SECURITIES AND EXCHANGE COMMISSION

                           Washington, D. C. 20549

                                 FORM 10-Q


                Quarterly Report Under Section 13 or 15(d) of
                     the Securities Exchange Act of 1934


For Quarter Ended:  September 30, 1996

Commission File Number:  1-5642  

                                                                               
                            DRAVO CORPORATION
    (Exact name of registrant as specified in its charter)

           Pennsylvania                                  25-0447860          
(State or other jurisdiction of                        (I.R.S. employer
  incorporation or organization)                      identification no.)


One Oliver Plaza, Pittsburgh, Pennsylvania                 15222             
(Address of principal executive offices)                (Zip Code)            

Registrant's telephone number, including area code:   (412) 566-3000     



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       

The number of shares outstanding of each of the registrant's classes of common
stock as of October 31, 1996:


     Title of Class                              Shares Outstanding
Common Stock, $1.00 par value                        14,763,649 


              DRAVO CORPORATION AND SUBSIDIARIES

                             INDEX


PART I - FINANCIAL INFORMATION

                                                                  Page No.

       Consolidated Balance Sheets at September 30, 1996
       and December 31, 1995                                         3, 4    
 
       Consolidated Statements of Earnings for the
       Quarters ended September 30, 1996 and 1995                       5

       Consolidated Statements of Earnings for the 
       Nine Months ended September 30, 1996 and 1995                    6    

       Consolidated Statements of Cash Flows for the
       Nine Months ended September 30, 1996 and 1995                 7, 8

       Notes to Consolidated Financial Statements                  9 - 12

       Management's Discussion and Analysis of Financial    
       Condition and Results of Operations                         13, 14


PART II - OTHER INFORMATION
 
      Item 6.  Exhibits and Reports on Form 8-K                        15


SIGNATURES                                                             16




























                                     
                               
                               
                              -2-
              DRAVO CORPORATION AND SUBSIDIARIES
                  Consolidated Balance Sheets
                          ($ in 000's)

<TABLE>
                                                 September 30,   December 31,
                                                     1996            1995      
                                                (unaudited)
<CAPTION>
ASSETS

Current assets:
 <S>                                                <C>             <C>
 Cash and cash equivalents                         $    885        $  1,086
 Accounts receivable, net                            25,565          24,251
 Notes receivable, net                                  870           1,296
 Inventories                                         15,214          14,194
 Net assets of disc. operations                          --             923
 Other current assets                                 1,534           1,322

  Total current assets                               44,068          43,072

Advances to and equity in joint ventures              2,897           2,466
Notes receivable                                      3,887           3,497
Other assets                                         24,108          23,205
Deferred income taxes                                24,853          24,853

Property, plant and equipment                       241,245         225,835
Less: accumulated depreciation and 
 amortization                                       117,243         109,667

  Net property, plant and equipment                 124,002         116,168

    Total assets                                   $223,815        $213,261
</TABLE>


See accompanying notes to consolidated financial statements.

                              -3-
              DRAVO CORPORATION AND SUBSIDIARIES
                  Consolidated Balance Sheets
                          ($ in 000's)

<TABLE>
                                                 September 30,   December 31,
                                                     1996            1995    
                                                  (unaudited)
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 <S>                                                <C>             <C>
 Current portion of long-term notes                $  6,138        $  6,099
 Accounts payable - trade                            16,736          17,969
 Income taxes                                            37             208
 Accrued insurance                                    1,176           1,639
 Accrued retirement contribution                      2,930           2,423
 Net liabilities of discontinued operations           3,770             --
 Other current liabilities                            4,619           4,969

  Total current liabilities                          35,406          33,307

Long-term notes                                      61,840          64,292
Net liabilities of discontinued operations            9,756           9,517
Other liabilities                                     8,244           6,290

Redeemable preference stock:
 Par value $1, issued 200,000 shares: 
  Series D, $12.35 cumulative, convertible, 
  exchangeable (entitled in liquidation to 
  $20.0 million)                                     20,000          20,000

Shareholders' equity:
 Preference stock, par value $1, authorized 
  1,878,870: Series B, $2.475 cumulative, 
  convertible; issued 25,386 shares
  (entitled in liquidation to $1.4 million);             25              25 
  Series D, reported above             

 Common stock, par value $1, authorized 
  35,000,000 shares; issued 15,080,737 
  and 15,055,237                                     15,081          15,055

 Other capital                                       61,050          60,818
 Retained earnings                                   16,755           8,464
 Treasury stock at cost:
  Common shares 333,168 and 347,691                  (4,342)         (4,507)

 Total shareholders' equity                          88,569          79,855

 Total liabilities and shareholders' equity        $223,815        $213,261
</TABLE>

See accompanying notes to consolidated financial statements.

                              -4-
              DRAVO CORPORATION AND SUBSIDIARIES
              Consolidated Statements of Earnings
        (unaudited, $ in 000's, except per share data)

<TABLE>
                                                Quarters ended September 30, 
                                                     1996            1995

<CAPTION>
<S>                                                  <C>             <C>
Revenue                                            $ 40,752        $ 37,774
Cost of revenue                                      30,217          28,310

    Gross profit                                     10,535           9,464

Selling, general and administrative expenses          5,454           5,440

    Earnings from operations                          5,081           4,024

Other income (expense):
 Equity in earnings of joint ventures                   234              96 
 Interest income                                          6              --
 Interest expense                                    (1,575)           (970)

    Net other income (expense)                       (1,335)           (874)

Earnings before taxes                                 3,746           3,150
Provision for income taxes                              113             220

Net earnings                                          3,633           2,930
Preference dividends                                    633             633

Net earnings available 
 for common shares                                 $  3,000        $  2,297

Earnings per share:
 Operations                                        $   0.20        $   0.15

Weighted average shares outstanding                  14,936          14,889
</TABLE>

See accompanying notes to consolidated financial statements.

                              -5-

              DRAVO CORPORATION AND SUBSIDIARIES
              Consolidated Statements of Earnings
        (unaudited, $ in 000's, except per share data)


<TABLE>
                                              Nine Months ended September 30,
                                                     1996            1995 

<CAPTION>
<S>                                                 <C>             <C>
Revenue                                           $ 118,325       $ 107,376
Cost of revenue                                      88,707          79,731

    Gross profit                                     29,618          27,645

Selling, general and administrative expenses         15,777          16,133

    Earnings from operations                         13,841          11,512

Other income (expense):
 Equity in earnings of joint ventures                   702             564 
 Other income                                            --             182
 Interest income                                        874              75
 Interest expense                                    (4,911)         (3,534)

    Net other income (expense)                       (3,335)         (2,713)

Earnings before taxes                                10,506           8,799 
Provision for income taxes                              316             616

Net earnings                                         10,190           8,183
Preference dividends                                  1,899           1,901 

Net earnings available for
 common shares                                     $  8,291        $  6,282

Earnings per share:
 Operations                                        $   0.56        $   0.42
  
Weighted average shares outstanding                  14,879          14,896
</TABLE>

See accompanying notes to consolidated financial statements.

                              -6-
              DRAVO CORPORATION AND SUBSIDIARIES
             Consolidated Statements of Cash Flows
                    (unaudited, $ in 000's)
                               

                                                                             
<TABLE>
                                              Nine Months ended September 30,
                                                      1996            1995  
 
<CAPTION>
<S>                                                 <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings                                       $ 10,190         $ 8,183
Adjustments to reconcile net earnings
 to net cash provided (used) by continuing
 operations activities:
  Depreciation and amortization                       7,744           6,869
  Equity in joint ventures                             (431)             67 
  Changes in assets and liabilities:
   Increase in accounts receivable                   (1,314)         (3,171)
   Decrease in notes receivable                          37             472  
   Increase in inventories                           (1,020)           (641)
   Decrease (increase) in other current assets         (145)            888
   Decrease in accounts payable  
    and accrued expenses                             (1,431)        (27,423) 
   Increase (decrease) in taxes payable                (171)            485  
   Increase in other assets                            (903)         (4,358)
   Increase in other liabilities                      1,954             134   

Net cash provided (used) by continuing
 operations activities                               14,510         (18,495)

Increase (decrease) in net liabilities 
 of discontinued operations                           4,932         (11,865)
Proceeds from repayment of notes receivable
 from sale of discontinued operations                    --           2,200

Net cash provided (used) by discontinued 
 operations activities                                4,932          (9,665) 
  
Net cash provided (used) by operating
 activities                                          19,442         (28,160) 

CASH FLOWS FROM INVESTING ACTIVITIES:
 Proceeds from sale of assets                            --         120,464
 Additions to property, plant and equipment         (15,528)        (27,742)
 Other, (net)                                            --              51

Net cash provided (used) by investing activities   $(15,528)       $ 92,773
</TABLE>

See accompanying notes to consolidated financial statements.

                              -7-
              DRAVO CORPORATION AND SUBSIDIARIES
             Consolidated Statements of Cash Flows
                    (unaudited, $ in 000's)


<TABLE>
                                               Nine Months ended September 30, 
                                                      1996            1995 

<CAPTION>
<S>                                                  <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
 Net borrowing under revolving credit
  agreements                                       $  3,550        $ 22,749
 Principal payments under long-term notes            (6,014)        (85,156)
 Proceeds from issuance of common stock                 248             511
 Purchase of treasury stock                              --          (2,667)
 Dividends on preference stock                       (1,899)         (1,901)

Net cash used by financing activities                (4,115)        (66,464)

Net decrease in cash and cash equivalents              (201)         (1,851) 
Cash and cash equivalents at beginning of
 period                                               1,086           2,027

Cash and cash equivalents at end of period         $    885        $    176

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Cash paid (received) during the period for:
  Interest (net of amount capitalized)             $  4,976        $  3,941
  Income tax                                            487             131
</TABLE>

See accompanying notes to consolidated financial statements.

                              -8-
              DRAVO CORPORATION AND SUBSIDIARIES
          Notes to Consolidated Financial Statements

(1)  Basis of Presentation

    The accompanying consolidated financial statements include the accounts
    of Dravo Corporation and its majority-owned subsidiaries (the company).
    The principal subsidiary is Dravo Lime Company, one of the nation's
    largest lime producers. The company completed a transaction on December
    30, 1994 in which it sold substantially all the assets and certain
    liabilities of Dravo Basic Materials Company, Inc. (DBM), a former
    principal subsidiary.  The consolidated cash flow statement for the nine
    months ended September 30, 1995 reflects the collection of proceeds from
    the sale of DBM, repayment of debt, and satisfaction of DBM liabilities,
    primarily accounts payable.  Significant intercompany balances and
    transactions have been eliminated in the consolidation process.
    
    These unaudited consolidated financial statements include all adjustments,
    consisting only of normal, recurring accruals, which management considers
    necessary for a fair presentation of the company's consolidated financial
    position, results of operations, and cash flows for the interim periods
    presented.  Certain reclassifications of previously reported balances have
    been made to conform to the current period's presentation.
    
    
(2)  Inventories

     Inventories are classified as follows:

     ($ in 000's)

<TABLE>
                                               September 30, December 31,
                                                   1996          1995    

<CAPTION>
    <S>                                          <C>           <C>
    Materials and supplies                     $ 12,476      $ 12,517
    Finished goods                                2,738         1,677

    Net inventories                            $ 15,214      $ 14,194
</TABLE>
    Finished goods are valued at average production cost or market, whichever
    is lower, and include raw materials, direct labor, and operating
    overhead.  Materials and supplies are valued at average cost.  
    
                              -9-
              DRAVO CORPORATION AND SUBSIDIARIES
          Notes to Consolidated Financial Statements

(3)  Contingent Liabilities
    
     The company has been notified by the federal Environmental Protection
     Agency (EPA) that the EPA believes the company is a potentially
     responsible party (PRP) for the clean-up of soil and groundwater
     contamination at four sub-sites in Hastings, Nebraska.  The Hastings
     site is one of the EPA's priority sites for taking remedial action under
     the Comprehensive Environmental Response, Compensation and Liability Act
     (CERCLA).  
     
     At one of these sub-sites, a municipal landfill, the company believes it
     could not have disposed of hazardous wastes at the particular sub-site
     because the landfill was closed prior to the time the company's
     predecessor began disposing of the hazardous substances found at this
     sub-site.  Other PRPs, including the local municipality, have agreed to
     perform the remedial investigation and to design soil and groundwater
     remedies at this sub-site.  The company is participating in an EPA-
     initiated allocation proceeding for this sub-site which will allocate
     shares of liability for costs of a proposed cap of the landfill.
     
     The company has also been notified by the EPA that the EPA considers it
     a PRP at another municipal landfill in Hastings.  At least three other
     parties (including the City of Hastings) are considered by the EPA to be
     PRPs at this second sub-site.  At this sub-site, the company has
     concluded that the City of Hastings is primarily responsible for a
     proper closure of the landfill and the remediation of any release of
     hazardous substances.  In January, 1994, EPA invited the company and the
     other PRPs to make an offer to conduct a remedial investigation and
     feasibility study (RI/FS) of this sub-site and stated that the EPA was
     in the process of preparing a work plan for the RI/FS.  None of the PRPs
     has volunteered to undertake the RI/FS.
     
     With respect to the third sub-site, the company and two other PRPs have
     been served with administrative orders directing them to undertake soil
     remediation and interim groundwater remediation at that sub-site.  The
     company is currently complying with these orders while reserving its
     right to seek reimbursement from the United States for its costs if it
     is determined it is not liable for response costs or if it is required
     to incur costs because of arbitrary, capricious or unreasonable
     requirements imposed by the EPA.  
     
     The EPA has taken no legal action with respect to its demand that the
     company and the other PRPs pay its past response costs.  A total of five
     parties have been named by the EPA as PRPs at this sub-site, but two of
     them have been granted de minimis status.  The company believes other
     persons should also be named as PRPs.
     
     The fourth sub-site is a former naval ammunition depot which was
     subsequently converted to an industrial park.  The company and its
     predecessor owned and operated a manufacturing facility in this
     industrial park.  To date, the company's investigation indicates that it
     did not cause the release of hazardous substances at this sub-site
     during the time it owned and operated the facility. The United States
     has undertaken to conduct the remediation of this sub-site.
                               
                             -10-

                    DRAVO CORPORATION AND SUBSIDIARIES
                Notes to Consolidated Financial Statements


(3)      Contingent Liabilities (continued)

     In addition to sub-site clean-up, the EPA is seeking a clean-up of
     area-wide contamination associated with all of the sub-sites in and around
     Hastings, Nebraska.  The company, along with other Hastings PRPs, has
     recommended that the EPA adopt institutional controls as the area-wide
     remedy in Hastings.  The EPA has indicated some interest in this
     proposal but has decided to first conduct an area-wide remedial
     investigation before choosing a remedy. 
     
     On August 10, 1992 the company filed suit in the Alabama District Court
     against its primary liability insurance carriers and one of its
     predecessor's insurers, seeking a declaratory judgment that the company
     is entitled to a defense and indemnity under its contracts of insurance
     (including certain excess policies provided by one of the primary
     carriers) with regard to the third Hastings sub-site.  The company has
     settled the claim against its predecessor's insurer, but the case
     against the company's insurers is still in litigation.  An award of
     punitive damages is also being sought against the company's insurers for
     their bad faith in failing to investigate the company's claim and/or
     denying the company's claim.  The company has notified its primary and
     excess general liability carrier, as well as the excess carrier of its
     predecessor, of the receipt of its notice of potential liability at the
     first, second and fourth sub-sites.
     
     Estimated total clean-up costs, including capital outlays and future
     maintenance costs for soil and groundwater remediation of approximately
     $18 million, are based on independent engineering studies.  Included in
     the discontinued operations provision is the company's estimate that it
     will participate in 33 percent of these remediation costs.  The
     company's estimated share of the costs is based on its assessment of the
     total clean-up costs, its potential exposure, and the viability of other
     named PRPs.
     
     Other claims and assertions made against the company will be resolved, in
     the opinion of management, without material additional charges to
     earnings.
     
     The company has asserted claims that management believes to be
     meritorious, but no estimate can be made at present of the timing or the
     amount of recovery.
    
                             -11-
              DRAVO CORPORATION AND SUBSIDIARIES
          Notes to Consolidated Financial Statements
                                  

     (4)  Discontinued Operations
     
    In December, 1987, Dravo's Board of Directors approved a major
    restructuring program which concentrated the company's future direction
    exclusively on opportunities involving its natural resources business. 
    
    The remaining discontinued operations' assets and liabilities at September
    30, 1996 and December 31, 1995 relate to non-cancelable leases, insurance,
    environmental, legal and other matters associated with exiting the
    engineering and construction business and are presented below:
                                                              
<TABLE>
    ($ in 000's)                                 September 30,  December 31,
                                                     1996           1995     
<CAPTION>
    <S>                                             <C>            <C>
    Current assets:
     Accounts and retainers receivable            $    323       $    122
     Other                                              --          7,185
    
       Total current assets                            323          7,307
    
     Accounts and retainers receivable                 --             333
     Other                                             309            309
    
       Total assets                               $    632       $  7,949
    
    Current liabilities:
     Accounts and retainers payable               $    146       $    140
     Accrued loss on leases                          2,348          2,240
     Other                                           1,599          4,004
    
       Total current liabilities                     4,093          6,384
    
     Accrued loss on leases                          1,592          3,328
     Other                                           8,473          6,831
    
       Total liabilities                          $ 14,158       $ 16,543
    
     Net liabilities and accrued loss 
      on leases of discontinued operations        $(13,526)      $ (8,594)
</TABLE>
                                     
                             -12-
              DRAVO CORPORATION AND SUBSIDIARIES
       Management's Discussion and Analysis of Financial
              Condition and Results of Operations
                                 
    
     Revenue for the third quarter was $40.8 million, nearly 8 percent
     higher than last year's quarter.  The principal reason for the revenue
     increase was strong lime demand in the southeastern United States and
     increased aggregate sales from the company's Longview facility located
     near Birmingham, Alabama.  Longview is a quarry operation and a new
     aggregates plant completed late last year allowed the company to
     process cap rock, which must be removed to reach limestone suitable
     for lime production, into salable sized aggregates.  Gross profit was
     $1.1 million higher than last year and reflected the higher revenue. 
     The current year's gross profit margin of 25.9 percent increased
     almost 1 percent over last year.  Gross profit was impacted, however,
     by higher inventory costs due to the lingering effects of second
     quarter delivery interruptions to a major electric utility customer
     caused by problems at the customer's generating station.  The
     associated shipping and production disruptions increased production
     costs and, ultimately, cost of sales at the Black River and Maysville,
     Kentucky operations.  Helping to partially offset the higher direct
     unit production costs were lower overhead expenses associated with
     employees' medical benefits and workers compensation insurance costs.
     Joint venture earnings at a 50-percent owned mining operation were
     $138,000 higher due to last year's unusually high maintenance
     expenses.  Interest expense was $605,000 higher because of higher debt
     levels, and because the 1995 period benefited from the capitalization
     of interest charges associated with the Black River expansion project.
     The higher debt resulted from revolving credit borrowing used to
     finance the completion of the Black River project and the ongoing
     expansion, discussed below,  at Maysville.  Also, the company used the
     proceeds received from the sale of a former principal subsidiary's
     assets, Dravo Basic Materials Company, Inc. (DBM) to reduce debt $85
     million in 1995.  Debt levels subsequently increased as the remaining
     liabilities of DBM retained by the company were satisfied.
     
     Year-to-date net earnings of $10.2 million, or 56 cents per share
     after preferred dividend payments, were 25 percent higher than the
     $8.2 million net earnings, or 42 cents per share, reported last year.
     Revenue for the nine months to date was up $10.9 million due to strong
     Longview sales and modestly higher sales to the utility lime market
     made possible by the mid-1995 completion of a major expansion at the
     company's Black River facility in northern Kentucky.  Gross profit
     increased nearly $2 million on the higher revenue.  Interest income
     was $799,000 higher than last year due to a second quarter refund
     received from a state taxing authority after the company filed amended
     tax returns based on its current interpretation of the state tax code.
     Interest expense was $1.4 million higher due to capital expenditures
     in 1996 and the lower debt level for part of 1995 resulting from the
     DBM asset sale.
     
     The previously announced $20 million expansion of the company's lime
     production facility near Maysville, Kentucky continues on schedule.  A
     new kiln and ancillary equipment, expected to start-up late in the
     first quarter of 1997, will increase Maysville's production capacity
     by 350,000 tons, or 33 percent.
    
                             -13-
            DRAVO CORPORATION AND SUBSIDIARIES
       Management's Discussion and Analysis of Financial
        Condition and Results of Operations (Continued)
                                
    
     On October 18, 1996, the company announced that it had engaged an
     investment adviser to explore all strategic alternatives that would
     enable it to achieve its goal of increasing business scope.  The
     company's current size makes operating performance acutely sensitive
     to major utility lime customers' level of lime utilization.  At this
     time, the company does not know whether or when it may pursue any such
     alternatives.
    
                             -14-
            DRAVO CORPORATION AND SUBSIDIARIES
                                
                 PART II - Other Information 
                                
    
           
      Item 6.   Exhibits and Reports on Form 8-K
                   
           (a)  Exhibits                             
                                    
                The following is filed as an exhibit
                   to Part I of this Form 10-Q:
                   
                Exhibit No. 11 - Statement re
                   computation of per share earnings.                     
                               
                   
           (b)  Reports on Form 8-K
                                
                The Company filed no Reports on Form
                   8-K for the quarter ended September 30, 1996.  
    
                             -15-
                        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.
    
    
    
    
                                                                             
                                            DRAVO CORPORATION                
                                            (Registrant)
    
    
    
    
   Date: November 12, 1996                  /s/ERNEST F. LADD III           
                                            Ernest F. Ladd III
                                            Executive Vice President and   
                                            Chief Financial Officer      
                                          
                                                                          
   Date: November 12, 1996                  /s/LARRY J. WALKER              
                                            Larry J. Walker                  
                                            Vice President and Controller
                                            (Principal Accounting Officer)
                                       
                             -16-