------     ------------
  Total liabilities and shareholders' equity            $ 84,068,335     $ 85,302,983
                                                        ============     ============
  </TABLE>
  
       See accompanying notes to consolidated condensed financial statements.
  
                               Page 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 29, 1996    July 1, 1995     June 29, 1996    July 1, 1995
  <S>                                  <C>              <C>              <C>              <C>         
  Net Sales                            $ 37,749,267     $ 36,656,188     $ 73,692,876     $ 73,720,455
                                       ------------     ------------     ------------     ------------
  
  Costs and expenses:
       Cost of sales                     23,334,633       23,016,442       46,151,965       46,169,548
  
       Depreciation                       1,813,701        1,825,788        3,652,499        3,709,932
  
       Selling, general and
          administrative                  9,963,743        9,523,043       19,595,314       18,893,691
  
       Severance charge                          --          950,000               --          950,000
  
       Interest expense                      99,048          154,159          227,574          319,067
  
       Other income, net                   (455,740)        (929,124)        (909,312)      (1,836,669)
                                       ------------     ------------     ------------     ------------
  
                                         34,755,385       34,540,308       68,718,040       68,205,569
                                       ------------     ------------     ------------     ------------
  
  Income before provision for
       income taxes                       2,993,882        2,115,880        4,974,836        5,514,886
  
  Provision for income taxes              1,157,108          889,034        1,918,713        2,317,164
                                       ------------     ------------     ------------     ------------
  
  Net income                           $  1,836,774     $  1,226,846     $  3,056,123     $  3,197,722
                                       ============     ============     ============     ============
  
  
  Average common shares outstanding       6,174,261        6,139,918        6,173,985        6,143,967
  
  
  
  Per share of common stock:
  
       Net income                      $        .30     $        .20     $        .50     $        .52
                                       ============     ============     ============     ============
  
       Cash dividend                   $        .14     $        .14     $        .28     $        .28
                                       ============     ============     ============     ============
  </TABLE>
  
  
  
       See accompanying notes to consolidated condensed financial statements.
  
                               Page 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 29, 1996    July 1, 1995
  <S>                                                    <C>             <C>        
  Cash flows from (used for) operating activities
       Net income                                        $ 3,056,123     $ 3,197,722
       Adjustments to reconcile net income to net
        cash provided by operating activities:
           Depreciation                                    3,652,499       3,709,932
           Amortization                                       35,158          26,943
           Deferred taxes                                         --         444,999
           Other                                             369,873         199,202
       Changes in assets and liabilities
        affecting operations                              (1,471,943)     (1,608,054)
                                                         -----------     -----------
  
       Net cash from operating activities                  5,641,710       5,970,744
                                                         -----------     -----------
  
  Cash flows from (used for) investing activities
       Proceeds from owner/operator's loan repayments      2,604,830       1,993,905
       Purchase of property, plant and equipment          (2,470,609)     (2,364,473)
       Loans to owner/operators                           (1,910,613)     (2,108,138)
       Other                                                  46,104          72,594
                                                         -----------     -----------
  
       Net cash used for investing activities             (1,730,288)     (2,406,112)
                                                         -----------     -----------
  
  Cash flows used for financing activities
       Additional long-term debt                           3,000,000              --
       Dividends paid                                     (1,731,915)     (1,718,174)
       Payment of long-term debt                          (4,531,278)       (330,403)
       Net decrease in short-term debt                      (700,000)     (1,600,000)
                                                         -----------     -----------
  
       Net cash used for financing activities             (3,963,193)     (3,648,577)
                                                         -----------     -----------
  
       Net decrease in cash                                  (51,771)        (83,945)
  
       Cash, beginning of year                                85,104         147,251
                                                         -----------     -----------
  
       Cash, end of period                               $    33,333     $    63,306
                                                         ===========     ===========
  
  
       Supplemental Cash Flow Information:
       Cash paid during the period for:
           Interest                                      $   233,946     $   292,525
                                                         ===========     ===========
           Income taxes                                  $ 1,718,612     $ 2,972,067
                                                         ===========     ===========
  </TABLE>
  
  
            See accompanying notes to consolidated condensed financial statements
  
                               Page 5 of 10
  
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
  
  
  1.   Manufacturing Facility
       On July 1, 1996,  the company,  through a  wholly-owned  subsidiary,  Tasty
       Baking  Oxford,  Inc.,  completed  the  purchase  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  $304,000 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.   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 29, 1996,  and December 30, 1995 and the
       results of its operations for the thirteen and twenty-six  weeks ended June
       29,  1996 and July 1, 1995 and cash flows for the  twenty-six  weeks  ended
       June 29,  1996 and July 1, 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
       twenty-six weeks ended June 29, 1996 are not necessarily  indicative of the
       results to be expected for the full year.
  
       Advertising  expenses  and  certain  other  expense  items are  charged  to
       operations in the year incurred.  However,  for interim reporting  purposes
       the  expenses  are  charged  to  operations  on a  pro-rata  basis over the
       company's  accounting periods. For the twenty-six weeks ended June 29, 1996
       and July 1, 1995, the difference  between the actual expenses  incurred and
       the expenses charged to operations was not significant.
  
  5.   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 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 1996, the company realized net income of $1,836,774 or
  $.30 per share  versus  $1,226,846  or $.20 per share for the second  quarter of
  1995. Results for the second quarter of 1995 were impacted by a severance charge
  of $950,000 and by $476,769 for the  amortization of the gain on the sale of the
  company's distribution routes. After adjusting for related tax consequences, net
  income was reduced by $550,000 or $.09 per share for the severance  charge while
  net income was increased by $254,269 or $.04 per share for the  amortization  of
  the gain. On a comparable  operating basis,  before the effects of the severance
  charge and the  amortization  of the gain,  net income for the second quarter of
  1995 was  $1,522,577 or $.25 per share.  Comparing this amount to second quarter
  1996 net income of $1,836,774 represents an increase of 20%.
  
  For the twenty-six weeks ended June 29, 1996, the company realized net income of
  $3,056,123  or $.50  per  share  versus  $3,197,722  or $.52 per  share  for the
  comparable period in 1995. After adjusting for the severance charge ($550,000 or
  $.09/share) and the amortization of the gain ($508,538 or $.08/share),  1995 net
  income was $3,239,184 or $.53 per share.
  
  Net sales for the second quarter of 1996 were $37,749,267 versus $36,656,188 for
  the second quarter of 1995, an increase of 3%. The second quarter's higher sales
  were due to  renewed  promotional  activity,  greater  acceptance  of the  price
  increase introduced during the fourth quarter of 1995 and the inclusion of Dutch
  Mill's sales.
  
  Cost of sales in the  second  quarter  of 1996  decreased  by 1% as a percent of
  sales compared to the second quarter of 1995  reflecting the effect of the price
  increase as fewer units were sold at improved margins.
  
  Interest expense  decreased in the second quarter of 1996 compared to the second
  quarter of 1995 primarily due to decreased average borrowing levels.
  
  The effective  tax rates on net income for the quarters  ended June 29, 1996 and
  July 1, 1995 were 38.6% and 42.0%,  respectively,  which  compares  to a federal
  statutory  rate of 34%.  The  principal  reason for the  difference  between the
  effective  rates and the statutory rate in 1996 and 1995 was the effect of state
  income taxes.
  
  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 twenty-six weeks ended June 29, 1996, net cash from operating activities
  decreased by $329,034 to $5,641,710  from  $5,970,744 for the  twenty-six  weeks
  ended July 1, 1995.  The  decrease  in net cash from  operating  activities  was
  principally  due to reductions in deferred  taxes relative to the same period in
  1995.
  
                                    Page 7 of 10
  
  <PAGE>
  
  Financial Condition (continued)
  
  Net cash used for investing  activities for the twenty-six  weeks ended June 29,
  1996 decreased by $675,824  relative to the same period in 1995  principally due
  to a  decrease  in the  funds  needed to  finance  the net  owner-operator  loan
  activity.
  
  Net cash used for financing  activities for the twenty-six  weeks ended June 29,
  1996 increased by $314,616  compared to the same twenty-six weeks in 1995 as the
  company continued to lower its overall debt level.
  
  For the  remainder  of  1995,  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   including
  anticipated expenditures for the recently acquired Oxford facility.
  
                                    Page 8 of 10
  
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
  
  PART II.  OTHER INFORMATION
  
  Item 6.   Exhibits and Reports on Form 8-K.
  
            (a) Exhibits: Exhibit 27 - Financial Data Schedule
  
            (b) Reports on Form 8-K
  
            The  registrant  did not file a report on Form 8-K during the thirteen
            weeks ended June 29, 1996.
  
  
                                    Exhibit Index
  
                        Exhibit 27 - Financial Data Schedule
  
  
                                    Page 9 of 10
  
  <PAGE>
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
  
                                     SIGNATURES
  
  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 9, 1996                             /s/ John M. Pettine
       (Date)                         -------------------------------------------
                                                 JOHN M. PETTINE
                                                VICE PRESIDENT AND
                                              CHIEF FINANCIAL OFFICER
                                     (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
  
                                    Page 10 of 10
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 24076}]
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": "96608768"}, "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 29, 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 June 29, 1996)
  
                    INDEX OF EXHIBITS IS LOCATED ON PAGE 9 OF 10.
  
                                    Page 1 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
  
                                        INDEX
  
                                                                         Page
  PART I.   FINANCIAL INFORMATION
  
  Item 1.   Financial Statements
  
            Consolidated Condensed Balance Sheets June 29, 1996 and
            December 30, 1995.............................................3
  
            Consolidated Condensed Statements of Operations
            Thirteen Weeks and Twenty-six Weeks Ended June 29, 1996
            and July 1, 1995..............................................4
  
            Consolidated Condensed Statements of Cash Flows
            Twenty-six Weeks Ended June 29, 1996 and July 1, 1995.........5
  
            Notes to Consolidated Condensed Financial Statements..........6
  
  Item 2.   Management's Discussion and Analysis of Financial 
            Condition and Results of Operations.........................7-8
  
  Part II. OTHER INFORMATION
  
  Item 6. Exhibits and Reports on Form 8-K................................9
  
  Signatures.............................................................10
  
                                    Page 2 of 10
  PART I. FINANCIAL INFORMATION
  
  Item 1. Financial Statements
  
                        TASTY BAKING COMPANY AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED BALANCE SHEETS
                                     (unaudited)
  June 29, 1996  December 30, 1995
  Current assets:
  Cash                                             $     33,333     $     85,104
       Accounts and notes receivable, net of
         allowance for doubtful accounts                  19,461,158       18,630,903
       Inventories:
         Raw materials                                     1,989,285        2,202,682
         Work in progress                                    603,038          593,416
         Finished goods                                      850,957          467,184
                                                        ------------     ------------
                                                           3,443,280        3,263,282
       Deferred income taxes, prepayments and other        3,124,884        3,349,314
                                                        ------------     ------------
         Total current assets                             26,062,655       25,328,603
                                                        ------------     ------------
  Property, plant and equipment:                         129,340,131      126,870,388
       Less accumulated depreciation                      94,882,403       91,230,770
                                                        ------------     ------------
                                                          34,457,728       35,639,618
                                                        ------------     ------------
  Long-term receivables                                   10,373,694       11,074,974
                                                        ------------     ------------
  Deferred income taxes                                    9,720,541        9,720,541
                                                        ------------     ------------
  Miscellaneous assets and deferred charges                3,453,717        3,539,247
                                                        ------------     ------------
  Total assets                                          $ 84,068,335     $ 85,302,983
                                                        ------------     ------------
  Current liabilities:
       Current portion of long-term debt                $    127,720     $    127,720
       Current obligations under capital leases              538,248          513,159
       Notes payable, banks                                       --          700,000
       Accounts payable                                    3,711,825        4,699,747
       Accrued liabilities                                 5,645,965        5,344,162
                                                        ------------     ------------
          Total current liabilities                       10,023,758       11,384,788
                                                        ------------     ------------
  Long-term debt, less current portion                     3,300,697        4,576,385
                                                        ------------     ------------
  Long-term obligations under capital leases,
       less current portion                                1,372,454        1,653,134
                                                        ------------     ------------
  Accrued pensions and other liabilities                  12,784,696       13,129,760
                                                        ------------     ------------
  Postretirement benefits other than pensions             19,260,912       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                                  20,750,057       19,425,849
                                                        ------------     ------------
                                                          54,065,122       52,732,723
       Less:
       Treasury stock, at cost                            16,363,340       16,364,757
       Management Stock Purchase Plan
         receivables and deferrals                           375,964          429,813
                                                        ------------     ------------
                                                          37,325,818       35,938,153
                                                        ------------     ------------
  Total liabilities and shareholders' equity            $ 84,068,335     $ 85,302,983
                                                        ============     ============
  See accompanying notes to consolidated condensed financial statements.
  
                               Page 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 29, 1996    July 1, 1995     June 29, 1996    July 1, 1995
  Net Sales                            $ 37,749,267     $ 36,656,188     $ 73,692,876     $ 73,720,455
                                       ------------     ------------     ------------     ------------
  
  Costs and expenses:
       Cost of sales                     23,334,633       23,016,442       46,151,965       46,169,548
  
       Depreciation                       1,813,701        1,825,788        3,652,499        3,709,932
  
       Selling, general and
          administrative                  9,963,743        9,523,043       19,595,314       18,893,691
  
       Severance charge                          --          950,000               --          950,000
  
       Interest expense                      99,048          154,159          227,574          319,067
  
       Other income, net                   (455,740)        (929,124)        (909,312)      (1,836,669)
                                       ------------     ------------     ------------     ------------
  
                                         34,755,385       34,540,308       68,718,040       68,205,569
                                       ------------     ------------     ------------     ------------
  
  Income before provision for
       income taxes                       2,993,882        2,115,880        4,974,836        5,514,886
  
  Provision for income taxes              1,157,108          889,034        1,918,713        2,317,164
                                       ------------     ------------     ------------     ------------
  
  Net income                           $  1,836,774     $  1,226,846     $  3,056,123     $  3,197,722
                                       ============     ============     ============     ============
  
  Average common shares outstanding       6,174,261        6,139,918        6,173,985        6,143,967
  
  Per share of common stock:
  
       Net income                      $        .30     $        .20     $        .50     $        .52
                                       ============     ============     ============     ============
  
       Cash dividend                   $        .14     $        .14     $        .28     $        .28
                                       ============     ============     ============     ============
  See accompanying notes to consolidated condensed financial statements.
  
                               Page 4 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                     (unaudited)
  For the Twenty-six Weeks Ended
                                                        June 29, 1996    July 1, 1995
  Cash flows from (used for) operating activities
       Net income                                        $ 3,056,123     $ 3,197,722
       Adjustments to reconcile net income to net
        cash provided by operating activities:
           Depreciation                                    3,652,499       3,709,932
           Amortization                                       35,158          26,943
           Deferred taxes                                         --         444,999
           Other                                             369,873         199,202
       Changes in assets and liabilities
        affecting operations                              (1,471,943)     (1,608,054)
                                                         -----------     -----------
  
       Net cash from operating activities                  5,641,710       5,970,744
                                                         -----------     -----------
  
  Cash flows from (used for) investing activities
       Proceeds from owner/operator's loan repayments      2,604,830       1,993,905
       Purchase of property, plant and equipment          (2,470,609)     (2,364,473)
       Loans to owner/operators                           (1,910,613)     (2,108,138)
       Other                                                  46,104          72,594
                                                         -----------     -----------
  
       Net cash used for investing activities             (1,730,288)     (2,406,112)
                                                         -----------     -----------
  
  Cash flows used for financing activities
       Additional long-term debt                           3,000,000              --
       Dividends paid                                     (1,731,915)     (1,718,174)
       Payment of long-term debt                          (4,531,278)       (330,403)
       Net decrease in short-term debt                      (700,000)     (1,600,000)
                                                         -----------     -----------
  
       Net cash used for financing activities             (3,963,193)     (3,648,577)
                                                         -----------     -----------
  
       Net decrease in cash                                  (51,771)        (83,945)
  
       Cash, beginning of year                                85,104         147,251
                                                         -----------     -----------
  
       Cash, end of period                               $    33,333     $    63,306
                                                         ===========     ===========
  
       Supplemental Cash Flow Information:
       Cash paid during the period for:
           Interest                                      $   233,946     $   292,525
                                                         ===========     ===========
           Income taxes                                  $ 1,718,612     $ 2,972,067
                                                         ===========     ===========
  See accompanying notes to consolidated condensed financial statements
  
                               Page 5 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
                NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
  
  1.   Manufacturing Facility
       On July 1, 1996,  the company,  through a  wholly-owned  subsidiary,  Tasty
       Baking  Oxford,  Inc.,  completed  the  purchase  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  $304,000 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.   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 29, 1996,  and December 30, 1995 and the
       results of its operations for the thirteen and twenty-six  weeks ended June
       29,  1996 and July 1, 1995 and cash flows for the  twenty-six  weeks  ended
       June 29,  1996 and July 1, 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
       twenty-six weeks ended June 29, 1996 are not necessarily  indicative of the
       results to be expected for the full year.
  
       Advertising  expenses  and  certain  other  expense  items are  charged  to
       operations in the year incurred.  However,  for interim reporting  purposes
       the  expenses  are  charged  to  operations  on a  pro-rata  basis over the
       company's  accounting periods. For the twenty-six weeks ended June 29, 1996
       and July 1, 1995, the difference  between the actual expenses  incurred and
       the expenses charged to operations was not significant.
  
  5.   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 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 1996, the company realized net income of $1,836,774 or
  $.30 per share  versus  $1,226,846  or $.20 per share for the second  quarter of
  1995. Results for the second quarter of 1995 were impacted by a severance charge
  of $950,000 and by $476,769 for the  amortization of the gain on the sale of the
  company's distribution routes. After adjusting for related tax consequences, net
  income was reduced by $550,000 or $.09 per share for the severance  charge while
  net income was increased by $254,269 or $.04 per share for the  amortization  of
  the gain. On a comparable  operating basis,  before the effects of the severance
  charge and the  amortization  of the gain,  net income for the second quarter of
  1995 was  $1,522,577 or $.25 per share.  Comparing this amount to second quarter
  1996 net income of $1,836,774 represents an increase of 20%.
  
  For the twenty-six weeks ended June 29, 1996, the company realized net income of
  $3,056,123  or $.50  per  share  versus  $3,197,722  or $.52 per  share  for the
  comparable period in 1995. After adjusting for the severance charge ($550,000 or
  $.09/share) and the amortization of the gain ($508,538 or $.08/share),  1995 net
  income was $3,239,184 or $.53 per share.
  
  Net sales for the second quarter of 1996 were $37,749,267 versus $36,656,188 for
  the second quarter of 1995, an increase of 3%. The second quarter's higher sales
  were due to  renewed  promotional  activity,  greater  acceptance  of the  price
  increase introduced during the fourth quarter of 1995 and the inclusion of Dutch
  Mill's sales.
  
  Cost of sales in the  second  quarter  of 1996  decreased  by 1% as a percent of
  sales compared to the second quarter of 1995  reflecting the effect of the price
  increase as fewer units were sold at improved margins.
  
  Interest expense  decreased in the second quarter of 1996 compared to the second
  quarter of 1995 primarily due to decreased average borrowing levels.
  
  The effective  tax rates on net income for the quarters  ended June 29, 1996 and
  July 1, 1995 were 38.6% and 42.0%,  respectively,  which  compares  to a federal
  statutory  rate of 34%.  The  principal  reason for the  difference  between the
  effective  rates and the statutory rate in 1996 and 1995 was the effect of state
  income taxes.
  
  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 twenty-six weeks ended June 29, 1996, net cash from operating activities
  decreased by $329,034 to $5,641,710  from  $5,970,744 for the  twenty-six  weeks
  ended July 1, 1995.  The  decrease  in net cash from  operating  activities  was
  principally  due to reductions in deferred  taxes relative to the same period in
  1995.
  
                                    Page 7 of 10
  Financial Condition (continued)
  
  Net cash used for investing  activities for the twenty-six  weeks ended June 29,
  1996 decreased by $675,824  relative to the same period in 1995  principally due
  to a  decrease  in the  funds  needed to  finance  the net  owner-operator  loan
  activity.
  
  Net cash used for financing  activities for the twenty-six  weeks ended June 29,
  1996 increased by $314,616  compared to the same twenty-six weeks in 1995 as the
  company continued to lower its overall debt level.
  
  For the  remainder  of  1995,  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   including
  anticipated expenditures for the recently acquired Oxford facility.
  
                                    Page 8 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
  
  PART II.  OTHER INFORMATION
  
  Item 6.   Exhibits and Reports on Form 8-K.
  
            (a) Exhibits: Exhibit 27 - Financial Data Schedule
  
            (b) Reports on Form 8-K
  
            The  registrant  did not file a report on Form 8-K during the thirteen
            weeks ended June 29, 1996.
  
                                    Exhibit Index
  
                        Exhibit 27 - Financial Data Schedule
  
                                    Page 9 of 10
  TASTY BAKING COMPANY AND SUBSIDIARIES
  
                                     SIGNATURES
  
  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 9, 1996                             /s/ John M. Pettine
       (Date)                         -------------------------------------------
                                                 JOHN M. PETTINE
                                                VICE PRESIDENT AND
                                              CHIEF FINANCIAL OFFICER
                                     (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
  
                                    Page 10 of 10