content: UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
  
                                      FORM 10-Q
  
  /x/     Quarterly  Report  Pursuant  to  Section  13 or 15(d) of the  Securities
          Exchange Act of 1934 FOR THE QUARTER ENDED JUNE 28, 1997
  
                                         OR
  
          Transition  Report  Pursuant  to Section  13 or 15(d) of the  Securities
          Exchange Act of 1934
  
  
           Commission File Number 1-3258
  
                                     LUKENS INC.
                                50 South First Avenue
                             Coatesville, PA 19320-0911
                                   (610) 383-2000
  
           Incorporated in Delaware
           I.R.S. Employer Identification Number 23-2451900
  
           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
  
                       SHARES OUTSTANDING AS OF AUGUST 1, 1997
                      Common Stock, $.01 Par Value, 14,940,779
  
  
  <PAGE>
  
                           PART I - FINANCIAL INFORMATION
  
  Item 1.  Financial Statements.
  
  
  Consolidated Statements of Earnings
  (Dollars and shares in thousands except per share amounts)
  <TABLE>
  <CAPTION>
                                                                                     SECOND QUARTER                YEAR-TO-DATE
                                                                                  Thirteen Weeks Ended        Twenty-six Weeks Ended
                                                                                June 28,        June 29,      June 28,       June 29,
                                                                                  1997            1996          1997           1996
  <S>                                                                          <C>              <C>            <C>            <C>    
  Net Sales                                                                    $ 258,247        255,955        506,365        520,127
  Operating Costs and Expenses
      Cost of products sold                                                      238,253        236,343        472,090        488,807
      Selling and administrative expenses                                         13,026         13,042         25,412         27,866
      Unusual item - work force reduction provision                                   --         10,782             --         10,782
                                                                               ---------      ---------      ---------      ---------
          Total operating costs and expenses                                     251,279        260,167        497,502        527,455
  
  Operating Earnings (Loss)                                                        6,968         (4,212)         8,863         (7,328)
  
      Interest expense                                                             4,803          4,045          9,532          7,895
                                                                               ---------      ---------      ---------      ---------
  
  Earnings (Loss) Before Income Taxes                                              2,165         (8,257)          (669)       (15,223)
  
      Income tax expense (benefit) (Note 5)                                          984         (2,524)           128         (5,115)
                                                                               ---------      ---------      ---------      ---------
  
  Net Earnings (Loss)                                                          $   1,181         (5,733)          (797)       (10,108)
                                                                               ---------      ---------      ---------      ---------
  
      Dividend requirements for preferred stock                                     (501)          (500)        (1,000)          (996)
  
  Net Earnings (Loss) Applicable to Common Stock                               $     680         (6,233)        (1,797)       (11,104)
                                                                               ---------      ---------      ---------      ---------
  
  Earnings (Loss) Per Common Share
      Primary                                                                  $     .05           (.42)          (.12)          (.75)
      Fully diluted                                                            $     .05           (.42)          (.12)          (.75)
  
  Common Shares and Equivalents Outstanding
      Primary                                                                     14,828         14,780         14,806         14,768
      Fully diluted                                                               16,252         16,257         16,234         16,247
  
  Cash Dividends on Common Stock - Per Share                                   $     .25            .25            .50            .50
                                                                               ---------      ---------      ---------      ---------
  </TABLE>
  
          The accompanying notes are an integral part of these statements 
  
                                          1
  <PAGE>
  
  Consolidated Balance Sheets
  (Dollars in thousands)
  <TABLE>
  <CAPTION>
                                                                                       June 28,         December 28,
                                                                                         1997               1996
  Assets
       Current Assets
  <S>                                                                            <C>                       <C>   
           Cash and cash equivalents                                             $         5,389           10,282
           Receivables, less allowance of $7,542 in 1997 and $7,750 in 1996              127,098           92,356
           Inventories
                 Products finished and in process                                        130,439          116,477
                 Raw materials                                                            30,482           27,762
                 Supplies                                                                  5,079            4,686
       ------------------------------------------------------------------------------------------   --------------
                                                                                         166,000          148,925
           Deferred income taxes (Note 5)                                                 13,724           13,129
           Prepaid expenses and other                                                      1,505            1,964
       ------------------------------------------------------------------------------------------   --------------
           Total current assets                                                          313,716          266,656
  
       Plant and Equipment                                                               959,930          953,753
         Less accumulated depreciation                                                   443,200          420,427
       ------------------------------------------------------------------------------------------   --------------
           Net plant and equipment                                                       516,730          533,326
       Intangible Assets, net of accumulated amortization of $10,200 in 1997
         and $9,114 in 1996                                                               56,133           57,158
       Deferred Income Taxes (Note 5)                                                     32,327           29,937
       Other Assets                                                                        1,723            1,674
       ------------------------------------------------------------------------------------------   --------------
  
       Total Assets                                                              $       920,629          888,751
       -----------------------------------------------------------------------------------------------------------
  
  Liabilities and Stockholders' Investment
       Current Liabilities
           Accounts payable                                                      $       101,726           92,252
           Accrued employment costs                                                       42,581           46,603
           Other accrued expenses (Notes 5 and 6)                                         40,094           23,765
           Current maturities of long-term debt                                            5,710            4,878
       ------------------------------------------------------------------------------------------   --------------
           Total current liabilities                                                     190,111          167,498
  
       Long-Term Debt (Note 4)                                                           265,435          248,695
       Retirement Benefits
           Pensions                                                                       46,295           43,995
           Medical and life insurance                                                    151,771          148,479
       Other Liabilities (Note 6)                                                         16,202           22,015
       ------------------------------------------------------------------------------------------   --------------
               Total liabilities                                                         669,814          630,682
       Commitments and Contingencies (Note 6)
       Redeemable Stock
           Series preferred stock, 1,000,000 shares authorized
             Series B ESOP convertible preferred
             (472,202 shares outstanding in 1997 and 480,018 in 1996)                     28,332           28,801
           Deferred compensation - ESOP                                                  (13,250)         (15,374)
       ------------------------------------------------------------------------------------------   --------------
           Total redeemable stock                                                         15,082           13,427
  
       Stockholders' Investment
           Common stock, 40,000,000 shares authorized and 15,813,259 issued                  158              158
           Capital in excess of par value (Note 3)                                        87,081           86,002
           Earnings invested                                                             162,457          171,730
           Foreign currency translation adjustments                                       (1,331)          (1,332)
           Deferred compensation - restricted stock (Note 3)                              (2,349)               -
           Repurchased stock, at cost (872,480 shares in 1997 and 1,010,988 in 1996)
             (Note 3)                                                                    (10,283)         (11,916)
       ------------------------------------------------------------------------------------------   --------------
               Total stockholders' investment                                            235,733          244,642
       ------------------------------------------------------------------------------------------   --------------
       Total Liabilities and Stockholders' Investment                            $       920,629          888,751
       -----------------------------------------------------------------------------------------------------------
  </TABLE>
          The accompanying notes are an integral part of these statements.
  
                                          2
  <PAGE>
  
  Consolidated Statements of Cash Flows
  (Dollars in thousands)
  <TABLE>
  <CAPTION>
                                                                                                YEAR-TO-DATE
                                                                                          Twenty-six Weeks Ended
                                                                                        June 28,            June 29,
                                                                                          1997                1996
  Operating Activity
  <S>                                                                              <C>                     <C>
       Net earnings (loss)                                                         $         (797)         (10,108)
  
  Adjustments to Reconcile Net Earnings (Loss) to
    Cash Flow Used for Operating Activity
       Depreciation and amortization                                                       25,395           24,441
       Income taxes deferred                                                               (1,124)          (8,747)
       Provision for uncollectible accounts                                                 3,140            4,293
       Retirement benefit funding less than expense                                         5,074           12,966
       Changes in working capital affecting operations
            Accounts receivable                                                           (34,260)           2,960
            Inventories                                                                   (17,075)         (10,662)
            Prepaid expenses and other                                                        459              471
            Accounts payable                                                               14,623          (12,209)
            Accrued expenses                                                               (3,916)          (7,536)
       Other, net                                                                            (303)           1,236
  ------------------------------------------------------------------------------------------------    -------------
            Cash flow used for operating activity                                          (8,784)          (2,895)
  
  Financing Activity
       Long-term debt
            Proceeds from issuance of notes                                                     -           74,538
            Other borrowed                                                                 19,800                -
            Other repaid                                                                     (159)         (30,349)
       Dividends paid                                                                      (8,548)          (8,562)
       Proceeds from stock options exercised                                                    -              802
       Other, net                                                                               -             (537)
  ------------------------------------------------------------------------------------------------    -------------
            Net from financing activity                                                    11,093           35,892
  
  Investing Activity
       Capital expenditures                                                                (8,212)         (36,824)
       Proceeds from sale of assets/subsidiaries                                              421              400
       Other, net                                                                             589             (849)
  ------------------------------------------------------------------------------------------------    -------------
            Net for investing activity                                                     (7,202)         (37,273)
  
  Cash and Cash Equivalents
       Increase (decrease)                                                                 (4,893)          (4,276)
       Start of period                                                                     10,282           11,056
  ------------------------------------------------------------------------------------------------    -------------
            End of period                                                          $        5,389            6,780
  -----------------------------------------------------------------------------------------------------------------
  </TABLE>
          The accompanying notes are an integral part of these statements.
  
                                          3
  
  <PAGE>
  
  SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Dollars in thousands except per share amounts)
  
  1.       Basis of Presentation
           The financial  statements  are  unaudited  but reflect all  adjustments
           (consisting of normal recurring  accruals) which are, in the opinion of
           management,  necessary  to a fair  statement  of the  results  for  the
           interim periods presented.  The preparation of our financial statements
           in conformity with generally accepted  accounting  principles  requires
           estimates  and  assumptions   that  affect  the  reported  amounts  and
           contingency  disclosures.  These financial statements should be read in
           conjunction with the financial statements and related notes in the 1996
           Annual Report to Stockholders.  Results from any interim period are not
           necessarily indicative of the results for a full year.
  
  2.       Future Accounting Changes
           In February 1997,  Statement of Financial  Accounting  Standards (SFAS)
           No. 128, "Earnings per Share," was issued. This statement specified the
           computation,  presentation and disclosure requirements for earnings per
           share (EPS).  The main objectives of the statement were to simplify the
           EPS calculation and to make EPS comparable on an  international  basis.
           Effective in the 1997 Annual Report, primary and fully diluted EPS will
           be replaced by basic and diluted  EPS.  Prior  period  results  will be
           restated. A significant  difference is that basic EPS no longer assumes
           potentially  dilutive  securities in the  computation.  Calculating EPS
           under the new method would have an  immaterial  impact on 1996 and 1997
           EPS figures.
  
           In  1997,  Lukens  will  also  adopt  SFAS  No.  129,   "Disclosure  of
           Information  about  Capital  Structure."  This  statement was issued in
           conjunction  with the earnings per share statement  discussed above and
           was intended to centralize  capital structure  disclosure  requirements
           and to expand the  number of  companies  subject  to the  requirements.
           Since  we  were in  compliance  with  the  existing  capital  structure
           disclosure  requirements,  we do not  expect to  materially  change our
           disclosures under the new standard.
  
           In June 1997,  SFAS No.  130,  "Reporting  Comprehensive  Income,"  was
           released.  Comprehensive income is a concept that includes the total of
           net earnings(loss) reported in the Consolidated Statements of Earnings,
           plus revenues,  expenses, gains and losses that are recognized directly
           in the  stockholders'  investment  section of the Consolidated  Balance
           Sheets. The purpose of the statement was to more prominently  highlight
           comprehensive income items and to report a total amount for a reporting
           period.  Effective  in  1998,  Lukens  will  be  required  to  disclose
           comprehensive   income  and  its   components   within  our   financial
           statements.  Prior  period  financial  statements  will be restated for
           comparative purposes.
  
                                         4
  
  <PAGE>
  
  
           SFAS No. 131,  "Disclosures about Segments of an Enterprise and Related
           Information,"  was  also  issued  in June of 1997.  Beginning  in 1998,
           disclosures  will be based  on the way  management  organizes  business
           segments to make  decisions  about  resource  allocation and to measure
           performance.  Disclosures will include interim reporting  requirements.
           Previously  reported  information  will  be  restated  for  comparative
           purposes.  Based on our initial  review of the reporting and disclosure
           requirements,  we do  not  expect  to  materially  change  our  segment
           disclosures under the new standard.
  
  3.       Compensation Plans - Restricted Stock
           The Board of  Directors  approved the  issuance of  performance  vested
           restricted  stock  to  officers  and  other  executives  as  part of an
           incentive  compensation  program.  During  the first  quarter  of 1997,
           134,000  restricted  shares were  awarded.  The shares carry voting and
           dividend  rights and were  recorded at fair  market  value on the grant
           date. A corresponding  charge to deferred  compensation was recorded in
           the  stockholders'  investment  section  of  the  Consolidated  Balance
           Sheets. The deferred compensation balance was subsequently adjusted for
           the change in the  quarter-end  market price of Lukens common stock and
           for  compensation  expense  recognized.  The awards  vest at the end of
           three years,  contingent on continued employment and the achievement of
           performance  goals that are tied to Lukens'  total  shareholder  return
           relative to other steel companies.  Compensation expense recognized for
           these awards totaled $214 through the first half of 1997.
  
  4.       Financial Instruments - Notes Payable
           During the second quarter of 1997, Standard & Poor's lowered its rating
           from BBB+ to BBB on $150,000 of Lukens notes due in 2004 and on $75,000
           of  Medium-Term  Notes,  Series A, due in 2006.  The  Standard & Poor's
           outlook is characterized as stable.
  
  5.       Income Taxes
           Year-to-date  results were used to develop the  effective  tax rates in
           1997  and  1996.  Consequently,  the  second  quarter  effective  rates
           included the impact of changing  rates from the first  quarter.  At the
           end of the first half of 1997,  income tax expense was  recognized on a
           loss before income taxes.  The expense  represented the impact of state
           taxes and non-deductible expenses that offset the tax benefit generated
           from the loss.
  
           Because  of  the  unusual  nature  of the  1996  work  force  reduction
           provision,  the tax impact of 36.4 percent was recognized separately in
           the second quarter 1996 income tax provision.  Excluding the work force
           provision,  an effective rate of 27.1 percent was applied to 1996 first
           half results.
  
           During the second  quarter of 1997,  a  settlement  was  reached in the
           Internal  Revenue Service audits of 1993 and 1994. The audit assessment
           was recognized in the Consolidated Balance Sheets by a reclassification
           to other  accrued  expenses  with a  corresponding  offset to  deferred
           income taxes.
  
                                         5
  
  <PAGE>
  
  
  6.       Commitments and Contingencies
           During the second  quarter of 1997, a tentative  settlement was reached
           in a Superfund  remediation  contingency  where Lukens was designated a
           potentially  responsible  party.  The obligation for the Superfund site
           was previously  recognized in the fourth quarter of 1996. The tentative
           settlement   resulted  in  a  reclassification   from  other  long-term
           liabilities  to other  accrued  expenses  in the  Consolidated  Balance
           Sheets.
  
           The company is party to various  claims,  disputes,  legal  actions and
           other  proceedings  involving  product  liability,   contracts,   equal
           employment opportunity,  occupational safety,  environmental issues and
           various other  matters.  In the opinion of  management,  the outcome of
           these  matters  should  not  have  a  material  adverse  effect  on the
           consolidated  financial  condition  or  results  of  operations  of the
           company.
  
  
                                         6
  
  <PAGE>
  
  
  Item 2.           Management's Discussion and Analysis of
                    Financial Condition and Results of Operations.
                    (Dollars in thousands)
  
  Changes in Financial Condition during
  the Twenty-six Weeks Ended June 28, 1997
  
  Capital Structure
  
  Cash and cash  equivalents  totaled $5,389 at the end of the second  quarter,  a
  decrease of $4,893  from the end of 1996.  Working  capital of  $123,605  was up
  $24,447 from the end of 1996.  Higher accounts  receivable and inventories  were
  partially offset by a build in accounts payable and an increase in other accrued
  expenses.  The  current  ratio  was  1.7 at the  end of the  quarter  and 1.6 at
  year-end 1996.
  
  Included in other accrued  expenses at the end of the second quarter were income
  taxes payable that included an Internal  Revenue  Service audit  assessment  for
  1993 and 1994.  Also  included in other  accrued  expenses was an  environmental
  reserve that was reclassified from other liabilities in the long-term section of
  the  Consolidated  Balance Sheets.  The  reclassification  reflected a tentative
  settlement agreement negotiated in the second quarter for a Superfund site where
  we were designated a potentially responsible party.
  
  Debt at the end of the second quarter was $271,145,  an increase of $17,572 from
  the beginning of the year. The increase reflected borrowings under our revolving
  credit  agreement.  Based on  conditions  at the end of the quarter,  additional
  borrowings  were limited to  approximately  $46,000 under the committed  line of
  credit covenant.  The ratio of long-term debt to capital was 54.3 percent, which
  compared to 51.7 percent at year-end 1996.
  
  The Board of Directors  approved the issuance of performance  vested  restricted
  stock to officers  and other  executives  as part of an  incentive  compensation
  program.  During  the first  quarter of 1997,  134,000  restricted  shares  were
  awarded.  The shares carry voting and dividend  rights and were recorded at fair
  market value on the grant date. A corresponding charge to deferred  compensation
  was recorded in the stockholders' investment section of the Consolidated Balance
  Sheets.  The deferred  compensation  balance was  subsequently  adjusted for the
  change  in  the  quarter-end  market  price  of  Lukens  common  stock  and  for
  compensation  expense  recognized.  The awards  vest at the end of three  years,
  contingent on continued employment and the achievement of performance goals that
  are tied to Lukens' total shareholder return relative to other steel companies.
  
  During the second  quarter of 1997,  Standard & Poor's  lowered  its rating from
  BBB+  to  BBB on  $150,000  of  Lukens  notes  due in  2004  and on  $75,000  of
  Medium-Term  Notes,  Series A, due in 2006.  The  Standard  & Poor's  outlook is
  characterized as stable.
  
                                         7
  
  <PAGE>
  
  
  Liquidity
  
  Operating  activity  required  cash of  $8,784  compared  to cash  required  for
  operations of $2,895 in the first half of 1996. Higher cash requirements in 1997
  were due to increased working capital requirements.
  
  Financing  activity  generated  $11,093 with net borrowings of $19,641 partially
  offset by  dividend  payments of $8,548.  Investing  activity  required  $7,202,
  primarily for capital expenditures of $8,212.
  
  Profitability  in the second half of 1997 is  dependent on the  continuation  of
  strong  shipments  in the  Carbon  &  Alloy  Group.  Although  we did  see  some
  improvement  in  stainless  selling  prices  during  the first half of the year,
  prices  remain a concern  and will  continue to limit  results in the  Stainless
  Group.  Results  should  benefit  from our  continued  focus  on cost  reduction
  initiatives  and  increased  utilization  of key  facilities  from  the  capital
  expenditure program.
  
  In addition to the earnings factors discussed above, inventory reduction will be
  a key to  producing  a capital  structure  at the end of 1997 that is similar to
  year-end 1996.
  
  During the first half of 1997,  integration of the Steckel Mill Advanced Rolling
  Technology  (SMART(R)) system,  located in Conshohocken,  Pennsylvania,  and the
  wide  anneal and  pickle  line,  located  in  Massillon,  Ohio,  was  initiated.
  Commercialization   of  products  from  the  wide  anneal  and  pickle  line  is
  continuing.  Although shipments are expected to double during the third quarter,
  utilization  of the  facility  is  anticipated  to be low for the balance of the
  year.
  
  Order backlog was $127,800 at the end of the second quarter,  which was slightly
  higher than  year-end  1996 order  backlog and 17 percent lower than at the same
  time last year.
  
  In the long term, Lukens relies on the ability to generate sufficient cash flows
  from  operating  activity to fund  investing and financing  requirements  and to
  maintain  a target  long-term  debt-to-capital  ratio of 35  percent.  Primarily
  because of our aggressive capital expenditure program, we continue to exceed our
  target long-term debt-to-capital ratio.
  
  Results of Operations for the Quarters Ended
  June 28, 1997 and June 29, 1996
  
  Operating Results
  
  Second  quarter  operating  earnings of $6,968  compared to an operating loss of
  $4,212  in the  second  quarter  of 1996.  The loss in 1996 was the  result of a
  $10,782 work force reduction provision recorded in the second quarter. Excluding
  the provision for comparison  purposes,  operating earnings were up 6 percent in
  1997.  Improved  results in the Carbon & Alloy Group were partially
  
                                         8
  
  <PAGE>
  
  offset by an operating loss recorded by the Stainless Group.  Despite some price
  relief,  Stainless Group results  continued to be impacted by depressed  selling
  prices throughout the second quarter.
  
  Sales for the second  quarter  were  $258,247,  up  slightly  from 1996 sales of
  $255,955.  Most of the increase in sales  resulted from higher  shipments in the
  Carbon & Alloy Group,  partially offset by lower selling prices in the Stainless
  Group.
  
  Interest Expense
  
  Interest expense of $4,803 was up 19 percent compared to 1996 expense of $4,045.
  The  increase  primarily  related  to higher  amounts  of  capitalized  interest
  recorded in 1996.
  
  Income Tax Expense (Benefit)
  
  The  effective  tax rate  was 45.5  percent  in 1997 and 30.6  percent  in 1996.
  Because of the unusual nature of the 1996 work force  reduction  provision,  the
  tax impact of 36.4 percent was recognized  separately in the second quarter 1996
  income tax provision.  Excluding the work force provision,  an effective rate of
  27.1 percent was applied to 1996 first half results.  Year-to-date  results were
  used to develop  the  effective  tax rates in 1997 and 1996.  Consequently,  the
  second  quarter  effective  rates included the impact of changing rates from the
  first quarter.
  
  Net Earnings (Loss)
  
  Net earnings of $1,181 were recorded for the second  quarter of 1997 compared to
  a net loss of $5,733 for the same period in 1996.  On an  after-tax  basis,  the
  work force reduction provision reduced results by $6,859 in 1996.
  
  Business Group Results
                                                      Operating
                            Net Sales              Earnings (Loss)
                      2Q 1997      2Q 1996      2Q 1997       2Q 1996
  
  Carbon & Alloy     $129,321      125,395       13,304         1,287
  Stainless           128,926      130,560       (2,818)         (812)
  Corporate                --           --       (3,518)       (4,687)
                     --------     --------     --------      --------
  
                     $258,247      255,955        6,968        (4,212)
                     --------     --------     --------      --------
  
                                         9
  
  <PAGE>
  
  
  Carbon & Alloy Group
  
  Net  sales  increased  3  percent.  The  increase  reflected  higher  shipments,
  particularly  in the carbon steel product line due to increased  utilization  of
  the SMART system. Shipped tons were a record 188,700 in 1997 compared to 170,300
  tons in 1996.  With the growth in carbon  shipments in 1997,  sales  reflected a
  lower-value shipment mix.
  
  Operating  earnings for the second  quarter were up  significantly.  Included in
  second  quarter  1996  earnings  was a work  force  reduction  charge of $6,178.
  Excluding the unusual charge for comparison purposes, operating earnings were up
  78 percent in 1997.  Earnings in 1997 benefited  from a continued  focus on cost
  reduction initiatives, increased utilization of the SMART system and lower scrap
  costs.
  
  Stainless Group
  
  The group  recorded an operating  loss in the second  quarters of 1997 and 1996.
  Included in second  quarter  1996 results was a work force  reduction  charge of
  $3,695.  Excluding the unusual charge for comparison purposes, an operating loss
  in 1997  compared to  operating  earnings  recorded in 1996.  Depressed  selling
  prices across most product lines continued to limit results.
  
  In spite of a favorable  shipment mix,  depressed selling prices led to a slight
  decline in sales.  Shipments of 69,600 tons in 1997 were flat compared to 69,700
  tons in 1996.  Higher  shipments in the cold rolled and hot rolled product lines
  were offset by lower conversion shipments.
  
  Results of Operations for the Twenty-six Weeks Ended
  June 28, 1997 and June 29, 1996
  
  Operating Results
  
  First half operating  earnings of $8,863 compared to an operating loss of $7,328
  in 1996.  The loss in 1996 was the  result of a  $10,782  work  force  reduction
  provision recorded in the second quarter. Excluding the provision for comparison
  purposes,  operating earnings more than doubled in 1997. Improved results in the
  Carbon & Alloy Group were partially  offset by an operating loss recorded by the
  Stainless Group.  Stainless Group results  continued to be impacted by depressed
  selling prices throughout the first half of the year, despite some price relief.
  Selling and  administrative  expenses were lower through two quarters  primarily
  due to the 1996 work force reduction.
  
  Sales  for the first  half were  $506,365,  down 3  percent  from 1996  sales of
  $520,127.  Most of the decrease in sales  resulted from lower selling  prices in
  the Stainless Group,  partially offset by higher shipments in the Carbon & Alloy
  Group.
  
                                         10
  
  <PAGE>
  
  Interest Expense
  
  Interest expense of $9,532 was up 21 percent compared to 1996 expense of $7,895.
  The  increase  primarily  related  to higher  amounts  of  capitalized  interest
  recorded in 1996.
  
  Income Tax Expense (Benefit)
  
  Year-to-date  results were used to develop the  effective  tax rates in 1997 and
  1996. At the end of the first half of 1997, income tax expense was recognized on
  a loss before income taxes.  The expense  represented  the impact of state taxes
  and non-deductible expenses that offset the tax benefit generated from the loss.
  
  Because of the unusual nature of the 1996 work force  reduction  provision,  the
  tax impact of 36.4 percent was recognized  separately in the second quarter 1996
  income tax provision.  Excluding the work force provision,  an effective rate of
  27.1 percent was applied to 1996 first half results.
  
  Net Earnings (Loss)
  
  A net loss of $797 in 1997  compared  to a net loss of  $10,108  in 1996.  On an
  after-tax basis, the work force reduction provision reduced results by $6,859 in
  1996.
  
  Business Group Results
                                                     Operating
                            Net Sales              Earnings (Loss)
                     YTD 1997     YTD 1996     YTD 1997      YTD 1996
  
  Carbon & Alloy     $252,331      246,822       21,200        (4,373)
  Stainless           254,034      273,305       (5,884)        5,773
  Corporate                --           --       (6,453)       (8,728)
                     --------     --------     --------      --------
                     $506,365      520,127        8,863        (7,328)
                     --------     --------     --------      --------
  
  
  Carbon & Alloy Group
  
  Sales for the first half increased 2 percent.  Shipped tons were 364,100 in 1997
  compared  to  339,200  tons in 1996.  The 7 percent  increase  reflected  higher
  utilization of the SMART system,  particularly  in the carbon product line. With
  the growth in carbon shipments in 1997,  sales reflected a lower-value  shipment
  mix.
  
  Operating  earnings for the first half  compared to an  operating  loss in 1996.
  Included in 1996 results was a work force reduction charge of $6,178.  Excluding
  the  unusual  charge  for  comparison
  
                                         11
  
  <PAGE>
  
  purposes,  operating  earnings improved  significantly in 1997.  Results in 1996
  also included a $3,756 charge for labor agreement signing bonuses, the impact of
  severe  winter  weather  and  disruptions  from the  commissioning  of the SMART
  system.  Earnings in 1997  benefited  from a continued  focus on cost  reduction
  initiatives, increased utilization of the SMART system and lower scrap costs.
  
  Stainless Group
  
  The group  recorded  an  operating  loss  through  two  quarters  in 1997 versus
  operating earnings in 1996.  Included in 1996 results was a work force reduction
  charge  of  $3,695.  Excluding  the  unusual  charge  for  comparison  purposes,
  operating results  deteriorated  significantly in 1997. Depressed selling prices
  across product lines continued to limit results.
  
  Despite a significant  increase in cold rolled  stainless  shipments,  depressed
  selling  prices led to a 7 percent sales  decline.  Shipments of 140,800 tons in
  1997 compared to 140,700 tons in 1996.
  
  
                                         12
  <PAGE>
  
  
  
  
                             PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
  As of the end of the  quarter,  approximately  50 active  workers'  compensation
  hearing loss claims  remained  against Lukens Steel Company.  Claims  previously
  reported for  Washington  Steel  Corporation  were  included in the Lukens Steel
  Company totals because the subsidiaries merged on December 29, 1996.
  
  Item 6.  Exhibits and Reports on Form 8-K.
  
  (a)      Exhibits
  
          (10.1)  Lukens Inc.  Non-Employee  Director  Equity  Compensation  Plan,
                  effective May 1, 1997
  
          (10.2)  Lukens  Inc.  1997  Performance-Vested  Restricted  Stock  Plan,
                  effective February 26, 1997
  
          (11)    Statement regarding computation of per share earnings
  
          (27)    Financial Data Schedule
  
  (b)      Reports on Form 8-K
           No report on Form 8-K was filed during the quarter ended June 28, 1997.
  
                                         13
  
  <PAGE>
  
  
  
  
                                     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.
  
  
  
  
                                      LUKENS INC.
  
  
  
  
          August 5, 1997          /s/ R. W. Van Sant
                                      --------------
                                      R. W. Van Sant
                                      Chairman and Chief Executive Officer
  
  
  
  
  
           August 5, 1997         /s/ John C. van Roden, Jr.
                                      ----------------------
                                      John C. van Roden, Jr.
                                      Senior Vice President and Chief Financial
                                      Officer
  
  
  
  
  
           August 5, 1997         /s/ P. Blaine Clemens
                                      -----------------
                                      P. Blaine Clemens
                                      Vice President and Controller
  
                                         14
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text: UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 10-Q
  
  /x/     Quarterly  Report  Pursuant  to  Section  13 or 15(d) of the  Securities
          Exchange Act of 1934 FOR THE QUARTER ENDED JUNE 28, 1997
  
                                         OR
  
          Transition  Report  Pursuant  to Section  13 or 15(d) of the  Securities
          Exchange Act of 1934
  
           Commission File Number 1-3258
  
                                     LUKENS INC.
                                50 South First Avenue
                             Coatesville, PA 19320-0911
                                   (610) 383-2000
  
           Incorporated in Delaware
           I.R.S. Employer Identification Number 23-2451900
  
           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
  
                       SHARES OUTSTANDING AS OF AUGUST 1, 1997
                      Common Stock, $.01 Par Value, 14,940,779
  PART I - FINANCIAL INFORMATION
  
  Item 1.  Financial Statements.
  
  Consolidated Statements of Earnings
  (Dollars and shares in thousands except per share amounts)
  SECOND QUARTER                YEAR-TO-DATE
                                                                                  Thirteen Weeks Ended        Twenty-six Weeks Ended
                                                                                June 28,        June 29,      June 28,       June 29,
                                                                                  1997            1996          1997           1996
  Net Sales                                                                    $ 258,247        255,955        506,365        520,127
  Operating Costs and Expenses
      Cost of products sold                                                      238,253        236,343        472,090        488,807
      Selling and administrative expenses                                         13,026         13,042         25,412         27,866
      Unusual item - work force reduction provision                                   --         10,782             --         10,782
                                                                               ---------      ---------      ---------      ---------
          Total operating costs and expenses                                     251,279        260,167        497,502        527,455
  
  Operating Earnings (Loss)                                                        6,968         (4,212)         8,863         (7,328)
  
      Interest expense                                                             4,803          4,045          9,532          7,895
                                                                               ---------      ---------      ---------      ---------
  
  Earnings (Loss) Before Income Taxes                                              2,165         (8,257)          (669)       (15,223)
  
      Income tax expense (benefit) (Note 5)                                          984         (2,524)           128         (5,115)
                                                                               ---------      ---------      ---------      ---------
  
  Net Earnings (Loss)                                                          $   1,181         (5,733)          (797)       (10,108)
                                                                               ---------      ---------      ---------      ---------
  
      Dividend requirements for preferred stock                                     (501)          (500)        (1,000)          (996)
  
  Net Earnings (Loss) Applicable to Common Stock                               $     680         (6,233)        (1,797)       (11,104)
                                                                               ---------      ---------      ---------      ---------
  
  Earnings (Loss) Per Common Share
      Primary                                                                  $     .05           (.42)          (.12)          (.75)
      Fully diluted                                                            $     .05           (.42)          (.12)          (.75)
  
  Common Shares and Equivalents Outstanding
      Primary                                                                     14,828         14,780         14,806         14,768
      Fully diluted                                                               16,252         16,257         16,234         16,247
  
  Cash Dividends on Common Stock - Per Share                                   $     .25            .25            .50            .50
                                                                               ---------      ---------      ---------      ---------
  The accompanying notes are an integral part of these statements 
  
                                          1
  Consolidated Balance Sheets
  (Dollars in thousands)
  June 28,         December 28,
                                                                                         1997               1996
  Assets
       Current Assets
  Cash and cash equivalents                                             $         5,389           10,282
           Receivables, less allowance of $7,542 in 1997 and $7,750 in 1996              127,098           92,356
           Inventories
                 Products finished and in process                                        130,439          116,477
                 Raw materials                                                            30,482           27,762
                 Supplies                                                                  5,079            4,686
       ------------------------------------------------------------------------------------------   --------------
                                                                                         166,000          148,925
           Deferred income taxes (Note 5)                                                 13,724           13,129
           Prepaid expenses and other                                                      1,505            1,964
       ------------------------------------------------------------------------------------------   --------------
           Total current assets                                                          313,716          266,656
  
       Plant and Equipment                                                               959,930          953,753
         Less accumulated depreciation                                                   443,200          420,427
       ------------------------------------------------------------------------------------------   --------------
           Net plant and equipment                                                       516,730          533,326
       Intangible Assets, net of accumulated amortization of $10,200 in 1997
         and $9,114 in 1996                                                               56,133           57,158
       Deferred Income Taxes (Note 5)                                                     32,327           29,937
       Other Assets                                                                        1,723            1,674
       ------------------------------------------------------------------------------------------   --------------
  
       Total Assets                                                              $       920,629          888,751
       -----------------------------------------------------------------------------------------------------------
  
  Liabilities and Stockholders' Investment
       Current Liabilities
           Accounts payable                                                      $       101,726           92,252
           Accrued employment costs                                                       42,581           46,603
           Other accrued expenses (Notes 5 and 6)                                         40,094           23,765
           Current maturities of long-term debt                                            5,710            4,878
       ------------------------------------------------------------------------------------------   --------------
           Total current liabilities                                                     190,111          167,498
  
       Long-Term Debt (Note 4)                                                           265,435          248,695
       Retirement Benefits
           Pensions                                                                       46,295           43,995
           Medical and life insurance                                                    151,771          148,479
       Other Liabilities (Note 6)                                                         16,202           22,015
       ------------------------------------------------------------------------------------------   --------------
               Total liabilities                                                         669,814          630,682
       Commitments and Contingencies (Note 6)
       Redeemable Stock
           Series preferred stock, 1,000,000 shares authorized
             Series B ESOP convertible preferred
             (472,202 shares outstanding in 1997 and 480,018 in 1996)                     28,332           28,801
           Deferred compensation - ESOP                                                  (13,250)         (15,374)
       ------------------------------------------------------------------------------------------   --------------
           Total redeemable stock                                                         15,082           13,427
  
       Stockholders' Investment
           Common stock, 40,000,000 shares authorized and 15,813,259 issued                  158              158
           Capital in excess of par value (Note 3)                                        87,081           86,002
           Earnings invested                                                             162,457          171,730
           Foreign currency translation adjustments                                       (1,331)          (1,332)
           Deferred compensation - restricted stock (Note 3)                              (2,349)               -
           Repurchased stock, at cost (872,480 shares in 1997 and 1,010,988 in 1996)
             (Note 3)                                                                    (10,283)         (11,916)
       ------------------------------------------------------------------------------------------   --------------
               Total stockholders' investment                                            235,733          244,642
       ------------------------------------------------------------------------------------------   --------------
       Total Liabilities and Stockholders' Investment                            $       920,629          888,751
       -----------------------------------------------------------------------------------------------------------
  The accompanying notes are an integral part of these statements.
  
                                          2
  Consolidated Statements of Cash Flows
  (Dollars in thousands)
  YEAR-TO-DATE
                                                                                          Twenty-six Weeks Ended
                                                                                        June 28,            June 29,
                                                                                          1997                1996
  Operating Activity
  Net earnings (loss)                                                         $         (797)         (10,108)
  
  Adjustments to Reconcile Net Earnings (Loss) to
    Cash Flow Used for Operating Activity
       Depreciation and amortization                                                       25,395           24,441
       Income taxes deferred                                                               (1,124)          (8,747)
       Provision for uncollectible accounts                                                 3,140            4,293
       Retirement benefit funding less than expense                                         5,074           12,966
       Changes in working capital affecting operations
            Accounts receivable                                                           (34,260)           2,960
            Inventories                                                                   (17,075)         (10,662)
            Prepaid expenses and other                                                        459              471
            Accounts payable                                                               14,623          (12,209)
            Accrued expenses                                                               (3,916)          (7,536)
       Other, net                                                                            (303)           1,236
  ------------------------------------------------------------------------------------------------    -------------
            Cash flow used for operating activity                                          (8,784)          (2,895)
  
  Financing Activity
       Long-term debt
            Proceeds from issuance of notes                                                     -           74,538
            Other borrowed                                                                 19,800                -
            Other repaid                                                                     (159)         (30,349)
       Dividends paid                                                                      (8,548)          (8,562)
       Proceeds from stock options exercised                                                    -              802
       Other, net                                                                               -             (537)
  ------------------------------------------------------------------------------------------------    -------------
            Net from financing activity                                                    11,093           35,892
  
  Investing Activity
       Capital expenditures                                                                (8,212)         (36,824)
       Proceeds from sale of assets/subsidiaries                                              421              400
       Other, net                                                                             589             (849)
  ------------------------------------------------------------------------------------------------    -------------
            Net for investing activity                                                     (7,202)         (37,273)
  
  Cash and Cash Equivalents
       Increase (decrease)                                                                 (4,893)          (4,276)
       Start of period                                                                     10,282           11,056
  ------------------------------------------------------------------------------------------------    -------------
            End of period                                                          $        5,389            6,780
  -----------------------------------------------------------------------------------------------------------------
  The accompanying notes are an integral part of these statements.
  
                                          3
  SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (Dollars in thousands except per share amounts)
  
  1.       Basis of Presentation
           The financial  statements  are  unaudited  but reflect all  adjustments
           (consisting of normal recurring  accruals) which are, in the opinion of
           management,  necessary  to a fair  statement  of the  results  for  the
           interim periods presented.  The preparation of our financial statements
           in conformity with generally accepted  accounting  principles  requires
           estimates  and  assumptions   that  affect  the  reported  amounts  and
           contingency  disclosures.  These financial statements should be read in
           conjunction with the financial statements and related notes in the 1996
           Annual Report to Stockholders.  Results from any interim period are not
           necessarily indicative of the results for a full year.
  
  2.       Future Accounting Changes
           In February 1997,  Statement of Financial  Accounting  Standards (SFAS)
           No. 128, "Earnings per Share," was issued. This statement specified the
           computation,  presentation and disclosure requirements for earnings per
           share (EPS).  The main objectives of the statement were to simplify the
           EPS calculation and to make EPS comparable on an  international  basis.
           Effective in the 1997 Annual Report, primary and fully diluted EPS will
           be replaced by basic and diluted  EPS.  Prior  period  results  will be
           restated. A significant  difference is that basic EPS no longer assumes
           potentially  dilutive  securities in the  computation.  Calculating EPS
           under the new method would have an  immaterial  impact on 1996 and 1997
           EPS figures.
  
           In  1997,  Lukens  will  also  adopt  SFAS  No.  129,   "Disclosure  of
           Information  about  Capital  Structure."  This  statement was issued in
           conjunction  with the earnings per share statement  discussed above and
           was intended to centralize  capital structure  disclosure  requirements
           and to expand the  number of  companies  subject  to the  requirements.
           Since  we  were in  compliance  with  the  existing  capital  structure
           disclosure  requirements,  we do not  expect to  materially  change our
           disclosures under the new standard.
  
           In June 1997,  SFAS No.  130,  "Reporting  Comprehensive  Income,"  was
           released.  Comprehensive income is a concept that includes the total of
           net earnings(loss) reported in the Consolidated Statements of Earnings,
           plus revenues,  expenses, gains and losses that are recognized directly
           in the  stockholders'  investment  section of the Consolidated  Balance
           Sheets. The purpose of the statement was to more prominently  highlight
           comprehensive income items and to report a total amount for a reporting
           period.  Effective  in  1998,  Lukens  will  be  required  to  disclose
           comprehensive   income  and  its   components   within  our   financial
           statements.  Prior  period  financial  statements  will be restated for
           comparative purposes.
  
                                         4
  SFAS No. 131,  "Disclosures about Segments of an Enterprise and Related
           Information,"  was  also  issued  in June of 1997.  Beginning  in 1998,
           disclosures  will be based  on the way  management  organizes  business
           segments to make  decisions  about  resource  allocation and to measure
           performance.  Disclosures will include interim reporting  requirements.
           Previously  reported  information  will  be  restated  for  comparative
           purposes.  Based on our initial  review of the reporting and disclosure
           requirements,  we do  not  expect  to  materially  change  our  segment
           disclosures under the new standard.
  
  3.       Compensation Plans - Restricted Stock
           The Board of  Directors  approved the  issuance of  performance  vested
           restricted  stock  to  officers  and  other  executives  as  part of an
           incentive  compensation  program.  During  the first  quarter  of 1997,
           134,000  restricted  shares were  awarded.  The shares carry voting and
           dividend  rights and were  recorded at fair  market  value on the grant
           date. A corresponding  charge to deferred  compensation was recorded in
           the  stockholders'  investment  section  of  the  Consolidated  Balance
           Sheets. The deferred compensation balance was subsequently adjusted for
           the change in the  quarter-end  market price of Lukens common stock and
           for  compensation  expense  recognized.  The awards  vest at the end of
           three years,  contingent on continued employment and the achievement of
           performance  goals that are tied to Lukens'  total  shareholder  return
           relative to other steel companies.  Compensation expense recognized for
           these awards totaled $214 through the first half of 1997.
  
  4.       Financial Instruments - Notes Payable
           During the second quarter of 1997, Standard & Poor's lowered its rating
           from BBB+ to BBB on $150,000 of Lukens notes due in 2004 and on $75,000
           of  Medium-Term  Notes,  Series A, due in 2006.  The  Standard & Poor's
           outlook is characterized as stable.
  
  5.       Income Taxes
           Year-to-date  results were used to develop the  effective  tax rates in
           1997  and  1996.  Consequently,  the  second  quarter  effective  rates
           included the impact of changing  rates from the first  quarter.  At the
           end of the first half of 1997,  income tax expense was  recognized on a
           loss before income taxes.  The expense  represented the impact of state
           taxes and non-deductible expenses that offset the tax benefit generated
           from the loss.
  
           Because  of  the  unusual  nature  of the  1996  work  force  reduction
           provision,  the tax impact of 36.4 percent was recognized separately in
           the second quarter 1996 income tax provision.  Excluding the work force
           provision,  an effective rate of 27.1 percent was applied to 1996 first
           half results.
  
           During the second  quarter of 1997,  a  settlement  was  reached in the
           Internal  Revenue Service audits of 1993 and 1994. The audit assessment
           was recognized in the Consolidated Balance Sheets by a reclassification
           to other  accrued  expenses  with a  corresponding  offset to  deferred
           income taxes.
  
                                         5
  6.       Commitments and Contingencies
           During the second  quarter of 1997, a tentative  settlement was reached
           in a Superfund  remediation  contingency  where Lukens was designated a
           potentially  responsible  party.  The obligation for the Superfund site
           was previously  recognized in the fourth quarter of 1996. The tentative
           settlement   resulted  in  a  reclassification   from  other  long-term
           liabilities  to other  accrued  expenses  in the  Consolidated  Balance
           Sheets.
  
           The company is party to various  claims,  disputes,  legal  actions and
           other  proceedings  involving  product  liability,   contracts,   equal
           employment opportunity,  occupational safety,  environmental issues and
           various other  matters.  In the opinion of  management,  the outcome of
           these  matters  should  not  have  a  material  adverse  effect  on the
           consolidated  financial  condition  or  results  of  operations  of the
           company.
  
                                         6
  Item 2.           Management's Discussion and Analysis of
                    Financial Condition and Results of Operations.
                    (Dollars in thousands)
  
  Changes in Financial Condition during
  the Twenty-six Weeks Ended June 28, 1997
  
  Capital Structure
  
  Cash and cash  equivalents  totaled $5,389 at the end of the second  quarter,  a
  decrease of $4,893  from the end of 1996.  Working  capital of  $123,605  was up
  $24,447 from the end of 1996.  Higher accounts  receivable and inventories  were
  partially offset by a build in accounts payable and an increase in other accrued
  expenses.  The  current  ratio  was  1.7 at the  end of the  quarter  and 1.6 at
  year-end 1996.
  
  Included in other accrued  expenses at the end of the second quarter were income
  taxes payable that included an Internal  Revenue  Service audit  assessment  for
  1993 and 1994.  Also  included in other  accrued  expenses was an  environmental
  reserve that was reclassified from other liabilities in the long-term section of
  the  Consolidated  Balance Sheets.  The  reclassification  reflected a tentative
  settlement agreement negotiated in the second quarter for a Superfund site where
  we were designated a potentially responsible party.
  
  Debt at the end of the second quarter was $271,145,  an increase of $17,572 from
  the beginning of the year. The increase reflected borrowings under our revolving
  credit  agreement.  Based on  conditions  at the end of the quarter,  additional
  borrowings  were limited to  approximately  $46,000 under the committed  line of
  credit covenant.  The ratio of long-term debt to capital was 54.3 percent, which
  compared to 51.7 percent at year-end 1996.
  
  The Board of Directors  approved the issuance of performance  vested  restricted
  stock to officers  and other  executives  as part of an  incentive  compensation
  program.  During  the first  quarter of 1997,  134,000  restricted  shares  were
  awarded.  The shares carry voting and dividend  rights and were recorded at fair
  market value on the grant date. A corresponding charge to deferred  compensation
  was recorded in the stockholders' investment section of the Consolidated Balance
  Sheets.  The deferred  compensation  balance was  subsequently  adjusted for the
  change  in  the  quarter-end  market  price  of  Lukens  common  stock  and  for
  compensation  expense  recognized.  The awards  vest at the end of three  years,
  contingent on continued employment and the achievement of performance goals that
  are tied to Lukens' total shareholder return relative to other steel companies.
  
  During the second  quarter of 1997,  Standard & Poor's  lowered  its rating from
  BBB+  to  BBB on  $150,000  of  Lukens  notes  due in  2004  and on  $75,000  of
  Medium-Term  Notes,  Series A, due in 2006.  The  Standard  & Poor's  outlook is
  characterized as stable.
  
                                         7
  Liquidity
  
  Operating  activity  required  cash of  $8,784  compared  to cash  required  for
  operations of $2,895 in the first half of 1996. Higher cash requirements in 1997
  were due to increased working capital requirements.
  
  Financing  activity  generated  $11,093 with net borrowings of $19,641 partially
  offset by  dividend  payments of $8,548.  Investing  activity  required  $7,202,
  primarily for capital expenditures of $8,212.
  
  Profitability  in the second half of 1997 is  dependent on the  continuation  of
  strong  shipments  in the  Carbon  &  Alloy  Group.  Although  we did  see  some
  improvement  in  stainless  selling  prices  during  the first half of the year,
  prices  remain a concern  and will  continue to limit  results in the  Stainless
  Group.  Results  should  benefit  from our  continued  focus  on cost  reduction
  initiatives  and  increased  utilization  of key  facilities  from  the  capital
  expenditure program.
  
  In addition to the earnings factors discussed above, inventory reduction will be
  a key to  producing  a capital  structure  at the end of 1997 that is similar to
  year-end 1996.
  
  During the first half of 1997,  integration of the Steckel Mill Advanced Rolling
  Technology  (SMART(R)) system,  located in Conshohocken,  Pennsylvania,  and the
  wide  anneal and  pickle  line,  located  in  Massillon,  Ohio,  was  initiated.
  Commercialization   of  products  from  the  wide  anneal  and  pickle  line  is
  continuing.  Although shipments are expected to double during the third quarter,
  utilization  of the  facility  is  anticipated  to be low for the balance of the
  year.
  
  Order backlog was $127,800 at the end of the second quarter,  which was slightly
  higher than  year-end  1996 order  backlog and 17 percent lower than at the same
  time last year.
  
  In the long term, Lukens relies on the ability to generate sufficient cash flows
  from  operating  activity to fund  investing and financing  requirements  and to
  maintain  a target  long-term  debt-to-capital  ratio of 35  percent.  Primarily
  because of our aggressive capital expenditure program, we continue to exceed our
  target long-term debt-to-capital ratio.
  
  Results of Operations for the Quarters Ended
  June 28, 1997 and June 29, 1996
  
  Operating Results
  
  Second  quarter  operating  earnings of $6,968  compared to an operating loss of
  $4,212  in the  second  quarter  of 1996.  The loss in 1996 was the  result of a
  $10,782 work force reduction provision recorded in the second quarter. Excluding
  the provision for comparison  purposes,  operating earnings were up 6 percent in
  1997.  Improved  results in the Carbon & Alloy Group were partially
  
                                         8
  offset by an operating loss recorded by the Stainless Group.  Despite some price
  relief,  Stainless Group results  continued to be impacted by depressed  selling
  prices throughout the second quarter.
  
  Sales for the second  quarter  were  $258,247,  up  slightly  from 1996 sales of
  $255,955.  Most of the increase in sales  resulted from higher  shipments in the
  Carbon & Alloy Group,  partially offset by lower selling prices in the Stainless
  Group.
  
  Interest Expense
  
  Interest expense of $4,803 was up 19 percent compared to 1996 expense of $4,045.
  The  increase  primarily  related  to higher  amounts  of  capitalized  interest
  recorded in 1996.
  
  Income Tax Expense (Benefit)
  
  The  effective  tax rate  was 45.5  percent  in 1997 and 30.6  percent  in 1996.
  Because of the unusual nature of the 1996 work force  reduction  provision,  the
  tax impact of 36.4 percent was recognized  separately in the second quarter 1996
  income tax provision.  Excluding the work force provision,  an effective rate of
  27.1 percent was applied to 1996 first half results.  Year-to-date  results were
  used to develop  the  effective  tax rates in 1997 and 1996.  Consequently,  the
  second  quarter  effective  rates included the impact of changing rates from the
  first quarter.
  
  Net Earnings (Loss)
  
  Net earnings of $1,181 were recorded for the second  quarter of 1997 compared to
  a net loss of $5,733 for the same period in 1996.  On an  after-tax  basis,  the
  work force reduction provision reduced results by $6,859 in 1996.
  
  Business Group Results
                                                      Operating
                            Net Sales              Earnings (Loss)
                      2Q 1997      2Q 1996      2Q 1997       2Q 1996
  
  Carbon & Alloy     $129,321      125,395       13,304         1,287
  Stainless           128,926      130,560       (2,818)         (812)
  Corporate                --           --       (3,518)       (4,687)
                     --------     --------     --------      --------
  
                     $258,247      255,955        6,968        (4,212)
                     --------     --------     --------      --------
  
                                         9
  Carbon & Alloy Group
  
  Net  sales  increased  3  percent.  The  increase  reflected  higher  shipments,
  particularly  in the carbon steel product line due to increased  utilization  of
  the SMART system. Shipped tons were a record 188,700 in 1997 compared to 170,300
  tons in 1996.  With the growth in carbon  shipments in 1997,  sales  reflected a
  lower-value shipment mix.
  
  Operating  earnings for the second  quarter were up  significantly.  Included in
  second  quarter  1996  earnings  was a work  force  reduction  charge of $6,178.
  Excluding the unusual charge for comparison purposes, operating earnings were up
  78 percent in 1997.  Earnings in 1997 benefited  from a continued  focus on cost
  reduction initiatives, increased utilization of the SMART system and lower scrap
  costs.
  
  Stainless Group
  
  The group  recorded an operating  loss in the second  quarters of 1997 and 1996.
  Included in second  quarter  1996 results was a work force  reduction  charge of
  $3,695.  Excluding the unusual charge for comparison purposes, an operating loss
  in 1997  compared to  operating  earnings  recorded in 1996.  Depressed  selling
  prices across most product lines continued to limit results.
  
  In spite of a favorable  shipment mix,  depressed selling prices led to a slight
  decline in sales.  Shipments of 69,600 tons in 1997 were flat compared to 69,700
  tons in 1996.  Higher  shipments in the cold rolled and hot rolled product lines
  were offset by lower conversion shipments.
  
  Results of Operations for the Twenty-six Weeks Ended
  June 28, 1997 and June 29, 1996
  
  Operating Results
  
  First half operating  earnings of $8,863 compared to an operating loss of $7,328
  in 1996.  The loss in 1996 was the  result of a  $10,782  work  force  reduction
  provision recorded in the second quarter. Excluding the provision for comparison
  purposes,  operating earnings more than doubled in 1997. Improved results in the
  Carbon & Alloy Group were partially  offset by an operating loss recorded by the
  Stainless Group.  Stainless Group results  continued to be impacted by depressed
  selling prices throughout the first half of the year, despite some price relief.
  Selling and  administrative  expenses were lower through two quarters  primarily
  due to the 1996 work force reduction.
  
  Sales  for the first  half were  $506,365,  down 3  percent  from 1996  sales of
  $520,127.  Most of the decrease in sales  resulted from lower selling  prices in
  the Stainless Group,  partially offset by higher shipments in the Carbon & Alloy
  Group.
  
                                         10
  Interest Expense
  
  Interest expense of $9,532 was up 21 percent compared to 1996 expense of $7,895.
  The  increase  primarily  related  to higher  amounts  of  capitalized  interest
  recorded in 1996.
  
  Income Tax Expense (Benefit)
  
  Year-to-date  results were used to develop the  effective  tax rates in 1997 and
  1996. At the end of the first half of 1997, income tax expense was recognized on
  a loss before income taxes.  The expense  represented  the impact of state taxes
  and non-deductible expenses that offset the tax benefit generated from the loss.
  
  Because of the unusual nature of the 1996 work force  reduction  provision,  the
  tax impact of 36.4 percent was recognized  separately in the second quarter 1996
  income tax provision.  Excluding the work force provision,  an effective rate of
  27.1 percent was applied to 1996 first half results.
  
  Net Earnings (Loss)
  
  A net loss of $797 in 1997  compared  to a net loss of  $10,108  in 1996.  On an
  after-tax basis, the work force reduction provision reduced results by $6,859 in
  1996.
  
  Business Group Results
                                                     Operating
                            Net Sales              Earnings (Loss)
                     YTD 1997     YTD 1996     YTD 1997      YTD 1996
  
  Carbon & Alloy     $252,331      246,822       21,200        (4,373)
  Stainless           254,034      273,305       (5,884)        5,773
  Corporate                --           --       (6,453)       (8,728)
                     --------     --------     --------      --------
                     $506,365      520,127        8,863        (7,328)
                     --------     --------     --------      --------
  
  Carbon & Alloy Group
  
  Sales for the first half increased 2 percent.  Shipped tons were 364,100 in 1997
  compared  to  339,200  tons in 1996.  The 7 percent  increase  reflected  higher
  utilization of the SMART system,  particularly  in the carbon product line. With
  the growth in carbon shipments in 1997,  sales reflected a lower-value  shipment
  mix.
  
  Operating  earnings for the first half  compared to an  operating  loss in 1996.
  Included in 1996 results was a work force reduction charge of $6,178.  Excluding
  the  unusual  charge  for  comparison
  
                                         11
  purposes,  operating  earnings improved  significantly in 1997.  Results in 1996
  also included a $3,756 charge for labor agreement signing bonuses, the impact of
  severe  winter  weather  and  disruptions  from the  commissioning  of the SMART
  system.  Earnings in 1997  benefited  from a continued  focus on cost  reduction
  initiatives, increased utilization of the SMART system and lower scrap costs.
  
  Stainless Group
  
  The group  recorded  an  operating  loss  through  two  quarters  in 1997 versus
  operating earnings in 1996.  Included in 1996 results was a work force reduction
  charge  of  $3,695.  Excluding  the  unusual  charge  for  comparison  purposes,
  operating results  deteriorated  significantly in 1997. Depressed selling prices
  across product lines continued to limit results.
  
  Despite a significant  increase in cold rolled  stainless  shipments,  depressed
  selling  prices led to a 7 percent sales  decline.  Shipments of 140,800 tons in
  1997 compared to 140,700 tons in 1996.
  
                                         12
  PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
  As of the end of the  quarter,  approximately  50 active  workers'  compensation
  hearing loss claims  remained  against Lukens Steel Company.  Claims  previously
  reported for  Washington  Steel  Corporation  were  included in the Lukens Steel
  Company totals because the subsidiaries merged on December 29, 1996.
  
  Item 6.  Exhibits and Reports on Form 8-K.
  
  (a)      Exhibits
  
          (10.1)  Lukens Inc.  Non-Employee  Director  Equity  Compensation  Plan,
                  effective May 1, 1997
  
          (10.2)  Lukens  Inc.  1997  Performance-Vested  Restricted  Stock  Plan,
                  effective February 26, 1997
  
          (11)    Statement regarding computation of per share earnings
  
          (27)    Financial Data Schedule
  
  (b)      Reports on Form 8-K
           No report on Form 8-K was filed during the quarter ended June 28, 1997.
  
                                         13
  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.
  
                                      LUKENS INC.
  
          August 5, 1997          /s/ R. W. Van Sant
                                      --------------
                                      R. W. Van Sant
                                      Chairman and Chief Executive Officer
  
           August 5, 1997         /s/ John C. van Roden, Jr.
                                      ----------------------
                                      John C. van Roden, Jr.
                                      Senior Vice President and Chief Financial
                                      Officer
  
           August 5, 1997         /s/ P. Blaine Clemens
                                      -----------------
                                      P. Blaine Clemens
                                      Vice President and Controller
  
                                         14