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 29, 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 MAY 2, 1997
                      Common Stock, $.01 Par Value, 14,940,329
  
  <PAGE>
  
                           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 29,       March 30,
                                                        1997            1996
  Net Sales                                          $ 248,118        264,172
  Operating Costs and Expenses
       Cost of products sold                           233,837        252,464
       Selling and administrative expenses              12,386         14,824
                                                     ---------      ---------
           Total operating costs and expenses          246,223        267,288
  
  Operating Earnings (Loss)                              1,895         (3,116)
  
       Interest expense                                  4,729          3,850
                                                     ---------      ---------
  
  Earnings (Loss) Before Income Taxes                   (2,834)        (6,966)
  
       Income tax expense (benefit)                       (856)        (2,591)
                                                     ---------      ---------
  
  Net Earnings (Loss)                                $  (1,978)        (4,375)
                                                     ---------      ---------
  
       Dividend requirements for preferred stock          (499)          (496)
  
  Net Earnings (Loss) Applicable to Common Stock     $  (2,477)        (4,871)
                                                     ---------      ---------
  
  Earnings (Loss) Per Common Share
       Primary                                       $    (.17)          (.33)
       Fully diluted                                 $    (.17)          (.33)
  
  Common Shares and Equivalents Outstanding
       Primary                                          14,805         14,757
       Fully diluted                                    16,251         16,300
  
  Cash Dividends on Common Stock - Per Share         $     .25            .25
                                                     ---------      ---------
  
  
          The accompanying notes are an integral part of these statements.
  
                                          1
  
  <PAGE>
  
  Consolidated Balance Sheets
  (Dollars in thousands)
  <TABLE>
  <CAPTION>
                                                                                           March 29,      December 28,
                                                                                             1997            1996
  <S>                                                                                     <C>               <C>   
  Assets
        Current Assets
            Cash and cash equivalents                                                     $   9,080         10,282
            Receivables, less allowance of $7,681 in 1997 and $7,750 in 1996                116,594         92,356
            Inventories
                  Products finished and in process                                          123,976        116,477
                  Raw materials                                                              30,373         27,762
                  Supplies                                                                    4,401          4,686
                                                                                          ---------        -------
                                                                                            158,750        148,925
            Deferred income taxes                                                            12,431         13,129
            Prepaid expenses and other                                                        1,289          1,964
                                                                                          ---------        -------
            Total current assets                                                            298,144        266,656
  
        Plant and Equipment                                                                 956,316        953,753
          Less accumulated depreciation                                                     431,024        420,427
                                                                                          ---------        -------
            Net plant and equipment                                                         525,292        533,326
        Intangible Assets net of accumulated amortization of $9,624 in 1997
          and $9,114 in 1996                                                                 57,825         57,158
        Deferred Income Taxes                                                                32,203         29,937
        Other Assets                                                                          1,689          1,674
                                                                                          ---------        -------
        Total Assets                                                                      $ 915,153        888,751
                                                                                          ---------        -------
  
  Liabilities and Stockholders' Investment
        Current Liabilities
            Accounts payable                                                              $ 117,840         92,252
            Accrued employment costs                                                         41,229         46,603
            Other accrued expenses                                                           23,901         23,765
            Current maturities of long-term debt                                              5,507          4,878
                                                                                          ---------        -------
            Total current liabilities                                                       188,477        167,498
  
        Long-Term Debt (Note 5)                                                             257,184        248,695
        Retirement Benefits
            Pensions                                                                         44,483         43,995
            Medical and life insurance                                                      150,372        148,479
        Other Liabilities                                                                    21,914         22,015
                                                                                          ---------        -------
                Total liabilities                                                           662,430        630,682
        Commitments and Contingencies (Note 4)
        Redeemable Stock
            Series preferred stock, 1,000,000 shares authorized
              Series B ESOP convertible preferred
              (475,057 shares outstanding in 1997 and 480,018 in 1996)                       28,503         28,801
            Deferred compensation - ESOP                                                    (14,312)       (15,374)
                                                                                          ---------        -------
            Total redeemable stock                                                           14,191         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)                                          86,812         86,002
            Earnings invested                                                               165,515        171,730
            Foreign currency translation adjustments                                         (1,336)        (1,332)
            Deferred compensation - restricted stock (Note 3)                                (2,328)          --
            Repurchased stock, at cost (872,930 shares in 1997 and 1,010,988 in 1996)
              (Note 3)                                                                      (10,289)       (11,916)
                                                                                          ---------        -------
                Total stockholders' investment                                              238,532        244,642
                                                                                          ---------        -------
       Total Liabilities and Stockholders' Investment                                     $ 915,153        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>
                                                                                               FIRST QUARTER
                                                                                           Thirteen Weeks Ended
                                                                                        March 29,      March 30,
                                                                                          1997           1996
  <S>                                                                                  <C>             <C>    
  Operating Activity
       Net earnings (loss)                                                             $ (1,978)       (4,375)
  
  Adjustments to Reconcile Net Earnings (Loss) to
    Cash Flow Used for Operating Activity
       Depreciation and amortization                                                     12,481        11,910
       Income taxes deferred                                                             (1,568)       (2,223)
       Provision for uncollectible accounts                                               1,637         1,666
       Retirement benefit funding less than expense                                         820         3,665
       Changes in working capital affecting operations
            Accounts receivable                                                         (25,875)          544
            Inventories                                                                  (9,825)      (17,790)
            Prepaid expenses and other                                                      675           507
            Accounts payable                                                             25,594        (3,486)
            Accrued expenses                                                             (5,238)      (19,804)
       Other, net                                                                          (223)          727
                                                                                         ------        ------
            Cash flow used for operating activity                                        (3,500)      (28,659)
  
  Financing Activity
       Long-term debt
            Proceeds from issuance of notes                                                --          74,538
            Other borrowed                                                               10,200          --
            Other repaid                                                                    (48)      (22,783)
       Dividends paid                                                                    (4,277)       (4,279)
       Proceeds from stock options exercised                                               --             802
       Other, net                                                                          --            (501)
                                                                                         ------        ------
            Net from financing activity                                                   5,875        47,777
  
  Investing Activity
       Capital expenditures                                                              (4,402)      (19,648)
       Proceeds from sale of assets/subsidiaries                                            371           363
       Other, net                                                                           454          (465)
                                                                                         ------        ------
            Net for investing activity                                                   (3,577)      (19,750)
  
  Cash and Cash Equivalents
       Increase (decrease)                                                               (1,202)         (632)
       Start of period                                                                   10,282        11,056
                                                                                         ------        ------
            End of period                                                              $  9,080        10,424
                                                                                         ------        ------
  </TABLE>
          The accompanying notes are an integral part of these statements.
  
                                          3
  <PAGE>
  
  
  <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 had no impact on 1996 or first  quarter  1997 EPS
           figures. Since we were in a net loss position, no adjustments were made
           that would be  antidilutive  or reduce the loss per share under  either
           method.
  
           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
           is 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.
  
  3.       Compensation Plans - Restricted Stock
           The Board of  Directors  approved the  issuance of  performance  vested
           restricted  stock  to  officers  and  other  executives  as  part of an
           incentive  compensation  program.  During  the first  quarter  of 1997,
           134,000  restricted  shares were  awarded.  The shares carry voting and
           dividend  rights and were  recorded at fair  market  value on the grant
           date. A corresponding  charge to deferred  compensation was recorded in
           the stockholders' investment section of the Consolidated Balance Sheets
           and was  adjusted  for the change in the  quarter-end  market  price of
           Lukens  common  stock.  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. No compensation expense was recognized for these
           awards in the 1997 first quarter.
  
                                         4
  
  <PAGE>
  
  4.       Commitments and Contingencies
           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.
  
  5.       Subsequent Events
           On May 6, 1997, Standard & Poor's lowered their rating from BBB+ to BBB
           on  $150,000 of Lukens notes due in 2004 and on $75,000 of  Medium-Term
           Notes,  Series  A, due in  2006.  The  Standard  &  Poor's  outlook  is
           characterized as stable. 
  
                                         5
  
  <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 29, 1997
  
  Capital Structure
  
  Cash and cash  equivalents  totaled  $9,080 at the end of the first  quarter,  a
  decrease of $1,202  from the end of 1996.  Working  capital of  $109,667  was up
  $10,509  from the balance at the end of 1996.  Higher  accounts  receivable  and
  inventories  were partially offset by a build in accounts  payable.  The current
  ratio was 1.6 at the end of the quarter and at year-end 1996.
  
  Debt at the end of the first  quarter was  $262,691,  an increase of $9,118 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  $50,500 under the committed  line of
  credit covenant.  The ratio of long-term debt to capital was 53.2 percent, which
  compared to 51.7 percent at year-end 1996.
  
  The Board of Directors  approved the issuance of performance  vested  restricted
  stock to officers  and other  executives  as part of an  incentive  compensation
  program.  During  the first  quarter of 1997,  134,000  restricted  shares  were
  awarded.  The shares carry voting and dividend  rights and were recorded at fair
  market value on the grant date. A corresponding charge to deferred  compensation
  was recorded in the stockholders' investment section of the Consolidated Balance
  Sheets and was adjusted for the change in the quarter-end market price of Lukens
  common stock. 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.
  
  On May 6,  1997,  Standard & Poor's  lowered  their  rating  from BBB+ to BBB on
  $150,000 of Lukens notes due in 2004 and on $75,000 of Medium-Term Notes, Series
  A, due in 2006. The Standard & Poor's outlook is characterized as stable.
  
  Liquidity
  
  Operating  activity  required cash of $3,500 compared to 1996 first quarter cash
  required for operations of $28,659.  Lower cash requirements in 1997 were due to
  improved   results  and  reduced   working   capital   requirements.   Incentive
  compensation payments,  related to prior-year results, have a negative impact on
  first quarter cash flow from operations, although to a lesser extent in 1997.
  
  Financing  activity  generated  $5,875 with net borrowings of $10,152  partially
  offset by  dividend  payments of $4,277.  Investing  activity  required  $3,577,
  primarily for capital expenditures of $4,402.
  
                                         6
  <PAGE>
  A return to profitability in 1997 is dependent on market conditions,  especially
  selling prices 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.
  
  Order backlog was $119,400 at the end of the first quarter,  which was 6 percent
  lower than  year-end  1996 order  backlog and 28 percent  lower than at the same
  time last year.
  
  In the long term, Lukens relies on the ability to generate sufficient cash flows
  from  operating  activity to fund  investing and financing  requirements  and to
  maintain  a target  long-term  debt-to-capital  ratio of 35  percent.  Primarily
  because of our aggressive capital expenditure program, we continue to exceed our
  target long-term debt-to-capital ratio.
  
  Results of Operations for the Quarters Ended
  March 29, 1997 and March 30, 1996
  
  Operating Results
  
  First  quarter  operating  earnings of $1,895  compared to an operating  loss of
  $3,116 in the first  quarter  of 1996.  Improved  results  in the Carbon & Alloy
  Group were  partially  offset by an  operating  loss  recorded by the  Stainless
  Group.  Stainless  Group results  continued to be impacted by depressed  selling
  prices throughout the first quarter.  In 1996, Carbon & Alloy Group results were
  limited by a charge for labor contract  signing bonuses and the impact of severe
  winter weather.  Selling and administrative  expenses were lower for the quarter
  primarily due to the 1996 work force reduction and lower incentive  compensation
  accruals.
  
  Sales for the first  quarter  were  $248,118,  down 6 percent from 1996 sales of
  $264,172.  Most of the decrease in sales  resulted from lower selling  prices in
  the Stainless Group,  partially offset by higher shipments in the Carbon & Alloy
  Group.
  
  Interest Expense
  
  Interest expense of $4,729 was up 23 percent compared to 1996 expense of $3,850.
  The  increase  primarily  related  to higher  amounts  of  capitalized  interest
  recorded in 1996.
  
  Income Tax Expense (Benefit)
  
  The  effective  tax rate  was 30.2  percent  in 1997 and 37.2  percent  in 1996.
  Year-to-date results were used to develop the 1997 effective tax rate.
  
  Net Earnings (Loss)
  
  A net loss of $1,978 was recorded through the first quarter of 1997 compared to
  a net loss of $4,375 for the same period in 1996.
  
                                         7
  <PAGE>
  
  Business Group Results
                                                       Operating
                           Net Sales                Earnings (Loss)
                      1Q 1997      1Q 1996       1Q 1997       1Q 1996
  
  Carbon & Alloy     $123,010      121,427        7,896        (5,660)
  Stainless           125,108      142,745       (3,066)        6,585
  Corporate              --           --         (2,935)       (4,041)
                     --------      -------        -----        ------ 
                     $248,118      264,172        1,895        (3,116)
                     ========      =======        =====        ====== 
  
  
  Carbon & Alloy Group
  
  Net sales increased  slightly due to a 4 percent increase in shipments.  Shipped
  tons were 175,400 in 1997 compared to 168,900 tons in 1996. Despite the increase
  in shipments, sales were unfavorably impacted by a lower-value shipment mix.
  
  The group recorded  operating  earnings in 1997 compared to an operating loss in
  the first  quarter of 1996.  Results in 1996  included a $3,756 charge for labor
  agreement  signing bonuses,  the impact of severe winter weather and disruptions
  from the commissioning of the Steckel Mill Advanced Rolling  Technology  system.
  Earnings in 1997 benefited from a continued focus on cost reduction initiatives.
  
  Stainless Group
  
  The group  recorded an operating  loss in the first  quarter of 1997.  Depressed
  selling  prices  across  product  lines  continued to limit  results.  Despite a
  significant  increase  in cold rolled  stainless  shipments,  depressed  selling
  prices and lower service center sales led to a 12 percent sales  decline.  First
  quarter 1996 sales were limited by inventory  corrections  by our customers that
  reduced cold rolled stainless  shipments.  Shipments of 71,200 tons in 1997 were
  up slightly compared to 71,000 tons in 1996.
  
                                         8
  
  <PAGE>
  
                             PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
  In connection with the workers' compensation hearing loss claims alleged against
  Lukens Steel Company, four additional claims were filed during the first quarter
  of  1997.  As of  the  end of the  quarter,  52  active  claims  remain.  Claims
  previously reported for Washington Steel Corporation were included in the Lukens
  Steel Company totals because the subsidiaries merged on December 29, 1996.
  
  Item 2.  Changes in Securities.
  
  Disclosures  concerning  the issuance of 134,000  shares of  performance  vested
  restricted stock are incorporated herein by reference from Part I, Item 2.
  
  Item 4.  Submission of Matters to a Vote of Security Holders.
  
  The issues listed below were voted upon at the Annual Meeting of Stockholders on
  April 30,  1997. 
  
  o The directors listed below were elected for a term of three years.
  
           T. Kevin Dunnigan
                    Votes For:                         12,408,187
                    Votes Withheld:                     1,607,670
  
           Ronald M. Gross
                    Votes For:                         12,565,292
                    Votes Withheld:                     1,631,349
  
           W. Paul Tippett
                    Votes For:                         12,567,752
                    Votes Withheld:                     1,628,891
  
           R. W. Van Sant
                    Votes For:                         12,306,627
                    Votes Withheld:                     1,723,856
  
                                         9
  
  <PAGE>
  
  
  Three non-binding shareholder proposals were also considered at the meeting.
  
  o        Shareholders voted for a proposal to eliminate the provisions  relating
           to the division of the  directors of the Company into three classes and
           to fix the term of each of the directors to one year, setting the total
           number of directors at 11.
  
                    Votes For:                          6,333,093
                    Votes Against:                      5,837,915
                    Abstained:                            182,419
                    Broker Non-Votes:                   1,575,739
  
  o        Shareholders voted against a proposal to set a target price equal to or
           greater  than the  highest  price  reached in the past three  years for
           stock  options  granted to current  directors,  officers  and other key
           employees.
  
                    Votes For:                          2,008,284
                    Votes Against:                     10,138,595
                    Abstained:                            206,818
                    Broker Non-Votes:                   1,575,739
  
  o        Shareholders  voted for a proposal to rescind and terminate the Renewed
           Rights  Agreement  adopted by the Board of Directors  on September  25,
           1996,  and to refrain from amending or extending  the Rights  Agreement
           dated as of July 29, 1987,  as amended as of July 25, 1990, or to adopt
           any other Rights  Agreement,  including the Renewed  Rights  Agreement,
           unless and until otherwise  recommended by the holders of a majority of
           the outstanding common stock of the company.
  
                    Votes For:                          6,313,343
                    Votes Against:                      5,849,053
                    Abstained:                            191,302
                    Broker Non-Votes:                   1,575,738
  
  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  March 29,
           1997.
  
                                         10
  <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, 1997                        R. W. Van Sant
                                              ------------------
                                              R. W. Van Sant
                                              Chairman and Chief Executive Officer
  
  
  
  
  
  
           May 7, 1997                        P. Blaine Clemens
                                              ------------------
                                              P. Blaine Clemens
                                              Vice President and Controller
  
  
  
  
                                         11
metadata_documents: [{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q", "secsgml_size_bytes": 31023}]
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": "97598640"}, "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 MARCH 29, 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 MAY 2, 1997
                      Common Stock, $.01 Par Value, 14,940,329
  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 29,       March 30,
                                                        1997            1996
  Net Sales                                          $ 248,118        264,172
  Operating Costs and Expenses
       Cost of products sold                           233,837        252,464
       Selling and administrative expenses              12,386         14,824
                                                     ---------      ---------
           Total operating costs and expenses          246,223        267,288
  
  Operating Earnings (Loss)                              1,895         (3,116)
  
       Interest expense                                  4,729          3,850
                                                     ---------      ---------
  
  Earnings (Loss) Before Income Taxes                   (2,834)        (6,966)
  
       Income tax expense (benefit)                       (856)        (2,591)
                                                     ---------      ---------
  
  Net Earnings (Loss)                                $  (1,978)        (4,375)
                                                     ---------      ---------
  
       Dividend requirements for preferred stock          (499)          (496)
  
  Net Earnings (Loss) Applicable to Common Stock     $  (2,477)        (4,871)
                                                     ---------      ---------
  
  Earnings (Loss) Per Common Share
       Primary                                       $    (.17)          (.33)
       Fully diluted                                 $    (.17)          (.33)
  
  Common Shares and Equivalents Outstanding
       Primary                                          14,805         14,757
       Fully diluted                                    16,251         16,300
  
  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 29,      December 28,
                                                                                             1997            1996
  Assets
        Current Assets
            Cash and cash equivalents                                                     $   9,080         10,282
            Receivables, less allowance of $7,681 in 1997 and $7,750 in 1996                116,594         92,356
            Inventories
                  Products finished and in process                                          123,976        116,477
                  Raw materials                                                              30,373         27,762
                  Supplies                                                                    4,401          4,686
                                                                                          ---------        -------
                                                                                            158,750        148,925
            Deferred income taxes                                                            12,431         13,129
            Prepaid expenses and other                                                        1,289          1,964
                                                                                          ---------        -------
            Total current assets                                                            298,144        266,656
  
        Plant and Equipment                                                                 956,316        953,753
          Less accumulated depreciation                                                     431,024        420,427
                                                                                          ---------        -------
            Net plant and equipment                                                         525,292        533,326
        Intangible Assets net of accumulated amortization of $9,624 in 1997
          and $9,114 in 1996                                                                 57,825         57,158
        Deferred Income Taxes                                                                32,203         29,937
        Other Assets                                                                          1,689          1,674
                                                                                          ---------        -------
        Total Assets                                                                      $ 915,153        888,751
                                                                                          ---------        -------
  
  Liabilities and Stockholders' Investment
        Current Liabilities
            Accounts payable                                                              $ 117,840         92,252
            Accrued employment costs                                                         41,229         46,603
            Other accrued expenses                                                           23,901         23,765
            Current maturities of long-term debt                                              5,507          4,878
                                                                                          ---------        -------
            Total current liabilities                                                       188,477        167,498
  
        Long-Term Debt (Note 5)                                                             257,184        248,695
        Retirement Benefits
            Pensions                                                                         44,483         43,995
            Medical and life insurance                                                      150,372        148,479
        Other Liabilities                                                                    21,914         22,015
                                                                                          ---------        -------
                Total liabilities                                                           662,430        630,682
        Commitments and Contingencies (Note 4)
        Redeemable Stock
            Series preferred stock, 1,000,000 shares authorized
              Series B ESOP convertible preferred
              (475,057 shares outstanding in 1997 and 480,018 in 1996)                       28,503         28,801
            Deferred compensation - ESOP                                                    (14,312)       (15,374)
                                                                                          ---------        -------
            Total redeemable stock                                                           14,191         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)                                          86,812         86,002
            Earnings invested                                                               165,515        171,730
            Foreign currency translation adjustments                                         (1,336)        (1,332)
            Deferred compensation - restricted stock (Note 3)                                (2,328)          --
            Repurchased stock, at cost (872,930 shares in 1997 and 1,010,988 in 1996)
              (Note 3)                                                                      (10,289)       (11,916)
                                                                                          ---------        -------
                Total stockholders' investment                                              238,532        244,642
                                                                                          ---------        -------
       Total Liabilities and Stockholders' Investment                                     $ 915,153        888,751
                                                                                          ---------        -------
  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 29,      March 30,
                                                                                          1997           1996
  Operating Activity
       Net earnings (loss)                                                             $ (1,978)       (4,375)
  
  Adjustments to Reconcile Net Earnings (Loss) to
    Cash Flow Used for Operating Activity
       Depreciation and amortization                                                     12,481        11,910
       Income taxes deferred                                                             (1,568)       (2,223)
       Provision for uncollectible accounts                                               1,637         1,666
       Retirement benefit funding less than expense                                         820         3,665
       Changes in working capital affecting operations
            Accounts receivable                                                         (25,875)          544
            Inventories                                                                  (9,825)      (17,790)
            Prepaid expenses and other                                                      675           507
            Accounts payable                                                             25,594        (3,486)
            Accrued expenses                                                             (5,238)      (19,804)
       Other, net                                                                          (223)          727
                                                                                         ------        ------
            Cash flow used for operating activity                                        (3,500)      (28,659)
  
  Financing Activity
       Long-term debt
            Proceeds from issuance of notes                                                --          74,538
            Other borrowed                                                               10,200          --
            Other repaid                                                                    (48)      (22,783)
       Dividends paid                                                                    (4,277)       (4,279)
       Proceeds from stock options exercised                                               --             802
       Other, net                                                                          --            (501)
                                                                                         ------        ------
            Net from financing activity                                                   5,875        47,777
  
  Investing Activity
       Capital expenditures                                                              (4,402)      (19,648)
       Proceeds from sale of assets/subsidiaries                                            371           363
       Other, net                                                                           454          (465)
                                                                                         ------        ------
            Net for investing activity                                                   (3,577)      (19,750)
  
  Cash and Cash Equivalents
       Increase (decrease)                                                               (1,202)         (632)
       Start of period                                                                   10,282        11,056
                                                                                         ------        ------
            End of period                                                              $  9,080        10,424
                                                                                         ------        ------
  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 had no impact on 1996 or first  quarter  1997 EPS
           figures. Since we were in a net loss position, no adjustments were made
           that would be  antidilutive  or reduce the loss per share under  either
           method.
  
           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
           is 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.
  
  3.       Compensation Plans - Restricted Stock
           The Board of  Directors  approved the  issuance of  performance  vested
           restricted  stock  to  officers  and  other  executives  as  part of an
           incentive  compensation  program.  During  the first  quarter  of 1997,
           134,000  restricted  shares were  awarded.  The shares carry voting and
           dividend  rights and were  recorded at fair  market  value on the grant
           date. A corresponding  charge to deferred  compensation was recorded in
           the stockholders' investment section of the Consolidated Balance Sheets
           and was  adjusted  for the change in the  quarter-end  market  price of
           Lukens  common  stock.  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. No compensation expense was recognized for these
           awards in the 1997 first quarter.
  
                                         4
  4.       Commitments and Contingencies
           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.
  
  5.       Subsequent Events
           On May 6, 1997, Standard & Poor's lowered their rating from BBB+ to BBB
           on  $150,000 of Lukens notes due in 2004 and on $75,000 of  Medium-Term
           Notes,  Series  A, due in  2006.  The  Standard  &  Poor's  outlook  is
           characterized as stable. 
  
                                         5
  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 29, 1997
  
  Capital Structure
  
  Cash and cash  equivalents  totaled  $9,080 at the end of the first  quarter,  a
  decrease of $1,202  from the end of 1996.  Working  capital of  $109,667  was up
  $10,509  from the balance at the end of 1996.  Higher  accounts  receivable  and
  inventories  were partially offset by a build in accounts  payable.  The current
  ratio was 1.6 at the end of the quarter and at year-end 1996.
  
  Debt at the end of the first  quarter was  $262,691,  an increase of $9,118 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  $50,500 under the committed  line of
  credit covenant.  The ratio of long-term debt to capital was 53.2 percent, which
  compared to 51.7 percent at year-end 1996.
  
  The Board of Directors  approved the issuance of performance  vested  restricted
  stock to officers  and other  executives  as part of an  incentive  compensation
  program.  During  the first  quarter of 1997,  134,000  restricted  shares  were
  awarded.  The shares carry voting and dividend  rights and were recorded at fair
  market value on the grant date. A corresponding charge to deferred  compensation
  was recorded in the stockholders' investment section of the Consolidated Balance
  Sheets and was adjusted for the change in the quarter-end market price of Lukens
  common stock. 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.
  
  On May 6,  1997,  Standard & Poor's  lowered  their  rating  from BBB+ to BBB on
  $150,000 of Lukens notes due in 2004 and on $75,000 of Medium-Term Notes, Series
  A, due in 2006. The Standard & Poor's outlook is characterized as stable.
  
  Liquidity
  
  Operating  activity  required cash of $3,500 compared to 1996 first quarter cash
  required for operations of $28,659.  Lower cash requirements in 1997 were due to
  improved   results  and  reduced   working   capital   requirements.   Incentive
  compensation payments,  related to prior-year results, have a negative impact on
  first quarter cash flow from operations, although to a lesser extent in 1997.
  
  Financing  activity  generated  $5,875 with net borrowings of $10,152  partially
  offset by  dividend  payments of $4,277.  Investing  activity  required  $3,577,
  primarily for capital expenditures of $4,402.
  
                                         6
  A return to profitability in 1997 is dependent on market conditions,  especially
  selling prices 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.
  
  Order backlog was $119,400 at the end of the first quarter,  which was 6 percent
  lower than  year-end  1996 order  backlog and 28 percent  lower than at the same
  time last year.
  
  In the long term, Lukens relies on the ability to generate sufficient cash flows
  from  operating  activity to fund  investing and financing  requirements  and to
  maintain  a target  long-term  debt-to-capital  ratio of 35  percent.  Primarily
  because of our aggressive capital expenditure program, we continue to exceed our
  target long-term debt-to-capital ratio.
  
  Results of Operations for the Quarters Ended
  March 29, 1997 and March 30, 1996
  
  Operating Results
  
  First  quarter  operating  earnings of $1,895  compared to an operating  loss of
  $3,116 in the first  quarter  of 1996.  Improved  results  in the Carbon & Alloy
  Group were  partially  offset by an  operating  loss  recorded by the  Stainless
  Group.  Stainless  Group results  continued to be impacted by depressed  selling
  prices throughout the first quarter.  In 1996, Carbon & Alloy Group results were
  limited by a charge for labor contract  signing bonuses and the impact of severe
  winter weather.  Selling and administrative  expenses were lower for the quarter
  primarily due to the 1996 work force reduction and lower incentive  compensation
  accruals.
  
  Sales for the first  quarter  were  $248,118,  down 6 percent from 1996 sales of
  $264,172.  Most of the decrease in sales  resulted from lower selling  prices in
  the Stainless Group,  partially offset by higher shipments in the Carbon & Alloy
  Group.
  
  Interest Expense
  
  Interest expense of $4,729 was up 23 percent compared to 1996 expense of $3,850.
  The  increase  primarily  related  to higher  amounts  of  capitalized  interest
  recorded in 1996.
  
  Income Tax Expense (Benefit)
  
  The  effective  tax rate  was 30.2  percent  in 1997 and 37.2  percent  in 1996.
  Year-to-date results were used to develop the 1997 effective tax rate.
  
  Net Earnings (Loss)
  
  A net loss of $1,978 was recorded through the first quarter of 1997 compared to
  a net loss of $4,375 for the same period in 1996.
  
                                         7
  Business Group Results
                                                       Operating
                           Net Sales                Earnings (Loss)
                      1Q 1997      1Q 1996       1Q 1997       1Q 1996
  
  Carbon & Alloy     $123,010      121,427        7,896        (5,660)
  Stainless           125,108      142,745       (3,066)        6,585
  Corporate              --           --         (2,935)       (4,041)
                     --------      -------        -----        ------ 
                     $248,118      264,172        1,895        (3,116)
                     ========      =======        =====        ====== 
  
  Carbon & Alloy Group
  
  Net sales increased  slightly due to a 4 percent increase in shipments.  Shipped
  tons were 175,400 in 1997 compared to 168,900 tons in 1996. Despite the increase
  in shipments, sales were unfavorably impacted by a lower-value shipment mix.
  
  The group recorded  operating  earnings in 1997 compared to an operating loss in
  the first  quarter of 1996.  Results in 1996  included a $3,756 charge for labor
  agreement  signing bonuses,  the impact of severe winter weather and disruptions
  from the commissioning of the Steckel Mill Advanced Rolling  Technology  system.
  Earnings in 1997 benefited from a continued focus on cost reduction initiatives.
  
  Stainless Group
  
  The group  recorded an operating  loss in the first  quarter of 1997.  Depressed
  selling  prices  across  product  lines  continued to limit  results.  Despite a
  significant  increase  in cold rolled  stainless  shipments,  depressed  selling
  prices and lower service center sales led to a 12 percent sales  decline.  First
  quarter 1996 sales were limited by inventory  corrections  by our customers that
  reduced cold rolled stainless  shipments.  Shipments of 71,200 tons in 1997 were
  up slightly compared to 71,000 tons in 1996.
  
                                         8
  PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
  In connection with the workers' compensation hearing loss claims alleged against
  Lukens Steel Company, four additional claims were filed during the first quarter
  of  1997.  As of  the  end of the  quarter,  52  active  claims  remain.  Claims
  previously reported for Washington Steel Corporation were included in the Lukens
  Steel Company totals because the subsidiaries merged on December 29, 1996.
  
  Item 2.  Changes in Securities.
  
  Disclosures  concerning  the issuance of 134,000  shares of  performance  vested
  restricted stock are incorporated herein by reference from Part I, Item 2.
  
  Item 4.  Submission of Matters to a Vote of Security Holders.
  
  The issues listed below were voted upon at the Annual Meeting of Stockholders on
  April 30,  1997. 
  
  o The directors listed below were elected for a term of three years.
  
           T. Kevin Dunnigan
                    Votes For:                         12,408,187
                    Votes Withheld:                     1,607,670
  
           Ronald M. Gross
                    Votes For:                         12,565,292
                    Votes Withheld:                     1,631,349
  
           W. Paul Tippett
                    Votes For:                         12,567,752
                    Votes Withheld:                     1,628,891
  
           R. W. Van Sant
                    Votes For:                         12,306,627
                    Votes Withheld:                     1,723,856
  
                                         9
  Three non-binding shareholder proposals were also considered at the meeting.
  
  o        Shareholders voted for a proposal to eliminate the provisions  relating
           to the division of the  directors of the Company into three classes and
           to fix the term of each of the directors to one year, setting the total
           number of directors at 11.
  
                    Votes For:                          6,333,093
                    Votes Against:                      5,837,915
                    Abstained:                            182,419
                    Broker Non-Votes:                   1,575,739
  
  o        Shareholders voted against a proposal to set a target price equal to or
           greater  than the  highest  price  reached in the past three  years for
           stock  options  granted to current  directors,  officers  and other key
           employees.
  
                    Votes For:                          2,008,284
                    Votes Against:                     10,138,595
                    Abstained:                            206,818
                    Broker Non-Votes:                   1,575,739
  
  o        Shareholders  voted for a proposal to rescind and terminate the Renewed
           Rights  Agreement  adopted by the Board of Directors  on September  25,
           1996,  and to refrain from amending or extending  the Rights  Agreement
           dated as of July 29, 1987,  as amended as of July 25, 1990, or to adopt
           any other Rights  Agreement,  including the Renewed  Rights  Agreement,
           unless and until otherwise  recommended by the holders of a majority of
           the outstanding common stock of the company.
  
                    Votes For:                          6,313,343
                    Votes Against:                      5,849,053
                    Abstained:                            191,302
                    Broker Non-Votes:                   1,575,738
  
  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  March 29,
           1997.
  
                                         10
  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, 1997                        R. W. Van Sant
                                              ------------------
                                              R. W. Van Sant
                                              Chairman and Chief Executive Officer
  
           May 7, 1997                        P. Blaine Clemens
                                              ------------------
                                              P. Blaine Clemens
                                              Vice President and Controller
  
                                         11