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 MARCH 28, 1998
  
                                         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 MAY 2, 1998
                      Common Stock, $.01 Par Value, 15,032,108
  
  <PAGE>
  
                           PART I - FINANCIAL INFORMATION
  
  Item 1.  Financial Statements.
  
  Consolidated Statements of Earnings
  (Dollars and shares in thousands except per share amounts)
  <TABLE>
  <CAPTION>
  <S>                                                                                   <C>                       <C>    
                                                                                                    FIRST QUARTER
                                                                                                Thirteen Weeks Ended
                                                                                               March 28,        March 29,
                                                                                                 1998             1997
  -------------------------------------------------------------------------------------------------------  ---------------
  Net Sales                                                                             $        258,342          248,118
  Operating Costs and Expenses
      Cost of products sold                                                                      245,881          233,837
      Selling and administrative expenses                                                         14,371           12,386
  -------------------------------------------------------------------------------------------------------  ---------------
          Total operating costs and expenses                                                     260,252          246,223
  
  Operating Earnings (Loss)                                                                       (1,910)           1,895
  
      Interest expense                                                                             4,507            4,729
  -------------------------------------------------------------------------------------------------------  ---------------
  
  Earnings (Loss) Before Income Taxes                                                             (6,417)          (2,834)
  
      Income tax expense (benefit) (Note 2)                                                       (2,034)            (856)
  -------------------------------------------------------------------------------------------------------  ---------------
  
  Net Earnings (Loss)                                                                   $         (4,383)          (1,978)
  ------------------------------------------------------------------------------------------------------------------------
  
      Dividend requirements for preferred stock                                                     (497)            (499)
  
  Net Earnings (Loss) Applicable to Common Stock                                        $         (4,880)          (2,477)
  ------------------------------------------------------------------------------------------------------------------------
  
  Earnings (Loss) Per Common Share
      Basic                                                                             $           (.33)            (.17)
      Diluted                                                                           $           (.33)            (.17)
  
  Common Shares and Equivalents Outstanding
      Basic                                                                                       14,838           14,805
      Diluted                                                                                     16,532           16,251
  
  Cash Dividends on Common Stock - Per Share                                            $            .25              .25
  ------------------------------------------------------------------------------------------------------------------------
  </TABLE>
          The accompanying notes are an integral part of these statements.
  
                                          1
  
  <PAGE>
  Consolidated Balance Sheets
  (Dollars in thousands)
  <TABLE>
  <CAPTION>
  <S>                                                                                         <C>                             <C>  
                                                                                                      March 28,         December 27,
                                                                                                       1998                1997
  --------------------------------------------------------------------------------------------------------------    ----------------
  Assets
        Current Assets
            Cash and cash equivalents                                                         $           6,138               6,629
            Receivables, less allowance of $6,734 in 1998 and $6,716 in 1997                            124,056             118,026
            Inventories
                  Products finished and in process                                                      115,224             117,455
                  Raw materials                                                                          27,050              23,326
                  Supplies                                                                                4,332               4,806
        --------------------------------------------------------------------------------------------------------    ----------------
                                                                                                        146,606             145,587
            Deferred income taxes                                                                        13,725              13,725
            Prepaid expenses and other                                                                    1,275               1,733
        --------------------------------------------------------------------------------------------------------    ----------------
            Total current assets                                                                        291,800             285,700
  
        Plant and Equipment                                                                             963,665             960,823
          Less accumulated depreciation                                                                 476,028             463,264
        --------------------------------------------------------------------------------------------------------    ----------------
            Net plant and equipment                                                                     487,637             497,559
        Intangible Assets,net of accumulated amortization of $12,062 in 1998
          and $11,352 in 1997                                                                            56,542              58,139
        Deferred Income Taxes                                                                            37,109              34,599
        Other Assets                                                                                      1,481               1,433
        --------------------------------------------------------------------------------------------------------    ----------------
  
        Total Assets                                                                          $         874,569             877,430
        ----------------------------------------------------------------------------------------------------------------------------
  
  Liabilities and Stockholders' Investment
        Current Liabilities
            Accounts payable                                                                  $          96,817              87,618
            Accrued employment costs                                                                     39,423              43,787
            Other accrued expenses (Note 3)                                                              26,724              33,510
            Current maturities of long-term debt                                                          6,622               6,276
        --------------------------------------------------------------------------------------------------------    ----------------
            Total current liabilities                                                                   169,586             171,191
  
        Long-Term Debt                                                                                  247,030             244,671
        Retirement Benefits
            Pensions                                                                                     55,062              53,690
            Medical and life insurance                                                                  152,240             151,307
        Other Liabilities                                                                                14,974              14,821
        --------------------------------------------------------------------------------------------------------    ----------------
            Total liabilities                                                                           638,892             635,680
        Commitments and Contingencies (Note 3)
  
        Stockholders' Investment
            Series preferred stock, 1,000,000 shares authorized
              Series B ESOP convertible preferred
              (454,308 shares outstanding in 1998 and 470,300 in 1997)                                   27,259              28,218
            Common stock, 40,000,000 shares authorized and 15,813,259 issued                                158                 158
            Capital in excess of par value                                                               89,790              88,444
            Earnings invested                                                                           141,520             150,140
            Foreign currency translation adjustments                                                     (1,640)             (1,739)
            Deferred compensation - ESOP                                                                 (9,308)            (10,619)
            Deferred compensation - restricted stock                                                     (2,623)             (2,574)
            Repurchased stock, at cost (804,242 shares in 1998 and 872,032 in 1997)                      (9,479)            (10,278)
        --------------------------------------------------------------------------------------------------------    ----------------
            Total stockholders' investment                                                              235,677             241,750
        --------------------------------------------------------------------------------------------------------    ----------------
  
        Total Liabilities and Stockholders' Investment                                        $         874,569             877,430
        ----------------------------------------------------------------------------------------------------------------------------
  </TABLE>
          The accompanying notes are an integral part of these statements.
  
                                          2
  <PAGE>
  Consolidated Statements of Cash Flows
  (Dollars in thousands)
  <TABLE>
  <CAPTION>
  <S>                                                                                       <C>                          <C>    
                                                                                                          FIRST QUARTER
                                                                                                      Thirteen Weeks Ended
                                                                                                   March 28,           March 29,
                                                                                                     1998                1997
  ----------------------------------------------------------------------------------------------------------      --------------
  Operating Activity
       Net earnings (loss)                                                                  $        (4,383)             (1,978)
  
  Adjustments to Reconcile Net Earnings (Loss) to
    Cash Flow (Used for) From Operating Activity
       Depreciation and amortization                                                                 13,395              12,481
       Income taxes deferred                                                                         (2,510)             (1,568)
       Provision for uncollectible accounts                                                           1,555               1,637
       Retirement benefit funding less than expense                                                   3,192                 820
       Changes in working capital affecting operations
            Accounts receivable                                                                      (7,585)            (25,875)
            Inventories                                                                              (1,019)             (9,825)
            Prepaid expenses and other                                                                  458                 675
            Accounts payable                                                                          9,218              25,594
            Accrued expenses                                                                        (11,150)             (5,238)
       Other, net                                                                                       757                (223)
  ----------------------------------------------------------------------------------------------------------      --------------
            Cash flow from (used for) operating activity                                              1,928              (3,500)
  
  Financing Activity
       Long-term debt
            Other borrowed                                                                            4,100              10,200
            Other repaid                                                                               (112)                (48)
       Dividends paid                                                                                (4,269)             (4,277)
       Proceeds from stock options exercised                                                            472                   -
  ----------------------------------------------------------------------------------------------------------      --------------
            Net from financing activity                                                                 191               5,875
  
  Investing Activity
       Capital expenditures                                                                          (2,610)             (4,402)
       Proceeds from sale of assets/subsidiaries                                                          -                 371
       Other, net                                                                                         -                 454
  ----------------------------------------------------------------------------------------------------------      --------------
            Net for investing activity                                                               (2,610)             (3,577)
  
  Cash and Cash Equivalents
       Increase (decrease)                                                                             (491)             (1,202)
       Start of period                                                                                6,629              10,282
  ----------------------------------------------------------------------------------------------------------      --------------
            End of period                                                                   $         6,138               9,080
  ------------------------------------------------------------------------------------------------------------------------------
  </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
  
       On December 15, 1997, Lukens entered into a merger agreement with Bethlehem
       Steel Corporation.  The agreement was subsequently amended as of January 4,
       1998. Under the merger agreement, Bethlehem Steel Corporation would acquire
       Lukens  outstanding  common  and  preferred  stock.  A special  meeting  of
       stockholders  is expected to be held on May 28, 1998, to vote on the merger
       agreement.
  
       The Consolidated  Financial Statements and Notes to Consolidated  Financial
       Statements  were  prepared  assuming  a  going-concern  basis  and  did not
       recognize the impact of the merger.
  
       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 included in the 1997 Form 10-K.
       Results  from any  interim  period are not  necessarily  indicative  of the
       results for a full year.
  
  
  2.   Income Taxes
  
       Year-to-date  results were used to develop the  effective tax rates in 1998
       and 1997.
  
  
  3.   Commitments and Contingencies
  
       Regarding the Helen Kramer  Superfund site,  Lukens'  settlement  agreement
       (the  Settlement  Agreement)  was finalized on April 14, 1998.  The Primary
       Settling  Parties  submitted  their  signature pages on or before April 20,
       1998.  Pursuant  to  the  terms  of the  Settlement  Agreement,  Lukens  is
       obligated  to pay  approximately  $5,600 to the  Primary  Settling  Parties
       within  30  days of the  effective  date of the  Settlement  Agreement.  In
       consideration of this
  
                                         4
  <PAGE>
  
       payment,  the Primary  Settling Parties agreed to use their best efforts to
       cause  Lukens  to be  included  as a party in any  consent  decree or other
       settlement  document  relating  to the site  entered  into with the  United
       States and/or the State of New Jersey.  In addition,  the Primary  Settling
       Parties  provided  a release  and  covenant  not to sue  Lukens  for claims
       covered by the Settlement Agreement. The release and covenant not to sue is
       subject to certain limited reopeners.
  
       Lukens  submitted a  signature  page to the  Primary  Settling  Parties for
       inclusion in the consent decree, which the Primary Settling Parties entered
       into with the United States (the US Consent  Decree).  Lukens  believes the
       Primary  Settling  Parties  submitted  the executed  signature  page to the
       United  States on April 22, 1998.  The US Consent  Decree  provides,  among
       other things, that (i) the responsibility of Lukens shall be limited to the
       payment of money in the amount and on the terms  provided in the Settlement
       Agreement, (ii) Lukens will avoid joint and several liability to the United
       States if Lukens complies with the terms of the Settlement Agreement, (iii)
       the United States will provide a site-wide  covenant not to sue, subject to
       certain limited reservation of rights and reopeners,  as well as a covenant
       not to sue from the  trustees  of Federal  natural  resources  for  natural
       resource damages, subject to the usual reservation of rights and reopeners,
       (iv) Lukens will receive  contribution  protection for matters addressed in
       the Consent Decree and (v) all settling parties, including Lukens, covenant
       not to sue and to dismiss all claims they have against  each other  related
       to the site.
  
       Lukens  submitted  signature  pages to the  Primary  Settling  Parties  for
       inclusion in the consent decree and the natural  resource  damages  consent
       decree,  which the Primary  Settling Parties entered into with the State of
       New Jersey (the State Consent Decrees).  The State Consent Decrees provide,
       among other things,  that (i) the responsibility of Lukens shall be limited
       to the  payment  of money in the amount  and on the terms  provided  in the
       Settlement Agreement, (ii) Lukens will avoid joint and several liability to
       the State of New Jersey if Lukens complies with the terms of the Settlement
       Agreement, (iii) the State of New Jersey will provide a site- wide covenant
       not to sue, subject to certain limited  reservation of rights and reopeners
       and (iv) Lukens will receive contribution  protection for matters addressed
       in the Consent Decrees.
  
                                         5
  <PAGE>
       There have not been any significant developments to the other environmental
       issues previously discussed in the 1997 Form 10-K.
  
       Lukens has been  designated  a  potentially  responsible  party (PRP) under
       Superfund law at certain waste  disposal sites and  continually  monitors a
       range  of  other  environmental  issues.  Superfund  designations  are made
       regardless of the extent of the company's  direct or indirect  involvement.
       These  claims  are  in  various  stages  of   administrative   or  judicial
       proceedings,  and include  demands for  recovery of incurred  costs and for
       future  investigation  or  remedial  actions.  The  company  accrues  costs
       associated with environmental  matters when they become probable and can be
       reasonably estimated.  In assessing  environmental  liability,  the company
       considers the extent and type of hazardous  substances at a site, the range
       of  technologies  that  can be used  for  remediation,  evolving  laws  and
       regulations, the allocation of costs among potentially responsible parties,
       and the number and financial strength of those parties.
  
       Due  to  their  uncertain   nature,   amounts  accrued  for   environmental
       liabilities could differ, perhaps significantly, from the actual costs that
       will be incurred. No potential insurance recoveries were taken into account
       in determining  the company's cost estimates or reserves.  Management  does
       not anticipate that its financial  position will be materially  affected by
       additional  environmental  remediation costs,  although quarterly or annual
       operating results could be materially affected by future developments.
  
       The company is party to various claims,  disputes,  legal actions and other
       proceedings involving negligence,  contracts, equal employment opportunity,
       occupational   safety  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 Thirteen Weeks Ended March 28, 1998
  
  Capital Structure
  
  Cash and cash  equivalents  totaled  $6,138 at the end of the first  quarter,  a
  decrease of $491 from the end of 1997. Working capital of $122,214 was up $7,705
  from the end of 1997.  The  increase  primarily  reflected  a build in  accounts
  receivables.  The current  ratio was 1.7 at the end of the first  quarter and at
  year-end 1997.
  
  Debt at the end of the first  quarter was  $253,652,  an increase of $2,705 from
  the beginning of the year. The increase reflected borrowings under our revolving
  credit agreement. The ratio of long-term debt to capital was 51.2 percent, which
  compared to 50.3 percent at year-end 1997.
  
  
  Liquidity
  
  Cash flow from operating  activity totaled $1,928 for the first quarter compared
  to cash  required  from  operating  activity  of $3,500 in the  comparable  1997
  period.  Lower  working  capital  requirements  combined  with lower  retirement
  benefit funding contributed to the improved cash flow.
  
  Financing  activity  generated  $191 with net  borrowings of $3,988 and proceeds
  from the exercise of stock options  essentially  offset by dividend  payments of
  $4,269. Investing activity required $2,610 for capital expenditures.
  
  As  discussed  in Note 3 to the  Consolidated  Financial  Statements,  a  $5,600
  settlement  payment  will be made in the  second  quarter  of 1998  related to a
  Superfund  site.  Order  backlog was  $178,100 at the end of the first  quarter,
  which was 7 percent higher than year-end 1997 backlog.
  
  
                                         7
  <PAGE>
  
  Results of Operations for the Quarters Ended
  March 28, 1998 and March 29, 1997
  
  Operating Results
  
  A first  quarter  operating  loss of $1,910  compared to  operating  earnings of
  $1,895 in the first quarter of 1997.  Despite a strong  improvement  in Carbon &
  Alloy Group results,  the Stainless Group recorded  significantly  higher losses
  that  resulted  in a  consolidated  loss for the  quarter.  Sales  for the first
  quarter were  $258,342,  up 4 percent  from 1997 sales of $248,118.  Most of the
  increase in sales resulted from higher shipments in the Carbon & Alloy Group.
  
  Interest Expense
  
  Interest  expense  of $4,507  was down 5 percent  compared  to 1997  expense  of
  $4,729.
  
  Income Tax Expense (Benefit)
  
  The  effective  tax rate  was 31.7  percent  in 1998 and 30.2  percent  in 1997.
  Year-to-date  results were used to develop the  effective  tax rates in 1998 and
  1997.
  
  
  Net Earnings (Loss)
  
  A net loss of $4,383 was  recorded for the first  quarter of 1998  compared to a
  net loss of $1,978 for the same period in 1997.
  
  
                                         8
  <PAGE>
  
  Business Group Results
                                                       Operating
                            Net Sales               Earnings (Loss)
                      1Q 1998      1Q 1997       1Q 1998        1Q 1997
  
  Carbon & Alloy     $139,465      123,010        16,187         7,896
  Stainless           118,877      125,108       (13,019)       (3,066)
  Corporate                --           --        (5,078)       (2,935)
  
                     $258,342      248,118        (1,910)        1,895
  
  
  Carbon & Alloy Group
  
  Net sales  increased  13  percent.  The  increase  reflected  higher  shipments,
  particularly  in the carbon steel product line due to increased  utilization  of
  the SMART  system.  Shipped  tons were 207,900 in 1998,  19 percent  higher than
  175,400  tons in 1997.  With the  continued  growth in carbon  shipments,  sales
  reflected a lower-  value  shipment  mix. The volume  improvement,  coupled with
  strong  manufacturing  performance,   translated  into  a  significant  earnings
  improvement from the first quarter of 1997.
  
  Stainless Group
  
  The group recorded an operating loss in the first quarters of 1998 and 1997. The
  continued  deterioration  in selling prices  combined with lower shipment levels
  resulted in a larger  operating loss compared to 1997. Sales were down 5 percent
  in 1998. Shipments of 66,900 tons in 1998 were down 6 percent compared to 71,200
  tons in 1997.
  
                                         9
  <PAGE>
  
                             PART II - OTHER INFORMATION
  
  
  Item 1.  Legal Proceedings.
  
  Legal  proceedings  disclosures  concerning  developments  in the  Helen  Kramer
  Superfund site are  incorporated  herein by reference to Note 3 Commitments  and
  Contingencies included in Part I of this Form 10-Q.
  
  
  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
       A report was filed on January 5, 1998, for Item 5. Other Events.,  and Item
       7. Financial  Statements,  Pro Forma  Financial  Information and Exhibits.,
       concerning an amendment to the merger with Bethleham Steel Corporation.  No
       other report on Form 8-K was filed during the quarter ended March 28, 1998.
  
  
                                         9
  <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.
  
  
  
  
  May 7, 1998                         /s/ R. W. Van Sant
                                          R. W. Van Sant
                                          Chairman and Chief Executive Officer
  
  
  May 7, 1998                        /s/ John C. van Roden, Jr.
                                         John C. van Roden, Jr.
                                         Senior Vice President and
                                         Chief Financial Officer
  
  
  May 7, 1998                        /s/ P. Blaine Clemens
                                         P. Blaine Clemens
                                         Vice President and Controller
  
  
                                         10
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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 MARCH 28, 1998
  
                                         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 MAY 2, 1998
                      Common Stock, $.01 Par Value, 15,032,108
  PART I - FINANCIAL INFORMATION
  
  Item 1.  Financial Statements.
  
  Consolidated Statements of Earnings
  (Dollars and shares in thousands except per share amounts)
  FIRST QUARTER
                                                                                                Thirteen Weeks Ended
                                                                                               March 28,        March 29,
                                                                                                 1998             1997
  -------------------------------------------------------------------------------------------------------  ---------------
  Net Sales                                                                             $        258,342          248,118
  Operating Costs and Expenses
      Cost of products sold                                                                      245,881          233,837
      Selling and administrative expenses                                                         14,371           12,386
  -------------------------------------------------------------------------------------------------------  ---------------
          Total operating costs and expenses                                                     260,252          246,223
  
  Operating Earnings (Loss)                                                                       (1,910)           1,895
  
      Interest expense                                                                             4,507            4,729
  -------------------------------------------------------------------------------------------------------  ---------------
  
  Earnings (Loss) Before Income Taxes                                                             (6,417)          (2,834)
  
      Income tax expense (benefit) (Note 2)                                                       (2,034)            (856)
  -------------------------------------------------------------------------------------------------------  ---------------
  
  Net Earnings (Loss)                                                                   $         (4,383)          (1,978)
  ------------------------------------------------------------------------------------------------------------------------
  
      Dividend requirements for preferred stock                                                     (497)            (499)
  
  Net Earnings (Loss) Applicable to Common Stock                                        $         (4,880)          (2,477)
  ------------------------------------------------------------------------------------------------------------------------
  
  Earnings (Loss) Per Common Share
      Basic                                                                             $           (.33)            (.17)
      Diluted                                                                           $           (.33)            (.17)
  
  Common Shares and Equivalents Outstanding
      Basic                                                                                       14,838           14,805
      Diluted                                                                                     16,532           16,251
  
  Cash Dividends on Common Stock - Per Share                                            $            .25              .25
  ------------------------------------------------------------------------------------------------------------------------
  The accompanying notes are an integral part of these statements.
  
                                          1
  Consolidated Balance Sheets
  (Dollars in thousands)
  March 28,         December 27,
                                                                                                       1998                1997
  --------------------------------------------------------------------------------------------------------------    ----------------
  Assets
        Current Assets
            Cash and cash equivalents                                                         $           6,138               6,629
            Receivables, less allowance of $6,734 in 1998 and $6,716 in 1997                            124,056             118,026
            Inventories
                  Products finished and in process                                                      115,224             117,455
                  Raw materials                                                                          27,050              23,326
                  Supplies                                                                                4,332               4,806
        --------------------------------------------------------------------------------------------------------    ----------------
                                                                                                        146,606             145,587
            Deferred income taxes                                                                        13,725              13,725
            Prepaid expenses and other                                                                    1,275               1,733
        --------------------------------------------------------------------------------------------------------    ----------------
            Total current assets                                                                        291,800             285,700
  
        Plant and Equipment                                                                             963,665             960,823
          Less accumulated depreciation                                                                 476,028             463,264
        --------------------------------------------------------------------------------------------------------    ----------------
            Net plant and equipment                                                                     487,637             497,559
        Intangible Assets,net of accumulated amortization of $12,062 in 1998
          and $11,352 in 1997                                                                            56,542              58,139
        Deferred Income Taxes                                                                            37,109              34,599
        Other Assets                                                                                      1,481               1,433
        --------------------------------------------------------------------------------------------------------    ----------------
  
        Total Assets                                                                          $         874,569             877,430
        ----------------------------------------------------------------------------------------------------------------------------
  
  Liabilities and Stockholders' Investment
        Current Liabilities
            Accounts payable                                                                  $          96,817              87,618
            Accrued employment costs                                                                     39,423              43,787
            Other accrued expenses (Note 3)                                                              26,724              33,510
            Current maturities of long-term debt                                                          6,622               6,276
        --------------------------------------------------------------------------------------------------------    ----------------
            Total current liabilities                                                                   169,586             171,191
  
        Long-Term Debt                                                                                  247,030             244,671
        Retirement Benefits
            Pensions                                                                                     55,062              53,690
            Medical and life insurance                                                                  152,240             151,307
        Other Liabilities                                                                                14,974              14,821
        --------------------------------------------------------------------------------------------------------    ----------------
            Total liabilities                                                                           638,892             635,680
        Commitments and Contingencies (Note 3)
  
        Stockholders' Investment
            Series preferred stock, 1,000,000 shares authorized
              Series B ESOP convertible preferred
              (454,308 shares outstanding in 1998 and 470,300 in 1997)                                   27,259              28,218
            Common stock, 40,000,000 shares authorized and 15,813,259 issued                                158                 158
            Capital in excess of par value                                                               89,790              88,444
            Earnings invested                                                                           141,520             150,140
            Foreign currency translation adjustments                                                     (1,640)             (1,739)
            Deferred compensation - ESOP                                                                 (9,308)            (10,619)
            Deferred compensation - restricted stock                                                     (2,623)             (2,574)
            Repurchased stock, at cost (804,242 shares in 1998 and 872,032 in 1997)                      (9,479)            (10,278)
        --------------------------------------------------------------------------------------------------------    ----------------
            Total stockholders' investment                                                              235,677             241,750
        --------------------------------------------------------------------------------------------------------    ----------------
  
        Total Liabilities and Stockholders' Investment                                        $         874,569             877,430
        ----------------------------------------------------------------------------------------------------------------------------
  The accompanying notes are an integral part of these statements.
  
                                          2
  Consolidated Statements of Cash Flows
  (Dollars in thousands)
  FIRST QUARTER
                                                                                                      Thirteen Weeks Ended
                                                                                                   March 28,           March 29,
                                                                                                     1998                1997
  ----------------------------------------------------------------------------------------------------------      --------------
  Operating Activity
       Net earnings (loss)                                                                  $        (4,383)             (1,978)
  
  Adjustments to Reconcile Net Earnings (Loss) to
    Cash Flow (Used for) From Operating Activity
       Depreciation and amortization                                                                 13,395              12,481
       Income taxes deferred                                                                         (2,510)             (1,568)
       Provision for uncollectible accounts                                                           1,555               1,637
       Retirement benefit funding less than expense                                                   3,192                 820
       Changes in working capital affecting operations
            Accounts receivable                                                                      (7,585)            (25,875)
            Inventories                                                                              (1,019)             (9,825)
            Prepaid expenses and other                                                                  458                 675
            Accounts payable                                                                          9,218              25,594
            Accrued expenses                                                                        (11,150)             (5,238)
       Other, net                                                                                       757                (223)
  ----------------------------------------------------------------------------------------------------------      --------------
            Cash flow from (used for) operating activity                                              1,928              (3,500)
  
  Financing Activity
       Long-term debt
            Other borrowed                                                                            4,100              10,200
            Other repaid                                                                               (112)                (48)
       Dividends paid                                                                                (4,269)             (4,277)
       Proceeds from stock options exercised                                                            472                   -
  ----------------------------------------------------------------------------------------------------------      --------------
            Net from financing activity                                                                 191               5,875
  
  Investing Activity
       Capital expenditures                                                                          (2,610)             (4,402)
       Proceeds from sale of assets/subsidiaries                                                          -                 371
       Other, net                                                                                         -                 454
  ----------------------------------------------------------------------------------------------------------      --------------
            Net for investing activity                                                               (2,610)             (3,577)
  
  Cash and Cash Equivalents
       Increase (decrease)                                                                             (491)             (1,202)
       Start of period                                                                                6,629              10,282
  ----------------------------------------------------------------------------------------------------------      --------------
            End of period                                                                   $         6,138               9,080
  ------------------------------------------------------------------------------------------------------------------------------
  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
  
       On December 15, 1997, Lukens entered into a merger agreement with Bethlehem
       Steel Corporation.  The agreement was subsequently amended as of January 4,
       1998. Under the merger agreement, Bethlehem Steel Corporation would acquire
       Lukens  outstanding  common  and  preferred  stock.  A special  meeting  of
       stockholders  is expected to be held on May 28, 1998, to vote on the merger
       agreement.
  
       The Consolidated  Financial Statements and Notes to Consolidated  Financial
       Statements  were  prepared  assuming  a  going-concern  basis  and  did not
       recognize the impact of the merger.
  
       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 included in the 1997 Form 10-K.
       Results  from any  interim  period are not  necessarily  indicative  of the
       results for a full year.
  
  2.   Income Taxes
  
       Year-to-date  results were used to develop the  effective tax rates in 1998
       and 1997.
  
  3.   Commitments and Contingencies
  
       Regarding the Helen Kramer  Superfund site,  Lukens'  settlement  agreement
       (the  Settlement  Agreement)  was finalized on April 14, 1998.  The Primary
       Settling  Parties  submitted  their  signature pages on or before April 20,
       1998.  Pursuant  to  the  terms  of the  Settlement  Agreement,  Lukens  is
       obligated  to pay  approximately  $5,600 to the  Primary  Settling  Parties
       within  30  days of the  effective  date of the  Settlement  Agreement.  In
       consideration of this
  
                                         4
  payment,  the Primary  Settling Parties agreed to use their best efforts to
       cause  Lukens  to be  included  as a party in any  consent  decree or other
       settlement  document  relating  to the site  entered  into with the  United
       States and/or the State of New Jersey.  In addition,  the Primary  Settling
       Parties  provided  a release  and  covenant  not to sue  Lukens  for claims
       covered by the Settlement Agreement. The release and covenant not to sue is
       subject to certain limited reopeners.
  
       Lukens  submitted a  signature  page to the  Primary  Settling  Parties for
       inclusion in the consent decree, which the Primary Settling Parties entered
       into with the United States (the US Consent  Decree).  Lukens  believes the
       Primary  Settling  Parties  submitted  the executed  signature  page to the
       United  States on April 22, 1998.  The US Consent  Decree  provides,  among
       other things, that (i) the responsibility of Lukens shall be limited to the
       payment of money in the amount and on the terms  provided in the Settlement
       Agreement, (ii) Lukens will avoid joint and several liability to the United
       States if Lukens complies with the terms of the Settlement Agreement, (iii)
       the United States will provide a site-wide  covenant not to sue, subject to
       certain limited reservation of rights and reopeners,  as well as a covenant
       not to sue from the  trustees  of Federal  natural  resources  for  natural
       resource damages, subject to the usual reservation of rights and reopeners,
       (iv) Lukens will receive  contribution  protection for matters addressed in
       the Consent Decree and (v) all settling parties, including Lukens, covenant
       not to sue and to dismiss all claims they have against  each other  related
       to the site.
  
       Lukens  submitted  signature  pages to the  Primary  Settling  Parties  for
       inclusion in the consent decree and the natural  resource  damages  consent
       decree,  which the Primary  Settling Parties entered into with the State of
       New Jersey (the State Consent Decrees).  The State Consent Decrees provide,
       among other things,  that (i) the responsibility of Lukens shall be limited
       to the  payment  of money in the amount  and on the terms  provided  in the
       Settlement Agreement, (ii) Lukens will avoid joint and several liability to
       the State of New Jersey if Lukens complies with the terms of the Settlement
       Agreement, (iii) the State of New Jersey will provide a site- wide covenant
       not to sue, subject to certain limited  reservation of rights and reopeners
       and (iv) Lukens will receive contribution  protection for matters addressed
       in the Consent Decrees.
  
                                         5
  There have not been any significant developments to the other environmental
       issues previously discussed in the 1997 Form 10-K.
  
       Lukens has been  designated  a  potentially  responsible  party (PRP) under
       Superfund law at certain waste  disposal sites and  continually  monitors a
       range  of  other  environmental  issues.  Superfund  designations  are made
       regardless of the extent of the company's  direct or indirect  involvement.
       These  claims  are  in  various  stages  of   administrative   or  judicial
       proceedings,  and include  demands for  recovery of incurred  costs and for
       future  investigation  or  remedial  actions.  The  company  accrues  costs
       associated with environmental  matters when they become probable and can be
       reasonably estimated.  In assessing  environmental  liability,  the company
       considers the extent and type of hazardous  substances at a site, the range
       of  technologies  that  can be used  for  remediation,  evolving  laws  and
       regulations, the allocation of costs among potentially responsible parties,
       and the number and financial strength of those parties.
  
       Due  to  their  uncertain   nature,   amounts  accrued  for   environmental
       liabilities could differ, perhaps significantly, from the actual costs that
       will be incurred. No potential insurance recoveries were taken into account
       in determining  the company's cost estimates or reserves.  Management  does
       not anticipate that its financial  position will be materially  affected by
       additional  environmental  remediation costs,  although quarterly or annual
       operating results could be materially affected by future developments.
  
       The company is party to various claims,  disputes,  legal actions and other
       proceedings involving negligence,  contracts, equal employment opportunity,
       occupational   safety  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 Thirteen Weeks Ended March 28, 1998
  
  Capital Structure
  
  Cash and cash  equivalents  totaled  $6,138 at the end of the first  quarter,  a
  decrease of $491 from the end of 1997. Working capital of $122,214 was up $7,705
  from the end of 1997.  The  increase  primarily  reflected  a build in  accounts
  receivables.  The current  ratio was 1.7 at the end of the first  quarter and at
  year-end 1997.
  
  Debt at the end of the first  quarter was  $253,652,  an increase of $2,705 from
  the beginning of the year. The increase reflected borrowings under our revolving
  credit agreement. The ratio of long-term debt to capital was 51.2 percent, which
  compared to 50.3 percent at year-end 1997.
  
  Liquidity
  
  Cash flow from operating  activity totaled $1,928 for the first quarter compared
  to cash  required  from  operating  activity  of $3,500 in the  comparable  1997
  period.  Lower  working  capital  requirements  combined  with lower  retirement
  benefit funding contributed to the improved cash flow.
  
  Financing  activity  generated  $191 with net  borrowings of $3,988 and proceeds
  from the exercise of stock options  essentially  offset by dividend  payments of
  $4,269. Investing activity required $2,610 for capital expenditures.
  
  As  discussed  in Note 3 to the  Consolidated  Financial  Statements,  a  $5,600
  settlement  payment  will be made in the  second  quarter  of 1998  related to a
  Superfund  site.  Order  backlog was  $178,100 at the end of the first  quarter,
  which was 7 percent higher than year-end 1997 backlog.
  
                                         7
  Results of Operations for the Quarters Ended
  March 28, 1998 and March 29, 1997
  
  Operating Results
  
  A first  quarter  operating  loss of $1,910  compared to  operating  earnings of
  $1,895 in the first quarter of 1997.  Despite a strong  improvement  in Carbon &
  Alloy Group results,  the Stainless Group recorded  significantly  higher losses
  that  resulted  in a  consolidated  loss for the  quarter.  Sales  for the first
  quarter were  $258,342,  up 4 percent  from 1997 sales of $248,118.  Most of the
  increase in sales resulted from higher shipments in the Carbon & Alloy Group.
  
  Interest Expense
  
  Interest  expense  of $4,507  was down 5 percent  compared  to 1997  expense  of
  $4,729.
  
  Income Tax Expense (Benefit)
  
  The  effective  tax rate  was 31.7  percent  in 1998 and 30.2  percent  in 1997.
  Year-to-date  results were used to develop the  effective  tax rates in 1998 and
  1997.
  
  Net Earnings (Loss)
  
  A net loss of $4,383 was  recorded for the first  quarter of 1998  compared to a
  net loss of $1,978 for the same period in 1997.
  
                                         8
  Business Group Results
                                                       Operating
                            Net Sales               Earnings (Loss)
                      1Q 1998      1Q 1997       1Q 1998        1Q 1997
  
  Carbon & Alloy     $139,465      123,010        16,187         7,896
  Stainless           118,877      125,108       (13,019)       (3,066)
  Corporate                --           --        (5,078)       (2,935)
  
                     $258,342      248,118        (1,910)        1,895
  
  Carbon & Alloy Group
  
  Net sales  increased  13  percent.  The  increase  reflected  higher  shipments,
  particularly  in the carbon steel product line due to increased  utilization  of
  the SMART  system.  Shipped  tons were 207,900 in 1998,  19 percent  higher than
  175,400  tons in 1997.  With the  continued  growth in carbon  shipments,  sales
  reflected a lower-  value  shipment  mix. The volume  improvement,  coupled with
  strong  manufacturing  performance,   translated  into  a  significant  earnings
  improvement from the first quarter of 1997.
  
  Stainless Group
  
  The group recorded an operating loss in the first quarters of 1998 and 1997. The
  continued  deterioration  in selling prices  combined with lower shipment levels
  resulted in a larger  operating loss compared to 1997. Sales were down 5 percent
  in 1998. Shipments of 66,900 tons in 1998 were down 6 percent compared to 71,200
  tons in 1997.
  
                                         9
  PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
  Legal  proceedings  disclosures  concerning  developments  in the  Helen  Kramer
  Superfund site are  incorporated  herein by reference to Note 3 Commitments  and
  Contingencies included in Part I of this Form 10-Q.
  
  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
       A report was filed on January 5, 1998, for Item 5. Other Events.,  and Item
       7. Financial  Statements,  Pro Forma  Financial  Information and Exhibits.,
       concerning an amendment to the merger with Bethleham Steel Corporation.  No
       other report on Form 8-K was filed during the quarter ended March 28, 1998.
  
                                         9
  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.
  
  May 7, 1998                         /s/ R. W. Van Sant
                                          R. W. Van Sant
                                          Chairman and Chief Executive Officer
  
  May 7, 1998                        /s/ John C. van Roden, Jr.
                                         John C. van Roden, Jr.
                                         Senior Vice President and
                                         Chief Financial Officer
  
  May 7, 1998                        /s/ P. Blaine Clemens
                                         P. Blaine Clemens
                                         Vice President and Controller
  
                                         10