FINANCIAL REVIEW

OVERVIEW

Dravo Corporation's financial results following its first year
operating as a lime company were positive.  Demand was robust
throughout the year in most lime markets, and spot market pricing
was strong.  Earnings from continuing operations increased not
only compared to 1994's actual results, which included Dravo
Basic Materials (DBM), the construction aggregates operation that
was divested at the end of 1994, but on a pro forma basis as
well.  Dampening 1995 performance, however, were a series of
startup problems and delays encountered in connection with the
expansion of the company's Black River facility in northern
Kentucky.  Production levels and operational cost targets were
not met during the initial startup period.  However, toward the
end of the year and continuing through early 1996, production
rates and costs were more in line with expectations.

Progress continued in resolving discontinued operations issues.
A contract dispute with Continental Energy Associates (CEA)
related to CEA's Hazleton Gasification Facility was resolved.
The company paid $2.8 million as its share of the settlement. CEA
had claimed damages as high as $35 million.  The settlement was
within the amount provided in the previously established reserve
for discontinued operations for legal fees anticipated to
litigate the claim and, therefore, did not impact current
earnings.

Earnings for the year were $11.0 million, or $0.57 per share.  In
1994, Dravo reported a net loss of $10.6 million, or $0.88 per
share.  A charge to discontinued operations of $6.5 million was
recorded in 1994 for legal fees and to provide for the settlement
of a lawsuit brought in Venezuela for contract services provided
in the mid-1970s.  Also, an extraordinary charge of $7.6 million,
or $0.51 per share, was recorded to reflect the write-off of fees
associated with debt instruments that were prepaid or
substantially altered as a result of the DBM asset sale.  A one-
time charge of $1.4 million, or $0.09 per share, reflects the
cumulative accounting effect of the adoption of Statement of
Financial Accounting Standards No. 112, "Employers Accounting for
Postemployment Benefits."

In 1993, earnings from continuing operations were $35.1 million,
or $2.20 per share.  Included in the 1993 earnings results was a
$24.9 million deferred tax benefit.  Loss on discontinued
operations was $35.3 million, or $2.38 per share.  The net loss
of $177,000 equaled $0.18 per share after payment of preferred
dividends.









RESULTS OF OPERATIONS

CONTINUING OPERATIONS

Revenue: Revenue in 1995 was $146.1 million compared to $278.1
million in 1994, which included DBM for the entire year.  Lime
revenue in 1994 was $125.7 million.  The increased lime revenue
in 1995 was mainly due to first-year shipments to American
Electric Power's Gavin station under a 15-year supply contract.
Shipments under a new supply agreement with the Henderson
Municipal Power and Light Station operated by Big Rivers Electric
Cooperative and strong spot market pricing in 1995 also
contributed to the revenue increase.

Revenue of $278.1 million during 1994 was up slightly over 1993's
level.  Lime revenue of $125.7 million was down compared to 1993
due to price concessions granted in return for multi-year
extensions of long-term lime supply contracts and weather-related
problems in the first quarter.  The impact of these items was
partially mitigated, however, by increased demand for non-utility
lime in 1994.  Demand was especially strong for metallurgical
lime used in making steel and aluminum.

Costs and Expenses: Gross profit of $36.5 million was $7.5
million lower in 1995 than in 1994, which included DBM.  Margins,
however, were much improved: 25 percent in 1995 versus 16 percent
last year.  The improved margins reflect the dilutive effect the
aggregates business had on the company's margins before the
divestiture.  Gross margins on lime sales were slightly higher
than last year's pro forma results, but the increase was less
than expected because of start-up related production costs at
Black River.

Gross profit of $44.0 million in 1994 was down $5.3 million from
1993.  Lime and aggregates operations located in the Ohio River
Valley were negatively affected by a severe winter that caused
operating difficulties during the first quarter.  Price
concessions on long-term lime supply contracts impacted gross
profit, as did an unscheduled seven-week outage at one of the
company's electric utility customer's generating stations.
Production costs at the Black River operation were higher as
personnel were added in preparation for expanded underground
mining and start-up of the two new lime kilns.  Also, the write-
off of equipment being replaced as part of the plant expansion
and modernization project affected profit margins.
                             -12-
<PAGE>                       
Selling expense of $5.0 million was lower primarily due to the
DBM sale.  Selling expense also varies due to amounts of research
and development expense that can be billed to third parties.
These research activities involve a variety of lime-related
technologies, with particular emphasis on air pollution control.
Depending on the project, reimbursement may be made by
governmental agencies, public utilities or private groups for all
or a portion of project costs.  Research and development costs
and billings to third parties are detailed in Note 16, Research
and Development, in the Notes to Consolidated Financial
Statements.

General and administrative expenses were $6.3 million lower in
1995 than last year due to personnel reductions following the DBM
sale and consolidation of the company's administrative functions
at Dravo's Pittsburgh headquarters.  On a pro forma basis,
administrative expenses were higher because of differences
between actual experience and the assumptions used in preparing
the pro forma analysis.  Expenses in 1994 were reduced by more
than six percent from 1993.  The reduction reflects lower
staffing levels, employee and retiree medical expenses, and
travel expenses, as well as lower charges related to the
amortization of a non-cancelable lease obligation on a downtown
Pittsburgh office building.

Equity in earnings of joint ventures includes, in 1995, the
company's share in two 50-percent owned joint ventures: a
contract phosphate rock mining operation in Idaho and a small
contract coke operation in Wyoming.  Prior to 1995, the company
also had a 50-percent share in a shell dredging operation located
off the Louisiana coast.  Earnings from joint ventures were down
$1.1 million from 1994 due to higher maintenance expense at the
Idaho facility and the sale of the shell dredging operation as
part of the DBM transaction.  In 1994, results for the shell
dredging operation were significantly improved over 1993.  The
phosphate mining operation's profitability varies depending on
mining conditions and its single contract customer's
requirements.  Strong demand led to improved results in 1994 over
1993.

Other income includes the gain on the sale of property, plant and
equipment.  In 1995, the amount is insignificant.  The $1.1
million gain in 1994 includes the sale of the company's airplane,
$324,000, and $487,000 from the sale, after accrued expenses, of
DBM's assets.  See Note 3, Dispositions, in the Notes to
Consolidated Financial Statements for a further discussion of the
DBM sale transaction.  In 1993, a gain was recognized on the sale
of property in Baton Rouge, Louisiana, and excess floating
equipment, mainly barges.

The decline in interest income from 1994 reflects the collection,
early in 1995, of an interest bearing note receivable.  In 1994,
interest income was lower due to a lower balance on this same
note receivable and the cessation of an interest accrual on
another note.

Interest expense of $4.8 million in 1995 was significantly lower
than 1994's expense of $12.4 million.  The reduction reflects
lower debt levels as the company prepaid $85.5 million of loans
early in 1995 from cash received from the DBM transaction.  Lower
interest rates and the capitalization of interest associated with
the Black River expansion also lowered expense.  Interest expense
in 1994 was $3.2 million higher than 1993.  The higher expense
was due to higher interest rates on a prime rate-based line of
credit and fees paid to a prospective lender whose participation
in the Black River financing package was terminated by the
company.  Capitalized interest on major capital projects amounted
to $2.8 million and $1.4 million in 1995 and 1994, respectively.
No interest was capitalized in 1993.

Income tax expense of $340,000 represents an accrual for state
income taxes.  Significant net operating loss carryforwards
(NOLs) exist that shelter the company's income from most federal,
and some state, income taxes.  In 1994, income tax expense of
$597,000 included an accrual of $300,000 for federal alternative
minimum tax arising from the sale of DBM assets.  In 1993, a
benefit for income taxes of $24.9 million was recorded under the
provisions of Statement of Financial Accounting Standards No. 109
(SFAS 109), "Accounting for Income Taxes."  Management believes
that, due to the large proportion of revenue generated by long-
term supply contracts, income can be reasonably projected for
purposes of determining whether the realization of the asset
resulting from the utilization of NOLs in future years is more
likely than not.  The amount of the net deferred tax asset
reflects that portion of the gross deferred tax asset that
management believes, based on current projections and estimates,
is more likely than not to be realized.  After the recognition of
all NOLs have been reflected in the consolidated financial
statements, the company's tax rate will return to a more normal,
higher effective rate

In conjunction with the sale of DBM's assets, existing loan
agreements were substantially altered, including a $35 million
reduction in the amount available under a revolving credit
facility.  Also, while negotiating a $50 million financing
agreement with Prudential Power Funding for the Black River
expansion, the company purchased a call option that enabled it to
prepay on May 17, 1995, without penalty, amounts outstanding
under the financing agreement.  With Prudential Power Funding's
consent, the entire amount borrowed was prepaid.  The fees
associated with these agreements were written off as
extraordinary items in 1994.
                              -13-
<PAGE>
Effects of inflation:  Inflation rates have been low over the
past three years and as a result have not had a significant
effect on the company's operations. In addition, Dravo Lime's
long-term lime supply contracts provide for price increases for
specific production expenses, such as labor, fuel and
electricity.


DISCONTINUED OPERATIONS

A contract dispute with Continental Energy Associates (CEA) was
resolved in 1995.  The company's share of the settlement, $2.8
million, did not necessitate an additional provision for
discontinued operations.  In 1994, a previously established
provision for discontinued operations was increased $6.6 million.
The additional charge was taken to cover a $4.5 million
settlement involving an alleged breach of contract by the company
for work performed between 1973 and 1978 in Venezuela.  The
balance of the provision was, for the most part, estimated legal
fees for the CEA dispute and an insurance claim.  As noted, the
CEA dispute was subsequently settled.  The second matter involves
the company's assertion that it is entitled to a defense and
indemnity under its contracts of insurance for environmental
clean-up costs in Hastings, Nebraska.  See Note 8, Contingent
Liabilities, in the Notes to Consolidated Financial Statements
for a further discussion of the Hastings matter.

In 1993, a $35.3 million charge was recorded.  The provision was
primarily to cover a settlement agreement with the City of Long
Beach, California, which included the company giving up its claim
to unpaid receivables and interest totaling $18 million.  The
provision also recognized an increase in the estimated
environmental clean-up costs at the Hastings superfund site,
write-off of a note receivable due to an unfavorable court ruling
and additional legal fees.


FINANCIAL POSITION AND LIQUIDITY

Significant changes on the company's balance sheet from December
31, 1994 to year-end 1995 resulted principally from the
collection of a $120.5 million receivable from Martin Marietta
Materials, Inc. (Martin Marietta) relating to the sale of DBM.
The company completed negotiations on December 30, 1994 for the
sale of substantially all the assets and certain liabilities of
DBM to Martin Marietta effective January 3, 1995.  The balance
sheet at December 31, 1994, reflected the effect of the sale
transaction, in that the assets and liabilities sold were removed
and a $120.5 million receivable from Martin Marietta recorded.
In early 1995, the receivable was satisfied with cash, a portion
of which was used to prepay $85.5 million of debt.  The
substantial reduction in accounts payable resulted from the
satisfaction of DBM payables outstanding at December 31, 1994.

Long-term debt increased $21.8 million from year-end 1994 due to
$27.9 million borrowed under a revolving credit facility,
partially offset by $6.1 million reclassified from long-term debt
to a current obligation.  The increase in the outstanding debt
under the revolving credit facility is due primarily to funding
the Black River expansion project.

The company has sufficient funds and borrowing capacity to meet
its anticipated operating and capital needs.  To minimize
interest charges, cash balances are kept low through a banking
arrangement that uses excess cash held in the company's accounts
to reduce the amount of overnight borrowing on the revolving
credit agreement.

Effective October 1, 1995, a revolving credit/letter of credit
facility provided by a consortium of lenders that includes First
Alabama Bank; PNC Bank, N.A.; and Bank of America Illinois was
increased to $65 million.  Interest on the revolver equals either
the base lending rate of Regions Financial Corporation, First
Alabama Bank's parent, or, at the option of the company, the
Eurodollar interest rate plus two percent.  The facility expires
July 31, 1997, but includes renewal provisions.

The company intends to use a portion of the line of credit to
finance construction of a new kiln and related material-handling
equipment at its Maysville facility.  On July 31, 1997, up to $17
million borrowed under the facility may be converted to a five-
year term loan.  Also on July 31, 1997, the amount available
under the revolver will be reduced from $65 million to $45
million.

Obligations under the revolving credit/letter of credit facility
and senior term notes are secured by a pledge of the stock of
Dravo Lime Company and Dravo Basic Materials Company along with
Dravo Lime Company's accounts receivable and finished goods
inventories.  Additionally, certain contract rights, patents and
mortgages on the company's Maysville, Black River and Longview
plants have been pledged as collateral.  The agreements contain
uniform restrictive covenants that require the company to
maintain minimum net worth levels and fixed charge ratios on a
consolidated basis; restrict incurrence of debt, liens and lease
obligations; restrict the sale of significant assets; and limit
payment of dividends.  These restrictions are not expected to
have an adverse impact on the company's ability to meet its
obligations.

All known outstanding discontinued operations items have been
classified as current or long-term based on the estimated timing
of future cash receipts and disbursements.  The discontinued
operations liabilities do not have a material adverse impact on
liquidity because cash payments needed to satisfy them are spread
over several years.
                               -14-
<PAGE>
In January, 1995, the Board of Directors approved a program
whereby the company was authorized to purchase up to 250,000
shares of its common stock on the open market.  During the year,
over 228,000 shares were repurchased.  The shares are being held
in the treasury and will be used for general corporate purposes.


DIVIDENDS

The company's loan agreement contains a covenant that limits
common stock dividend payments.  A common stock dividend may not
be declared if that dividend plus all other common dividends paid
after September 30, 1995, exceeds 25 percent of cumulative
earnings from continuing operations after September 30, 1995.
Cumulative earnings exclude gains from the sale of capital
assets, extraordinary gains and unremitted earnings of joint
ventures. At December 31, 1995, cumulative earnings since
September 30, 1995, from which dividends could be declared
totaled $2.8 million.  No dividends on common stock were
declared.  Dividends on the $3.0875 cumulative, convertible,
exchangeable, Series D Preference Stock and the $2.475 cumulative
convertible Series B Preference Stock were declared quarterly
throughout each of the last three years.  All declared preference
dividends have been paid on a timely basis.


COMMON STOCK MARKET PRICE

The principal market on which Dravo's common stock is traded is
the New York Stock Exchange under the symbol, DRV.  The high and
low common stock sales prices for each quarterly period in 1995
and 1994 as reported for New York Stock Exchange composite
transactions were:
<TABLE>
                         1995                     1994
<CAPTION>
Quarter             High      Low            High      Low

<S>                 <C>       <C>            <C>       <C>
First               11 3/4    10             13 3/8    10 1/4
Second              14 3/4    10 1/4         12 1/4    10
Third               14 3/4    12 1/2         12 5/8     9 1/2
Fourth              13 5/8    11 1/2         12         9 3/4
</TABLE>

OUTLOOK

Continuing operations: Dravo Corporation successfully completed
its first year operating as a lime business.  With over two-
thirds of production capacity committed under long-term utility
and merchant lime contracts, and the balance expected to be sold
into strong spot markets, the company foresees building on the
progress made in 1995.

A major expansion at Black River, despite delays and start-up
problems, is now performing at the level envisioned in the
project design.  The next major capital project, the installation
of a new kiln and related material-handling equipment at the
company's Maysville, Kentucky, facility, is scheduled for
completion in early 1997.  The project will cost approximately
$20 million and will add 350,000 tons of annual capacity.  A
smaller, but important project, will be the refurbishing of an
older-existing kiln at Black River.  The project will increase
production of the kiln while significantly reducing its
production costs.

The Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS 123) in October, 1995.  Financial
statements presented for fiscal 1996 will measure the fair value
of stock-based compensation awarded to employees in 1995 and
thereafter.  SFAS 123 allows companies a choice between
continuing to account for stock-based awards using the intrinsic
value, as prescribed by Accounting Principles Board Opinion No.
25 (APB 25), or the fair value.  If the company chooses to
continue following APB 25, the pro forma effect the fair value
methodology would have had on net income and earnings per share
will be disclosed.  The company has not yet determined the
magnitude of the difference between the intrinsic value and fair
value approaches nor the method it will choose to account for
stock-based compensation.

The FASB also issued SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
(SFAS 121).  SFAS is effective for fiscal years beginning after
December 31, 1995.  The effect of adopting SFAS 121 will be
immaterial to the company.

Discontinued operations:  The company formerly operated a metal
fabrication facility in Hastings, Nebraska.  The federal
Environmental Protection Agency (EPA) has notified the company it
believes the company is a potentially responsible party (PRP) for
the clean-up of soil and groundwater contamination at four sub-
sites in the Hastings area.  See Note 8, Contingent Liabilities,
in the Notes to Consolidated Financial Statements for further
discussion of the company's estimate of total clean-up costs and
its share of those costs.

Management believes the provision for losses on discontinued
operations is adequate at this time.  However, in establishing
the provision and monitoring it, the costs of exiting
discontinued businesses and pursuing the company's rights through
litigation were estimated.  A ruling by the courts or a
settlement of the disputes that is adverse to Dravo's position,
or other unforeseen developments, could require a future
additional provision for discontinued operations.
                              -15-
<PAGE>

               DRAVO CORPORATION AND SUBSIDIARIES

                   Consolidated Balance Sheets
<TABLE>
                                               December 31,
                                              1995      1994
<CAPTION>
(In thousands)

ASSETS
 <S>                                       <C>       <C>
Current assets:
 Cash and cash equivalents                $  1,086  $  2,027
 Receivable from sale of Dravo Basic
  Materials Company (Note 3)                    --   120,464
 Accounts receivable, net of allowance for
  uncollectibles of $934 and $108           24,251    20,138
 Notes receivable (Note 15)                  1,296     2,803
 Inventories (Note 4)                       14,194    12,638
 Net assets of discontinued
  operations (Note 2)                          923        --
 Other current assets                        1,322     2,067

Total current assets                        43,072   160,137

Advances to and equity in joint ventures     2,466     2,536
Notes receivable (Note 15)                   3,497     5,061
Other assets                                23,205    21,281
Deferred income taxes (Note 13)             24,853    24,853

Property, plant and equipment:
  Land                                       6,164     6,127
  Mine development                           9,218     8,376
  Building and improvements                 11,562     9,722
  Machinery and other equipment            198,891   171,108

                                           225,835   195,333

  Less accumulated depreciation
   and amortization                        109,667   101,872

Net property, plant and equipment          116,168    93,461

Total assets                              $213,261  $307,329

</TABLE>
See accompanying notes to consolidated financial statements.
                              -16-
<PAGE>
               DRAVO CORPORATION AND SUBSIDIARIES

                   Consolidated Balance Sheets
<TABLE>
                                               December 31,

<CAPTION>
                                              1995      1994
(In thousands,
  except share amounts)

LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                        <C>       <C>
Current liabilities:
  Current  portion of long-term 
   notes (Notes 5  and  15)              $   6,099  $ 85,077
 Accounts payable - trade                   17,969    36,257
 Accrued insurance                           1,639     2,265
 Accrued retirement contribution             2,423     2,388
  Net  liabilities of discontinued
   operations  (Note  2)                        --    13,547
 Other current liabilities                   5,177    14,264

 Total current liabilities                  33,307   153,798

Long-term notes (Notes 5 and 15)            64,292    42,440
 Other liabilities                           6,290     5,900
Net  liabilities  of discontinued
 operations  (Note  2)                       9,517     8,445

Redeemable preference stock (Notes 6 and 15):
 Par value $1, issued 200,000 shares:
  cumulative, convertible, exchangeable
   Series D (entitled in liquidation 
   to $20.0 million)                        20,000    20,000

Shareholders' equity (Notes 6 and 12):
Preference stock, par value $1, authorized
  1,878,870 shares: Series B, $2.475
  cumulative, convertible, issued 25,386
  and 28,386 shares (entitled in liquidation
  to $1.4 million and $1.6 million);
  Series D, reported above                      25        28
Common stock, par value $1, authorized
  35,000,000  shares: issued 15,055,237
  and 14,985,839 shares                     15,055    14,986
Other capital                               60,818    63,554
Retained earnings                            8,464        18
 Treasury stock at cost;
  347,691 and 119,221 common shares         (4,507)   (1,840)

Total shareholders' equity                  79,855    76,746

Total liabilities and shareholders'
 equity                                   $213,261  $307,329

</TABLE>


See accompanying notes to consolidated financial statements.
                              -17-
<PAGE>
               DRAVO CORPORATION AND SUBSIDIARIES

              Consolidated Statements of Operations
<TABLE>
<CAPTION>
                                           Years ended December 31,
(In thousands, except per share data)    1995      1994      1993
<S>                                   <C>       <C>       <C>
Revenue                              $146,067  $278,052  $277,590
Cost of revenue                       109,541   234,018   228,266

  Gross profit                         36,526    44,034    49,324

Selling expenses                        5,009     7,116     7,602
General and administrative expenses    16,228    22,497    24,058

  Earnings from operations             15,289    14,421    17,664

Other income (expense):
  Equity  in  earnings (loss)
   of joint ventures                      572     1,672       (18)
 Other income                             182     1,088       692
 Interest income                           85       754     1,327
 Interest expense                      (4,807)  (12,408)   (9,194)

  Net other expense                    (3,968)   (8,894)   (7,193)

Earnings  before  taxes  from
 continuing operations                 11,321     5,527    10,471
Income tax expense (benefit) (Note 13)    340       597   (24,655)

Earnings from continuing operations    10,981     4,930    35,126
Loss on discontinued operations (Note 2)   --     6,554    35,303

Earnings (loss) before extraordinary item
  and cumulative accounting change     10,981    (1,624)     (177)
Extraordinary item (Note 14)               --    (7,572)       --
Cumulative  effect  of accounting
 change (Note  10)                         --    (1,361)       --

  Net earnings (loss)                  10,981   (10,557)     (177)
Preference dividends                    2,535     2,544     2,554

Net  earnings  (loss) available
 for common stock                   $   8,446  $(13,101) $ (2,731)

Weighted average shares outstanding    14,875    14,859    14,835

Primary earnings (loss) per share:
  Continuing operations              $   0.57  $   0.16  $   2.20
  Discontinued operations                  --     (0.44)    (2.38)
  Extraordinary item                       --     (0.51)       --
  Cumulative effect of accounting change   --     (0.09)       --

Net earnings (loss)                  $   0.57  $  (0.88) $  (0.18)
</TABLE>
See accompanying notes to consolidated financial statements.
                              -18-
<PAGE>
               DRAVO CORPORATION AND SUBSIDIARIES

          Consolidated Statements of Retained Earnings
<TABLE>
<CAPTION>

                                           Years ended December 31,
(In thousands, except per share data)     1995     1994      1993
<S>                                     <C>      <C>       <C>

Retained earnings at beginning of year $    18 $ 13,119  $ 15,850
Net earnings (loss)                     10,981  (10,557)     (177)

                                        10,999    2,562    15,673

Dividends declared:    1995  1994   1993

Series B preference
 stock $ 2.475 $ 2.475 $  2.475             65         74      84
Series D preference
 stock 12.350 12.350 12.350              2,470      2,470   2,470

                                         2,535      2,544   2,554

Retained earnings at end of year       $ 8,464  $      18 $13,119
</TABLE>

See accompanying notes to consolidated financial statements.
                              -19-
<PAGE>
               DRAVO CORPORATION AND SUBSIDIARIES

              Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                   Years  ended December 31,
(In thousands)                                      1995      1994      1993
<S>                                               <C>       <C>       <C>

Cash flows from operating activities:
Earnings from continuing operations              $ 10,981  $  4,930  $ 35,126
Adjustments to reconcile earnings from
 continuing operations to net cash provided
 (used) by continuing operations activities:
  Depreciation and amortization                     9,536    17,626    17,985
  Change in accounting principle                       --    (1,361)       --
  Gain on sale of assets                             (182)   (1,088)     (692)
  Equity in joint ventures                             70      (116)   (2,155)
  Changes in assets and liabilities, net of
      effects from DBM disposition:
   Increase in accounts receivable                 (4,113)     (143)   (5,410)
   Decrease in notes receivable                       568       464     1,008
   Decrease (increase) in inventories              (1,556)    3,909     6,311
   Decrease (increase) in other current assets        745      (869)      721
   Increase in other assets                        (5,150)   (6,302)   (2,373)
   Increase in deferred income taxes                   --        --   (24,853)
   Increase (decrease) in accounts payable
    and accrued expenses                          (27,142)    7,873       947
   Increase (decrease) in income taxes payable       (144)      329       (20)
   Increase in other liabilities                      390     3,178        71

   Total adjustments                              (26,978)   23,500    (8,460)

Net cash provided (used) by continuing
 operations activities                            (15,997)   28,430    26,666

Loss from discontinued operations                      --    (6,554)  (35,303)
Increase (decrease) in net liabilities of
 discontinued operations                          (13,099)   (4,592)   21,647
Proceeds from repayment of notes receivable
 from sale of discontinued operations               2,200     1,600     1,992

Net cash used by discontinued
 operations activities                            (10,899)   (9,546)  (11,664)
Net cash used by extraordinary item                    --    (7,572)       --

Net cash provided (used) by
 operating activities                           $(26,896)   $11,312  $ 15,002

</TABLE>

See accompanying notes to consolidated financial statements
                                  -20-
<PAGE>

               DRAVO CORPORATION AND SUBSIDIARIES

              Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                   Years  ended December 31,
(In thousands)                                      1995      1994      1993
<S>                                               <C>       <C>       <C>

Cash flows from investing activities:
Proceeds from sale of assets                     $120,867  $  2,148  $  1,249
Additions to property, plant and equipment        (33,144)  (44,757)  (13,646)
Other, net                                              3       509      (553)

Net cash provided (used) by
 investing activities                              87,726   (42,100)  (12,950)

Cash flows from financing activities:
Net borrowing under revolving
 credit agreements                                 27,948    19,300     4,600
Principal payments under long-term notes          (85,259)   (4,736)   (4,446)
Principal payments under capital
 lease obligations                                     --        --      (306)
Proceeds from issuance of long-term notes             185    19,945       391
Proceeds from issuance of common stock                557        42       101
Purchase of treasury stock                         (2,667)       --        --
Dividends                                          (2,535)   (2,544)   (2,554)

Net cash provided (used) by
 financing activities                             (61,771)   32,007    (2,214)

Net increase (decrease) in cash
 and cash equivalents                                (941)    1,219      (162)
Cash and cash equivalents at beginning of year      2,027       808       970

Cash and cash equivalents at end of year         $  1,086   $ 2,027   $   808

Supplemental disclosures of cash flow information:
Cash paid (received) during the year for:
 Interest (net of amount capitalized)            $  5,695   $12,408   $ 9,195
 Income tax                                           175      (143)      487

</TABLE>
See accompanying notes to consolidated financial statements.
                                 -21-
<PAGE>
               DRAVO CORPORATION AND SUBSIDIARIES

           Notes to Consolidated Financial Statements


Note 1: Summary of Significant Accounting Policies

Description   of   Business:   The  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.  Lime is sold to electric  utility
companies  under  long-term contracts and to  the  pulp  and
paper,   metals,   chemicals,  municipal  and   construction
markets.   Three  major  utility companies,  with  whom  the
company  has  long-term contracts, each accounted  for  more
than 10 percent of consolidated revenue in 1995. 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 assets and liabilities  sold  are
removed  from  the  company's December  31,  1995  and  1994
consolidated balance sheets.  The December 31, 1994 and 1993
consolidated   statements  of  operations  and  consolidated
statements of cash flows include the results of DBM for  the
entire year.

Principles   of  Consolidation:   Significant   intercompany
balances  and  transactions  have  been  eliminated  in  the
consolidation process.

Use  of  Estimates:  The preparation of financial statements
in  conformity with generally accepted accounting principles
requires  management to make estimates and assumptions  that
affect  the  reported amounts of assets and liabilities  and
disclosure of contingent assets and liabilities at the  date
of  the  financial  statements and the  reported  amount  of
revenues  and expenses during the reporting period.   Actual
results could differ from those estimates.

Cash  and Cash Equivalents:  For purposes of reporting  cash
flows,   the  company  considers  all  highly  liquid   debt
instruments  purchased with a maturity of  three  months  or
less to be cash equivalents.

Inventories:   Inventories are valued at average  production
cost  or  market, whichever is lower.  The cost of  products
produced  includes raw materials, direct labor and operating
overhead.

Property,  Plant,  Equipment  and  Depreciation:   Property,
plant  and  equipment  are stated  at  cost.   The  cost  of
buildings,  equipment  and  machinery  is  depreciated  over
estimated   useful   lives   on   a   straight-line   basis.
Expenditures  for  maintenance  and  repairs  which  do  not
materially   extend  the  lives  of  assets   are   expensed
currently.  The asset cost and accumulated depreciation  are
removed  from  the accounts for assets sold or retired,  and
any  resulting gain or loss is included in other income  and
expense.


               DRAVO CORPORATION AND SUBSIDIARIES

           Notes to Consolidated Financial Statements


Note   1:   Summary   of  Significant  Accounting   Policies
(continued)

Income  Taxes:   Deferred  income  taxes  reflect  the   tax
consequences on future years of differences between the  tax
bases   of   assets  and  liabilities  and  their  financial
reporting  amounts.   Future  tax  benefits,  such  as   net
operating  loss carryforwards, are recognized to the  extent
that realization of such benefits are more likely than not.

Earnings Per Share:  Primary earnings per share are based on
net earnings less preference dividends declared in the year,
divided  by  the  weighted  average  sum  of  common  shares
outstanding  during  the year and common share  equivalents.
Shares  exercisable  as  employee stock  options  and  stock
appreciation rights are considered common share  equivalents
except when their inclusion would be anti-dilutive.  Primary
common share equivalents are calculated based on the average
common stock price for the year.  Fully diluted earnings per
share  are based on net earnings, divided by the sum of  the
weighted average number of common shares outstanding  during
the  year, weighted average number of shares resulting  from
the assumed conversion of issued preference shares to common
shares  and common share equivalents.  Fully diluted  common
share equivalents are calculated based on the higher of  the
average  or  ending common stock price for the year.   Fully
diluted  earnings per share are anti-dilutive in 1995,  1994
and 1993 and are not presented.

Note 2:  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.  An additional charge of $6.5
million was taken in 1994 for discontinued operations.  The
charge included $4.5 million to settle a claim that alleged
the company breached a contract relating to engineering and
procurement services rendered between 1973 and 1978 for a
sugar cane processing facility in Venezuela.  The provision
also included amounts for legal fees anticipated to pursue
                               -22-
<PAGE>

various lawsuits and claims, the most significant being the
Hastings insurance litigation discussed in Note 8,
Contingent Liabilities, and a contract dispute with
Continental Energy Associates (CEA).  The CEA dispute was
settled in 1995 and did not exceed the amount provided in
the discontinued operations provision.

A $35.3 million provision for discontinued operations
expenses was recorded in 1993. The provision covered the
write-off of receivables and accrual of a settlement
relating to a resource recover facility built in Long Beach,
California; updated estimates of the potential costs to
clean-up soil and groundwater contamination at a former
operation located in Hastings, Nebraska; write-down of a
receivable from a Portland, Maine, utility to reflect a jury
award; and estimated legal fees.

The company received cash proceeds of $2.2 million in 1995,
$1.6 million in 1994 and $2.0 million in 1993 from the
repayment of notes received from the previous sales of
discontinued businesses.

The remaining discontinued operations' assets and
liabilities for the respective years ended December 31
relate to non-cancelable leases, environmental, insurance,
legal and other matters associated with exiting the
engineering and construction business and are presented
below:

<TABLE>
(In thousands)                             1995         1994
<CAPTION>
<S>                                      <C>         <C>

Current assets:
Accounts and retainers receivable       $   122     $     24
Other                                     7,185           --
  Total current assets                    7,307           24

Accounts and retainers receivable           333          444
Other                                       309        5,121
  Total assets                          $ 7,949     $  5,589

Current liabilities:
Accounts and retainers payable          $   140     $     63
Accrued loss on leases                    2,240        2,315
Other                                     4,004       11,193

  Total current liabilities               6,384       13,571

Accrued loss on leases                    3,328        5,632
Other                                     6,831        8,378

  Total liabilities                     $16,543      $27,581

Net liabilities and accrued loss
 on leases of discontinued operations   $(8,594)    $(21,992)
</TABLE>


               DRAVO CORPORATION AND SUBSIDIARIES

           Notes to Consolidated Financial Statements


Note 3:  Dispositions

The company completed a transaction on December 30, 1994 in which
it sold to Martin Marietta Materials, Inc. (Martin Marietta),
effective January 3, 1995, substantially all the assets of its
construction aggregates business.  Assets sold included the
assets, properties and leases of Dravo Basic Materials Company,
Inc. (DBM), a wholly owned subsidiary of the company, and
Atchafalaya Mining Company, Inc. (AMC), a wholly owned subsidiary
of DBM, used in the production, marketing, distribution and sale
of various aggregate products.  Also sold was the capital stock
of Dravo Bahama Rock Limited (DBR), a wholly owned foreign
subsidiary of DBM.

The company, DBM and AMC retained substantially all obligations
and liabilities which arose from, or in connection with,
operations prior to the sales transaction.  After expenses, a net
pre-tax gain of $487,000 was recorded as other income.

The assets and liabilities sold to Martin Marietta were removed
from the company's December 31, 1994 balance sheet, and a
corresponding receivable from the sale of DBM of $120.5 million
was recorded.  The December 31, 1994 consolidated statement of
operations includes the results of DBM for the entire year.

The following pro forma consolidated statement of operations
presents the results of operations assuming the disposition of
DBM had been completed as of the beginning of 1994. Adjustments
have been made to exclude the results of DBM, to decrease
interest expense for loans prepaid in early 1995 from the sale
proceeds, and to record interest income at overnight investment
rates for cash assumed to have been received in excess of
liabilities paid.  Pro forma data is provided for comparative
purposes only and does not purport to be indicative of the
results which actually would have been obtained if the
disposition had taken place prior to the pro forma dates.
                              -23-
<PAGE>

(In thousands, except per share data)
<TABLE>
<CAPTION>
                                             December 31,
                                            1995     1994
                                            Actual Pro Forma
                                                  (Unaudited)
<S>                                        <C>       <C>

Revenue                                   $146,067  $125,661
Cost of revenue                            109,541    94,859

Gross profit                                36,526    30,802

Selling expenses                             5,009     4,530

General and administrative expenses         16,228    12,872

 Earnings from operations                   15,289    13,400

Other income (expense):
 Equity in earnings of joint ventures          572     1,115
 Other income                                  182       199
 Interest income                                85     1,727
 Interest expense                           (4,807)   (5,717)
  Net other expense                         (3,968)   (2,676)

Earnings before taxes from
 continuing operations                      11,321    10,724

Income tax expense                             340       489

Earnings from continuing operations      $  10,981 $  10,235

Earnings per share, continuing operations$    0.57 $    0.52
</TABLE>

Note 4:  Inventories
<TABLE>
Inventories for the respective years ended December  31  are
classified as follows:
<CAPTION>
(In thousands)                           1995      1994
<S>                                    <C>       <C>

Finished goods                        $ 1,677   $ 1,834
Materials and supplies                 12,517    10,804

Net inventories                       $14,194   $12,638

</TABLE>

Note 5:  Notes Payable
<TABLE>
Notes payable at December 31 include the following:
<CAPTION>
(In thousands)
                                           1995         1994
<S>                                      <C>         <C>

Short-term:
Current portion of long-term notes      $ 6,099     $ 85,077

Total short-term                          6,099       85,077

Long-term:
Variable rate revolving line of credit   27,950       55,800
Variable rate note                           --        6,297
9.95% notes                                  --        2,800
10.13% notes                                 --       19,944
11.21% notes, payable through 2002       41,800       41,800
Other notes, payable through 2005           641          876

                                         70,391      127,517
Deduct: Current portion of notes          6,099       85,077
Total long-term notes                   $64,292     $ 42,440
</TABLE>

The following is a description of the terms and conditions
of the company's major debt instruments:

The $27.9 million note payable was borrowed under a $65.0
million revolving credit/letter of credit facility with
First Alabama Bank; PNC Bank, N.A.; and Bank of America
Illinois.  Interest on the revolver equals either the base
lending rate of Regions Financial Corporation, First Alabama
Bank's parent, or , at the option of the company, the
Eurodollar interest rate plus two percent.  The facility
expires July 31, 1997, but includes renewal provisions.

The company intends to use a portion of the line of credit
to finance construction of a new kiln and related material-
handling equipment at its Maysville facility.  On July 31,
1997, up to $17.0 million borrowed under the facility may be
converted to a five-year term loan.  Also on July 31, 1997,
the amount available under the revolver will be reduced from
$65.0 million to $45.0 million.

The variable rate note, 9.95 percent promissory notes and
10.13 percent construction notes were prepaid early in 1995
from a portion of the Dravo Basic Materials sale proceeds.

The 11.21 percent term notes require quarterly interest
payments and annual principal repayments in the amount of
$6.0 million beginning January, 1996.

Obligations under the revolving credit/letter of credit
facility and the 11.21 percent term notes are secured by a
pledge of the stock of Dravo Lime Company and Dravo Basic
Materials Company along with Dravo Lime Company's accounts
receivable and finished goods inventories.  Additionally,
certain contract rights, patents and mortgages on the
company's Maysville, Black River and Longview plants have
been pledged as collateral.  The agreements contain uniform
restrictive covenants that require the company to maintain
minimum net worth levels and fixed charge ratios on a
consolidated basis; restrict incurrence of debt, liens and
lease obligations; restrict the sale of significant assets,
and limit payment of dividends.  The company may not declare
a common stock dividend if that dividend plus all other
common dividends paid after September 30, 1995, exceed 25
percent of cumulative earnings from continuing operations
after September 30, 1995.  Cumulative earnings exclude gains
from the sale of capital assets, extraordinary gains and
unremitted earnings of joint ventures.  At December 31,
1995, cumulative earnings since September 30, 1995, from
which dividends could be declared totaled $2.8 million.  No
dividends on common stock were declared.
<PAGE>

Assets pledged under certain notes and leases had a book
value of $133.4 million at December 31, 1995.

In February, 1993, the company entered into an interest rate
swap agreement with Continental Bank, N.A. on the $41.8
million fixed rate long-term notes payable.  The transaction
was accounted for as a hedge of those notes.  On December
30, 1994, the company paid $1.4 million to terminate the
swap agreement.

Amounts payable on long-term debt due in 1996 and thereafter
are: 1996, $6.1 million; 1997, $6.1 million; 1998, $6.1
million; 1999, $6.0 million; 2000, $6.0 million; and after
2000, $12.1 million.

Note 6:  Redeemable Preference Stock

The  company  has outstanding 200,000 shares of  cumulative,
convertible,   exchangeable,  Series  D  Preference   Stock.
Cumulative  dividends  of  $3.0875  per  share  are  payable
quarterly.  Each share of preference stock may be converted,
at  the  option  of  the holder, into 8.0 shares  of  common
stock. The stock is also exchangeable, at the option of  the
company,  for 12.35 percent Senior Subordinated  Convertible
notes  due  September  21, 2001.  The 12.35  percent  Senior
Subordinated Notes would contain the same conversion rights,
restrictions and other terms as the preference stock.

The  company  may redeem the Series D Preference  Stock,  in
whole or in part, after January 21, 1996, for $100 per share
plus  accrued dividends, provided that the market  price  of
common  stock as of the date of the decision to  redeem  the
shares,  as  defined  in  the Certificate  of  Designations,
Preferences  and  Rights for the Series D Preference  Stock,
shall  be  at  least equal to 175 percent of the  conversion
price for the preference stock.  Mandatory annual redemption
of  the lesser of 50,000 shares or the number of shares then
outstanding  begins September 21, 1998, at  $100  per  share
plus accrued dividends.  In the event of liquidation of  the
company,  the  holders of outstanding  Series  D  Preference
Stock  shall be entitled to receive a distribution  of  $100
per share plus all accumulated and unpaid dividends.

The  company  had  outstanding 25,386 and 28,386  shares  of
cumulative,  convertible  Series  B  Preference   Stock   on
December 31, 1995 and 1994, respectively.  Cumulative annual
dividends  of $2.475 per share are payable quarterly.   Each
share  of Series B Preference Stock may be converted at  the
option  of  the holder to 3.216 shares of common stock.   In
the  event of the company's liquidation, the holders of  the
Series B Preference Stock are entitled to $55 per share plus
all accumulated and unpaid dividends.

Note 7:  Commitments

Total  rental  expense for 1995, 1994,  and  1993  was  $3.1
million, $35.2 million and $34.4 million, respectively.  The
minimum gross rentals under non-cancelable operating  leases
for  these years were $13.0 million, $17.3 million and $17.5
million,  respectively.   Of these amounts,  $10.5  million,
$10.5  million  and $10.4 million in 1995,  1994  and  1993,
respectively,   were  provided  for  in   the   discontinued
operations provision.

The  minimum  future rentals under non-cancelable  operating
leases  and future rental receipts from subleases  to  third
parties  as  of  December  31, 1995  are  indicated  in  the
following table.  Of the $10.7 million net minimum payments,
$5.6  million relates to, and has been expensed as part  of,
discontinued operations.
<TABLE>
Minimum Future Rentals and Rental Receipts
<CAPTION>
(In thousands)
<S>                                   <C>

1996                                 $ 12,382
1997                                   12,051
1998                                    3,757
1999                                       --
2000                                       --
After 2001                                 --

Total minimum payments required        28,190
Less: Sublease rental receipts       (17,514)

Net minimum payments                 $ 10,676
</TABLE>

A  joint  venture phosphate mining operation, in  which  the
company is a 50 percent partner, has credit available  under
a  bank loan agreement for equipment purchases.  The company
would be required to repay the entire loan in the event of a
failure of both the joint venture and the other partner.  At
December  31, 1995 and 1994, $4.6 million and $2.9  million,
respectively, was borrowed under the agreement.

At  December  31, 1995 and 1994, the company had outstanding
letters  of  credit totaling $5.0 million and $7.5  million,
respectively.

Note 8:  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
                                -25-
<PAGE>
closed prior to the
time the company and its predecessor initiated the operation
which generated the type of 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 has
agreed to participate in an EPA-initiated allocation proceeding
for this sub-site.

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 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 in 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.

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.

Note 9:  Retirement Plans

The   company   has  several  defined  benefit   plans   covering
substantially all employees.  Benefits for the salaried plan  are
based  on  salary  and years of service, while hourly  plans  are
based on negotiated benefits and years of service.  The company's
funding  policy  is  to make contributions as  are  necessary  to
provide assets sufficient to meet the benefits to be paid to plan
members  in  accordance  with the requirements  of  the  Employee
Retirement Income Security Act of 1974.  Plan assets are composed
primarily  of  government  securities  and  corporate  debt   and
equities.
                                 -26-
<PAGE>
<TABLE>
The  status  of  combined employee pension benefit  plans  as  of
December 31, 1995 and 1994 is shown below:
<CAPTION>
                                 1995                               1994
                 Plans which have   Plans which have   Plans which have   Plans which have
                   funded assets       accumulated       funded assets       accumulated
                    in excess of         benefit         in excess of          benefit
                     accumulated       obligations        accumulated        obligations
                       benefit        in excess of          benefit         in excess of
(In thousands)       obligations     funded assets        obligations      funded assets
<S>                      <C>               <C>               <C>               <C>

Actuarial present
 value of projected
 benefit obligation:
Vested employees        $179,649          $27,100           $147,801          $21,567
Non-vested employees         277              855                284            1,710
Accumulated benefit
 obligation              179,926           27,955            148,085           23,277
Effect of projected
 future salary increases   3,264            1,410              2,130              398
Total projected
 benefit obligation      183,190           29,365            150,215           23,675
Plan assets              182,661           19,555            148,303           18,357
Assets less than projected
 benefit obligation         (529)          (9,810)            (1,912)          (5,318)
Unamortized net (asset)
 liability existing
 at transition date            0              325               (687)             367
Unrecognized net loss from
 actuarial experience     22,450            7,187             20,888            2,755
Adjustment to recognize
 minimum liability           --            (6,175)                --           (2,922)
Prepaid (accrued)
 pension expense       $ 21,921           $(8,473)          $ 18,289         $ (5,118)
</TABLE>

The sale of Dravo Basic Materials' assets resulted in the termination
of  employment  for essentially all Dravo Basic Materials  employees
and  certain executive and administrative employees of a  subsidiary
company.   As a result, the company recognized a charge in 1994  for
pension  curtailment and special termination benefits expense.   The
components  of  1995,  1994 and 1993 net periodic  pension  (income)
expense are as follows:
<TABLE>
                                         Years ended December 31,
                                         1995     1994     1993
(In thousands)
<CAPTION>
<S>                                   <C>         <c >      <C>

Service cost of benefits
 earned during the year              $    470   $  1,023   $    901
Interest cost on projected
 benefit obligation                    14,356     13,981     14,431
Actual (return) loss on
 plan assets                          (52,972)    14,570    (30,951)
Net amortization (deferral)            38,446    (29,521)    15,566
Curtailment and special
 termination benefits expense              --        921         --

Net pension (income)
 expense for year                    $    300   $    974   $    (53)

Expected long-term rate of
 return on assets used to determine
 net pension (income) expense            9.0%       8.0%        9.0%
</TABLE>

The  following  assumptions were used for the  valuation  of  the
pension obligations as of December 31:
<TABLE>
                                         1995     1994     1993
<CAPTION>
<S>                                     <C>      <C>       <C>

Discount rate                           7.25%    8.55%     7.5%
Rate of increase in
 compensation levels                     5.0%     5.0%     5.0%
</TABLE>

Note 10:  Postretirement and Postemployment Benefits

The  company provides health care and life insurance benefits for
retired  employees.   Employees may become eligible  for  certain
benefits  if  they meet eligibility qualifications while  working
for  the company. Previously, the company paid all cost increases
for employees who retired prior to 1985 and who did not elect  to
participate  in  a  plan in which they paid  cost  increases,  in
exchange for expanded benefits, in excess of a specified  amount.
For  employees  retiring after 1984, the company's liability  was
limited  to  a fixed contribution amount for each participant  or
dependent.   Recently, the company communicated to all  Medicare-
eligible  retirees that, commencing in 1996, it will  participate
in  various Medicare HMOs.  The retiree will have the  option  of
joining  a  Medicare  HMO or selecting other health  care  plans;
however,  the company will contribute a fixed amount  toward  the
cost  of  the  coverage  regardless of the  plan  selected.   The
accumulated postretirement benefit obligation (APBO) at  December
31,  1995,  as  presented in the following  table,  reflects  the
implementation of this initiative.

The provisions of Statement of Financial Accounting Standards No.
106,  "Employers'  Accounting for Postretirement  Benefits  Other
Than  Pensions,"  were adopted effective January  1,  1993.   The
company accrues for the expected cost of providing postretirement
benefits  to
                              -27-
<PAGE>
the  employee and the employee's beneficiaries  and
covered  dependents  during  the  years  of  employment  service.
Expense  in  1994 includes a $471,000 curtailment loss  resulting
from  the  termination of essentially all Dravo  Basic  Materials
employees and certain executive and administrative employees of a
subsidiary company due to the Dravo Basic Materials asset sale.

No  funds  are  segregated for future postretirement obligations.
The  company is amortizing its accumulated postretirement benefit
obligation (APBO) over a 20-year period.  The APBO was calculated
using  a  discount  rate of 7.25 percent and a health  care  cost
trend  rate of 9.0 percent in 1996, gradually declining  to  5.25
percent in 2001.  An increase in the health care cost trend  rate
of  one percent would increase the APBO at December 31, 1995,  by
$331,000  and  the total service and interest rate components  of
the 1995 postretirement benefit cost by $90,000.

Postretirement benefit cost for 1995, 1994 and 1993 includes  the
following components:

<TABLE>
(In thousands)                         1995     1994    1993
<CAPTION>
<S>                                   <C>      <C>      <C>

Service cost - benefits earned
 during the period                   $   44   $  105   $  177
Interest cost on accumulated
 postretirement benefit obligation    2,683    2,659    2,887
Amortization of accumulated
 postretirement benefit obligation    1,705    1,789    1,789
Curtailment loss                         --      471       --

Postretirement benefit cost          $4,432   $5,024   $4,853
</TABLE>

<TABLE>
The  postretirement benefit plans' funded status reconciled  with
the  amount included in the company's consolidated balance sheets
at December 31 is as follows:
<CAPTION>
(In thousands)                                  1995     1994
<S>                                          <C>      <C>

Accumulated postretirement
 benefit obligation:
 Retirees and related beneficiaries         $ 21,505 $ 30,248
 Other fully eligible participants             1,284    1,601
 Other active participants not fully eligible    866      747

Accumulated postretirement
 benefit obligation:                          23,655   32,596

 Unrecognized transition obligation          (15,122) (30,822)
 Unrecognized net loss                        (6,536)    (134)

Accrued postretirement
 benefit liability                          $  1,997 $  1,640
</TABLE>

The  company  adopted  the provisions of Statement  of  Financial
Accounting   Standards  No.  112,  "Employers'   Accounting   for
Postemployment  Benefits" (SFAS 112) effective January  1,  1994.
SFAS  112  requires  accrual of the estimated  cost  of  benefits
provided  by  the  employer  to  former  or  inactive  employees,
including  their  beneficiaries  and  covered  dependents,  after
employment  but before retirement.  A charge of $1.4 million  was
recorded in the first quarter as a cumulative effect for a change
in  accounting  principle  to recognize the  company's  estimated
liability for postemployment benefits covered by SFAS 112.

Note   11:    Stock  Options,  Stock  Appreciation   Rights   and
Performance Shares

The  company  has  outstanding to executives  and  key  employees
common stock options and stock appreciation rights (collectively,
rights) under four plans: the 1978 Plan, the 1983 Plan, the  1988
Plan  and the 1994 Plan.  Under the 1988 and 1994 Plans,  options
may  be  granted  either alone or in tandem  with  related  stock
appreciation rights, or stock appreciation rights may be  granted
separately.  The 1983 Plan provided for the granting of  options,
stock  appreciation rights (either separate or in tandem  with  a
related  option)  and performance shares.   The  price  of  stock
options and the basis of stock appreciation rights so granted  is
the  fair  market value on the date of grant.  Rights  cannot  be
exercised  until  one year after the grant date  and  expire  ten
years  from  date  of  grant.   Any incremental  value  of  stock
appreciation rights and performance shares granted is  recognized
as  expense, while a decline in the market value of the stock  is
recognized  as  a  reduction in expense to the extent  previously
recognized.  There was no change in the incremental value  during
the   last  three  years.   The  exercise  of  options  does  not
necessitate a charge or credit to income.

No  additional  grants can be made from the 1978 or  1983  Plans,
both  of  which  have expired.  There were no performance  shares
outstanding at December 31, 1995 and 1994.

Prices per share of outstanding rights at December 31, 1994  were
$5.94  to  $19.31.  During 1995 grants were awarded at prices  of
$10.69  to  $14.06, rights were exercised at $5.94 to $11.88  and
rights were forfeited at $10.25 to $19.31.  Rights outstanding at
December  31, 1995, are exercisable at prices ranging from  $5.94
to $19.31 per share.
                                -28-
<PAGE>
<TABLE>
The following summary shows the changes in outstanding rights:
<CAPTION>
                          1978      1983      1988    1994
                          Plan      Plan      Plan    Plan     Total
 <S>                   <C>       <C>       <C>     <C>       <C>

Outstanding at
  December 31, 1994     53,200   239,050   982,300  12,000   1,286,550
Granted                     --        --        -- 417,500     417,500
Exercised                   --   (1,250)  (58,500)      --     (59,750)
Forfeited              (33,750) (42,000)  (90,000)  (6,000)   (171,750)
Outstanding at
  December 31, 1995     19,450  195,800   833,800  423,500   1,472,550

Rights exercisable:
  December 31, 1994     53,200  239,050   919,800       --   1,212,050
  December 31, 1995     19,450  195,800   833,800    6,000   1,055,050

Shares available for future grant:
  December 31, 1994         --       --        --  988,000     988,000
  December 31, 1995         --       --    90,000  576,500     666,500
</TABLE>

The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS 123) in October, 1995.  Financial
statements presented for fiscal 1996 will measure the fair value
of stock-based compensation awarded to employees in 1995 and
thereafter.  SFAS 123 allows companies a choice between
continuing to account for stock-based awards using the intrinsic
value, as prescribed by Accounting Principles Board Opinion No.
25 (APB 25), or the fair value.  If the company chooses to
continue following APB 25, the pro forma effect the fair value
methodology would have had on net income and earnings per share
will be disclosed.  The company has not yet determined the
magnitude of the difference between the intrinsic value and fair
value approaches nor the method it will choose to account for
stock-based compensation.

Note 12:  Shareholders' Equity
<TABLE>
Components  of  shareholders'  equity  at  December  31   (except
retained   earnings  which  is  set  forth  in  the  Consolidated
Statements of Retained Earnings) are presented below:
<CAPTION>
                            Preference    Common     Other  Treasury
(In thousands)                   Stock     Stock   Capital    Shares
<S>                                <C>   <C>       <C>      <C>

Balance, January 1, 1993           $35   $14,945   $65,960  $(1,840)

Common shares issued through:
  Retirement of Series B
   preference stock (9,648)         (3)       10        (7)
  Common stock options
   exercised (12,700)                         13        88
Recognition of minimum
 liability on pension plan                          (2,781)

Balance, December 31, 1993        $32    $14,968   $63,260  $(1,840)

Common shares issued through:
  Retirement of Series B
   preference stock (12,864)       (4)        13       (9)
  Common stock options
   exercised (5,151)                           5        37
Recognition of minimum
 liability on pension plan                             266

Balance, December 31, 1994         $28   $14,986   $63,554  $(1,840)

Common shares issued through:
  Retirement of Series B
   preference stock (9,648)        (3)         9        (6)
  Common stock options
   exercised (59,750)                         60       496
Purchase of treasury 
 shares (228,470)                                            (2,667)
Recognition of minimum
 liability on pension plan                          (3,226)

Balance, December 31, 1995         $25   $15,055   $60,818  $(4,507)
</TABLE>
                                 -29-
<PAGE>

Note 13:  Income Taxes
<TABLE>
Income before taxes and provisions for income tax expense
(benefit) from continuing operations at December 31 are:
<CAPTION>
(In thousands)                           1995      1994      1993
<S>                                    <C>      <C>       <C>

Income before taxes                   $11,321  $  5,527  $ 10,471

Current federal income taxes          $    --  $    350  $     --
Deferred federal income taxes              --        --   (24,853)
Current state income taxes                340       247       198

  Total                               $   340  $    597  $(24,655)
</TABLE>
<TABLE>
The actual income tax expense attributable to earnings from
continuing operations for the years ended December 31, 1995, 1994
and 1993 differed from the amounts computed by applying the U. S.
federal tax rate of 34 percent to pretax earnings from continuing
operations as a result of the following:
<CAPTION>
(In thousands)                           1995      1994      1993
<S>                                     <C>     <C>       <C>

Computed "expected" tax expense        $3,849  $  1,879  $  3,560
Alternative minimum tax                    --       300        --
Percentage depletion                     (992)   (1,880)   (3,374)
State income taxes, net of federal
 income tax benefit                       224       163       131
Other items                                51       135      (119)
Benefit of operating
 loss carryforwards                    (2,792)       --   (24,853)

  Provision (benefit) for income tax   $  340  $    597  $(24,655)
</TABLE>

The significant components of the deferred income tax benefit
attributable to income from continuing operations for the years
ended December 31 are as follows:
<TABLE>
(In thousands)                                      1995      1994      1993
<CAPTION>
<S>                                              <C>        <C>      <C>

Deferred tax (benefit) expense (exclusive of the
 effects of other components listed below)      $ (6,058)  $ 1,340  $ (2,431)
Increase (decrease) in balance of the valuation
  allowance for deferred tax assets                6,058    (1,340)  (22,422)

  Total                                         $    --    $    --  $(24,853)
</TABLE>
<TABLE>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at December 31 are as follows:
<CAPTION>
                                                   1995      1994
 <S>                                             <C>       <C>

Deferred tax assets:
 Provision for discontinued operations          $ 3,008   $ 7,477
 Accounts receivable, principally due
  to allowance for doubtful accounts                302       296
 Inventories, principally due to additional
  costs inventoried for tax purposes
  pursuant to the Tax Reform Act of 1986             19       215
 Compensated absences, principally due to
  accrual for financial reporting purposes          500       745
 Net operating loss carryforwards                67,229    61,713
 Investment tax credit carryforwards              1,722     2,543
 Other                                            1,022       721

Total gross deferred tax assets                  73,802    73,710
 Less valuation allowance                      (36,381)  (30,323)

Net deferred tax assets                          37,421    43,387

Deferred tax liabilities:
 Properties and equipment, principally due
  to depreciation                                 6,417    13,682
 Pension accrual                                  6,151     4,682
 Other                                               --       170

Total gross deferred tax liabilities             12,568    18,534

Net deferred tax asset                         $ 24,853  $ 24,853
</TABLE>

The net change in the total valuation allowance for the years
ended December 31, 1995 and 1994 was an increase of $6.1 million
and a decrease of $1.3 million, respectively.

The company adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes," (SFAS 109), effective
January 1, 1993.  The statement requires that deferred income
taxes reflect the tax consequences on future years of differences
between the tax bases of assets and liabilities and their bases
for financial reporting purposes.  In addition, SFAS 109 requires
the recognition of future tax benefits, such as net operating
loss carryforwards (NOLs), to the extent that realization of such
benefits are more likely than not.  There was no cumulative
effect of this accounting change at the time of adoption.
                               -30-
<PAGE>
<TABLE>
The company had NOLs of approximately $192.1 million at December
31, 1995, because of losses associated with discontinued
businesses.  These NOLs expire as follows:
<CAPTION>
(In thousands)
<S>                                        <C>

2002                                      $ 18,039
2003                                        76,662
2004                                        39,012
2005                                        17,428
2006                                         7,336
2007                                         1,629
2008                                        15,031
2009                                        12,171
2010                                         4,776
</TABLE>

Tax benefits of $4.9 million for investment tax credits expiring
in 1996 and later are also being carried forward.

Under the provisions of SFAS 109, NOLs represent temporary
differences that enter into the calculation of deferred tax
assets and liabilities.  At January 1, 1993, primarily as a
result of the NOLs, the company was in a net deferred tax asset
position under SFAS 109.  The full amount of the deferred tax
asset was offset by a valuation allowance due to uncertainties
associated with unresolved issues related to discontinued
operations.

In the fourth quarter of 1993, the company reduced its valuation
allowance resulting in a net deferred tax asset of $24.9 million.
Two factors contributed to the reduction in the valuation
allowance.  First was the
resolution of long-standing litigation between the company and
the City of Long Beach, California, regarding a waste-to-energy
plant the company built for the city and the ability to quantify,
relying upon advice of legal counsel, the potential financial
impact of the remaining uncertainties associated with previously
discontinued operations.  Second, the company was awarded a
contract to supply American Electric Power's Gavin plant with
450,000 tons of lime annually for 15 years commencing in 1995.
In addition,  the company had pending the renewal of existing
contracts which were finalized in 1994 and raised utility lime
sales backlog to $800 million.  With these contracts in place,
nearly 65 percent of the company's annual revenue was projected
to be generated from long-term contracts.  As a result, the
company believed that revenue and income from its lime subsidiary
could be reasonably projected over the life of its long-term
contracts.

The amount of the net deferred tax asset was not adjusted in
1995.  In assessing the valuation allowance, estimates were made
as to the potential financial impact on the company should
resolution of the remaining substantive uncertainty associated
with discontinued operations substantially exceed management's
estimates.  The uncertainty involves the Hastings, Nebraska,
environmental matter and is discussed more fully in Note 8,
Contingent Liabilities.  Management's position is to vigorously
pursue its claims against other PRPs and to contest the liability
for environmental clean-up.  In determining the appropriate
valuation allowance, however, management has used the upper limit
of the potential financial impact estimated for this matter.
Also, operating profits were lower than forecasted in 1995
primarily due to higher-than-expected expenses incurred during
start-up of the Black River expansion project.  The lower profit,
expenses related to discontinued operations and recognition for
tax purposes of fees and expenses totaling $9.5 million
associated with loans prepaid from funds received from the sale
of Dravo Basic Materials' assets created a tax loss and generated
additional NOLs.

Management believes that, with the resolution of the Black River
start-up problems, the company will generate sufficient future
taxable income to realize the entire deferred tax asset prior to
expiration of any NOLs and that the realization of a $24.9
million net deferred tax asset is more likely than not.  Income
projections for the contract lime business are based on
historical information adjusted for contract terms. In order to
fully realize the net deferred tax asset, the company will need
to generate future taxable income of approximately $73.2 million
prior to the expiration of the NOLs.

Historically, Dravo Lime's cumulative taxable earnings for the
past five years total $55.5 million.  There can be no assurance,
however, that the company will generate any earnings or any
specific level of continuing earnings.

Note 14:  Extraordinary Item

In conjunction with the sale of Dravo Basic Materials' assets,
existing loan agreements were substantially altered, including a
$35 million reduction in the amount available under a revolving
credit facility.  Also, while negotiating a financing agreement
with Prudential Power Funding for the Black River expansion, the
company purchased a call option that enabled it to prepay on May
17, 1995, without penalty, amounts outstanding under the
financing agreement.  Cash received from the Dravo Basic
Materials asset sale equaling the outstanding principal on the
Prudential Power Funding facility, interest through May 16, 1995
and an exit fee was placed in escrow.  With Prudential Power
Funding's consent, the entire amount borrowed was prepaid.  The
fees associated with these agreements were written off as
extraordinary items in 1994.
                              -31-
<PAGE>

Note 15: Fair Value of Financial Instruments

The fair value of financial instruments without extended
maturities equals their carrying values.  The estimated fair
value of financial instruments with extended maturities at
December 31 is presented below:
<TABLE>
(In thousands)
<CAPTION>
                                           1995             1994

                                   Carrying    Fair      Carrying    Fair
                                    Value      Value      Value     Value
<S>                                 <C>        <C>       <C>       <C>

Notes payable                      $70,391    $72,124   $127,517  $126,220
Series D Preference Stock           20,000     23,242     20,000    21,347
</TABLE>

The carrying amounts of notes receivable approximate fair value.
The fair value of notes payable and the Series D Preference Stock
is based upon the amount of future cash flows associated with
each instrument discounted using the company's estimated
borrowing rate for similar debt instruments of comparable
maturity.  The Preference Stock fair value also includes an
estimated factor to value the conversion feature.

Fair value estimates are made at a specific point in time, based
on relevant market information and information about the
financial instrument.  These estimates are subjective in nature
and involve uncertainties and matters of significant judgment and
therefore cannot be determined with precision.  Changes in
assumptions could significantly affect the estimates.

Note 16:  Research and Development
<TABLE>
Research and development activity for the years ended December 31
is as follows:
<CAPTION>

(In thousands)                             1995      1994      1993
<S>                                       <C>       <C>       <C>

Total research and development expense   $3,558    $4,393    $4,166

Billings to third parties                 1,255     2,361     1,915

Net research and development expense     $2,303    $2,032    $2,251
</TABLE>

Note 17: Interim Financial Information
<TABLE>
(Unaudited, in millions,      First    Second     Third  Fourth
 except earnings per share) Quarter   Quarter   Quarter Quarter
<CAPTION>
<S>                           <C>       <C>       <C>      <C>

1995
Revenue                      $33.9     $35.7     $37.8    $38.6
Gross profit                   8.7       9.5       9.5      8.8
Earnings before taxes from
 continuing operations         2.7       2.9       3.1      2.6
Provision (benefit) for
 income taxes                  0.2        0.2       0.2    (0.3)
Net earnings                   2.5       2.7       2.9      2.9
Earnings per share:
  Net earnings                0.13      0.14      0.15     0.15


1994
Revenue                      $57.7     $72.6     $75.3    $72.5
Gross profit                   7.6      12.6      12.7     11.1
Earnings (loss) before taxes
 from continuing operations   (1.3)      3.8       3.7     (0.7)
Provision (benefit) for
 income taxes                   --       0.6      (0.2)     0.2
Earnings (loss) from
 continuing operations        (1.3)      3.2       3.9     (0.9)
Discontinued operations        --        --        --      (6.5)
Earnings (loss) before
 extraordinary item and
 cumulative accounting change (1.3)      3.2       3.9     (7.4)
Extraordinary item             --        --        --      (7.5)
Cumulative effect of
 accounting change            (1.4)      --        --       --
Net earnings (loss)           (2.7)      3.2       3.9    (14.9)
Earnings (loss) per share:
  Continuing operations      (0.13)     0.17      0.22    (0.10)
  Discontinued operations       --        --        --    (0.44)
  Extraordinary item            --        --        --    (0.51)
  Cumulative accounting
   change                    (0.09)       --        --       --
  Net earnings (loss)        (0.22)     0.17      0.22    (1.05)
</TABLE>
                               -32-
<PAGE>

Management's Report

The   consolidated  financial  statements  and  other   financial
information appearing in this Annual Report were prepared by  the
management of Dravo Corporation, which is responsible  for  their
integrity and objectivity.  These financial statements have  been
prepared   in  conformity  with  generally  accepted   accounting
principles  and  include  amounts  that  are  based  on  informed
judgments  and  estimates of the expected effects of  events  and
transactions.

Dravo   maintains  a  system  of  internal  controls  to  provide
reasonable  assurance  as  to the reliability  of  the  financial
records  and  the  protection of assets.  This  internal  control
system  is  supported  by  careful  selection  and  training   of
qualified personnel, and a broad program of internal audits.   In
addition, the company's business ethics policy requires employees
to maintain the highest level of ethical standards in the conduct
of  the  company's  business, and their compliance  is  regularly
monitored.

The company's financial statements have been audited by KPMG Peat
Marwick LLP, independent certified public accountants.  As stated
in  their  report,  their  audit  was  made  in  accordance  with
generally accepted auditing standards and included such study and
evaluation   of  the  company's  system  of  internal  accounting
controls  as  they considered necessary to determine the  nature,
timing  and  extent  of  the  auditing  procedures  required  for
expressing an opinion on the company's financial statements.

The  Board  of  Directors,  acting through  its  Audit  Committee
composed  exclusively of outside directors, reviews and  monitors
the  company's  financial reports and accounting practices.   The
Board   of  Directors,  upon  the  recommendation  of  the  Audit
Committee,  appoints the independent certified public accountants
subject to ratification by the shareholders.  The Audit Committee
meets periodically with management, the internal auditors and the
independent  auditors.   These meetings  include  discussions  of
internal  accounting  control, results  of  audit  work  and  the
quality of financial reporting.  Financial management as well  as
the internal auditors and independent auditors have full and free
access to the Audit Committee.

[KPMG Peat Marwick LLP logo]

Independent Auditors' Report


The Board of Directors and Shareholders
Dravo Corporation:

We  have audited the accompanying consolidated balance sheets  of
Dravo  Corporation and subsidiaries as of December 31,  1995  and
1994,  and  the  related consolidated statements  of  operations,
retained  earnings and cash flows for each of the  years  in  the
three-year  period  ended December 31, 1995.  These  consolidated
financial  statements  are the responsibility  of  the  Company's
management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We  conducted  our  audits in accordance with generally  accepted
auditing  standards.  Those standards require that  we  plan  and
perform  the  audit to obtain reasonable assurance about  whether
the  financial statements are free of material misstatement.   An
audit  includes  examining, on a test basis, evidence  supporting
the  amounts  and  disclosures in the financial  statements.   An
audit also includes assessing the accounting principles used  and
significant  estimates made by management, as well as  evaluating
the  overall  financial statement presentation.  We believe  that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above  present  fairly, in all material respects,  the  financial
position of Dravo Corporation and subsidiaries as of December 31,
1995 and 1994, and the results of their operations and their cash
flows  for  each  of  the  years in the three-year  period  ended
December   31,  1995,  in  conformity  with  generally   accepted
accounting principles.

As  discussed  in  Notes 10 and 13 to the consolidated  financial
statements,  the  company adopted the method  of  accounting  for
postemployment  benefits  prescribed by  Statement  of  Financial
Accounting  Standards  No.  112  in  1994  and  the  methods   of
accounting  for postretirement benefits other than  pensions  and
income  taxes  prescribed by Statements of  Financial  Accounting
Standards Nos. 106 and 109, respectively, in 1993.

/s/ KPMG PEAT MARWICK LLP

KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
January 24, 1996
                                  -33-
<PAGE>

                                        Five-Year Summary
<TABLE>
Years ended December 31,          1995      1994      1993      1992    1991
<CAPTION>
(Amounts in millions, except per share
data and average mineral resource prices)
<S>                            <C>       <C>       <C>       <C>       <C>

Summary of operations:
Revenue                       $146.1    $278.1    $277.6    $273.0    $295.7
Gross profit                    36.5      44.0      49.3      51.7      57.7
Interest expense                 4.8      12.4       9.2      10.5      11.2
Depreciation expense             9.5      17.6      18.0      18.6      17.7
Earnings before taxes
 from continuing operations     11.3       5.5      10.5      12.7      16.1
Provision (benefit) for
 income taxes                    0.3       0.6     (24.6)      2.4       3.9
Earnings from continuing
 operations                     11.0       4.9      35.1      10.3      12.2
Loss from discontinued
  operations, net of
  income taxes                    --      (6.5)    (35.3)       --     (38.5)
Extraordinary item                --      (7.5)       --       1.6        --
Cumulative accounting change      --      (1.4)       --        --        --
Net earnings (loss)             11.0     (10.5)     (0.2)     11.9     (26.3)
Preferred dividends declared     2.5       2.5       2.6       2.6       2.6
Capital expenditures            33.1      44.8      13.6       8.5      19.7
Employees at year end            756       768     1,416     1,421     1,556

Summary of financial position:
Total assets                  $213.3    $307.3    $272.1    $268.5    $271.8
Working capital                  9.8       6.3      59.5      60.1      45.6
Long-term obligations and
 redeemable preference stock    84.3      62.4     108.5     108.1     109.7
Total debt and redeemable
 preference stock               90.4     147.5     113.0     112.8     114.4
Property, plant and
 equipment, net                116.2      93.5     110.0     114.9     128.5
Shareholders' equity            79.9      76.7      89.5      95.0      85.5

Per common share data:
Earnings from continuing
  operations                 $  0.57    $ 0.16   $  2.20   $  0.52   $  0.65
Loss from discontinued
  operations                      --     (0.44)    (2.38)       --     (2.60)
Extraordinary item                --     (0.51)       --       0.11       --
Cumulative accounting change      --     (0.09)       --         --       --
Net earnings (loss)             0.57     (0.88)    (0.18)      0.63    (1.95)
Book value                      5.33      5.06      6.15       6.27     5.63
Shareholders at year end       2,924     3,192     3,442      3,736    3,893

Mineral resources (in millions of tons):
Proven and probable reserves
Total reserves                 522.2     502.1   1,121.2   1,142.1   1,074.7
Tons mined                       7.1      23.2      22.8      25.4      24.7
Average market price          $ 3.3    $  5.80   $  6.01   $  5.85  $   6.31
</TABLE>
                                  -34-
<PAGE>

Board of Directors                   Principal Executives

Carl A. Gilbert                      Carl A. Gilbert *
President and Chief
 Executive Officer,                  President and
Dravo Corporation                    Chief Executive Officer

Arthur E. Byrnes                     Ernest F. Ladd III *
Chairman,                            Executive Vice President and
Deltec Asset Management Corporation  Chief Financial Officer

James C. Huntington, Jr.             Marshall S. Johnson *
Retired Senior Vice President,       Vice President,
American Standard, Inc.              Operations and Engineering

William E. Kassling                  John R. Major *
Chairman, Chief Executive Officer    Vice President, Administration
 and President,
Westinghouse Air Brake Company       James J. Puhala *
                                     Vice President,
William G. Roth                      General  Counsel and Secretary
Retired Chairman,
Dravo Corporation                    Richard E. Redlinger *
                                     Vice President, Corporate
Konrad M. Weis                       Development, and Treasurer
Retired President and
Chief Executive Officer,             Donald H. Stowe, Jr.
Bayer USA, Inc.                      Vice President,
                                     Sales and Technology

                                     Larry J. Walker
                                     Vice President and Controller

                                     *Member of
                                      Management Executive Committee
                                  -35-
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