UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the fiscal year ended June 27, 1997

                         Commission file number 0-15105

                      SCOTT & STRINGFELLOW FINANCIAL, INC.
             (Exact name of Registrant as specified in its charter)

                   Virginia                                   54-1315256
State or other jurisdiction of incorporation or organization  I.R.S. Employer
                                                              Identification No.

                 909 East Main Street Richmond, Virginia 23219
              (Address of principal executive offices) (zip code)

                                 (804) 643-1811
              (Registrant's telephone number, including area code)

               Securities registered pursuant to Section 12(b) of the Act:
                                      none


          Securities registered pursuant to Section 12(g) of the Act:
                    Common stock, par value $0.10 per share

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 ....

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

On September 12, 1997, there were 3,160,349 shares of Scott & Stringfellow
Financial, Inc. Common Stock, par value $.10, issued and outstanding of which
2,006,667 shares were held by non-affiliates. The aggregate market value of such
Common Stock held by non-affiliates, based on the closing market price of $26.00
on September 12, 1997 was approximately $52,173,000.

                      DOCUMENTS INCORPORATED BY REFERENCE
                        (To the Extent Indicated Herein)

Certain Portions of the 1997 Annual Report to Shareholders (in Parts I and II)
Notice of Annual Meeting and Proxy Statement Dated September 23, 1997 (in Part
III).

Exhibit Index Appears on Page 15


<PAGE>



                      SCOTT & STRINGFELLOW FINANCIAL, INC.

                                   FORM 10-K

                        For the Year Ended June 27, 1997

                               TABLE OF CONTENTS


                                                                    Page
Item                                                               Number

PART I

1. Business                                                          3

2. Properties                                                       12

3. Legal Proceedings                                                12

4. Submission of Matters to a Vote of Security Holders              12

PART II

5. Market for Registrant's Common Stock and Related
     Shareholder Matters                                            14

6. Selected Financial Data                                          14

7. Management's Discussion and Analysis of Financial
     Condition and Results of Operations                            14

8. Financial Statements and Supplementary Data                      15

9. Changes in and Disagreements with Accountants on
     Accounting and Financial Disclosure                            15

PART III

10.Directors and Executive Officers of Registrant                   15

11.Executive Compensation                                           15

12.Security Ownership of Certain Beneficial Owners
     and Management                                                 15

13.Certain Relationships and Related Transactions                   15

PART IV

14.Exhibits, Financial Statement Schedules,
     and Reports on Form 8-K                                        15

SIGNATURES                                                          17

FINANCIAL STATEMENT SCHEDULES                                       19

EXHIBITS

                                       2

<PAGE>



PART I

Item 1. BUSINESS

General

     The Registrant, Scott & Stringfellow Financial, Inc., is a holding company
whose principal business activities are conducted through its wholly-owned
subsidiary, Scott & Stringfellow, Inc. ("Scott & Stringfellow"). Scott &
Stringfellow is a regional brokerage, investment banking, and financial services
firm headquartered in Richmond, Virginia. It operates 29 offices in communities
located across Virginia, North Carolina, West Virginia, and South Carolina. Its
primary activity is retail securities brokerage. Other significant activities
include institutional securities brokerage, management of and participation in
the underwriting of corporate and municipal securities, investment management
services, corporate and municipal finance, trading of taxable and tax-exempt
fixed income and equity securities, equity research, money market accounts,
retirement accounts, and the distribution of mutual fund and insurance products.

     Scott & Stringfellow was originally founded as a partnership in 1893. The
firm has been a member of the New York Stock Exchange, Inc. ("NYSE") since June
20, 1895. Scott & Stringfellow is believed to be the South's oldest continuous
member of the New York Stock Exchange and one of only three firms outside of New
York which have been members for at least 100 years. Scott & Stringfellow was
incorporated in 1974. In 1986, Scott & Stringfellow Financial, Inc. conducted an
initial public offering of its common stock, increasing its capital in that year
to approximately $14 million. Since 1986, Scott & Stringfellow has pursued a
growth strategy, increasing the number of its branch offices from 14 to 29
through expansion into North Carolina and South Carolina and a merger with
Norfolk-based Investment Corporation of Virginia in 1989. During this time, the
Company has also increased the number of products and services offered to
clients.

     For the fiscal year ended June 27, 1997, approximately 53% of total
revenues were derived from brokerage commissions on investments purchased and
sold on an agency basis, 17% from principal transactions, 10% from investment
banking, 10% from interest and dividends, and 10% from advisory and
administrative fees and other sources. (See table entitled "Revenues by Source"
on page 5 of this report.)

     In addition to its NYSE membership, Scott & Stringfellow has seats on the
American Stock Exchange, Inc. ("AMEX") and the Chicago Stock Exchange, and is a
member of the National Association of Securities Dealers ("NASD"), the
Securities Investor Protection Corporation ("SIPC"), the Securities Industry
Association, and the Public Securities Association. Scott & Stringfellow's two
NYSE seats are leased to third parties under one year agreements which may be
canceled by either party subject to 90 days' notice. The AMEX seat is leased to
a third party under three month agreements which may be canceled by either party
subject to 90 days' notice. SIPC provides protection for client accounts up to
$500,000 each, with a limitation of $100,000 for claims for cash balances. In
addition to the SIPC protection, Scott & Stringfellow has obtained a separate
excess SIPC bond issued by an insurance company which increases the protection
of client accounts by an additional $9.5 million. The combined insurance
coverage of client accounts is therefore $10 million, with a limitation of
$100,000 for cash balances.

     The Registrant has 29 offices located in 4 states. Retail sales activities
are conducted through registered investment brokers in all of its offices. Most
of its other activities are conducted at its main office located in Richmond,
Virginia. On June 27, 1997, the Registrant had approximately 566 employees
including 237 employees with full-time investment broker responsibilities. The
following table reflects the location of the Registrant's offices, the year each
office opened, and the number of investment brokers in each office as of June
27, 1997:




                                       3

<PAGE>



                                    Calendar
                                     Year                     Number of
                                     Branch                  Investment
       Location                      Opened                   Brokers

       Virginia
         Richmond                       1893                         52
         Blacksburg                     1988                          4
         Chesapeake                     1987                          2
         Charlottesville                1982                          8
         Chesterfield                   1987                          7
         Culpepper                      1971                          3
         Danville                       1986                          3
         Harrisonburg                   1991                          5
         Lexington                      1986                          2
         Lynchburg                      1984                          9
         Manassas                       1987                          6
         Martinsville                   1983                          5
         Norfolk                        1978                         23
         Roanoke                        1984                          7
         Staunton                       1970                          7
         Tyson's Corner                 1986                         10
         Virginia Beach                 1995                          1
         Warrenton                      1970                          6
         Williamsburg                   1995                          3
         Winchester                     1970                          5
           Total Virginia                                           168

       North Carolina
         Charlotte                      1988                         10
         Greensboro                     1988                         19
         Kinston                        1988                          3
         North Wilkesboro               1988                          2
         Raleigh                        1992                         11
         Wilmington                     1990                          4
         Winston-Salem                  1987                         13
           Total North Carolina                                      62

       West Virginia
         Bluefield                      1971                          3

       South Carolina
         Charleston                     1996                          4

           Total Company                                            237



                                       4

<PAGE>


Revenues by Source

       The following table sets forth the consolidated revenues of the
Registrant and its subsidiaries for the periods indicated in dollars and as a
percentage of total revenues.

<TABLE>
<CAPTION>

Years Ended                             June 27, 1997              June 28, 1996             June 30, 1995
                                      Amount        %            Amount        %           Amount        %
<S> <C>
Commissions:
   Exchange Listed Securities   $ 21,384,632     26.4      $ 19,879,066     27.2     $ 15,055,569     27.8
   Over-the-Counter Equities       7,801,982      9.6         8,549,871     11.7        5,220,192      9.7
   Mutual Funds                    9,113,106     11.3         7,574,445     10.3        5,220,372      9.6
   Annuities                       2,714,368      3.4         2,235,440      3.1        1,571,392      2.9
   Options                         1,410,963      1.7         1,207,922      1.6          806,672      1.5
   Other                             240,795      0.3           455,679      0.6          426,486      0.8
     Total Commissions            42,665,846     52.7        39,902,423     54.5       28,300,683     52.3

Principal Transactions:
   Municipal Bonds                 1,633,679      2.0         1,742,336      2.4        3,094,290      5.7
   Over-the-Counter Equities      10,185,985     12.6         7,764,215     10.6        5,676,936     10.5
   Corporate and Govt.
    Bonds and Other                2,067,174      2.6         1,652,883      2.3        1,953,794      3.6
     Total Principal Transactions 13,886,838     17.2        11,159,434     15.3       10,725,020     19.8

Investment Banking                 8,357,622     10.3        10,559,244     14.4        6,257,511     11.6
Interest and Dividends             7,856,697      9.7         6,621,355      9.1        5,852,740     10.8
Advisory and Administrative
  Service Fees                     7,651,131      9.5         4,677,522      6.4        2,781,944      5.1
Other                                489,077      0.6           245,327      0.3          201,391      0.4

   Total Revenues               $ 80,907,211    100.0      $ 73,165,305    100.0     $ 54,119,289    100.0

</TABLE>


   The percentage contribution to total revenues of each aspect of the
Registrant's operations does not necessarily reflect a corresponding percentage
contribution to net income. Because of the interdependence of various activities
and departments of the Registrant's business, and the assumptions which would be
involved in allocating overhead, including administrative, operations,
communications and data processing expenses, it is inappropriate to state a
percentage contribution to net income of each aspect of the Registrant's
operations.

Retail Markets

   Retail investment brokerage is the Registrant's principal business activity
and is the largest contributor to the Registrant's revenues. During fiscal 1997,
revenues from the Registrant's retail brokerage activities are estimated to
represent approximately 93% of the Registrant's brokerage and investment banking
revenues and 75% of total revenues. Revenues from retail brokerage activities
are generated through customer purchases and sales of stocks, bonds, mutual
funds, and other securities. Commissions are charged on both listed and
over-the-counter agency transactions. When the Registrant executes
over-the-counter transactions as a dealer, it may charge mark-ups or mark-downs
in lieu of commissions. (See "Market- Making and Principal Transactions.")

   Retail commissions are charged in accordance with a schedule which the
Registrant has formulated, and


                                       5

<PAGE>



which may be changed from time to time. In many cases, discounts from the
schedule are granted to retail clients, generally on large trades or to active
customers. A significant portion of the Registrant's retail clients are
individuals who reside in the Southeastern United States. The Registrant is not
dependent on any single client or small number of clients. However, the
Registrant is heavily dependent on the continued services of its investment
brokers to attract and retain clients. (See "Employees.")

   The Registrant has recently introduced managed account services. Under this
client service arrangement, revenues are derived from a fee based on a
percentage of client account assets in lieu of a separate commission for each
securities transaction. This service is provided for accounts managed by clients
and investment brokers as well as for professionally managed accounts. For
fiscal 1997, revenues from managed account fees approximated 1% of total
revenues. Providing clients with a fee-based alternative to the traditional
transaction commission is a significant emerging trend in the securities
industry. Therefore, the Registrant's success in marketing managed account
services may be increasingly important to the growth and profitability of its
retail brokerage revenues.

   In addition to brokerage revenues, the Registrant's client accounts are a
significant source of interest income. Approximately 88% of interest and
dividend income and 9% of total revenues is attributable to interest charged on
client margin accounts. Balances in client margin accounts increased by 15% from
1996 to 1997 to a total of approximately $90 million at year-end, following a
21% increase from 1995 to 1996. As a service to its retail clients, the
Registrant provides margin accounts which allow the customer to pay less than
the full cost of a security purchased, with the balance of the purchase price
being provided by the Registrant as a loan secured by the securities purchased.
Clients may also borrow money from the Registrant for other purposes, provided
the loan is adequately secured by marketable securities held in a margin
account. The amount of such margin loans are subject to the margin requirements
(Regulation T) of the Board of Governors of the Federal Reserve System, NYSE
margin requirements, and the Registrant's internal policies, which in some
instances are more, but in no event less stringent than requirements set by
Regulation T and the NYSE. In permitting customers to purchase securities on
margin or otherwise borrow money through a margin account, the Registrant bears
the risk of a market decline which could reduce the value of its collateral
below customers' indebtedness.

   In addition to securities brokerage and margin lending services, the
Registrant also provides its retail clients specialized financial services
including equity and fixed income research, portfolio evaluation, retirement
planning, financial planning, individual retirement account custodial services,
money market services, and other personal investment advisory services. Fees are
charged for some, but not all, of these services. Advisory and administrative
service fees, which also include investment management fees, accounted for
approximately 10% of the Registrant's total revenues in 1997. (See also
"Investment Management." )

   During 1997, the Registrant installed new computerized workstations for the
primary benefit of its retail investment brokers. The workstations include
modern client contact and portfolio management software and are connected to the
Registrant's data processing and administrative network systems. (Also see
"Administration and Operations.")

Capital Markets

   The Registrant's Capital Markets effort is coordinated through a Capital
Markets Group consisting of Institutional Brokerage, Trading, Research, and
Corporate and Municipal Finance departments. The Registrant's business strategy
for developing its Capital Markets business includes an emphasis on quality
investment research, with a primary focus on equity securities of companies
located within the Registrant's geographical region.

Institutional Brokerage


                                       6

<PAGE>



   The Registrant executes securities transactions for institutional investors
such as banks, mutual funds, insurance companies, and pension and profit-sharing
plans. The 11 investment brokers in the institutional equity and municipal bond
sales departments account for a significant portion of these transactions.
Institutional investors normally purchase and sell securities in large
quantities which require special marketing and trading expertise. The Registrant
believes that a significant portion of its institutional brokerage commissions
are received as a consequence of providing institutions with research reports
and services regarding specific corporations and industries and securities
market information. The Registrant provides services to a nationwide
institutional client base as well as several institutional clients in Europe.
During fiscal 1997, revenues from institutional brokerage activities are
estimated to represent approximately 5% of the Registrant's brokerage and
investment banking revenues and 4% of total revenues.

   Transactions for institutional investors are executed by the Registrant
acting as broker or as principal. The Company permits discounts from its
commission schedule to its institutional customers. The size of such discounts
varies with the size of particular transactions and other factors.

Market-Making and Principal Transactions

   The Registrant actively engages in trading as principal in various phases of
the over-the-counter securities business. To facilitate trading by its
customers, the Registrant buys, sells, and maintains inventories of municipal
and corporate bonds and common stocks in order to "make markets" in those
securities. Revenues from principal transactions, which include trading profits
or losses and sales credits, depend upon the general trend of prices, the level
of activity in the securities markets, the skill of employees engaged in
market-making, and the size of the inventories. The activities of the Registrant
in trading as principal require the commitment of capital and create an
opportunity for profit and risk of loss due to market fluctuations. As of June
27, 1997, Scott & Stringfellow made markets in the common stock or other equity
securities of approximately 147 NASDAQ listed corporations, emphasizing local
and regional companies, for which the Registrant has performed investment
banking services, or which are covered by the Registrant's research department.

   The following table shows, for the fiscal year ended June 27, 1997, the
highest, lowest, and average monthly inventories (based upon the aggregate,
rather than the net, of both long and short positions) for securities in which
the Registrant trades as principal:

<TABLE>
<CAPTION>

                                             Highest                    Lowest                    Average
                                            Inventory                  Inventory                 Inventory
<S> <C>
Municipal Securities                      $ 8,694,168                $ 2,294,247               $ 4,785,532
Equity Securities (primarily common
  stocks)                                   8,074,710                  2,247,338                 3,292,323
Corporate Debt Securities                   3,468,082                    809,193                 1,653,990
U. S. Government Securities                 1,809,924                    276,036                 1,019,889
Other Securities                            1,413,739                    270,768                   552,650
</TABLE>

   In executing customers' orders to buy or sell over-the-counter securities in
which it makes a market, the Registrant may sell to or purchase from its
customers at a price which is approximately equal to the current inter-dealer
market price, plus or minus a mark-up or mark-down. Alternatively, the
Registrant may act as an agent and execute a customer's purchase or sell order
with another broker-dealer which acts as a market- maker, at the best
inter-dealer market price, in which case a commission is charged.

   Personnel engaged in market-making and principal transactions include 6
employees involved in municipal bond trading, 6 employees in over-the-counter
equity trading, and 4 employees in taxable debt securities trading. Each trading
department is subject to internal position limits. The Registrant has a credit

                                       7

<PAGE>


committee for the purpose of maintaining policies with regard to position limits
and other areas of financial risk.

   During 1997, the Registrant effected a significant organizational
consolidation of its institutional municipal bond sales, trading and public
finance functions. The departments responsible for these functions previously
operated out of both the Richmond headquarters office and the Lynchburg,
Virginia office. To increase efficiency and administrative control, these
functions were consolidated in the Richmond office during December 1996. This
change also included a workforce reduction of approximately 6 employees.

Investment Banking

   The Registrant participates in corporate and tax-exempt securities
distributions as a manager or as a member of an underwriting syndicate or
selling group. Corporate offerings involve common or preferred stock, debt
securities or other securities issued by corporations. Tax-exempt securities are
obligations issued by state and municipal governments, hospitals, educational
institutions, public utility systems, and industrial development authorities.
The following table sets forth corporate and tax-exempt underwriting
participations of the Registrant:


<TABLE>
<CAPTION>



                             Managed or Co-Managed           Syndicate Participations
Fiscal                     Number of        Amount of      Number of        Amount of
Years                       Issues           Offering        Issues     Participations
<S> <C>
Corporate Stock and Bond Offerings:

1997                               5    $ 292,171,623         138       $ 511,520,858
1996                              10      615,862,188         197         214,542,845
1995                               2      133,750,000         149         154,448,702
1994                               9      430,922,500         274         301,812,330
1993                               9    1,207,690,313         244         268,304,018

Tax-Exempt Bond Offerings

1997                              26    1,017,250,000          44          26,100,000
1996                              33    1,359,685,000          35          19,035,000
1995                              12      326,308,000          29          22,110,000
1994                              48    1,851,323,000          31          30,775,000
1993                              42    2,719,273,000          22          22,915,000
</TABLE>

     The Registrant's underwriting activities, together with its selling group
participations, are an important source of securities for distribution to its
clients. Managed or co-managed offerings, in particular, are an important source
of revenue because of the availability of a large amount of securities for
distribution and management fees earned in connection with such offerings. The
Registrant's underwriting business is very competitive for both corporate and
tax-exempt offerings and is expected to remain so in the near future. The
Registrant's corporate stock and bond offerings are highly dependent on market
conditions.

     Participation in an underwriting syndicate or selling group involves both
economic and regulatory risks. An underwriting participant may incur losses if
it is unable to resell the securities it is committed to

                                       8

<PAGE>


purchase, or if it is forced to liquidate its commitment at less than the agreed
purchase price. In addition, under federal securities laws, other statutes and
court decisions, an underwriting participant or selling group member may be
subject to substantial liability for material misstatements or omissions in
prospectuses and other communications with respect to such offerings. Further,
underwriting commitments require a charge against net capital and the
Registrant's ability to make underwriting commitments may be limited by the
requirement that it must at all times be in compliance with the net capital
rule. (See "Regulation".)

     In addition to the underwriting and syndication activities described above,
the Registrant engages in other investment banking services such as structuring,
managing, and marketing private offerings of corporate and tax-exempt
securities, assisting in arranging mergers and acquisitions, and providing
valuation and financial consulting services for gift and estate tax purposes,
employee stock ownership plans, mergers, acquisitions, stock purchase
agreements, and other corporate finance purposes. Fees generated by corporate
and municipal finance fees accounted for approximately 2% of the Registrant's
total revenues during 1997.

Research Services

     The Registrant's research activities include reviewing and analyzing
general market conditions and specific industries and performing primary
research on individual companies, with particular emphasis on equity securities
of companies in the Southeastern and Middle Atlantic United States; making
investment recommendations; reviewing client portfolios; publishing portfolio
strategy recommendations; providing investment seminars for the benefit of
clients and investment brokers; providing market and investment commentary
through local media outlets; and responding to inquiries from clients and
investment brokers. The Registrant's primary research effort is provided by 9
primary equity analysts, 4 junior analysts, a technical analyst and is
supplemented by two New York correspondent firms which cover approximately 2,500
companies worldwide and provide extensive coverage on the economy and securities
markets. The services provided by the Research Department are critically
important to virtually all revenue-generating activities of the firm, including
retail and institutional brokerage, market-making, and investment banking.
Research reports are made available without charge to the Registrant's clients.

Investment Management

     Scott & Stringfellow Capital Management, Inc. ("SSCM"), a subsidiary of the
Registrant, is a registered investment advisor which provides investment
management services for individuals and their estates and trusts, corporations,
charitable and educational foundations and employee benefit plans. As of June
27, 1997, SSCM had approximately $600 million of assets under management, an
increase of 93% from $311 million at June 28, 1996. Fee income charged on
investment accounts managed by SSCM, which are included in advisory and
administrative service fees, represented approximately 3% of total revenues in
1997. Investment advisory fee income increased 85% from the previous fiscal year
and investment management services are an important component of management's
business strategy.

Administration and Operations

     The Registrant's operations and administrative personnel, which included 97
employees as of June 27, 1997, are responsible for the execution of orders;
processing of securities transactions; receipt, identification and delivery of
funds and securities; custody of clients' securities; cash management; credit;
internal financial control; accounting; finance; human resources; employee
benefits; purchasing; telecommunications; technology; facilities; general office
services; client services; marketing; and compliance with regulatory
requirements.

     There is considerable fluctuation in the volume of transactions which a
securities firm must handle. In the past, when the volume of trading in
securities reached record levels, the securities industry experienced
significant operating problems. The Registrant has never experienced any
significant operating difficulties,

                                       9

<PAGE>



even during periods of exceptionally heavy trading. There is, however, no
assurance that heavy trading volume in the future will not result in clearing
and processing difficulties. The following table sets forth the high, low, and
average number of monthly sale and purchase transactions processed by the
Registrant during the periods shown.


                                            Monthly
  Fiscal Years                High             Low             Average

     1997                    41,858           28,036            35,332
     1996                    42,272           25,281            32,048
     1995                    33,659           19,936            24,360
     1994                    25,141           18,857            21,485
     1993                    24,441           14,658            18,973

     The Registrant currently utilizes the services of SunGard Financial
Systems, Inc. for the electronic data processing of all data pertinent to
security transactions. General accounting is performed through an in-house
general ledger system. Other computerized systems are used in support of various
administrative, operations, and trading functions. During 1997, the Registrant
installed an administrative computer network ("intranet") to support electronic
mail and the sharing of computer files between employees which it believes will
improve productivity and communication between its various departments and
branches.

     The Registrant believes that its internal controls and safeguards against
securities theft, including use of depositories and periodic securities counts,
are adequate. As required by the NYSE and other regulatory bodies, the
Registrant carries fidelity bonds covering loss or theft of securities, as well
as employee dishonesty, forgery and alteration of checks or similar items, and
forgery of securities. Such bonds provide total coverage of $10,000,000 (subject
to a $250,000 deductible per claim.)

     Customer transactions are recorded and posted to the books daily;
designated personnel monitor them to ensure compliance with applicable laws,
rules, and regulations. An Administration and Operations Committee meets
frequently to review operational conditions in the firm. In addition, the Chief
Operations Officer, Chief Financial Officer, Chief Compliance Officer, Director
of Human Resources, and Director of Administrative Services sit on the
Management Committee which normally meets weekly to discuss current issues
related to the overall day-to-day management of the firm. The Registrant has an
internal auditor who performs periodic reviews of controls and has direct access
to the Audit Committee of the Board of Directors, which includes three outside
directors.

Competition

     The Registrant is engaged in the highly competitive securities brokerage
and financial services businesses. It competes directly with other regional
securities brokerage firms, large Wall Street securities firms, and discount
brokerage firms for a share of the retail brokerage business in its market area.
To an increasing degree, the Registrant also competes for various segments of
the retail financial service business with other institutions such as commercial
banks, savings institutions, mutual fund companies, life insurance companies and
financial planning firms. In particular, legal and regulatory changes have
recently allowed commercial banks and their holding companies to compete more
directly in the brokerage and investment banking businesses.

      In addition to the competition for retail investment business, there is
substantial competition among firms in the securities industry to attract and
retain experienced and productive investment brokers.  (See "Employees.")

     Many of these competitors have far greater personnel and financial
resources than the Registrant. Larger competitors are able to advertise their
products and services on a national or regional basis and have a far greater
number and variety of distribution outlets for their products. Discount
brokerage firms market

                                       10

<PAGE>



their services through aggressive pricing and promotional efforts. In addition,
several regional competitors have much more extensive investment banking
activities than the Registrant and therefore possess a relative advantage with
regard to securities distribution.

     Recent rapid advancements in computing and communications technology are
substantially changing the means by which financial services are delivered.
These changes are providing consumers with more direct access to a wide variety
of financial and investment services including market information and on-line
trading and account information. Advancements in technology also create demand
for more sophisticated levels of client services. Provision of these services
may entail considerable cost without an offsetting source of revenue. Although
management is committed to utilizing technological advancements to provide a
high level of client service, many of the Registrant's competitors have far
greater technological and financial resources at their disposal.

     The Registrant follows a strategy of attempting to offer superior service
and investment advice in order to differentiate itself from competitors.

Employees

     As of June 27, 1997, the Registrant had 566 employees, of whom 237 had
full-time investment broker responsibilities. None of the Registrant's employees
are covered by a collective bargaining agreement.

     In large part, the Registrant's future success is dependent upon its
continuing ability to hire, train and retain qualified investment brokers. The
total number of investment brokers increased to 237 from 223 during the fiscal
year reflecting new hires offset by investment brokers leaving the Registrant's
employ and employees transferred to and from investment broker and other
positions. The Registrant trains new investment brokers who are required to take
examinations given by the NYSE, the NASD and certain state securities regulators
in order to be registered and qualified. The Registrant also provides for
continuing training programs for investment brokers. Investment brokers are
required to meet continuing education requirements as promulgated by the
industry. Competition is intense among securities firms for investment brokers
with good sales production records.

     The Registrant considers its employee relations to be very good and
considers its compensation and employee benefits, which include medical, life,
accidental death and disability insurance, a profit sharing and 401(k) plan, an
employee stock purchase plan, educational assistance, as well as a flexible
benefits plan which allows pre-tax contributions for medical insurance premiums,
out-of-pocket medical expenses, and dependent care expenses, to be competitive
with those offered by other securities firms. In addition to the benefits
offered to all eligible employees, the Registrant maintains a stock option plan,
a non-qualified deferred compensation plan, and a management stock purchase loan
plan to attract and retain executive personnel and investment brokers with
outstanding sales production records.

Regulation

     The securities industry in the United States is subject to extensive
regulation under federal and state laws. The Securities and Exchange Commission
("SEC") is the federal agency charged with administration of the federal
securities laws. Much of the regulation of broker-dealers, however, has been
delegated to self-regulatory organizations, principally the NASD and the
national securities exchanges. These self-regulatory organizations adopt rules
(which are subject to approval by the SEC) which govern the industry and conduct
periodic examinations of member broker-dealers. Securities firms are also
subject to regulation by state securities commissions in the states in which
they are registered. Scott & Stringfellow is currently registered in 42 states
and the District of Columbia.

     The regulations to which broker-dealers are subject cover all aspects of
the securities business, including sales practices, trade practices among
broker-dealers, capital structure of securities firms, uses

                                       11

<PAGE>



and safekeeping of clients' funds and securities, record keeping, and the
conduct of directors, officers and employees. Additional legislation, changes in
rules promulgated by the SEC and by self-regulatory organizations, or changes in
interpretations or enforcement of existing laws and rules, often affect directly
the method of operation and profitability of broker-dealers. The SEC and the
self-regulatory organizations may conduct administrative proceedings which can
result in censure, fines, suspension or expulsion of a broker-dealer, its
officers or employees. The principal purpose of regulation and discipline of
broker-dealers is the protection of clients and the securities market rather
than the protection of creditors or stockholders of broker-dealers.

     One of the most important regulations with which the Registrant's
broker-dealer subsidiary must continually comply is SEC Rule 15c3-1 and a
similar rule of the NYSE which require the Registrant's broker-dealer subsidiary
to maintain a minimum amount of net capital, as defined. These rules, under the
alternative method, prohibit a broker or dealer from engaging in any securities
transactions at a time when its net capital is less than 2% of aggregate debit
items arising from customer transactions; in addition, restrictions may be
imposed on the operations of a broker or dealer if its net capital is less than
5% of aggregate debit items. At June 27, 1997, the Registrant's broker-dealer
subsidiary's net capital was 16% of aggregate debit items. (See note 6 of Notes
to Consolidated Financial Statements for fiscal 1997 incorporated herein by
reference.)

     The laws, rules and regulations of the various federal, state and other
regulatory bodies of which the business of the Registrant is subject are
constantly changing. While the management believes that it is currently in
compliance in all material respects with all laws, rules and regulations
applicable to its business, it cannot predict what effect any such changes might
have.

Item 2. PROPERTIES

     The Registrant uses general office space for the conduct of its business.
The Registrant's main office is located in the Mutual Building, 909 East Main
Street, Richmond, Virginia, and its branch operations are conducted in various
office buildings located in 28 other municipalities in which it does business.
All of the Registrant's offices are leased. (See note 12 of Notes to
Consolidated Financial Statements for fiscal 1997 incorporated herein by
reference.) The Registrant is currently in the final stages of renovation of its
main office space, which includes a modern, efficient trading floor and an
auditorium for sales meetings and training. The Registrant renovates and
relocates its retail branch offices as needed to accommodate additional
investment brokers and improve client service. Although the Registrant's offices
are leased, relocations and renovations often require capital expenditures for
leasehold improvements, furniture and equipment. In addition, installation of
new computer hardware, software and supporting systems pursuant to the
Registrant's technology plan has required significant capital expenditures in
1996 and 1997.

Item 3.  LEGAL PROCEEDINGS

     The Registrant has been named in legal actions relating to its securities
business. Management of the Registrant, after consultation with legal counsel,
believes the resolution of these various lawsuits and claims will have no
material adverse effect on the financial position of the Registrant.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.

EXECUTIVE OFFICERS OF THE REGISTRANT

     The Executive Officers of the Registrant as of June 27, 1997, are as
follows:

                                       12

<PAGE>


<TABLE>
<CAPTION>

Name                        Age     Positions with the Registrant
<S> <C>
S. Buford Scott              64     Chairman of the Board
Frederic Scott Bocock        65     Vice Chairman of the Board
John Sherman, Jr.            51     Director, President and Chief Executive Officer
Steven C. DeLaney            42     Director, Executive Vice President and Director of Capital Markets
Charles E. Mintz             42     Senior Vice President and Director of Retail Markets
Sandra D. Glass              58     Senior Vice President and Director of Operations
William F. Gunter            54     Senior Vice President and Director of Financial Products and Services
Norman L. Hancock            59     Senior Vice President and Chief Compliance Officer
Kenneth A. Thomas            49     Senior Vice President and Director of Administrative Services
Diann D. Fox                 48     Senior Vice President and Director of Human Resources
Guy P. Chance                62     First Vice President and Director of Marketing
Mike D. Johnston             37     Vice President and Chief Financial Officer

</TABLE>

       S. Buford Scott has served as Chairman of the Board of Directors of the
Registrant and Scott & Stringfellow since 1974. He also served as its Chief
Executive Officer from 1974 until 1984. Mr. Scott is a member of the Board of
Directors of Ethyl Corporation. He is also a Director of Sheltering Arms
Hospital, a Director of the Virginia Council on Economic Education, a Director
of the National Council on Economic Education, a Director of Richmond
Renaissance, a Director of the Atlantic Rural Exposition (State Fair of
Virginia), a Director of the Hollywood Cemetery Association, a Trustee of the
Securities Industry Foundation for Economic Education, and Chairman of Elk Hill
Farm, Inc.

     Frederic Scott Bocock has served as Vice Chairman of the Board of Directors
of the Registrant and Scott & Stringfellow since 1984, and served as President
of Scott & Stringfellow from 1974 until 1984. Mr. Bocock is Chairman of Scott &
Stringfellow Capital Management, Inc. and is President of the Men's Board of the
Virginia Home.  Mr. Bocock, S. Buford Scott and R. Strother Scott, a First Vice
President - Corporate Finance, are first cousins and grandsons of Frederic
William Scott, co-founder of Scott & Stringfellow.

     John Sherman, Jr. was elected President and Chief Executive Officer
effective January 1, 1996. Prior to that he was Executive Vice President and
Chief Operating Officer from August 1995 to January 1996. From 1993 until 1995
he served as Senior Vice President for Branch Administration and Retail Sales of
Scott & Stringfellow. Mr. Sherman joined Scott & Stringfellow in October 1988 as
Vice President and manager of the Kinston, North Carolina branch office. Prior
to joining Scott & Stringfellow, Mr. Sherman served as President of Shurgard
Capital Investments located in Seattle, Washington from January 1988 to October
1988. Prior to January 1988, Mr. Sherman held the position of Vice President and
Kinston branch manager of Wheat, First Securities, Inc.

     Steven C. DeLaney, was elected to the Board of Directors of the Registrant
in October 1995. Mr. DeLaney currently serves as Executive Vice President and
Director of Capital Markets with overall responsibility for the research,
investment banking, institutional sales, and trading functions of the Company.
Mr. DeLaney served as Chief Financial Officer of the Company from 1992 to 1995.
Prior to joining the Registrant, Mr. DeLaney was employed from 1976 to 1991 by a
Virginia-based, diversified financial services company where he held various
financial and executive positions including President and Chief Operating
Officer and Chief Financial Officer.

     Charles E. Mintz was named Senior Vice President Director of Retail Markets
of Scott & Stringfellow in February 1997.  From January 1996 to February 1997,
Mr. Mintz served as Chief Financial Officer after serving as First Vice
President and Chief Administrative Officer from May 1995 to January 1996.  Mr.
Mintz joined Scott & Stringfellow in August 1990 as manager of the Wilmington,
North Carolina branch

                                       13

<PAGE>



office. Prior to joining Scott & Stringfellow, Mr. Mintz served as President of
Fox, Graham & Mintz Securities, Inc. from 1985 until its 1990 acquisition by
Scott & Stringfellow.  Prior to 1985, Mr. Mintz was the Myrtle Beach, South
Carolina branch manager of Wheat, First Securities, Inc.

     Sandra D. Glass joined the Registrant in 1986 as Director of Operations.
Previously, she was a Senior Vice President and Director of Operations for
Schneider, Bernet & Hickman, Inc., a regional brokerage firm in Dallas, Texas
where she was employed from 1965 to 1985. Ms. Glass was named Senior Vice
President in 1993 and elected to the Board of Directors of Scott & Stringfellow,
Inc. in 1996.

     William F. Gunter was elected Senior Vice President in 1993 and a Director
of Scott & Stringfellow, Inc. in April 1996. Mr. Gunter joined Scott &
Stringfellow in 1981, and is currently Director of Financial Products and
Services with overall responsibility for mutual funds, annuities, insurance,
retirement plans, financial planning, money markets, and managed assets. Prior
to 1981, Mr. Gunter was a Vice President with Wheat First Securities and a trust
officer with First & Merchants National Bank.

     Norman L. Hancock joined Scott & Stringfellow in October 1992 as Chief
Compliance Officer.  Prior to joining Scott & Stringfellow, Mr. Hancock was with
Wheat, First Securities, Inc. for 35 years, where he was Senior Vice President
and Compliance Director for 18 years.  He served as cashier and personnel
director in earlier years.  Mr. Hancock was named Senior Vice President in 1996.

     Kenneth A. Thomas is a Senior Vice President and Chief Administrative
Officer at Scott & Stringfellow. He also serves on the firm's Management and
Operations Committees. Mr. Thomas joined Scott & Stringfellow 4 years ago and is
responsible for the firm's technology, communications, facilities, and other
office support systems and services. Previously, he was a Senior Vice President
with another Richmond-based regional brokerage firm serving 21 years in various
administrative, systems, and operational management capacities.

     Diann D. Fox was elected Senior Vice President of Human Resources in
January 1997. Ms. Fox joined Scott & Stringfellow in 1972 after being with Paine
Webber (formerly Abbot, Proctor and Payne) since 1968. Prior to accepting an
administrative position in Human Resources, Ms. Fox served in the research
department providing analytical support to the firm's investment advisory,
primary, and correspondent reserach functions. Ms. Fox has managed the Human
Resources function since 1987.

     Guy P. Chance joined Scott & Stringfellow in 1985 and served as Director of
Research from 1987 to 1992. He then served as Director of National Research
until May 1996, when he was appointed Director of Marketing. Mr. Chance was
named First Vice President in 1987. Prior to joining Scott & Stringfellow, Mr.
Chance worked for several financial services firms in the Boston area in a
variety of institutional and retail marketing and research positions.

     Mike D. Johnston joined Scott & Stringfellow in 1987 and was named Vice
President and Treasurer in 1995.  In February 1997, Mr. Johnston was named Chief
Financial Officer.  As Chief Financial Officer, Mr. Johnston is responsible for
accounting, finance, and client services functions.  Prior to joining Scott &
Stringfellow, Mr. Johnston was a tax manager for KPMG Peat Marwick.  Mr.
Johnston holds a CPA certificate and serves on the board of directors of NOVA of
Virginia Aquatics.

     All officers serve at the discretion of the Board of Directors.


PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS


                                       14

<PAGE>



     The information required by this item is incorporated herein by reference
to the Corporate Information on exhibit page 13.40 of the Annual Report to
Shareholders for fiscal 1997. The computation of the approximate number of
holders of the Registrant's common stock is based on the number of holders of
record as of June 27, 1997. Information on the holders of record of the
Registrant's common stock is maintained and produced by the Registrant's
transfer agent, ChaseMellon Shareholder Services.

Item 6.  SELECTED FINANCIAL DATA

     The information required by this item is incorporated herein by reference
to exhibit page 13.1 of the Annual Report to Shareholders for fiscal 1997.

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     The information required by this item is incorporated herein by reference
to exhibit pages 13.2 to 13.9 of the Annual Report to Shareholders for fiscal
1997.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this item, except for the required financial
statement schedules, is incorporated herein by reference to exhibit pages 13.10
to 13.24 of the Annual Report to Shareholders for fiscal 1997. The financial
statement schedules, which include the Parent-only Condensed Financial
Statements of the Registrant, are included on pages 18 to 20 of this Form 10-K.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     There were no changes in accountants or disagreements on accounting and
financial disclosure.


PART III

     The information required by Items 10, 11, 12, and 13, except for the
information regarding Executive Officers called for by Item 10, is incorporated
by reference to the Registrant's definitive Proxy Statement to be used in
connection with the solicitation of proxies to be voted at the Registrant's
Annual Meeting of Shareholders to be held October 21, 1997, which was filed with
the Commission pursuant to Regulation 240.14a(6)(c) on September 22, 1997.

     The information regarding Executive Officers required by Item 10 is shown
on page 12 of this Form 10-K.

PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (a) List of Financial Statements, Financial Statement Schedules, and
         Exhibits

         (1) The following consolidated financial statements of the Registrant
         and its subsidiaries, included on exhibit pages 13.10 to 13.25 of the
         Annual Report to Stockholders for fiscal 1997, are incorporated herein
         by reference:

                                       15

<PAGE>


         Consolidated Statements of Financial Condition - June 27, 1997 and June
         28, 1996. Consolidated Statements of Income - Fiscal years ended June
         27, 1997, June 28, 1996, and June 30, 1995. Consolidated Statements of
         Changes in Stockholders' Equity - Fiscal years ended June 27, 1997,
         June 28, 1996, and June 30, 1995. Consolidated Statements of Cash Flows
         - Fiscal years ended June 27, 1997, June 28, 1996 and June 30, 1995.
         Notes to Consolidated Financial Statements. Report of Independent
         Auditors

         (2) The following financial statement schedules of Scott & Stringfellow
         Financial, Inc. are required by Section 210.5-04 of Regulation S-X:

         Independent Auditors' Report on Financial Statement Schedules
         pg. 19

         Schedule I - Condensed Financial Statements of Registrant pg. 20

         All other schedules for which provision is made in the applicable
         accounting regulations of the Securities and Exchange Commission are
         not required under the related instructions, or are inapplicable, or
         the required information is included in the consolidated financial
         statements or notes thereto and therefore have been omitted.

         (3) The following exhibits are filed herewith or incorporated by
         reference as indicated. Exhibit number refers to Item 601 of Regulation
         S-K:

<TABLE>
<CAPTION>

         EXHIBIT NUMBER                                                PAGE

<S> <C>

         3. Articles of Incorporation                                  Filed as Exhibits 3.1 through 3.4 to
                                                                       Form S-18 Registration Statement
                                                                       #33-8967 and incorporated herein
                                                                       by reference

         4. Material Contracts -



             Other Material Contracts                                  Filed as  Exhibits 10.1 through
                                                                       10.5 in Form S-18 Registration
                                                                       Statement #33-8967 and incorporated
                                                                       herein by reference



             Master Borrowing Note agreement with Crestar Bank         Filed as Exhibit 10 with the
                                                                       Registrant's Annual Report on
                                                                       Form 10-K for the fiscal year ended June 24,
                                                                       1994 and incorporated by reference

             Broker Loan Agreement with Crestar Bank                   Filed as Exhibit 10 with the
                                                                       Registrant's Annual Report on
                                                                       Form 10-K for the fiscal year ended
                                                                       June 24, 1994 and incorporated by
                                                                       reference

             Commercial Note with Crestar Bank                         Exhibit 10

         11. Statement re: Computation of Earnings per Share           Exhibit 11

         13. Certain portions of the Annual Report to Shareholders for

</TABLE>
                                       16
<TABLE>
<CAPTION>
<S> <C>

         the year ended June 27, 1997, to the extent specifically
         incorporated by reference herein                            Exhibit 13

         22. List of Subsidiaries of Registrant                        Filed as Exhibit 22 with the
                                                                       Registrant's Annual Report on
                                                                       Form 10-K for the fiscal year
                                                                       ended June 24, 1994 and
                                                                       incorporated by reference

         23. Consent of Independent Auditors                           Exhibit 23

         27. Financial Data Schedule                                   Exhibit 27

</TABLE>


     (b) Reports on Form 8-K.

     The Registrant filed a Current Report on Form 8-K on March 6, 1997 which
reported on the declaration of a 50% stock dividend by its board of directors on
February 25, 1997.

SIGNATURES

     Pursuant to the requirements of Sections 13 or 15(d) 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, in the City of
Richmond, State of Virginia, on the 22nd day of September, 1997.

               SCOTT & STRINGFELLOW FINANCIAL, INC. (REGISTRANT)

BY   /s/ John Sherman, Jr.                            September 22, 1997
     ---------------------                            Date
     John Sherman, Jr.
     President and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.


<TABLE>
<CAPTION>

<S> <C>
/s/ John Sherman, Jr.              President and Director             September 22, 1997
---------------------              (Principal Executive Officer)
John Sherman, Jr.

/s/ Mike D. Johnston               Vice President and                 September 22, 1997
--------------------               Chief Financial Officer
Mike D. Johnston                   (Principal Financial / Accounting Officer)


/s/ S. Buford Scott                Director                           September 22, 1997
-------------------
S. Buford Scott

/s/ Frederic S. Bocock             Director                           September 22, 1997
----------------------
Frederic S. Bocock

/s/ William F. Calliott            Director                           September 22, 1997
-----------------------
William F. Calliott

</TABLE>

                                       17

<PAGE>


Signature                              Title                 Date


/s/ David Plageman                    Director         September 22, 1997
------------------
David Plageman

/s/ John J. Muldowney                 Director         September 22, 1997
---------------------
John. J. Muldowney

/s/ R. Bruce Campbell                 Director         September 22, 1997
---------------------
R. Bruce Campbell

/s/ William P. Schubmehl              Director         September 22, 1997
------------------------
William P. Schubmehl

/s/ Steven C. DeLaney                 Director         September 22, 1997
---------------------
Steven C. DeLaney

/s/ William W. Berry                  Director         September 22, 1997
--------------------
William W. Berry


R. Gordon Smith                       Director         September 22, 1997

/s/ Robert L. Hintz
-------------------
Robert L. Hintz                       Director         September 22, 1997



                                       18

<PAGE>



         INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES



The Board of Directors
Scott & Stringfellow Financial, Inc.


Under date of August 5, 1997, we reported on the consolidated statements of
financial condition of Scott & Stringfellow Financial, Inc. and subsidiaries as
of June 27, 1997 and June 28, 1996 and the related consolidated statements of
income, changes in stockholders' equity, and cash flows for the years ended June
27, 1997, June 28, 1996 and June 30, 1995, as contained in the 1997 annual
report to stockholders. These consolidated financial statements and our report
thereon are incorporated by reference in the 1997 annual report on Form 10-K. In
connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement Schedule I.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedules based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.



/s/KPMG Peat Marwick LLP
------------------------

Richmond, Virginia
August 5, 1997

                                       19

<PAGE>



Schedule I - Condensed Financial Statements of Registrant
Scott & Stringfellow Financial, Inc. (Parent only)

Condensed Statements of Financial Condition

<TABLE>
<CAPTION>

                                                     June 27,           June 28,
                                                      1997               1996
<S> <C>

ASSETS
   Cash                                               $ 65,385               -
   Investments in not readily
     marketable securities                              77,831            77,831
   Investments in subsidiaries (a)                  29,486,822        29,852,132
   Other assets                                          6,010              -

   Total Assets                                   $ 29,636,048      $ 29,929,963

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Intercompany (a)                                  $ 172,831         $ 172,831
   Dividends payable                                   285,565           266,697
   Distributions payable to shareholders for
    purchase and retirement of common stock               -            3,800,000
   Total Liabilities                                   458,396         4,239,528

Stockholders' Equity:
   Common stock, $0.10 par value. Authorized
     10,000,000 shares; issued and outstanding
     3,172,946 in 1997 and 2,022,475 shares
     in 1996                                           317,295           202,247
   Additional paid-in capital                       12,540,734        10,426,723
   Retained earnings                                17,384,953        15,537,305
   Less: Subscriptions Receivable                   -1,065,330          -475,840

   Total Stockholders' Equity                       29,177,652        25,690,435

   Total Liabilities and Stockholders' Equity       29,636,048      $ 29,929,963


Condensed Statements of Income
                                                                      Year Ended
                                                 June 27, 1997     June 28, 1996    June 30, 1995

Equity in undistributed net income
   from subsidiaries (a)                           $ 2,418,346       $ 3,318,073      $ 1,278,649
Cash dividends (a)                                   1,003,409           857,640          822,766
Interest income                                         35,824              -                -

Net income                                         $ 3,457,579       $ 4,175,713      $ 2,101,415

</TABLE>


(a) Eliminated in consolidation

See Notes to Consolidated Financial Statements contained in the 1997 Annual
Report to Shareholders and

                                       20

<PAGE>



incorporated herein by reference.

See accompanying independent auditors' report.






Schedule I
Condensed Financial Statements of Registrant
Scott & Stringfellow Financial, Inc. (Parent only)

Condensed Statements of Cash Flows

<TABLE>
<CAPTION>


                                                                     Years Ended
                                                 June 27, 1997     June 28, 1996    June 30, 1995

<S> <C>

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                      $ 3,457,579       $ 4,175,713      $ 2,101,415
     Adjustments to reconcile net income to net
     cash provided by operating activities:
     Equity in undistributed net income
     of subsidiaries                                -2,418,346        -3,318,073       -1,278,649
   Changes in assets and liabilities:
     Inter-company payable                                -              -                  5,000
     Other assets                                       -6,010

Net cash provided by operating activities            1,033,223           857,640          827,766

CASH FLOWS FROM FINANCING ACTIVITIES
   Cash dividends paid                              -1,003,409          -857,640         -822,766
   Purchase and retirement of common stock          -4,296,161           -19,140         -564,151
   Issuance of common stock                          1,548,070         1,009,250          519,158

Net cash provided by (used in) financing activities -3,751,500           132,470         -867,759

CASH FLOWS FROM INVESTING ACTIVITIES
   Distributions from subsidiary                     4,296,161            19,140          564,151
   Contributions to subsidiaries                    -1,512,499        -1,009,250         -524,158

Net cash provided by (used in) investing activities  2,783,662          -990,110           39,993

Net change in cash and cash equivalents                65,385              -               -

Cash and cash equivalents at beginning of year           -                 -               -

Cash and cash equivalents at end of year               65,385              -               -

</TABLE>

See Notes to Consolidated Financial Statements contained in the 1997 Annual
Report to Shareholders and incorporated herein by reference.

See accompanying independent auditors' report.

                                       21

<PAGE>