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:  June 30, 1998

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.)


11 Stanwix Street, Pittsburgh, Pennsylvania                 15222            
 (Address of principal executive offices)                (Zip Code)          
 

Registrant's telephone number, including area code:   (412) 995-5500     



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 July 31, 1998:


     Title of Class                              Shares Outstanding
Common Stock, $1.00 par value                        14,718,509  




              DRAVO CORPORATION AND SUBSIDIARIES

                             INDEX


PART I - FINANCIAL INFORMATION

                                                                  Page No.

       Consolidated Balance Sheets at June 30, 1998
       and December 31, 1997                                    3, 4
 
       Consolidated Statements of Earnings for the
       Quarters ended June 30, 1998 and 1997                       5

       Consolidated Statements of Earnings for the
       Six months ended June 30, 1998 and 1997                     6

       Consolidated Statements of Cash Flows for the
       Six months ended June 30, 1998 and 1997                  7, 8

       Notes to Consolidated Financial Statements             9 - 14

       Management's Discussion and Analysis of Financial    
       Condition and Results of Operations                   15 - 17


PART II - OTHER INFORMATION
 
      Item 6.  Exhibits and Reports on Form 8-K                   18


SIGNATURES                                                        19


                              -2-

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

<TABLE>
<CAPTION>
                                                   June 30,      December 31,
                                                     1998            1997    
                                                  (unaudited)

ASSETS
 <S>                                              <C>             <C>

Current assets:
 Cash and cash equivalents                        $  3,583        $  1,477
 Accounts receivable, net                           19,325          24,995
 Notes receivable, net                                 576             769
 Inventories                                        17,034          17,434
 Other current assets                                  824             980

  Total current assets                              41,342          45,655

Advances to and equity in joint ventures             2,355           2,450
Notes receivable                                     5,537           6,873
Other assets                                        26,883          27,627
Deferred income taxes                               29,976          29,976

Property, plant and equipment                      269,812         263,926
Less: accumulated depreciation and 
 amortization                                      126,349         121,277

  Net property, plant and equipment                143,463         142,649

    Total assets                                  $249,556        $255,230
</TABLE>

See accompanying notes to consolidated financial statements.


                              -3-

              DRAVO CORPORATION AND SUBSIDIARIES
                  Consolidated Balance Sheets
                          ($ in 000's)
<TABLE>
<CAPTION>
                                                   June 30,       December 31,
                                                     1998            1997    
                                                  (unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
 <S>                                              <C>             <C>

Current liabilities:
 Current portion of long-term notes               $  9,767        $  9,736
 Accounts payable - trade                           14,786          17,546
 Accrued insurance                                   1,842           1,482
 Net liabilities of discontinued operations          2,623           3,613
 Redeemable preference stock                         5,000           5,000
 Other current liabilities                           7,180           4,368

  Total current liabilities                         41,198          41,745

Long-term notes                                     64,549          74,396
Net liabilities of discontinued operations           5,178           5,401
Other liabilities                                    8,786           9,022

Redeemable preference stock:
 Par value $1, issued 200,000 shares: 
  Series D, $12.35 cumulative, convertible, 
  exchangeable (entitled in liquidation to 
  $20.0 million)                                    15,000          15,000

Shareholders' equity:
 Preference stock, par value $1, authorized 
  1,878,870: Series B, $2.475 cumulative, 
  convertible; issued 16,000 shares and 18,386
  shares(entitled in liquidation to $880,000 and        16              18
  $1.0 million); Series D, reported above             

 Common stock, par value $1, authorized 
  35,000,000 shares; issued 15,110,922 
  and 15,103,249                                    15,111          15,103

 Other capital                                      66,809          66,819
 Retained earnings                                  37,783          32,662
 Treasury stock at cost:
  Common shares 392,413 and 397,413                (4,874)          (4,936)

 Total shareholders' equity                        114,845         109,666

 Total liabilities and shareholders' equity       $249,556        $255,230

</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>
<CAPTION>
                                                   Quarters ended June 30, 
                                                     1998          1997
<S>                                               <C>             <C>

Revenue                                           $ 41,883        $ 42,435
Cost of revenue                                     30,986          30,908

    Gross profit                                    10,897          11,527

Selling, general and administrative expenses         5,150           5,497

    Earnings from operations                         5,747           6,030

Other income (expense):
 Equity in earnings of joint ventures                   32             174
 Other income                                           --             (9)
 Interest income                                       130              50
 Interest expense                                  (1,725)         (1,607)

    Net other expense                              (1,563)         (1,392)

Earnings before taxes                                4,184           4,638
Provision for income taxes                             774             326

Net earnings                                         3,410           4,312
Preference dividends                                   628             629

Net earnings available 
 for common shares                                $  2,782        $  3,683

Earnings per share:
 Basic                                            $   0.19        $   0.25
 Diluted                                          $   0.19        $   0.25

Weighted average shares outstanding:
 Basic                                              14,717          14,776
 Diluted                                            14,760          14,818

</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)

                                                   Six Months ended June 30, 
                                                     1998          1997
<TABLE>
<CAPTION>
<S>                                               <C>          <C>

Revenue                                           $ 84,257     $ 80,059
Cost of revenue                                     63,352       60,759

    Gross profit                                    20,905       19,300

Selling, general and administrative expenses         9,957       10,781

    Earnings from operations                        10,948        8,519

Other income (expense):
 Equity in earnings of joint ventures                  227          373
 Other income                                           12          (9)
 Interest income                                       228           82
 Interest expense                                  (3,592)      (3,169)

    Net other expense                              (3,125)      (2,723)

Earnings before taxes                                7,823        5,796
Provision for income taxes                           1,447          410

Net earnings                                         6,376        5,386
Preference dividends                                 1,255        1,259

Net earnings available 
 for common shares                                $  5,121     $  4,127

Earnings per share:
 Basic                                            $   0.35     $   0.28
 Diluted                                          $   0.35     $   0.28

Weighted average shares outstanding:
 Basic                                              14,712       14,773
 Diluted                                            14,758       14,851
</TABLE>

See accompanying notes to consolidated financial statements.


                              -6-
              DRAVO CORPORATION AND SUBSIDIARIES
             Consolidated Statements of Cash Flows
                    (unaudited, $ in 000's)
                               
<TABLE>
<CAPTION>
                                                    Six Months ended June 30,
                                                      1998         1997  
<S>                                               <C>             <C>
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings                                      $  6,376        $  5,386
Adjustments to reconcile net earnings
 to net cash provided by continuing
 operations activities:
  Depreciation and amortization                      5,652           5,007
  Gain on sale of assets                              (12)               9
  Equity in joint ventures                              95           (470)
  Changes in assets and liabilities:
   Decrease in accounts receivable                   5,670           1,937
   Decrease (increase) in notes receivable           1,529         (1,039)
   Decrease (increase) in inventories                  400           (450)
   Decrease in other current assets                    214              62
   Decrease in accounts payable  
    and accrued expenses                             (666)         (1,069) 
   Increase in taxes payable                         1,079              77
   Decrease in other assets                            744              42
   Increase (decrease) in other liabilities          (236)             432

Net cash provided by continuing
 operations activities                              20,845           9,924

Net cash used by discontinued 
 operations activities                             (1,213)         (1,821)
  
Net cash provided by operating activities           19,632           8,103

CASH FLOWS FROM INVESTING ACTIVITIES:
 Proceeds from the sale of assets                       12              --
 Additions to property, plant and equipment        (6,466)        (18,854)

Net cash used by investing activities             $(6,454)       $(18,854)

</TABLE>
See accompanying notes to consolidated financial statements.


                              -7-

              DRAVO CORPORATION AND SUBSIDIARIES
             Consolidated Statements of Cash Flows
                    (unaudited, $ in 000's)
<TABLE>
<CAPTION>

                                                    Six Months ended June 30, 
                                                      1998         1997 
  <S>                                            <C>              <C>

CASH FLOWS FROM FINANCING ACTIVITIES:
 Net borrowing (repayment) under revolving
  credit agreements                              $ (2,000)        $ 15,390
 Principal payments under long-term notes          (7,816)         (6,133)
 Proceeds from issuance of long-term notes              --           1,663
 Dividends on preference stock                     (1,256)         (1,259)

Net cash provided (used) by financing activities  (11,072)           9,661

Net increase (decrease) in cash 
  and cash equivalents                              2,106           (1,090)
Cash and cash equivalents at beginning of
 period                                              1,477           1,600

Cash and cash equivalents at end of period        $  3,583        $    510

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Cash paid during the period for:
  Interest (net of amount capitalized)            $  3,722        $  3,183
  Income taxes                                         256             336

</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.  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>
<CAPTION>
                                                    June 30,     December 31,
                                                      1998           1997    
         <S>                                      <C>         <C>

         Materials and supplies                   $ 13,796    $ 14,615
         Finished goods                              3,238       2,819

         Total inventories                        $ 17,034    $ 17,434
</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 cleanup of soil and groundwater
    contamination at four sub-sites in Hastings, NE.  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).
 
    Regarding the first sub-site, the company participated in an EPA-initiated
    allocation proceeding for a municipal landfill sub-site to
    allocate shares of liability for past response costs and costs of a
    proposed cap of the landfill.  As part of this proceeding, the
    allocator conducted a mediation session that resulted in a settlement
    among the EPA and the PRPs.  Pursuant to the settlement, the company
    agreed to pay 14.33 percent of the EPA's past costs and the estimated
    costs of the cap and its maintenance.  A Consent Decree incorporating
    the settlement and requiring the private parties to pay for,
    construct and maintain the cap has been approved by the United States
    Justice Department and lodged with the Federal District Court.  In
    exchange, the company received contribution protection against third-party
    claims as well as a covenant from the EPA not to sue for matters covered by
    the settlement.
     
    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 proper closure of the landfill and the remediation
    of any release of hazardous substances.  The EPA has conducted the
    remedial investigation for this sub-site.  The company, along with
    some of the other PRPs, including the City of Hastings, is
    considering a proposal from the EPA to conduct the feasibility study. 
    In 1997, the company and the other PRPs at this sub-site received a
    demand from the EPA that they pay the EPA's response costs at this
    sub-site through September 30, 1994.  The company and some of the
    other PRPs, including the City of Hastings, intend to examine these
    costs to determine whether or not they are valid. 
    
                           -10-

              DRAVO CORPORATION AND SUBSIDIARIES
       Notes to Consolidated Financial Statements 

(3)  Contingent Liabilities (continued)
    
    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 costs it incurs, as a result of these orders, which are
    inconsistent with statutory and regulatory requirements.
       
    In 1997, the company and the other PRPs at this sub-site received a
    demand from the EPA that they pay the EPA's response costs at this
    sub-site through September 30, 1994.  The company and some of the
    other PRPs intend to examine these costs to determine whether or not
    they are valid.  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 parties should also be
    named as PRPs.
    
    The fourth sub-site is a former naval ammunition depot that 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
    is conducting the remediation of this sub-site.
    
    In addition to sub-site cleanup, the EPA is seeking remediation of
    area-wide contamination associated with all of the sub-sites in and
    around Hastings.  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 completed an area-wide remedial
    investigation and has asked the PRPs to agree to perform a
    feasibility study to determine whether institutional controls or
    another remedial alternative should be undertaken.  The company,
    along with seven other PRPs, is considering this proposal.  An
    acceptable area-wide remediation plan could result in interim
    remedies at the sub-sites becoming final remedies.  In 1997, the
    company and the other area-wide PRPs received a demand from the EPA
    that they pay the EPA's area-wide response costs through September
    30, 1994.  The company and some of the other area-wide PRPs are
    examining these costs to determine whether or not they are valid.
    
                           -11-

              DRAVO CORPORATION AND SUBSIDIARIES
       Notes to Consolidated Financial Statements 

(3)  Contingent Liabilities (continued)
    
    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. 
    On motion of the defendant insurance carriers, the suit was
    transferred to the District Court for the Western District of
    Pennsylvania on October 31, 1996.  The company has settled the claim
    against its predecessor's insurer regarding the third sub-site, 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 handling the company's claim.  A
    tentative trial date has been set for early 1999.  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 second and fourth sub-sites.
       
    Estimated future cleanup costs at the third sub-site, including
    capital outlays and maintenance costs for soil and groundwater
    remediation of approximately $6.2 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 and a pro rata share of the EPA's
    past response costs. The company's estimated share of the costs is
    based on its assessment of the total cleanup costs, its potential
    exposure, and the viability of other named PRPs.  These estimates
    are, by their nature, uncertain and dependent upon numerous factors,
    any of which could cause actual results to differ materially from
    projected amounts.
   
    During World War II, the company conducted military shipbuilding
    activities for the U.S. Navy on a tract of property in Wilmington,
    Delaware.  More limited commercial activities were conducted on a
    much smaller parcel of property during the period 1927 - 1967.  By
    letter dated May 22, 1998, the Delaware Department of Natural
    Resources and Environmental Control (DNREC) asserted the company's
    liability under Delaware's Hazardous Substance Control Act with
    respect to possible contamination of its former shipyard in
    Wilmington.  The company and the U.S. Army Corps of Engineers (on
    behalf of the U. S. Navy) have been invited to participate in cost
    recovery negotiations with the DNREC.
                                
                              -12-

               DRAVO CORPORATION AND SUBSIDIARIES
          Notes to Consolidated Financial Statements 

(3)  Contingent Liabilities (continued)
    
    A portion of the Wilmington site is currently being developed for
    commercial use under Delaware's "brown fields" legislation.  The
    company understands from the DNREC that, for at least a portion of the
    site, existing and planned development will achieve a substantial part
    of the State's remediation goals, because on-site structures, such as
    parking lots, roads and buildings will prevent migration of
    contaminants.
    
    The company is currently investigating the DNREC's claims, the use and
    ownership of the Wilmington site, both before and after the company's
    operations, and the company's historical relationship with the Navy. 
    A detailed title search of the affected properties has begun.  To date,
    the company has identified several other former property owners that
    were not originally known to the DNREC.  At this time no accrual has
    been made because the amount of the liability, if any, and any share
    of the liability for which the company may be responsible, is unknown. 
    The company does not consider it reasonable to expect that the
    resolution of this matter will have a material adverse affect on its
    financial position.
    
    Other claims and assertions made against the company will be resolved,
    in the opinion of management, without material additional charges to
    earnings.
    
    On April 3, 1998, the company filed suit in the New Jersey Federal
    District Court against IMO Delaval (Delaval), successor to the entity
    that supplied a steam turbine generator to a waste-to-energy facility
    designed and built by one of the company's discontinued operations. 
    Several years ago the company settled a dispute with the facility's
    owner over failure to meet contractual performance obligations.  The
    company now believes a contributing factor to its failure to meet the
    performance obligations was caused by equipment supplied by Delaval
    that did not meet contract specifications.  The defect remained
    undetected until a scheduled maintenance outage called for the
    generator to be disassembled.  The company intends to vigorously pursue
    its claim against Delaval.
    
                             -13-

              DRAVO CORPORATION AND SUBSIDIARIES
          Notes to Consolidated Financial Statements 

(4)  Discontinued Operations

    Discontinued operations' assets and liabilities at June 30, 1998 and
    December 31, 1997 relate to non-cancelable leases, insurance,
    environmental, legal and other matters associated with exiting the
    engineering and construction business and are presented below:
                                                               
     ($ in 000's)                                    June 30,   December 31,
                                                      1998          1997     
<TABLE>
<CAPTION>
     <S>                                          <C>         <C>  

     Current assets:
     Accounts and retainers receivable            $     --      $    209
     
       Total assets                               $     --      $    209
     
     Current liabilities:
     Accounts and retainers payable               $     --      $    135
     Accrued loss on leases                             --         1,026
     Insurance                                         350           405
     Environmental                                   1,633         1,684
     Other                                             640           572
     
       Total current liabilities                     2,623         3,822
     
     Insurance                                       2,851         2,706
     Environmental                                   1,214         1,286
     Other                                           1,113         1,409
     
       Total liabilities                          $  7,801      $  9,223
     
      Net liabilities and accrued loss 
      on leases of discontinued operations       $ (7,801)     $ (9,014)
</TABLE>
       
(5)  Comprehensive Income

    In June 1997, the Financial Accounting Standards Board issued Statement
    of Financial Accounting Standards No. 130, "Reporting Comprehensive
    Income" (SFAS 130).  SFAS 130 requires the reporting of changes in
    equity during the period from nonowner sources, such as minimum pension
    liability adjustments.  There were no items of comprehensive income in
    equity at June 30, 1998 or December 31, 1997.
    
                              -14-

               DRAVO CORPORATION AND SUBSIDIARIES
        Management's Discussion and Analysis of Financial
               Condition and Results of Operations
      
    Revenue during the quarter was down 1.3 percent from the same quarter
    last year.  Wet weather and associated interruptions in lime unloading
    at power plant locations late in the quarter affected Ohio Valley
    sales.  The slightly lower revenue and resultant lower production
    levels suppressed gross profit and margins compared to last year's
    second quarter results, which were especially strong due to pent up
    demand caused by unprecedented flooding in northern Kentucky during
    last year's first quarter.  Improved selling, general and
    administrative expenses, largely due to lower pension expense,
    partially offset the reduced gross profit.  Earnings from joint
    ventures were also down due to lower demand from the single customer
    at a phosphate contract mining facility.  The company's net earnings
    for reporting purposes reflects an effective tax rate of 19 percent
    this year versus 7 percent last year.  This change in tax rate is the
    result of the reassessment of the recoverability of the deferred tax
    asset during last year's fourth quarter as required by Statement of
    Financial Accounting Standard No. 109.  The effective tax rate is used
    for financial reporting purposes only and will not affect actual taxes
    paid, which will remain low due to net operating loss utilization.
    
    Steady and predictable demand during both the first and second quarters
    of 1998 led to higher revenue, gross profit and gross profit margins
    compared to last year when flooding, mentioned above, negatively
    impacted the company's first six months' results.  Earnings before
    taxes increased 35 percent on higher revenue, lower overhead costs and
    improved operating efficiencies.
    
    Net cash flow from operating activities was $19.6 million at June 30,
    1998 versus $8.1 million during the first six months of 1997.  Better
    earnings and substantial reductions in both accounts and notes
    receivable principally contributed to the increase.  Cash flow from
    operating activities was used to reduce debt $9.8 million from year-end
    levels and to finance $6.5 million of capital expenditures.
    
    On August 12, 1998, the company and a consortium of six banks completed
    a financing package that restructured the company's $53.0 million
    revolving credit/letter of credit facility and $15.3 million term loan. 
    The new agreement consists of a $60.0 million five-year revolving
    credit/letter of credit facility and a $40.0 million five-year term
    loan.  The term loan is payable in equal quarterly installments in the
    final two years.  Interest on the total financing package equals the
    Eurodollar rate plus 100 basis points through December 31, 1998
    compared to current pricing of the Eurodollar rate plus 200 basis
    points.  Commencing January 1, 1999, interest equals 
    
                              -15-

               DRAVO CORPORATION AND SUBSIDIARIES
        Management's Discussion and Analysis of Financial
         Condition and Results of Operations (continued)
    
     the Eurodollar rate plus a margin determined by the company's ratio
     of total debt to earnings before interest, taxes, depreciation and
     amortization.  The margin ranges between 75 and 125 basis points. 
     The company expects to use part of the additional funds provided by
     the new package to finance the Longview plant's expansion and
     modernization project.
    
     The "Year 2000 Issue," or "Y2K," refers to errors that may occur
     because many existing computer programs use only the last two
     digits to refer to a year and may not function properly in the year
     2000.  Over the past 18 months, the company has replaced its
     general ledger, payroll, accounts payable, and accounts receivable
     financial systems with fully compliant Y2K hardware and software. 
     An evaluation is being performed to assess whether other financial
     systems identified as non-Y2K compliant will be replaced or whether
     existing software will be modified to accept the year 2000 date. 
     These systems include, billing, spare parts inventory,
     requisitioning and purchasing.  Currently, the company is running
     diagnostic checks on all its computers to identify hardware and
     non-financial software that must be upgraded or replaced to be
     compliant. Also, process control technologies, used to operate
     various equipment at the company's operating sites, are being
     evaluated.  Major customers and suppliers are being contacted and
     asked to complete questionnaires to determine their awareness of
     the Y2K issue and how they are addressing it.
    
     The company plans to be Y2K compliant by the end of the third
     quarter of 1999.  Future expenditures to become compliant are
     currently estimated to approximate $1.0 million.
    
     The Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 133, Accounting for Derivative
     Instruments and Hedging Activities (FAS 133) in June 1998.  FAS 133
     standardizes the accounting for derivative instruments, including
     certain derivative instruments embedded in other contracts.  Under
     the standard, entities are required to carry all derivative
     instruments on its balance sheet at fair value and changes (ie.
     gains or losses) in fair value may be required, given certain
     conditions, to be recognized in earnings in the period of change. 
     Adoption of FAS 133 is required by January 1, 2000.  The company
     does not currently have any conventional financial derivative
     instruments and does not believe it has any other derivative
     instruments as defined by FAS 133; however, a thorough review of
     FAS 133 and the company's contracts is ongoing.
    
                              -16-

                  DRAVO CORPORATION AND SUBSIDIARIES
        Management's Discussion and Analysis of Financial
         Condition and Results of Operations (continued)

     Certain statements contained in this report, including environmental
     cleanup costs and the company's estimated completion date and cost to
     become Year 2000 compliant, are forward looking statements within the
     meaning of the Securities Exchange Act of 1934.  In addition, the
     company or persons acting on its behalf may from time to time publish
     or communicate other items which could also be construed to be forward
     looking statements.  Statements of this sort are or will be based on
     the company's estimates, assumptions and projections, and are subject
     to risks and uncertainties that could cause actual results to differ
     materially from those included in the forward looking statements.

                               -17-


              DRAVO CORPORATION AND SUBSIDIARIES
   
                  PART II - Other Information 



Item 6.        Exhibits and Reports on Form 8-K
     
       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 June
          30, 1998.  



                              -18-

                          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: August 13, 1998                    /s/EARL J. BELLISARIO          
                                              Earl J. Bellisario
                                              Senior Vice President,         
                                              Chief Financial Officer      
                                              and Secretary
                                                                           
     Date: August 13, 1998                    /s/LARRY J. WALKER             
                                              Larry J. Walker                
                                              Vice President and Controller
                                              (Principal Accounting Officer)
                                       
                             -19-