<PAGE>
 
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

/x/      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities 
         Exchange Act of 1934 FOR THE QUARTER ENDED SEPTEMBER 28, 1996

                                       OR

         Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         Commission File Number 1-3258

                                   LUKENS INC.
                              50 South First Avenue
                           Coatesville, PA 19320-0911
                                 (610) 383-2000

         Incorporated in Delaware
         I.R.S. Employer Identification Number 23-2451900

         Indicate by check mark whether the registrant (1) has filed all reports
         required to be filed by Section 13 or 15(d) of the Securities Exchange
         Act of 1934 during the preceding 12 months (or for such shorter period
         that the registrant was required to file such reports), and (2) has
         been subject to such filing requirements for the past 90 days.

         Yes /x/    No

                    SHARES OUTSTANDING AS OF OCTOBER 21, 1996
                    Common Stock, $.01 Par Value, 14,801,032
<PAGE>
                         PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements.


Consolidated Statements of Earnings
(Dollars and shares in thousands except per share amounts)

<TABLE> 
<CAPTION> 
                                                                                                                    
                                                                                    THIRD QUARTER                        
                                                                                 Thirteen Weeks Ended                 
                                                                        September 28,         September 30,  
                                                                            1996                   1995      
-----------------------------------------------------------------------------------------  ------------------
<S>                                                               <C>                      <C>    
Net Sales                                                         $      234,421                254,660      
Operating Costs and Expenses
    Cost of products sold                                                223,192                222,825      
    Selling and administrative expenses                                   13,089                 14,307      
    Unusual item - work force reduction provision (Note 5)                     -                      -      
-------------------------------------------------------------------------------------------------------------
        Total operating costs and expenses                               236,281                237,132      

Operating Earnings (Loss)                                                 (1,860)                17,528      

    Interest expense                                                       4,135                  3,545      
-------------------------------------------------------------------------------------------------------------

Earnings (Loss) Before Income Taxes                                       (5,995)                13,983      

    Income tax expense (benefit) (Note 7)                                 (1,908)                 5,285      
-------------------------------------------------------------------------------------------------------------

Net Earnings (Loss)                                               $       (4,087)                 8,698      
-------------------------------------------------------------------------------------------------------------

    Dividend requirements for preferred stock                               (499)                  (488)     

Net Earnings (Loss) Applicable to Common Stock                    $       (4,586)                 8,210      
-------------------------------------------------------------------------------------------------------------

Earnings (Loss) Per Common Share
    Primary                                                       $         (.31)                   .55      
    Fully diluted                                                 $         (.31)                   .52      

Common Shares and Equivalents Outstanding
    Primary                                                               14,796                 14,853      
    Fully diluted                                                         16,258                 16,352      

Cash Dividends on Common Stock - Per Share (Note 9)               $          .50                    .25      
-------------------------------------------------------------------------------------------------------------
</TABLE> 

<TABLE> 
<CAPTION> 
                                                                                                      
                                                                           YEAR-TO-DATE                       
                                                                     Thirty-nine Weeks Ended       
                                                                  September 28,    September 30, 
                                                                      1996             1995  
--------------------------------------------------------------------------------   ------------
<S>                                                              <C>               <C>       
Net Sales                                                             754,548         786,442  
Operating Costs and Expenses                                                                   
    Cost of products sold                                             711,999         689,245  
    Selling and administrative expenses                                40,955          43,512  
    Unusual item - work force reduction provision (Note 5)             10,782               -  
-----------------------------------------------------------------------------------------------
        Total operating costs and expenses                            763,736         732,757  
                                                                                               
Operating Earnings (Loss)                                              (9,188)         53,685  
                                                                                               
    Interest expense                                                   12,030           9,729  
-----------------------------------------------------------------------------------------------
                                                                                               
Earnings (Loss) Before Income Taxes                                   (21,218)         43,956  
                                                                                               
    Income tax expense (benefit) (Note 7)                              (7,023)         16,615  
-----------------------------------------------------------------------------------------------
                                                                                               
Net Earnings (Loss)                                                   (14,195)         27,341  
-----------------------------------------------------------------------------------------------
                                                                                               
    Dividend requirements for preferred stock                          (1,495)         (1,472) 
                                                                                               
Net Earnings (Loss) Applicable to Common Stock                        (15,690)         25,869  
-----------------------------------------------------------------------------------------------
                                                                                               
Earnings (Loss) Per Common Share                                                               
    Primary                                                             (1.06)           1.75  
    Fully diluted                                                       (1.06)           1.65  
                                                                                               
Common Shares and Equivalents Outstanding                                                      
    Primary                                                            14,778          14,820  
    Fully diluted                                                      16,286          16,351  
                                                                                               
Cash Dividends on Common Stock - Per Share (Note 9)                      1.00             .75  
-----------------------------------------------------------------------------------------------
</TABLE> 

The accompanying notes are an integral part of these statements.     
                                                                
<PAGE>
<TABLE> 
<CAPTION> 


Consolidated Balance Sheets
(Dollars in thousands)
                                                                               
                                                                                         September 28,        December 30,
                                                                                             1996                  1995
-----------------------------------------------------------------------------------------------------     -----------------
<S>                                                                                      <C>                      <C> 
Assets
       Current Assets
           Cash and cash equivalents                                                     $     7,087                11,056
           Receivables, less allowance of $7,666 in 1996 and $6,632 in 1995                  113,956               130,601
           Inventories
                 Products finished and in process                                            116,030               131,886
                 Raw materials                                                                28,186                26,240
                 Supplies                                                                      4,845                 4,999
       ----------------------------------------------------------------------------------------------     -----------------
                                                                                             149,061               163,125
           Deferred income taxes (Note 7)                                                      9,184                 8,442
           Prepaid expenses and other                                                          2,844                 1,667
       ----------------------------------------------------------------------------------------------     -----------------
           Total current assets                                                              282,132               314,891

       Plant and Equipment (Note 2)                                                          954,549               908,379
         Less accumulated depreciation                                                       414,257               378,947
       ----------------------------------------------------------------------------------------------     -----------------
           Net plant and equipment                                                           540,292               529,432
       Intangible Assets,  net of accumulated amortization of $8,605 in 1996
         and $7,076 in 1995 (Note 2)                                                          84,632                57,861
       Deferred Income Taxes (Note 7)                                                         26,272                16,301
       Other Assets                                                                            1,263                 1,178
       ----------------------------------------------------------------------------------------------     -----------------

       Total Assets                                                                      $   934,591               919,663
       --------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Investment
       Current Liabilities
           Accounts payable                                                              $    96,819               121,923
           Accrued employment costs                                                           48,923                53,688
           Other accrued expenses                                                             23,719                22,209
           Current maturities of long-term debt (Note 8)                                       4,679                10,850
       ----------------------------------------------------------------------------------------------     -----------------
           Total current liabilities                                                         174,140               208,670

       Long-Term Debt (Note 8)                                                               260,495               217,339
       Retirement Benefits (Note 6)
           Pensions                                                                           70,217                39,275
           Medical and life insurance                                                        147,088               146,401
       Other Liabilities                                                                      10,477                 9,259
       ----------------------------------------------------------------------------------------------     -----------------
               Total liabilities                                                             662,417               620,944
       Commitments and Contingencies (Note 10)
       Stockholders' Investment (Note 9)
           Series preferred stock, 1,000,000 shares authorized
             Series B ESOP convertible preferred                                              29,107                29,665
             (485,113 shares outstanding in 1996 and 494,413 in 1995)
           Common stock, 40,000,000 shares authorized and 15,813,259 issued (Note 3)             158                   158
           Capital in excess of par value                                                     85,963                85,204
           Earnings invested                                                                 186,451               216,934
           Foreign currency translation adjustments                                           (1,128)               (1,141)
           Deferred compensation - ESOP (Note 8)                                             (16,436)              (19,404)
           Repurchased stock, at cost (1,013,103 shares in 1996 and 1,077,305 in 1995)       (11,941)              (12,697)
       ----------------------------------------------------------------------------------------------     -----------------
               Total stockholders' investment                                                272,174               298,719
       ----------------------------------------------------------------------------------------------     -----------------

       Total Liabilities and Stockholders' Investment                                    $   934,591               919,663
       --------------------------------------------------------------------------------------------------------------------
</TABLE> 
       The accompanying notes are an integral part of these statements.
<PAGE>
                                                               

Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE> 
<CAPTION> 

                                                                                YEAR-TO-DATE
                                                                           Thirty-nine Weeks Ended
                                                                        September 28,     September 30,
                                                                            1996              1995
------------------------------------------------------------------------------------    ----------------
<S>                                                               <C>                   <C>   
Operating Activity
     Net earnings (loss)                                              $     (14,195)             27,341

Adjustments to Reconcile Net Earnings (Loss) to
  Cash Flow From Operating Activity
     Depreciation and amortization                                           36,940              31,018
     Income taxes deferred                                                  (10,713)              4,415
     Provision for uncollectible accounts                                     5,329               7,340
     Retirement benefit funding less than expense                            12,959                 750
     Changes in working capital affecting operations
          Accounts receivable                                                11,316             (24,856)
          Inventories                                                        14,064             (38,535)
          Prepaid expenses and other                                         (1,177)               (480)
          Accounts payable                                                  (28,793)             12,646
          Accrued expenses                                                  (12,517)               (845)
     Other, net                                                               1,615                 727
------------------------------------------------------------------------------------    ----------------
          Cash flow from operating activity                                  14,828              19,521

Financing Activity
     Long-term debt
          Proceeds from issuance of notes                                    74,538                   -
          Other borrowed                                                          -              70,350
          Other repaid                                                      (34,664)            (15,475)
     Dividends paid                                                         (12,854)            (12,843)
     Proceeds from stock options exercised                                      802                 408
     Other, net                                                                (537)                (12)
------------------------------------------------------------------------------------    ----------------
          Net from financing activity                                        27,285              42,428

Investing Activity
     Capital expenditures                                                   (45,590)            (77,769)
     Proceeds from sale of assets/subsidiaries                                  420              17,007
     Other, net                                                                (912)             (3,827)
------------------------------------------------------------------------------------    ----------------
          Net for investing activity                                        (46,082)            (64,589)

Cash and Cash Equivalents
     Increase (decrease)                                                     (3,969)             (2,640)
     Start of period                                                         11,056               9,806
------------------------------------------------------------------------------------    ----------------
          End of period                                               $       7,087               7,166
--------------------------------------------------------------------------------------------------------
</TABLE> 
       The accompanying notes are an integral part of these statements.

<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
         (including 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 1995
         Annual Report to Stockholders. Results from any interim period are not
         necessarily indicative of the results for a full year.

2.       Accounting Changes
         In 1996, Lukens adopted Statement of Financial Accounting Standards
         (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and
         for Long-Lived Assets to Be Disposed Of." This statement requires
         review and measurement methods to calculate impairment of long-lived
         assets, including certain identifiable intangible assets and goodwill.
         The statement also requires that long-lived assets to be disposed of be
         reported at the lower of the carrying amount or fair value less costs
         to sell. The adoption of the statement, based on conditions existing at
         the beginning of the year, did not require a write-down of assets.

         In 1996, Lukens will also adopt SFAS No. 123, "Accounting for
         Stock-Based Compensation." This statement provides for an
         implementation option, reflecting the controversy surrounding the
         measurement of compensation expense for stock options and other
         stock-based compensation. One option is to recognize compensation
         expense in the consolidated financial statements using a fair-value
         based method, applied to virtually all stock-based compensation. The
         alternative would not change the current intrinsic-value approach to
         expense recognition, but would require pro forma disclosure in the
         notes to the consolidated financial statements using the fair-value
         method. We plan on adopting the pro forma disclosure option in the 1996
         Annual Report to Stockholders, which will not have a material effect on
         our consolidated financial condition or results of operations.

3.       Stock Options
         At the Annual Meeting of Stockholders on April 24, 1996, stockholders
         approved an amendment to the 1985 Stock Option and Appreciation Plan
         that increased the number of shares of common stock available for
         issuance by 900,000 to a maximum of 2,737,500.
<PAGE>
 
4.       Business Group Reporting
         With the continued integration of our facilities, effective in 1996
         business group results are reported on a product line basis. The new
         groups are the Carbon & Alloy Group and the Stainless Group. Prior
         year results have been restated to conform with these business groups.

5.       Unusual Item
         During the second quarter of 1996, Lukens announced a work force
         reduction program of approximately 150 salaried positions. The program
         was primarily aimed at reducing costs by integrating administrative
         functions. Termination benefits accrued and charged to expense in the
         second quarter totaled $10,782. On an after-tax basis, the provision
         reduced results by $6,859, or $.46 per common share.

         The components of the charge included severance related benefits of
         $6,784. Termination benefits paid and charged against the liability as
         of September 28, 1996, were $2,098. The remaining severance benefits
         are anticipated to be paid during the fourth quarter of 1996 and during
         1997. Pension related benefits included $3,998 from the combination of
         pension plan benefits that are triggered at termination and from the
         recognition of a curtailment loss. Pension benefits were measured at a
         7.75 percent discount rate.

6.       Retiree Benefits - Retiree Health & Life Insurance Benefits
         As required under the new contract for the bargaining unit employees at
         the Coatesville, Pennsylvania, plant, a Voluntary Employees'
         Beneficiary Association (VEBA) Trust was established to provide funding
         for retiree medical benefit and life insurance programs. The trust
         agreement requires an annual contribution of $2,500 during the
         four-year term of the contract. The initial contribution was made on
         July 1, 1996.

7.       Income Taxes
         Because of the unusual nature of the work force reduction provision,
         the tax impact of 36.4 percent was recognized separately in the 1996
         second quarter income tax provision. Excluding the work force
         provision, an effective rate of 29.9 percent was applied to 1996
         results for the first three quarters. Year-to-date results were used
         to develop the 1996 effective tax rate.

8.       Financial Instruments - Long-term Debt
         The Employee Stock Ownership Plan (ESOP) term loan, guaranteed by
         Lukens, is recognized as debt in the Consolidated Balance Sheets. In
         June 1996, the quarterly payments of the ESOP debt were restructured to
         align anticipated benefits with the release of Lukens Inc. preferred
         stock. The term of the ESOP loan on the component that carries a
         variable interest rate and a prepayment option was not changed.
         Prepayments may be made into 2000. With the revised estimates of
         benefit requirements, however, the entire ESOP loan is projected to be
         repaid by the end of 1999.
<PAGE>
 
9.       Stockholders' Investment
         Common Stock. Due to the timing of the Board of Directors meetings, two
         quarterly common stock dividends were declared in the third quarter,
         totaling $.50 per share. Common stock dividends paid in 1996 totaled
         $1.00 per share.

         Shareholder Rights Plan. In September 1996, the Board of Directors
         adopted the Renewed Rights Agreement, effective when the existing plan
         expires on August 10, 1997. The Renewed Rights Agreement is
         substantially identical to the existing plan with the following
         modifications:

         .    each outstanding share of common stock is entitled to one right

         .    each right entitles stockholders to buy one one-hundredth of a
              share of Series A Junior Participating Preferred Stock at an
              exercise price of $80

         .    the rights become exercisable if a person or group acquires or
              makes a tender or exchange offer for 15 percent or more of common
              stock outstanding

         .    Lukens will generally be entitled to redeem the rights at $.01
              per right at any time until the tenth day following public
              announcement that a 15 percent position has been acquired

         .    the purchase rights will expire on September 25, 2006, unless the
              Board of Directors extends the final expiration date or redeems
              the rights earlier.

10.      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 long-term financial condition or results of operations of
         the company.
<PAGE>
 
Item 2.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations.
                  (Dollars in thousands)

Changes in Financial Condition during
the Thirty-nine Weeks Ended September 28, 1996

Capital Structure

Cash and cash equivalents totaled $7,087 at the end of the third quarter, a
decrease of $3,969 from the end of 1995. Working capital of $107,992 was up
$1,771 from the balance at the end of 1995. The reductions in accounts
receivable and inventory were primarily offset by the change in accounts
payable. The current ratio was 1.6 compared to 1.5 at year-end 1995.

Included in Intangible Assets and Retirement Benefits - Pensions was $25,570 of
pension minimum liabilities recognized during the first quarter. The additional
minimum liabilities resulted from a new labor contract for the Coatesville,
Pennsylvania, facility.

Debt at the end of the third quarter was $265,174, an increase of $36,985 from
the beginning of the year. The increase reflected the issuance of $75,000 of
Medium-Term Notes, Series A, under a $100,000 shelf registration completed in
June 1994. The notes are due in February 2006 and are rated BBB+ by Standard and
Poor's and Baa2 by Moody's. Interest is paid semi-annually and the notes carry a
coupon rate of 6.5 percent with an effective rate of 6.585 percent. Net proceeds
were primarily used to repay the outstanding balance of revolving credit
agreements. The ratio of long-term debt to capital (long-term debt plus
stockholders' investment) was 48.9 percent, which compared to 42.1 percent at
year-end 1995.

At the Annual Meeting of Stockholders on April 24, 1996, stockholders approved a
900,000 increase in the number of shares of common stock available for issuance
under the 1985 Stock Option and Appreciation Plan, increasing the total to
2,737,500.

Liquidity

Cash flow from operating activity totaled $14,828 for the first three quarters
compared to $19,521 in the comparable 1995 period. The decrease was primarily
due to lower results in 1996. Cash flow from operations benefited from lower
inventory levels as inventory reduction initiatives began to be realized in the
third quarter.

Financing activity generated $27,285. Proceeds from the issuance of the notes
discussed in the Capital Structure section above were offset by net repayments
of $34,664 and dividend payments of $12,854. Investing activity required $46,082
primarily for capital expenditures of $45,590.

Improving cash flow from operations for the balance of 1996 is primarily
dependent on an inventory reduction program. We do not see any immediate
improvement in the weak North American stainless steel market conditions as
imports continue to severely depress selling prices. We anticipate that we will
record a loss again in the fourth quarter, making it difficult to surpass 
<PAGE>
 
1995 cash flow levels. Improved operations from the Steckel Mill Advanced
Rolling Technology (SMART(R)) system should be a positive factor during the
balance of the year.

We have released 10 grades of SMART carbon, alloy and stainless plate for
order-entry, in sizes that represent the core of our wide, light-gauge product
mix. Our challenge now is to balance order rates to levels that will match the
increased production of the SMART system. The wide anneal & pickle line project
is expected to be ready for production by the end of the year.

Order backlog was $118,300 at the end of the third quarter, which was 13 percent
lower than year-end 1995 order backlog and 23 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. Because of our
aggressive capital expenditure program, we continue to exceed our target
long-term debt-to-capital ratio. The projected benefits of the program should
improve cash flow from operations and enable us to reach our target in the long
term.

Results of Operations for the Quarters Ended
September 28, 1996 and September 30, 1995

Operating Earnings (Loss)

The third quarter operating loss of $1,860 compared to operating earnings of
$17,528 in the third quarter of 1995. The Stainless Group reported a loss in the
third quarter primarily due to a highly competitive stainless steel market,
which put substantial pressure on base selling prices.

Sales for the third quarter were $234,421, down 8 percent from 1995 sales of
$254,660. The decrease resulted from lower sales in the Stainless Group,
partially offset by improvements in the Carbon & Alloy Group.

Interest Expense

Interest expense of $4,135 was up 17 percent compared to 1995 expense of $3,545.
The increase primarily related to higher debt levels in 1996.
<PAGE>
 
Income Tax Expense (Benefit)

The effective tax rate was 31.8 percent in 1996 and 37.8 percent in 1995.
Year-to-date results were used to develop the 1996 effective tax rate.

Net Earnings (Loss)

A net loss of $4,087 was recorded for the third quarter of 1996 compared to net
earnings of $8,698 for the same period in 1995.

Business Group Results

<TABLE> 
<CAPTION> 
                                                                                  Operating                        
                                              Net Sales                        Earnings (Loss)                     
                                     3Q 1996            3Q 1995            3Q 1996        3Q 1995                  
<S>                               <C>                <C>                <C>            <C>                         
Carbon & Alloy                    $    119,567            102,297             6,896          3,301                 
Stainless                              114,854            152,363            (5,398)        18,604                 
Corporate                                    -                  -            (3,358)        (4,377)                
                                  ------------       ------------       ------------   ------------                
                                  $    234,421            254,660            (1,860)        17,528                 
                                  ------------       ------------       ------------   ------------                
</TABLE> 

Carbon & Alloy Group

Net sales increased 17 percent. The increase was largely attributable to a 20
percent increase in shipments, particularly in the carbon steel product line.
Shipped tons were 159,600 tons in 1996 compared to 132,600 tons in 1995. The
sales improvement translated into a strong earnings improvement from the third
quarter of 1995. Although to a lesser extent, results continued to be impacted
by production disruptions and expenses associated with the commissioning of the
SMART system.

Stainless Group

Highly competitive conditions in the stainless steel market led to a 25 percent
decrease in sales. Increases in imported products contributed to depressed base
selling prices across all product lines. Shipments were 63,000 tons in 1996
compared to 63,500 tons in 1995. Excluding lower-value conversion tonnage,
shipments were down 12 percent from last year, primarily due to a decrease in
hot-rolled stainless product shipments.

The group recorded a loss in the third quarter. Lower margins due to a less
favorable shipment mix and lower selling prices contributed to the earnings
erosion.
<PAGE>
 
Results of Operations for the Thirty-nine Weeks Ended
September 28, 1996 and September 30, 1995

Operating Earnings (Loss)

The operating loss of $9,188 through three quarters compared to operating
earnings of $53,685 in 1995. Included in 1996 results was a work force reduction
provision of $10,782. Excluding the provision for comparison purposes, operating
earnings were $1,594, down 97 percent from 1995. The Stainless Group primarily
contributed to the decrease due to a highly competitive stainless steel market,
which put substantial pressure on base selling prices. The Carbon & Alloy Group
results were impacted by higher utility costs caused by severe winter weather
and by signing bonuses associated with a new labor contract for the Coatesville,
Pennsylvania, facility.

Sales for the first three quarters of $754,548 were 4 percent behind 1995 sales
of $786,442. The decrease resulted from weak business conditions in the
Stainless Group, partially offset by improvements in the Carbon & Alloy Group.

Interest Expense

Interest expense of $12,030 was up 24 percent compared to 1995 expense of
$9,729. Higher debt levels primarily contributed to the increase.

Income Tax Expense (Benefit)

The effective tax rate was 33.1 percent in 1996 and 37.8 percent in 1995.
Because of the unusual nature of the work force reduction provision, the tax
impact of 36.4 percent was recognized separately in the second quarter 1996
income tax provision. Excluding the work force provision, an effective rate of
29.9 percent was applied to 1996 results through the first three quarters.
Year-to-date results were used to develop the 1996 effective tax rate.

Net Earnings (Loss)

A net loss of $14,195 in 1996 compared to net earnings of $27,341 in 1995. On an
after-tax basis, the work force reduction provision recorded in the second
quarter reduced results by $6,859 in 1996.
<PAGE>
 
Business Group Results

<TABLE> 
<CAPTION> 
                                                                            Operating                          
                                          Net Sales                      Earnings (Loss)                       
                                  YTD 1996        YTD 1995           YTD 1996       YTD 1995                    
<S>                              <C>             <C>                <C>            <C>                          
Carbon & Alloy                   $   366,389         325,460            2,523           7,576                   
Stainless                            388,159         460,982              375          59,703                   
Corporate                                  -               -          (12,086)        (13,594)                  
                                 -----------     -----------        ----------     -----------                  
                                 $   754,548         786,442           (9,188)         53,685                   
                                 ===========     ===========        ==========     ===========                  
</TABLE> 

Carbon & Alloy Group

Net sales for three quarters increased 13 percent. The increase was largely
attributable to a 16 percent increase in shipments, particularly in the carbon
steel product line. Shipped tons were 498,800 tons in 1996 compared to 428,600
tons in 1995.

Earnings through three quarters were down 67 percent, primarily due to a work
force reduction charge of $6,178 recorded in the second quarter. Before the
provision, earnings of $8,701 were up 15 percent from 1995. Also impacting 1996
results was a $3,756 charge for signing bonuses associated with the new labor
agreement at the Coatesville, Pennsylvania, facility, higher utility costs
caused by severe winter weather and strike preparation costs. Although to a
lesser extent, results continued to be impacted by production disruptions and
expenses associated with the commissioning of the SMART system.

Stainless Group

Weak stainless steel market conditions led to a 16 percent decrease in sales.
Inventory corrections by our customers during the first half of the year reduced
cold-rolled stainless shipments and increased imported products significantly
reduced stainless selling prices across product lines. A lower-value shipment
mix also contributed to the decrease. Shipments for three quarters increased 
3 percent, from 196,900 tons in 1995 to 203,700 tons in 1996. The increase was
primarily due to lower-value conversion tonnage.

Earnings through three quarters were down significantly. Included in earnings
was a work force reduction charge of $3,695 recorded in the second quarter.
Excluding the unusual charge for comparison purposes, earnings of $4,070 were
down 93 percent. The decline reflected a significant deterioration in stainless
steel market conditions as previously discussed.
<PAGE>
 
                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

As of the end of the 1996 third quarter, there were 21 active workers'
compensation hearing loss claims alleged against Lukens Steel Company. This
includes five new workers' compensation hearing loss claims that were filed
against Lukens Steel Company during the 1996 third quarter.

Item 2.  Changes in Securities.

Lukens has a Shareholder Rights Plan designed to deter coercive or unfair
takeover tactics and to prevent a buyer from gaining control of Lukens without
offering a fair price to stockholders. The existing plan is scheduled to expire
in August 1997. At its meeting on September 25, 1996, the Board of Directors
adopted the Renewed Rights Agreement, a copy of which is attached as Exhibit
(4), and incorporated in this Item by reference.

Effective upon expiration of the existing plan, the Renewed Rights Agreement
entitles each outstanding share of common stock to one right. Each right
entitles stockholders to buy one one-hundredth of a share of Series A Junior
Participating Preferred Stock at an exercise price of $80. The rights become
exercisable if a person or group acquires or makes a tender or exchange offer
for 15 percent or more of common stock outstanding. The rights can also become
exercisable if the Board of Directors determines, with the concurrence of
outside directors, that a person has certain interests adverse to Lukens and has
acquired at least 10 percent of common stock outstanding.

If the company is then acquired in a merger or other business combination
transaction, each right will entitle the holder to receive, upon exercise,
common stock of either Lukens or the acquiring company having a value equal to
two times the exercise price of a right.

Lukens will generally be entitled to redeem the rights at $.01 per right at any
time until the tenth business day following public announcement that a
15 percent position has been acquired. The purchase rights will expire on 
September 25, 2006, unless the Board of Directors extends the final expiration 
date or redeems the rights earlier.

Item 5.  Other Information.

On October 10, 1996, Lukens published a letter from the Chief Executive Officer
to the shareholders regarding the decline in the common stock price, results for
the balance of the year and other management initiatives. A copy of the letter
is attached as Exhibit (19) and is incorporated in this Item by reference.
<PAGE>
 
Item 6.  Exhibits and Reports on Form 8-K.

(a)  Exhibits

     (4)    Renewed Rights Agreement, dated as of September 25, 1996
     (11)   Statement regarding computation of per share earnings
     (19)   Letter to Lukens Shareholders, dated October 10, 1996
     (27)   Financial Data Schedule

(b)  Reports on Form 8-K
     No report on Form 8-K was filed during the quarter ended September 28, 1996
<PAGE>
 
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                           LUKENS INC.




         November 1, 1996                  /s/ R. W. Van Sant
                                               --------------
                                               R. W. Van Sant
                                               Chairman and Chief Executive 
                                               Officer






         November 1, 1996                  /s/ John C. van Roden, Jr.
                                               ----------------------
                                               John C. van Roden, Jr.
                                               Senior Vice President, Chief 
                                               Financial Officer and Treasurer





         November 1, 1996                  /s/ P. Blaine Clemens
                                               -----------------
                                               P. Blaine Clemens
                                               Vice President and Controller