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 SEPTEMBER 27, 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 OCTOBER 31, 1997
                      Common Stock, $.01 Par Value, 14,941,227
  
  <PAGE>
                           PART I - FINANCIAL INFORMATION
  
  
  Item 1.  Financial Statements.
  
  
  Consolidated Statements of Earnings
  (Dollars and shares in thousands except per share amounts)
  <TABLE>
  <CAPTION>
                                                                THIRD QUARTER                  YEAR-TO-DATE
                                                             Thirteen Weeks Ended        Thirty-nine Weeks Ended
                                                         September 27,  September 28,  September 27,  September 28,
                                                             1997            1996           1997           1996
  <S>                                                     <C>              <C>            <C>            <C>    
  Net Sales                                               $ 243,371        234,421        749,736        754,548
  Operating Costs and Expenses
      Cost of products sold                                 225,583        223,192        697,673        711,999
      Selling and administrative expenses                    12,210         13,089         37,622         40,955
      Unusual item - work force reduction provision              --             --             --         10,782
                                                          ---------      ---------      ---------      ---------
          Total operating costs and expenses                237,793        236,281        735,295        763,736
  
  Operating Earnings (Loss)                                   5,578         (1,860)        14,441         (9,188)
  
      Interest expense                                        4,932          4,135         14,464         12,030
                                                          ---------      ---------      ---------      ---------
  
  Earnings (Loss) Before Income Taxes                           646         (5,995)           (23)       (21,218)
  
      Income tax expense (benefit) (Note 5)                     513         (1,908)           641         (7,023)
                                                          ---------      ---------      ---------      ---------
  
  Net Earnings (Loss)                                     $     133         (4,087)          (664)       (14,195)
                                                          ---------      ---------      ---------      ---------
  
      Dividend requirements for preferred stock                (504)          (499)        (1,504)        (1,495)
  
  Net Earnings (Loss) Applicable to Common Stock          $    (371)        (4,586)        (2,168)       (15,690)
                                                          ---------      ---------      ---------      ---------
  
  Earnings (Loss) Per Common Share
      Primary                                             $    (.03)          (.31)          (.15)         (1.06)
      Fully diluted                                       $    (.03)          (.31)          (.15)         (1.06)
  
  Common Shares and Equivalents Outstanding
      Primary                                                14,807         14,796         14,806         14,778
      Fully diluted                                          16,240         16,258         16,247         16,286
  
  Cash Dividends on Common Stock - Per Share (Note 6)     $     .50            .50           1.00           1.00
                                                          ---------      ---------      ---------      ---------
  </TABLE>
  
          The accompanying notes are an integral part of these statements.
  
                                         1
  <PAGE>
  Consolidated Balance Sheets
  (Dollars in thousands)
  <TABLE>
  <CAPTION>
                                                                                       September 27,   December 28,
                                                                                           1997            1996
  <S>                                                                                    <C>               <C>   
  Assets
       Current Assets
           Cash and cash equivalents                                                     $   4,549         10,282
           Receivables, less allowance of $7,622 in 1997 and $7,750 in 1996                122,574         92,356
           Inventories
                 Products finished and in process                                          131,292        116,477
                 Raw materials                                                              26,785         27,762
                 Supplies                                                                    5,076          4,686
                                                                                         ---------      ---------
                                                                                           163,153        148,925
           Deferred income taxes (Note 5)                                                   13,724         13,129
           Prepaid expenses and other                                                        1,487          1,964
                                                                                         ---------      ---------
           Total current assets                                                            305,487        266,656
  
       Plant and Equipment                                                                 965,507        953,753
         Less accumulated depreciation                                                     455,562        420,427
                                                                                         ---------      ---------
           Net plant and equipment                                                         509,945        533,326
       Intangible Assets, net of accumulated amortization of $10,776 in 1997
         and $9,114 in 1996                                                                 54,455         57,158
       Deferred Income Taxes (Note 5)                                                       32,886         29,937
       Other Assets                                                                          1,319          1,674
                                                                                         ---------      ---------
  
       Total Assets                                                                      $ 904,092        888,751
                                                                                         ---------      ---------
  
  Liabilities and Stockholders' Investment
       Current Liabilities
           Accounts payable                                                              $  91,857         92,252
           Accrued employment costs                                                         46,640         46,603
           Other accrued expenses (Note 7)                                                  29,562         23,765
           Current maturities of long-term debt                                              5,949          4,878
                                                                                         ---------      ---------
           Total current liabilities                                                       174,008        167,498
  
       Long-Term Debt (Note 4)                                                             272,050        248,695
       Retirement Benefits
           Pensions                                                                         47,479         43,995
           Medical and life insurance                                                      149,929        148,479
       Other Liabilities (Note 7)                                                           16,494         22,015
                                                                                         ---------      ---------
           Total liabilities                                                               659,960        630,682
       Commitments and Contingencies (Note 7)
       Redeemable Stock
           Series preferred stock, 1,000,000 shares authorized
             Series B ESOP convertible preferred
             (470,862 shares outstanding in 1997 and 480,018 in 1996)                       28,252         28,801
           Deferred compensation - ESOP                                                    (12,188)       (15,374)
                                                                                         ---------      ---------
           Total redeemable stock                                                           16,064         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)                                          87,174         86,002
           Earnings invested (Note 6)                                                      154,615        171,730
           Foreign currency translation adjustments                                         (1,307)        (1,332)
           Deferred compensation - restricted stock (Note 3)                                (2,294)            --
           Repurchased stock, at cost (872,032 shares in 1997 and 1,010,988 in 1996)
             (Note 3)                                                                      (10,278)       (11,916)
                                                                                         ---------      ---------
           Total stockholders' investment                                                  228,068        244,642
                                                                                         ---------      ---------
  
       Total Liabilities and Stockholders' Investment                                    $ 904,092        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
                                                              Thirty-nine Weeks Ended
                                                           September 27,   September 28,
                                                               1997           1996
  <S>                                                        <C>            <C>     
  Operating Activity
       Net earnings (loss)                                   $   (664)      (14,195)
  
  Adjustments to Reconcile Net Earnings (Loss) to
    Cash Flow (Used for) From Operating Activity
       Depreciation and amortization                           38,760        36,940
       Income taxes deferred                                     (679)      (10,713)
       Provision for uncollectible accounts                     4,260         5,329
       Retirement benefit funding less than expense             5,459        12,959
       Changes in working capital affecting operations
            Accounts receivable                               (30,856)       11,316
            Inventories                                       (14,228)       14,064
            Prepaid expenses and other                            477        (1,177)
            Accounts payable                                   (4,086)      (28,793)
            Accrued expenses                                   (6,253)      (12,517)
       Other, net                                                 (62)        1,615
                                                             --------      --------
            Cash flow (used for) from operating activity       (7,872)       14,828
  
  Financing Activity
       Long-term debt
            Proceeds from issuance of notes                        --        74,538
            Other borrowed                                     27,800            --
            Other repaid                                         (271)      (34,664)
       Dividends paid                                         (12,817)      (12,854)
       Proceeds from stock options exercised                       --           802
       Other, net                                                  --          (537)
                                                             --------      --------
            Net from financing activity                        14,712        27,285
  
  Investing Activity
       Capital expenditures                                   (13,948)      (45,590)
       Proceeds from sale of assets/subsidiaries                  996           420
       Other, net                                                 379          (912)
                                                             --------      --------
            Net for investing activity                        (12,573)      (46,082)
  
  Cash and Cash Equivalents
       Increase (decrease)                                     (5,733)       (3,969)
       Start of period                                         10,282        11,056
                                                             --------      --------
            End of period                                    $  4,549         7,087
                                                             --------      --------
  </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 certain  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.
  
  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
       remains characterized as stable in the third quarter.
  
       During the third quarter of 1997,  Moody's  lowered its rating from Baa2 to
       Baa3 on the notes payable discussed above.
  
  5.   Income Taxes
       Year-to-date  results were used to develop the  effective tax rates in 1997
       and 1996.  Consequently,  the third quarter  effective  rates  included the
       impact of  changing  rates  from the  second  quarter.  At the end of three
       quarters in 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 29.9  percent was applied to 1996  results for the first
       three quarters.
  
                                         5
  <PAGE>
  
       During the second quarter of 1997, a settlement was reached in the Internal
       Revenue  Service  audits of 1993 and 1994.  With the  payment  of the audit
       assessment in the third quarter, audits were completed through 1994.
  
       During the third quarter of 1997,  the 1997 Taxpayer  Relief Act (1997 TRA)
       was enacted.  Changes to the Federal tax structure included a restructuring
       of the depreciable  lives used in the alternative  minimum tax calculation.
       Additionally,  the net operating loss  carryback  period was reduced to two
       years and the carryforward  period was increased to 20 years. These changes
       will become  effective in the coming years and will likely have a favorable
       impact on the tax position of Lukens. The enactment of the 1997 TRA did not
       require any recognition in the 1997 tax provision for the  remeasurement of
       our deferred tax  balances or for changes to the  estimated  amount of 1997
       Federal taxes payable.
  
  6.   Stockholders' Investment
       Due to the timing of the Board of Directors meetings,  two quarterly common
       stock dividends totaling $.50 per share were declared in the third quarters
       of 1997 and 1996.  Common stock dividends  declared totaled $1.00 per share
       in both 1997 and 1996.
  
  7.   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 Thirty-nine Weeks Ended September 27, 1997
  
  Capital Structure
  
  Cash and cash  equivalents  totaled  $4,549 at the end of the third  quarter,  a
  decrease of $5,733  from the end of 1996.  Working  capital of  $131,479  was up
  $32,321 from the end of 1996.  Higher accounts  receivable and inventories  were
  partially offset by an increase in other accrued expenses. The current ratio was
  1.8 at the end of the quarter and 1.6 at year-end 1996.
  
  Included  in other  accrued  expenses  at the end of the  third  quarter  was an
  environmental  reserve that was  reclassified  during the second quarter of 1997
  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 third quarter was  $277,999,  an increase of $24,426 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  $38,000 under the committed  line of
  credit covenant.  The ratio of long-term debt to capital was 55.8 percent, which
  compared to 51.7 percent at year-end 1996.
  
  The Board of Directors  approved the issuance of performance  vested  restricted
  stock  to  certain  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 remains
  characterized as stable in the third quarter.  During the third quarter of 1997,
  Moody's  lowered  its rating  from Baa2 to Baa3 on the notes  payable  discussed
  above.
  
                                         7
  
  <PAGE>
  
  
  Liquidity
  
  Operating activity required cash of $7,872 for the first three quarters compared
  to cash flow from operating  activity of $14,828 in the comparable  1996 period.
  Higher  cash  requirements  in  1997  were  due  to  increased  working  capital
  requirements.
  
  Financing  activity  generated  $14,712 with net borrowings of $27,529 partially
  offset by dividend  payments of $12,817.  Investing  activity  required $12,573,
  primarily for capital expenditures of $13,948.
  
  Profitability  in the fourth quarter of 1997 is dependent on the continuation of
  strong  shipments  in the Carbon & Alloy  Group.  The  improvement  in stainless
  selling prices  achieved during the first half of the year began to erode during
  the third  quarter and we  anticipate  the downward  trend will continue for the
  balance of the year.  We expect that  depressed  prices  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,  our inventory  reduction
  plan will be key to  producing  a capital  structure  at the end of 1997 that is
  similar to year-end 1996. The relatively high level of inventories at the end of
  the 1997 third  quarter was partially  attributable  to the start-up of the wide
  anneal and pickle  line,  located in  Massillon,  Ohio.  It will be difficult to
  attain cash flow levels comparable to 1996 without the significant  reduction in
  inventory planned for the fourth quarter.
  
  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 was  initiated.  Although  shipments  from the wide
  anneal and pickle line almost doubled  during the third quarter,  utilization of
  the facility is anticipated to continue to be low for the balance of the year.
  
  Order backlog was $117,800 at the end of the third quarter,  which was 8 percent
  lower than year-end 1996 order backlog and slightly  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.
  
                                         8
  <PAGE>
  
  Results of Operations for the Quarters Ended
  September 27, 1997 and September 28, 1996
  
  Operating Results
  
  Third  quarter  operating  earnings of $5,578  compared to an operating  loss of
  $1,860  in  the  third  quarter  of  1996.   Improved   results  were  primarily
  attributable  to the  Carbon & Alloy  Group.  Sales for the third  quarter  were
  $243,371,  up 4 percent  from 1996 sales of  $234,421.  Most of the  increase in
  sales resulted from higher shipments in the Carbon & Alloy Group.
  
  Interest Expense
  
  Interest expense of $4,932 was up 19 percent compared to 1996 expense of $4,135.
  The  increase  primarily  related  to higher  amounts  of  capitalized  interest
  recorded in 1996.
  
  Income Tax Expense (Benefit)
  
  The  effective  tax rate  was 79.4  percent  in 1997 and 31.8  percent  in 1996.
  Year-to-date  results were used to develop the  effective  tax rates in 1997 and
  1996.  Consequently,  the third quarter  effective  rates included the impact of
  changing rates from the second quarter.
  
  During the third quarter of 1997,  the 1997  Taxpayer  Relief Act (1997 TRA) was
  enacted.  Changes to the Federal tax structure  included a restructuring  of the
  depreciable lives used in the alternative minimum tax calculation. Additionally,
  the net  operating  loss  carryback  period  was  reduced  to two  years and the
  carryforward  period  was  increased  to 20 years.  These  changes  will  become
  effective in the coming years and will likely have a favorable impact on the tax
  position  of  Lukens.  The  enactment  of the  1997  TRA  did  not  require  any
  recognition in the 1997 tax provision for the  remeasurement of our deferred tax
  balances or for changes to the estimated amount of 1997 Federal taxes payable.
  
  Net Earnings (Loss)
  
  Net earnings of $133 were  recorded for the third  quarter of 1997 compared to a
  net loss of $4,087 for the same period in 1996.
  
                                         9
  
  <PAGE>
  
  
  Business Group Results
  <TABLE>
  <CAPTION>
                                                                 Operating
                                Net Sales                     Earnings (Loss)
                        3Q 1997          3Q 1996         3Q 1997           3Q 1996
  <S>                   <C>              <C>             <C>             <C>  
  Carbon & Alloy        $127,469         119,567          12,686            6,896
  Stainless              115,902         114,854          (3,762)          (5,398)
  Corporate                   --              --          (3,346)          (3,358)
                        --------        --------        --------         --------
  
                        $243,371         234,421           5,578           (1,860)
                        ========        ========        ========         ======== 
  </TABLE>
  
  Carbon & Alloy Group
  
  Net  sales  increased  7  percent.  The  increase  reflected  higher  shipments,
  particularly  in the carbon steel product line due to increased  utilization  of
  the SMART  system.  Shipped  tons were 183,000 in 1997,  15 percent  higher than
  159,600  tons in 1996.  With the  growth  in  carbon  shipments  in 1997,  sales
  reflected a lower-value  shipment mix. The sales  improvement  translated into a
  strong  earnings  improvement  from the third quarter of 1996.  Earnings in 1997
  benefited  from a continued  focus on cost reduction  initiatives  and increased
  utilization of the SMART system.
  
  Stainless Group
  
  The group  recorded an  operating  loss in the third  quarters of 1997 and 1996.
  Depressed selling prices continued to negatively affect results.  Selling prices
  dropped  significantly  in the 1996 third quarter as the influence of imports on
  the North American  stainless steel market became  apparent.  Stainless  selling
  prices were at similarly low levels during the third quarter of 1997.
  
  Sales were up slightly in 1997 with a favorable  sales mix offset by a reduction
  in volume for the group.  Shipments  of 58,700  tons in 1997 were down 7 percent
  compared to 63,000 tons in 1996. Higher shipments in the hot rolled product line
  were offset by lower conversion shipments.
  
  Results of Operations for the Thirty-nine Weeks Ended
  September 27, 1997 and September 28, 1996
  
  Operating Results
  
  Operating  earnings of $14,441  through three quarters  compared to an operating
  loss of $9,188 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 were up significantly 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
  
                                         10
  
  <PAGE>
  
  impacted by depressed  selling  prices  through three  quarters of the year. The
  price  relief  achieved in the first half of the year began to erode  during the
  third quarter.
  
  Sales for the first three quarters were $749,736,  down slightly from 1996 sales
  of $754,548.  Higher  shipments in the Carbon & Alloy Group were offset by lower
  selling prices in the Stainless Group.
  
  Interest Expense
  
  Interest  expense  of  $14,464  was up 20 percent  compared  to 1996  expense of
  $12,030.  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.  Through three  quarters in 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
  29.9 percent was applied to 1996 results through three quarters.
  
  During the third quarter of 1997,  the 1997  Taxpayer  Relief Act (1997 TRA) was
  enacted.  Changes to the Federal tax structure  included a restructuring  of the
  depreciable lives used in the alternative minimum tax calculation. Additionally,
  the net  operating  loss  carryback  period  was  reduced  to two  years and the
  carryforward  period  was  increased  to 20 years.  These  changes  will  become
  effective in the coming years and will likely have a favorable impact on the tax
  position  of  Lukens.  The  enactment  of the  1997  TRA  did  not  require  any
  recognition in the 1997 tax provision for the  remeasurement of our deferred tax
  balances or for changes to the estimated amount of 1997 Federal taxes payable.
  
  Net Earnings (Loss)
  
  A net loss of $664 in 1997  compared  to a net loss of  $14,195  in 1996.  On an
  after-tax basis, the work force reduction provision reduced results by $6,859 in
  1996.
  
                                         11
  
  <PAGE>
  
  
  Business Group Results
  
  <TABLE>
  <CAPTION>
                                                                 Operating
                               Net Sales                      Earnings (Loss)
                        YTD 1997        YTD 1996        YTD 1997          YTD 1996
  <S>                   <C>              <C>              <C>             <C>  
  Carbon & Alloy        $379,800         366,389          33,886            2,523
  Stainless              369,936         388,159          (9,646)             375
  Corporate                   --              --          (9,799)         (12,086)
                        --------        --------        --------         --------
  
                        $749,736         754,548          14,441           (9,188)
                        ========        ========        ========         ======== 
  </TABLE>
  
  Carbon & Alloy Group
  
  Sales for three quarters increased 4 percent.  Shipped tons were 547,100 in 1997
  compared  to 498,800  tons in 1996.  The 10  percent  increase  in shipped  tons
  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.
  
  Included in 1996 results was a work force reduction charge of $6,178.  Excluding
  the  unusual  charge  for  comparison  purposes,   operating  earnings  improved
  significantly  through three  quarters 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  three  quarters in 1997 versus
  break-even 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.
  
  Depressed selling prices led to a 5 percent sales decline.  Shipments of 199,500
  tons in 1997  compared to 203,700  tons in 1996.  Higher  shipments  in the cold
  rolled product line were offset by lower conversion shipments.
  
                                         12
  
  <PAGE>
  
                             PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
  As of the end of the  quarter,  approximately  40 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 4. Submission of Matters to a Vote of Security Holders.
  
  The Board of  Directors  continues  to  consider  what  action it might  take in
  response to the two shareholder proposals approved at the 1997 Annual Meeting. A
  decision  on that  subject  will be  reached  by the  Board  once it has  better
  assessed how the recommended actions would impact the Company, its shareholders,
  its employees and the Board's efforts to maximize value for all shareholders.
  
  Item 6.  Exhibits and Reports on Form 8-K.
  
  (a)  Exhibits
  
       (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  September  27,
       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.
  
  
  
  
           November 5, 1997                   /s/ R. W. Van Sant
                                              ------------------------------------
                                              R. W. Van Sant
                                              Chairman and Chief Executive Officer
  
  
  
  
  
           November 5, 1997                   /s/ John C. van Roden, Jr.
                                              ------------------------------------
                                              John C. van Roden, Jr.
                                              Senior Vice President and Chief 
                                              Financial Officer
  
  
  
  
  
           November 5, 1997                   /s/ P. Blaine Clemens
                                              ------------------------------------
                                              P. Blaine Clemens
                                              Vice President and Controller
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 40547}]
metadata_filer: {"company-data": {"conformed-name": "LUKENS INC", "cik": "0000060860", "assigned-sic": "3312", "irs-number": "232451900", "state-of-incorporation": "DE", "fiscal-year-end": "1227"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-03258", "film-number": "97709030"}, "business-address": {"street1": "50 S FIRST AVE", "city": "COATESVILLE", "state": "PA", "zip": "19320-0911", "phone": "6103832000"}, "mail-address": {"street1": "50 SOUTH FIRST AVENUE", "city": "COATESVILLE", "state": "PA", "zip": "19320-0911"}, "former-company": [{"former-conformed-name": "LUKENS INC /DE/", "date-changed": "19920703"}, {"former-conformed-name": "LUKENS STEEL CO", "date-changed": "19820506"}]}
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 SEPTEMBER 27, 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 OCTOBER 31, 1997
                      Common Stock, $.01 Par Value, 14,941,227
  PART I - FINANCIAL INFORMATION
  
  Item 1.  Financial Statements.
  
  Consolidated Statements of Earnings
  (Dollars and shares in thousands except per share amounts)
  THIRD QUARTER                  YEAR-TO-DATE
                                                             Thirteen Weeks Ended        Thirty-nine Weeks Ended
                                                         September 27,  September 28,  September 27,  September 28,
                                                             1997            1996           1997           1996
  Net Sales                                               $ 243,371        234,421        749,736        754,548
  Operating Costs and Expenses
      Cost of products sold                                 225,583        223,192        697,673        711,999
      Selling and administrative expenses                    12,210         13,089         37,622         40,955
      Unusual item - work force reduction provision              --             --             --         10,782
                                                          ---------      ---------      ---------      ---------
          Total operating costs and expenses                237,793        236,281        735,295        763,736
  
  Operating Earnings (Loss)                                   5,578         (1,860)        14,441         (9,188)
  
      Interest expense                                        4,932          4,135         14,464         12,030
                                                          ---------      ---------      ---------      ---------
  
  Earnings (Loss) Before Income Taxes                           646         (5,995)           (23)       (21,218)
  
      Income tax expense (benefit) (Note 5)                     513         (1,908)           641         (7,023)
                                                          ---------      ---------      ---------      ---------
  
  Net Earnings (Loss)                                     $     133         (4,087)          (664)       (14,195)
                                                          ---------      ---------      ---------      ---------
  
      Dividend requirements for preferred stock                (504)          (499)        (1,504)        (1,495)
  
  Net Earnings (Loss) Applicable to Common Stock          $    (371)        (4,586)        (2,168)       (15,690)
                                                          ---------      ---------      ---------      ---------
  
  Earnings (Loss) Per Common Share
      Primary                                             $    (.03)          (.31)          (.15)         (1.06)
      Fully diluted                                       $    (.03)          (.31)          (.15)         (1.06)
  
  Common Shares and Equivalents Outstanding
      Primary                                                14,807         14,796         14,806         14,778
      Fully diluted                                          16,240         16,258         16,247         16,286
  
  Cash Dividends on Common Stock - Per Share (Note 6)     $     .50            .50           1.00           1.00
                                                          ---------      ---------      ---------      ---------
  The accompanying notes are an integral part of these statements.
  
                                         1
  Consolidated Balance Sheets
  (Dollars in thousands)
  September 27,   December 28,
                                                                                           1997            1996
  Assets
       Current Assets
           Cash and cash equivalents                                                     $   4,549         10,282
           Receivables, less allowance of $7,622 in 1997 and $7,750 in 1996                122,574         92,356
           Inventories
                 Products finished and in process                                          131,292        116,477
                 Raw materials                                                              26,785         27,762
                 Supplies                                                                    5,076          4,686
                                                                                         ---------      ---------
                                                                                           163,153        148,925
           Deferred income taxes (Note 5)                                                   13,724         13,129
           Prepaid expenses and other                                                        1,487          1,964
                                                                                         ---------      ---------
           Total current assets                                                            305,487        266,656
  
       Plant and Equipment                                                                 965,507        953,753
         Less accumulated depreciation                                                     455,562        420,427
                                                                                         ---------      ---------
           Net plant and equipment                                                         509,945        533,326
       Intangible Assets, net of accumulated amortization of $10,776 in 1997
         and $9,114 in 1996                                                                 54,455         57,158
       Deferred Income Taxes (Note 5)                                                       32,886         29,937
       Other Assets                                                                          1,319          1,674
                                                                                         ---------      ---------
  
       Total Assets                                                                      $ 904,092        888,751
                                                                                         ---------      ---------
  
  Liabilities and Stockholders' Investment
       Current Liabilities
           Accounts payable                                                              $  91,857         92,252
           Accrued employment costs                                                         46,640         46,603
           Other accrued expenses (Note 7)                                                  29,562         23,765
           Current maturities of long-term debt                                              5,949          4,878
                                                                                         ---------      ---------
           Total current liabilities                                                       174,008        167,498
  
       Long-Term Debt (Note 4)                                                             272,050        248,695
       Retirement Benefits
           Pensions                                                                         47,479         43,995
           Medical and life insurance                                                      149,929        148,479
       Other Liabilities (Note 7)                                                           16,494         22,015
                                                                                         ---------      ---------
           Total liabilities                                                               659,960        630,682
       Commitments and Contingencies (Note 7)
       Redeemable Stock
           Series preferred stock, 1,000,000 shares authorized
             Series B ESOP convertible preferred
             (470,862 shares outstanding in 1997 and 480,018 in 1996)                       28,252         28,801
           Deferred compensation - ESOP                                                    (12,188)       (15,374)
                                                                                         ---------      ---------
           Total redeemable stock                                                           16,064         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)                                          87,174         86,002
           Earnings invested (Note 6)                                                      154,615        171,730
           Foreign currency translation adjustments                                         (1,307)        (1,332)
           Deferred compensation - restricted stock (Note 3)                                (2,294)            --
           Repurchased stock, at cost (872,032 shares in 1997 and 1,010,988 in 1996)
             (Note 3)                                                                      (10,278)       (11,916)
                                                                                         ---------      ---------
           Total stockholders' investment                                                  228,068        244,642
                                                                                         ---------      ---------
  
       Total Liabilities and Stockholders' Investment                                    $ 904,092        888,751
                                                                                         ---------      ---------
  The accompanying notes are an integral part of these statements.
  
                                          2
  Consolidated Statements of Cash Flows
  (Dollars in thousands)
  YEAR-TO-DATE
                                                              Thirty-nine Weeks Ended
                                                           September 27,   September 28,
                                                               1997           1996
  Operating Activity
       Net earnings (loss)                                   $   (664)      (14,195)
  
  Adjustments to Reconcile Net Earnings (Loss) to
    Cash Flow (Used for) From Operating Activity
       Depreciation and amortization                           38,760        36,940
       Income taxes deferred                                     (679)      (10,713)
       Provision for uncollectible accounts                     4,260         5,329
       Retirement benefit funding less than expense             5,459        12,959
       Changes in working capital affecting operations
            Accounts receivable                               (30,856)       11,316
            Inventories                                       (14,228)       14,064
            Prepaid expenses and other                            477        (1,177)
            Accounts payable                                   (4,086)      (28,793)
            Accrued expenses                                   (6,253)      (12,517)
       Other, net                                                 (62)        1,615
                                                             --------      --------
            Cash flow (used for) from operating activity       (7,872)       14,828
  
  Financing Activity
       Long-term debt
            Proceeds from issuance of notes                        --        74,538
            Other borrowed                                     27,800            --
            Other repaid                                         (271)      (34,664)
       Dividends paid                                         (12,817)      (12,854)
       Proceeds from stock options exercised                       --           802
       Other, net                                                  --          (537)
                                                             --------      --------
            Net from financing activity                        14,712        27,285
  
  Investing Activity
       Capital expenditures                                   (13,948)      (45,590)
       Proceeds from sale of assets/subsidiaries                  996           420
       Other, net                                                 379          (912)
                                                             --------      --------
            Net for investing activity                        (12,573)      (46,082)
  
  Cash and Cash Equivalents
       Increase (decrease)                                     (5,733)       (3,969)
       Start of period                                         10,282        11,056
                                                             --------      --------
            End of period                                    $  4,549         7,087
                                                             --------      --------
  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 certain  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.
  
  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
       remains characterized as stable in the third quarter.
  
       During the third quarter of 1997,  Moody's  lowered its rating from Baa2 to
       Baa3 on the notes payable discussed above.
  
  5.   Income Taxes
       Year-to-date  results were used to develop the  effective tax rates in 1997
       and 1996.  Consequently,  the third quarter  effective  rates  included the
       impact of  changing  rates  from the  second  quarter.  At the end of three
       quarters in 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 29.9  percent was applied to 1996  results for the first
       three quarters.
  
                                         5
  During the second quarter of 1997, a settlement was reached in the Internal
       Revenue  Service  audits of 1993 and 1994.  With the  payment  of the audit
       assessment in the third quarter, audits were completed through 1994.
  
       During the third quarter of 1997,  the 1997 Taxpayer  Relief Act (1997 TRA)
       was enacted.  Changes to the Federal tax structure included a restructuring
       of the depreciable  lives used in the alternative  minimum tax calculation.
       Additionally,  the net operating loss  carryback  period was reduced to two
       years and the carryforward  period was increased to 20 years. These changes
       will become  effective in the coming years and will likely have a favorable
       impact on the tax position of Lukens. The enactment of the 1997 TRA did not
       require any recognition in the 1997 tax provision for the  remeasurement of
       our deferred tax  balances or for changes to the  estimated  amount of 1997
       Federal taxes payable.
  
  6.   Stockholders' Investment
       Due to the timing of the Board of Directors meetings,  two quarterly common
       stock dividends totaling $.50 per share were declared in the third quarters
       of 1997 and 1996.  Common stock dividends  declared totaled $1.00 per share
       in both 1997 and 1996.
  
  7.   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 Thirty-nine Weeks Ended September 27, 1997
  
  Capital Structure
  
  Cash and cash  equivalents  totaled  $4,549 at the end of the third  quarter,  a
  decrease of $5,733  from the end of 1996.  Working  capital of  $131,479  was up
  $32,321 from the end of 1996.  Higher accounts  receivable and inventories  were
  partially offset by an increase in other accrued expenses. The current ratio was
  1.8 at the end of the quarter and 1.6 at year-end 1996.
  
  Included  in other  accrued  expenses  at the end of the  third  quarter  was an
  environmental  reserve that was  reclassified  during the second quarter of 1997
  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 third quarter was  $277,999,  an increase of $24,426 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  $38,000 under the committed  line of
  credit covenant.  The ratio of long-term debt to capital was 55.8 percent, which
  compared to 51.7 percent at year-end 1996.
  
  The Board of Directors  approved the issuance of performance  vested  restricted
  stock  to  certain  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 remains
  characterized as stable in the third quarter.  During the third quarter of 1997,
  Moody's  lowered  its rating  from Baa2 to Baa3 on the notes  payable  discussed
  above.
  
                                         7
  Liquidity
  
  Operating activity required cash of $7,872 for the first three quarters compared
  to cash flow from operating  activity of $14,828 in the comparable  1996 period.
  Higher  cash  requirements  in  1997  were  due  to  increased  working  capital
  requirements.
  
  Financing  activity  generated  $14,712 with net borrowings of $27,529 partially
  offset by dividend  payments of $12,817.  Investing  activity  required $12,573,
  primarily for capital expenditures of $13,948.
  
  Profitability  in the fourth quarter of 1997 is dependent on the continuation of
  strong  shipments  in the Carbon & Alloy  Group.  The  improvement  in stainless
  selling prices  achieved during the first half of the year began to erode during
  the third  quarter and we  anticipate  the downward  trend will continue for the
  balance of the year.  We expect that  depressed  prices  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,  our inventory  reduction
  plan will be key to  producing  a capital  structure  at the end of 1997 that is
  similar to year-end 1996. The relatively high level of inventories at the end of
  the 1997 third  quarter was partially  attributable  to the start-up of the wide
  anneal and pickle  line,  located in  Massillon,  Ohio.  It will be difficult to
  attain cash flow levels comparable to 1996 without the significant  reduction in
  inventory planned for the fourth quarter.
  
  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 was  initiated.  Although  shipments  from the wide
  anneal and pickle line almost doubled  during the third quarter,  utilization of
  the facility is anticipated to continue to be low for the balance of the year.
  
  Order backlog was $117,800 at the end of the third quarter,  which was 8 percent
  lower than year-end 1996 order backlog and slightly  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.
  
                                         8
  Results of Operations for the Quarters Ended
  September 27, 1997 and September 28, 1996
  
  Operating Results
  
  Third  quarter  operating  earnings of $5,578  compared to an operating  loss of
  $1,860  in  the  third  quarter  of  1996.   Improved   results  were  primarily
  attributable  to the  Carbon & Alloy  Group.  Sales for the third  quarter  were
  $243,371,  up 4 percent  from 1996 sales of  $234,421.  Most of the  increase in
  sales resulted from higher shipments in the Carbon & Alloy Group.
  
  Interest Expense
  
  Interest expense of $4,932 was up 19 percent compared to 1996 expense of $4,135.
  The  increase  primarily  related  to higher  amounts  of  capitalized  interest
  recorded in 1996.
  
  Income Tax Expense (Benefit)
  
  The  effective  tax rate  was 79.4  percent  in 1997 and 31.8  percent  in 1996.
  Year-to-date  results were used to develop the  effective  tax rates in 1997 and
  1996.  Consequently,  the third quarter  effective  rates included the impact of
  changing rates from the second quarter.
  
  During the third quarter of 1997,  the 1997  Taxpayer  Relief Act (1997 TRA) was
  enacted.  Changes to the Federal tax structure  included a restructuring  of the
  depreciable lives used in the alternative minimum tax calculation. Additionally,
  the net  operating  loss  carryback  period  was  reduced  to two  years and the
  carryforward  period  was  increased  to 20 years.  These  changes  will  become
  effective in the coming years and will likely have a favorable impact on the tax
  position  of  Lukens.  The  enactment  of the  1997  TRA  did  not  require  any
  recognition in the 1997 tax provision for the  remeasurement of our deferred tax
  balances or for changes to the estimated amount of 1997 Federal taxes payable.
  
  Net Earnings (Loss)
  
  Net earnings of $133 were  recorded for the third  quarter of 1997 compared to a
  net loss of $4,087 for the same period in 1996.
  
                                         9
  Business Group Results
  Operating
                                Net Sales                     Earnings (Loss)
                        3Q 1997          3Q 1996         3Q 1997           3Q 1996
  Carbon & Alloy        $127,469         119,567          12,686            6,896
  Stainless              115,902         114,854          (3,762)          (5,398)
  Corporate                   --              --          (3,346)          (3,358)
                        --------        --------        --------         --------
  
                        $243,371         234,421           5,578           (1,860)
                        ========        ========        ========         ========
  Carbon & Alloy Group
  
  Net  sales  increased  7  percent.  The  increase  reflected  higher  shipments,
  particularly  in the carbon steel product line due to increased  utilization  of
  the SMART  system.  Shipped  tons were 183,000 in 1997,  15 percent  higher than
  159,600  tons in 1996.  With the  growth  in  carbon  shipments  in 1997,  sales
  reflected a lower-value  shipment mix. The sales  improvement  translated into a
  strong  earnings  improvement  from the third quarter of 1996.  Earnings in 1997
  benefited  from a continued  focus on cost reduction  initiatives  and increased
  utilization of the SMART system.
  
  Stainless Group
  
  The group  recorded an  operating  loss in the third  quarters of 1997 and 1996.
  Depressed selling prices continued to negatively affect results.  Selling prices
  dropped  significantly  in the 1996 third quarter as the influence of imports on
  the North American  stainless steel market became  apparent.  Stainless  selling
  prices were at similarly low levels during the third quarter of 1997.
  
  Sales were up slightly in 1997 with a favorable  sales mix offset by a reduction
  in volume for the group.  Shipments  of 58,700  tons in 1997 were down 7 percent
  compared to 63,000 tons in 1996. Higher shipments in the hot rolled product line
  were offset by lower conversion shipments.
  
  Results of Operations for the Thirty-nine Weeks Ended
  September 27, 1997 and September 28, 1996
  
  Operating Results
  
  Operating  earnings of $14,441  through three quarters  compared to an operating
  loss of $9,188 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 were up significantly 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
  
                                         10
  impacted by depressed  selling  prices  through three  quarters of the year. The
  price  relief  achieved in the first half of the year began to erode  during the
  third quarter.
  
  Sales for the first three quarters were $749,736,  down slightly from 1996 sales
  of $754,548.  Higher  shipments in the Carbon & Alloy Group were offset by lower
  selling prices in the Stainless Group.
  
  Interest Expense
  
  Interest  expense  of  $14,464  was up 20 percent  compared  to 1996  expense of
  $12,030.  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.  Through three  quarters in 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
  29.9 percent was applied to 1996 results through three quarters.
  
  During the third quarter of 1997,  the 1997  Taxpayer  Relief Act (1997 TRA) was
  enacted.  Changes to the Federal tax structure  included a restructuring  of the
  depreciable lives used in the alternative minimum tax calculation. Additionally,
  the net  operating  loss  carryback  period  was  reduced  to two  years and the
  carryforward  period  was  increased  to 20 years.  These  changes  will  become
  effective in the coming years and will likely have a favorable impact on the tax
  position  of  Lukens.  The  enactment  of the  1997  TRA  did  not  require  any
  recognition in the 1997 tax provision for the  remeasurement of our deferred tax
  balances or for changes to the estimated amount of 1997 Federal taxes payable.
  
  Net Earnings (Loss)
  
  A net loss of $664 in 1997  compared  to a net loss of  $14,195  in 1996.  On an
  after-tax basis, the work force reduction provision reduced results by $6,859 in
  1996.
  
                                         11
  Business Group Results
  Operating
                               Net Sales                      Earnings (Loss)
                        YTD 1997        YTD 1996        YTD 1997          YTD 1996
  Carbon & Alloy        $379,800         366,389          33,886            2,523
  Stainless              369,936         388,159          (9,646)             375
  Corporate                   --              --          (9,799)         (12,086)
                        --------        --------        --------         --------
  
                        $749,736         754,548          14,441           (9,188)
                        ========        ========        ========         ========
  Carbon & Alloy Group
  
  Sales for three quarters increased 4 percent.  Shipped tons were 547,100 in 1997
  compared  to 498,800  tons in 1996.  The 10  percent  increase  in shipped  tons
  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.
  
  Included in 1996 results was a work force reduction charge of $6,178.  Excluding
  the  unusual  charge  for  comparison  purposes,   operating  earnings  improved
  significantly  through three  quarters 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  three  quarters in 1997 versus
  break-even 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.
  
  Depressed selling prices led to a 5 percent sales decline.  Shipments of 199,500
  tons in 1997  compared to 203,700  tons in 1996.  Higher  shipments  in the cold
  rolled product line were offset by lower conversion shipments.
  
                                         12
  PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
  As of the end of the  quarter,  approximately  40 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 4. Submission of Matters to a Vote of Security Holders.
  
  The Board of  Directors  continues  to  consider  what  action it might  take in
  response to the two shareholder proposals approved at the 1997 Annual Meeting. A
  decision  on that  subject  will be  reached  by the  Board  once it has  better
  assessed how the recommended actions would impact the Company, its shareholders,
  its employees and the Board's efforts to maximize value for all shareholders.
  
  Item 6.  Exhibits and Reports on Form 8-K.
  
  (a)  Exhibits
  
       (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  September  27,
       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.
  
           November 5, 1997                   /s/ R. W. Van Sant
                                              ------------------------------------
                                              R. W. Van Sant
                                              Chairman and Chief Executive Officer
  
           November 5, 1997                   /s/ John C. van Roden, Jr.
                                              ------------------------------------
                                              John C. van Roden, Jr.
                                              Senior Vice President and Chief 
                                              Financial Officer
  
           November 5, 1997                   /s/ P. Blaine Clemens
                                              ------------------------------------
                                              P. Blaine Clemens
                                              Vice President and Controller