SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                 ---------------

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                 ---------------

For the quarter ended September 30, 1997            Commission File No. 0-16452
                      ------------------                                -------

                          A. P. GREEN INDUSTRIES, INC.
                          ----------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                            43-0899374
          --------                                            ----------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)

  Green Boulevard, Mexico, Missouri                              65265
  ---------------------------------                              -----
(Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code:  (573) 473-3626

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes x No

Indicate the number of shares outstanding of each of the registrant's classes of
common  stock as of the  latest  practicable  date:  As of  November  14,  1997,
8,060,665 shares of Common Stock, $1 par value, were outstanding.







                                  Page 1 of 27


<PAGE>

A. P. GREEN INDUSTRIES, INC.

PART I.    FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

                                                     September 30, December 31,
                                                          1997         1996
                                                     ------------- ------------
(Dollars in thousands, except per share data)

ASSETS

  Current Assets
    Cash and cash equivalents                          $  5,539     $  9,477
    Receivables (net of allowances -
       1997, $1,600;  1996, $1,701)                      44,717       42,084
    Reimbursement due on paid asbestos claims                 -        3,898
    Inventories                                          53,648       53,674
    Deferred income tax asset                             3,089        3,374
    Other                                                 6,717        7,030
                                                        -------      -------
        Total current assets                            113,710      119,537

  Property, plant and equipment, net                    105,961      107,394
  Projected insurance recovery on asbestos claims        82,556      110,374
  Pension assets                                          9,180        9,044
  Intangible assets, net                                  4,415        4,132
  Other assets                                            4,079        4,648
                                                        -------      -------
Total assets                                           $319,901     $355,129
                                                        =======      =======


LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
    Accounts payable                                   $ 16,202     $ 20,408
    Accrued expenses
        Payrolls                                          6,689        6,267
        Taxes other than on income                        2,490        1,860
        Insurance reserves                                4,242        3,574
        Other                                             6,473        6,528
    Current maturities of long-term debt                  6,599        4,168
    Income taxes                                          1,423        1,191
                                                        -------      -------
        Total current liabilities                        44,118       43,996

  Deferred income taxes                                   7,863       10,228
  Long-term non-pension benefits                         17,568       16,583
  Long-term pensions                                     12,287       12,449
  Long-term debt                                         30,680       40,109
  Projected asbestos claims                              82,556      111,966
                                                        -------      -------
        Total liabilities                               195,072      235,331
                                                        -------      -------
  Minority Interests                                      1,486        1,414

  Stockholders' Equity
    Preferred stock - $1 par value;
       authorized:  2,000,000 shares;
       issued and outstanding:  none                          -            -
    Common stock - $1 par value;
       authorized: 10,000,000 shares;
       issued:  9,014,099 in 1997
       and 8,975,442 in 1996                              9,014        8,975
    Additional paid-in capital                           68,505       68,309
    Retained earnings                                    65,830       61,151
    Less: Deferred foreign currency translation          (3,448)      (2,875)
          Treasury stock of 953,934 shares in 1997
            and 1996, at cost                            (9,498)      (9,498)
          Note receivable-ESOT                           (6,323)      (6,941)
          Minimum pension liability adjustment, net of
            tax                                            (737)        (737)
                                                        -------      -------
      Total stockholders' equity                        123,343      118,384
                                                        -------      -------
    Total liabilities and stockholders' equity         $319,901     $355,129
                                                        =======      =======

See accompanying notes to consolidated financial statements.


                                       2
<PAGE>

A. P. GREEN INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)




                                                Three months ended September 30,
                                                -------------------------------
(Dollars in thousands, except per share data)        1997             1996
                                                --------------   --------------

Net sales                                          $   70,696     $   61,948

Cost of sales                                          57,907         52,856
                                                    ---------      ---------

  Gross profit                                         12,789          9,092

Expenses and other income

  Selling & administrative expenses                     9,447          8,798

  Interest expense                                        817            766

  Interest income                                        (232)          (279)

  Minority interest in loss of partnerships              (124)           (35)

  Other income, net                                       (83)          (324)
                                                    ---------      ---------
    Earnings before income taxes                        2,964            166

Income tax expense (benefit)                            1,003            (66)

Equity in net income of affiliates                       (143)             -

Minority interest in loss of consolidated 
  subsidiaries                                            (56)          (112)
                                                    ---------      ---------
  Net earnings                                     $    2,160     $      344
                                                    =========      =========
Net earnings per common share                      $     0.27     $     0.04
                                                    =========      =========
Weighted average number of common shares            8,055,114      8,021,508
                                                    =========      =========
Dividends per common share                         $     0.04     $     0.04
                                                    =========      =========

See accompanying notes to consolidated financial statements.






















                                       3
<PAGE>

A. P. GREEN INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)




                                                 Nine months ended September 30,
                                                 ------------------------------
(Dollars in thousands, except per share data)         1997            1996
                                                 --------------  --------------

Net sales                                          $  207,365     $   195,720

Cost of sales                                         170,160         161,511
                                                    ---------       ---------
  Gross profit                                         37,205          34,209

Expenses and other income

  Selling & administrative expenses                    27,846          27,015

  Interest expense                                      2,463           2,343

  Interest income                                        (731)           (885)

  Minority interest in loss of partnerships              (209)            (76)

  Other income, net                                      (200)           (591)
                                                    ---------       ---------
    Earnings before income taxes                        8,036           6,403

Income tax expense                                      2,797           2,307

Equity in net income of affiliates                       (174)           (379)

Minority interest in loss of consolidated
  subsidiaries                                           (209)           (437)
                                                    ---------       ---------
  Net earnings                                     $    5,622      $    4,912
                                                    =========       =========
Net earnings per common share                      $     0.70      $     0.61
                                                    =========       =========
Weighted average number of common shares            8,034,771       8,043,150
                                                    =========       =========
Dividends per common share                         $     0.12      $     0.11
                                                    =========       =========

See accompanying notes to consolidated financial statements.






















                                       4
<PAGE>

A. P. GREEN INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                 Nine months ended September 30,
                                                 ------------------------------
(Dollars in thousands)                                1997            1996
                                                 --------------  --------------

Cash flows from operating activities

  Net earnings                                      $  5,622        $  4,912

  Adjustments for items not requiring
     (providing) cash
    Depreciation, depletion and amortization           9,014           7,902
    Stock compensation to directors                       39              28
    Provision for losses on accounts receivable          542             511
    Loss on sale of assets                                42              14
    Equity in earnings of affiliates,
      net of dividends received                          (26)            (95)
    Minority interest in losses of consolidated
      subsidiaries and partnerships                     (418)           (513)

  Decrease (increase) in assets
    Trade receivables                                 (3,188)          2,834
    Asbestos claim and fee reimbursements received    21,681          17,260
    Inventories                                           26           3,340
    Receivable and prepaid taxes                          45            (137)
    Other current assets                                 132          (1,626)

  Increase (decrease) in liabilities
    Accounts payable and accrued expenses             (2,541)         (5,258)
    Asbestos claims paid                             (19,361)        (18,508)
    Pensions                                            (163)         (1,588)
    Income taxes                                         232            (418)
    Deferred income taxes                             (2,080)           (527)
    Long-term non-pension benefits                       986             784
                                                     -------         -------
  Net cash provided by operating activities           10,584           8,915
                                                     -------         -------
Cash flows from investing activities

  Capital expenditures                                (6,598)         (9,374)
  Increase in other long-term assets                    (187)           (454)
  Increase in pension assets                            (136)            (30)
  Proceeds from sales of assets                          314             389
  Payment received on ESOT note                          618             564
                                                     -------         -------
  Net cash used in investing activities               (5,989)         (8,905)
                                                     -------         -------
Cash flows from financing activities

  Repayments of debt                                 (17,702)         (2,669)
  Proceeds from borrowings                            10,000             325
  Exercised stock options                                195               -
  Dividends paid                                        (964)           (884)
  Capital contributions from minority partner            490               -
  Purchase of common stock for treasury                    -            (480)
  Tax benefit on dividends paid to ESOT                   21              22
                                                     -------         -------
  Net cash used in financing activities               (7,960)         (3,686)
                                                     -------         -------
Effect of exchange rate changes                         (573)           (144)
                                                     -------         -------
Net decrease in cash and cash equivalents             (3,938)         (3,820)

Cash and cash equivalents at beginning of year         9,477           9,284
                                                     -------         -------
Cash and cash equivalents at end of period          $  5,539        $  5,464
                                                     =======         =======

See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

A. P. GREEN INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.       MANAGEMENT'S COMMENTS REGARDING ADJUSTMENTS AND RESULTS OF OPERATIONS
         ---------------------------------------------------------------------

         In the opinion of management,  the accompanying  consolidated financial
         statements  include all  adjustments  of a normal and recurring  nature
         necessary for a fair presentation of the financial position and results
         of operations for the periods  presented.  These  financial  statements
         should be read in conjunction  with the Company's Annual Report on Form
         10-K for the year ended  December 31, 1996. The results for the quarter
         and  nine-month  period ended  September  30, 1997 are not  necessarily
         indicative  of the results  which may occur for the full year.  All per
         share amounts have been restated to reflect the two-for-one stock split
         effective  September  20,  1996.  Certain  prior year amounts have been
         reclassified to conform to the 1997 presentation.

2.       RESERVES FOR PLANT CLOSINGS
         ---------------------------

         The Company  has  reserves  for  estimated  exit costs and  termination
         benefits in connection  with the shutdown of certain  facilities in the
         U.S. and Canada. Three of the plants acquired in the acquisition of the
         refractories assets of General  Refractories Company and its affiliated
         companies  ("General")  were closed during 1994, a $3.6 million reserve
         for which was  established at the time of  acquisition  and included on
         the opening  balance  sheet.  During 1995 the reserve was  increased by
         approximately $700,000 due to the closing of the Weston, Ontario Plant,
         which  was  sold in  December  1995,  and  revised  estimates  of U. S.
         employee   termination  benefits  resulting  from  the  sale  of  these
         facilities taking longer than anticipated.  Substantially all employees
         at these facilities have been terminated and approximately $3.2 million
         of  termination  benefits  and plant  closing  costs have been  charged
         against the reserves to date. The U.S.  facilities are held for sale at
         their estimated net realizable  value, one of which was sold in October
         1997 as discussed under Financial Condition.













                                        6

<PAGE>

3.       INVENTORIES
         -----------

                                         September 30, 1997   December 31, 1996
                                         ------------------   -----------------

         Finished goods & work-in-process 
           Valued at LIFO:
             FIFO cost                         $ 32,633           $ 31,278
             Less LIFO reserve                  (14,300)           (14,907)
                                                 ------             ------
               LIFO cost                         18,333             16,371
           Valued at FIFO                        12,460             13,225
                                                 ------             ------
             TOTAL                               30,793             29,596
                                                 ------             ------

         Raw materials and supplies 
           Valued at LIFO:
             FIFO cost                           16,381             17,702
             Less LIFO reserve                   (5,914)            (6,129)
                                                 ------             ------
               LIFO cost                         10,467             11,573
           Valued at FIFO                        12,388             12,505
                                                 ------             ------
             TOTAL                               22,855             24,078
                                                 ------             ------
                                               $ 53,648           $ 53,674
                                                 ======             ======


4.       LITIGATION
         ----------

         Asbestos-related Claims - Personal Injury
         -----------------------------------------

         A. P. Green is among  numerous  defendants  in  lawsuits  pending as of
         September  30,  1997 that  seek to  recover  compensatory,  and in many
         cases,  punitive damages for personal injury  allegedly  resulting from
         exposure to asbestos-containing products.

         A. P.  Green is a member  of the  Center  for  Claims  Resolution  (the
         Center),  an  organization  of  twenty  companies  (Members)  who  were
         formerly distributors or manufacturers of asbestos-containing products.
         The Center administers, evaluates, settles, pays and defends all of the
         asbestos-related  personal injury lawsuits involving its Members. Under
         the  terms  of the  Center  Agreement,  each  Member's  portion  of the
         liability  payments  and  defense  costs are based  upon,  among  other
         things,  the  number  and type of claims  brought  against  it.  Claims
         activity for the Company for each of the years ended December 31, 1996,
         1995 and 1994 was as follows:

                                        7

<PAGE>

                                                 1996        1995       1994
                                                 ----        ----       ----

         Claims pending at January 1            48,367      50,920     52,122
         Claims filed                           29,702      12,560     14,836
         Cases settled, dismissed or
           otherwise resolved                  (19,184)    (15,113)   (16,038)
                                                ------      ------     ------ 

           Claims pending at December 31        58,885      48,367     50,920
                                                ======      ======     ======

         Average settlement amount per claim(1) $1,582      $1,778     $1,816

         (1)Substantially all settlements are covered by the Company's insurance
            program.

         On January 15, 1993,  the Members were named as  defendants  in a class
         action  lawsuit  brought  on  behalf  of  all  persons  who  have  been
         occupationally  exposed to asbestos-containing  products of the Members
         and who have  unasserted  claims for such exposure (the Class) pursuant
         to Federal  Rule of Civil  Procedure  23(b)(3) in the Federal  District
         Court for the Eastern  District of  Pennsylvania.  At the same time,  a
         settlement (the Settlement) between the Members and the Class was filed
         with the  court.  On June 25,  1997,  after a  favorable  ruling in the
         Federal  District Court for the Eastern  District of Pennsylvania and a
         reversal of that  ruling by the Third  Circuit  Court of  Appeals,  the
         United States Supreme Court upheld the ruling of the Third Circuit. The
         result  of such  ruling  is  that  the  class  action  lawsuit  and the
         Settlement are of no effect.

         As the  Settlement  established a numerical cap on the number of claims
         that  could  be  processed  each  year  during  the  ten  years  of the
         Settlement and because the Settlement  provided for a range of payments
         for  different  disease  categories,  it was  possible to estimate  the
         aggregate  amount of liability for the Company through 2004 and related
         insurance  recoveries.  The amounts  reported  for  projected  asbestos
         claims and  projected  insurance  recovery  on  asbestos  claims in the
         consolidated  statements of financial  position as of December 31, 1996
         were determined based upon the Settlement.

         Without the  Settlement the Company can only estimate the liability and
         related insurance recoveries associated with known claims. As such, the
         amounts reported for projected asbestos claims and projected  insurance
         recovery on asbestos claims as of September 30, 1997 reflect only those
         claims known to have been filed as of that date.  In order to arrive at
         these  projected  amounts,  the Company  also  reviewed  its  insurance
         policies  and  historical   settlement  amounts.  This  resulted  in  a
         reduction in both the liability  and asset of $19.4 million  during the
         third quarter of 1997. There was no effect on the consolidated earnings
         of the Company.

         Management  anticipates that the Company's insurance carriers will make
         all required  payments for these claims.  While management  understands
         the inherent uncertainty in

                                        8

<PAGE>

         litigation of this type and the possibility  that past costs may not be
         indicative  of future  costs,  management  does not believe  that these
         claims and cases will have any  additional  material  adverse effect on
         the Company's consolidated financial position or results of operations.

         In  December  1996,  the  Company  and a former  subsidiary,  The E. J.
         Bartells Company, reached a comprehensive settlement agreement with all
         insurance  carriers  except  one.  Under the  terms of this  settlement
         agreement,  such  carriers  have agreed to pay  (subject to  applicable
         policy  limits) on behalf of the insureds,  liabilities  arising out of
         asbestos personal injury claims.  The Company is pursuing its claim for
         coverage against the non-settling carrier.

         In addition to asbestos-related personal injury claims asserted against
         A.  P.  Green,   a  number  of  claims  have  been   asserted   against
         Bigelow-Liptak Corporation (now known as A. P. Green Services, Inc.), a
         subsidiary  of the Company.  These  claims have been and are  currently
         being  handled  by such  subsidiary's  insurance  carriers.  Except for
         deductible amounts or retentions provided for under insurance policies,
         no claim for  reimbursement  of defense or indemnity  payments has been
         made against the Company or such subsidiary by any such carriers.

        Asbestos-related Claims - Property Damage
        -----------------------------------------

         A. P.  Green is also among  numerous  defendants  in a property  damage
         class action suit pending in South Carolina. A. P. Green previously has
         been dismissed from a number of property damage cases and believes that
         it should be dismissed  from the South  Carolina  case based on the end
         uses of its  products.  A similar  suit  pending in the State of Oregon
         involves a former  wholly owned  subsidiary of the Company and is being
         defended by the Company's  insurance carrier.  Based upon the Company's
         history in these  asbestos-related  property damage claims,  management
         does not believe that the  ultimate  resolution  of these  matters will
         have a material adverse effect on the Company's  consolidated financial
         position or results of operations.

         Environmental
         -------------

         The EPA or other  private  parties have named the Company or one of its
         subsidiaries as a potentially  responsible party in connection with two
         superfund sites in the United States. The Company is a de minimis party
         with  respect to one of the sites and expects to arrive at a settlement
         agreement and consent  decree with respect to it for an amount which is
         not  expected to be material.  With respect to the second,  involving a
         wholly owned subsidiary of the Company, there does not appear to be any
         evidence  of  delivery  to  the  site  of  hazardous  material  by  the
         subsidiary.  An  estimate  has been made of the costs to be incurred in
         these matters and the Company has recorded a reserve  respecting  those
         costs.





                                       9

<PAGE>

         Other
         -----

         From time to time, A. P. Green is subject to claims and other  lawsuits
         that arise in the ordinary  course of business,  some of which may seek
         damages in substantial  amounts,  including  punitive or  extraordinary
         damages.  Reserves for these  claims and lawsuits are  recorded  to the
         extent  that  losses  are deemed  probable  and are  estimable.  In the
         opinion  of  management,  the  disposition  of all  current  claims and
         lawsuits will not have a material  adverse  effect on the  consolidated
         financial position or results of operations of A. P. Green.





































                                       10

<PAGE>

A. P. GREEN INDUSTRIES, INC.

PART I.  FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
              OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1997
-------------------------------------------------------------
COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996
-------------------------------------------------

               Total sales increased 14.1% to $70.7 million for the three months
               ended  September 30, 1997 from $61.9  million for the  comparable
               1996  three-month  period.  Gross profit increased 40.7% to $12.8
               million from $9.1 million for the comparable periods.  The impact
               from the December 31, 1996  acquisition of the Eastern Ridge Lime
               facility  in  Ripplemead,  Virginia  was  to  increase  sales  by
               approximately  $2.8  million,  with a  slight  increase  in gross
               profit which was immaterial to the consolidated results.

Refractory Products and Services
--------------------------------

               Total  refractory  products and services sales increased 10.2% to
               $57.5 million for the three months ended  September 30, 1997 from
               $52.2  million for the  comparable  1996  period.  United  States
               refractory  sales were $47.9  million  and $43.9  million for the
               three-month   periods   ended   September   30,  1997  and  1996,
               respectively,  an increase of 9.1%. U.S. refractory product sales
               volumes   increased  an  average  of  4.6%,   with  increases  in
               specialties,  INTOGREEN  Co. and Lanxide  ThermoComposites,  Inc.
               (LTI)  products  partially  offset by declines in brick,  precast
               shape and ceramic fiber volumes. Prices for brick, ceramic fiber,
               precast  shapes and LTI  products  were up  compared to the third
               quarter of 1996, partially offset by decreases in specialties and
               INTOGREEN  pricing for a net price increase of 3.5%.  U.S. export
               sales  declined 1.4% to $5.7 million in the third quarter of 1997
               from $5.8 million for the third quarter of 1996, due primarily to
               weaker  sales  to the Far  East and the  Middle  East,  partially
               offset by increased sales to South America.

               Sales of the Canadian  subsidiary  increased 8.1% to $6.6 million
               for the  three-month  period ended  September  30, 1997 from $6.1
               million  for the  comparable  1996  period.  Increases  in brick,
               ceramic fiber,  precast shape and crucible volumes were partially
               offset  with a decline in  specialties  volumes  for a net volume
               increase  of 8.0%.  Prices  increased  an average  of 2.5%,  with
               increases in specialties,  brick and crucibles  pricing partially
               offset by price reductions in ceramic fiber and precast shapes.

               The Canadian operation  generated pre-tax earnings of $42,000 for
               the third  quarter of 1997  compared to a pre-tax loss of $53,000
               for the  comparable  1996  period.  The  increase in earnings was
               primarily due to improved  efficiencies leading to improved gross
               margins,  partially  offset by an increase in the  provision  for
               doubtful  accounts in the third  quarter of 1997  compared to the
               same period of 1996 and currency

                                       11

<PAGE>

               exchange losses on U.S. dollar denominated accounts.

               Sales in the United  Kingdom (U.K.) were flat at $2.4 million for
               the third  quarters  of 1997 and 1996.  Lower  production  volume
               levels   compared  to  1996   resulted   in  reduced   production
               efficiencies,  contributing  to a decline in pre-tax  earnings to
               $18,000  for the  three  months  ended  September  30,  1997 from
               $186,000 for the 1996 period.  Also  contributing  to the reduced
               earnings were  increased  depreciation  expense and higher salary
               and related costs.

               Sales  at A. P.  Green  de  Mexico  for the  three  months  ended
               September 30, 1997  increased  22.0% to $2.7 million  compared to
               $2.2 million for the 1996 period,  with 1997 pre-tax  earnings of
               $303,000 compared to $258,000 for the third quarter of 1996.

               Sales at PT AP Green Indonesia were $197,000, with a pre-tax loss
               of  $229,000  due to the  relatively  high fixed costs at the low
               initial volume level. This operation is expected to be near break
               even on a monthly  basis by the end of the first quarter of 1998.
               The  Indonesian  operation  incurred a pre-tax  start-up  loss of
               $160,000 during the third quarter of 1996.

               Total refractory  products cost of sales as a percentage of sales
               decreased  to 82.2%  compared to 87.4% for the three months ended
               September  30, 1997 and 1996,  respectively.  This  reduction was
               primarily  due  to  higher  production  levels   contributing  to
               improved  production  efficiencies,  as well as  lower  equipment
               maintenance,   casualty  insurance  and  depreciation   expenses.
               Partially  offsetting these  improvements  were increased workers
               compensation and group health  insurance costs.  Total refractory
               operating profits increased to $3.6 million from $388,000 for the
               comparable  three-month  periods primarily due to the improvement
               in gross margins.

Industrial Lime
---------------

               Industrial  lime sales  increased  35.0% to $13.2 million for the
               third  quarter of 1997 from $9.8 million for the third quarter of
               1996.  Sales  from the plant in  Ripplemead,  Virginia,  acquired
               December 31, 1996,  accounted  for $2.8 million of the  increase.
               Volumes increased an average of 0.6% at the Kimballton,  Virginia
               plant,  with increases in hydrate and Cal-Dol partially offset by
               a reduction in quicklime volume.  Prices at Kimballton  increased
               1.3%, with higher  quicklime and Col-Dol prices  partially offset
               by lower  pricing on  hydrate.  Volumes  increased  an average of
               11.3% across all product lines at the New Braunfels, Texas plant.
               Prices for road  stabilization  lime  declined at New  Braunfels,
               partially  offset by increases in industrial  and building  lime,
               resulting in an overall price decrease of 1.1%.

               Gross profit increased 8.3% to $2.5 million from $2.3 million for
               the respective third quarters of 1997 and 1996. Gross profit as a
               percentage  of sales  declined to 19.2% for the third  quarter of
               1997 compared to 23.9% for the third quarter of 1996. This

                                       12

<PAGE>

               decline  in gross  profit  percentage  was  primarily  due to the
               relatively high operating costs and  depreciation  related to the
               newly acquired Ripplemead plant. Improvements continue to be made
               at this  facility,  which  generated  a small net  profit for the
               quarter,  and the  impact  of these  improvements,  coupled  with
               increased  synergies  with the nearby  Kimballton  plant,  should
               result in improved gross profit percentages in future periods.

               Also  contributing  to the lower  gross  profit  percentage  were
               increased  power  and  processing  fuel  costs at the  Kimballton
               plant,  increased  purchased  material  and workers  compensation
               costs at New Braunfels and increased group health insurance costs
               at both plants.  Partially  offsetting  these cost increases were
               improved  efficiencies  at  both  plants  and  reduced  equipment
               maintenance,  processing fuel and contract  demolition expense at
               the  New  Braunfels  plant.   Industrial  lime  operating  profit
               increased  7.4%  to  $2.2  million  from  $2.0  million  for  the
               comparable  quarters  due  primarily  to the  increase  in  gross
               profit.

Expenses and Other Income
-------------------------

               Selling  and  administrative  expenses  increased  7.4%  to  $9.4
               million in the third  quarter of 1997 from $8.8  million  for the
               comparable 1996 period.  The increase was primarily due to higher
               management  incentive,  travel and group health  insurance costs,
               partially offset by reduced LTI research expenditures.

               Interest expense increased 6.6% to $817,000 in 1997 from $766,000
               in 1996, due to interest  associated with borrowings  against the
               Company's U.S. long-term line of credit.  Daily average bank line
               borrowings  were  approximately  $2.8  million  during  the third
               quarter of 1997, while there were no bank line borrowings  during
               the same period of 1996. Interest income for the third quarter of
               1997 declined  16.9% to $232,000 from $279,000 in the  comparable
               1996  three-month  period  due to  reduced  funds  available  for
               investing and reduced interest on notes receivable, including the
               note due from the  ESOT.  Other  income  declined  74.2%  for the
               comparable  three-month periods,  primarily due to an increase in
               currency  conversion  losses on the U.S.  dollar at the Company's
               Canadian subsidiary and gains on the sale of the Pueblo, Colorado
               plant and  certain  equipment  at the closed  Warren,  Ohio plant
               during the third quarter of 1996.

               The  Company and its  Canadian  and U.K.  subsidiaries  typically
               transact business in their own currencies and accordingly are not
               subject to significant  currency  conversion gains and losses. A.
               P.  Green  de  Mexico  and  PT  AP  Green  Indonesia  transact  a
               significant  portion of their  business in U.S.  dollars  and, as
               such, use the dollar as their functional  currency.  This results
               in  currency  conversion  gains and  losses on  Mexican  peso and
               Indonesian  rupiah  transactions,  A. P. Green's portion of which
               was not significant to the consolidated results.



                                       13

<PAGE>

Income Taxes
------------

               The tax benefit in the third quarter of 1996 was due primarily to
               partial  recognition of benefits from the pre-tax start up losses
               of LTI during the first half of 1996.  Long- term  projections of
               LTI's  operating  results  indicate  future  earnings  should  be
               adequate  to  ensure  realization  of the  benefits  from the tax
               losses in future periods.  As such, a portion of the tax benefits
               earned during the first half of 1996 were recognized in the third
               quarter of 1996,  with the balance  recognized  during the fourth
               quarter of that year.

Equity in Net Income of Affiliates
----------------------------------

               The Company's  share of income from its two Colombian  affiliates
               was $143,000 for the three months ended September 30, 1997. There
               was no income  from these  affiliates  during the same  period of
               1996 due to a recession in the Colombian  construction  industry,
               political   uncertainty   and  a  general   decline  in  economic
               conditions in Colombia.




                                       14

<PAGE>

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED
---------------------------------------------------------------------
TO NINE MONTHS ENDED SEPTEMBER 30, 1996
---------------------------------------

               Total sales  increased 6.0% to $207.4 million for the nine months
               ended  September 30, 1997 from $195.7  million for the comparable
               1996  nine-month  period.  Gross profit  increased  8.8% to $37.2
               million from $34.2 million for the comparable periods. The impact
               from the December 31, 1996  acquisition of the Eastern Ridge Lime
               facility was to increase  sales by  approximately  $7.5  million,
               with a slight  increase in gross profit which was  immaterial  to
               the consolidated results.

Refractory Products and Services
--------------------------------

               Total refractory  products and services sales were $170.0 million
               and $165.9  million for the nine months ended  September 30, 1997
               and  September  30, 1996,  respectively,  increasing  2.5%.  U.S.
               refractory  sales  increased  0.6% to $143.0 million for the nine
               months  ended  September  30,  1997 from  $142.2  million for the
               comparable 1996 period. Significantly limiting this increase were
               lower sales of silica  products  from the  Company's  Lehi,  Utah
               plant,  which  experienced  high  sales  in 1996  due to  capital
               projects at several glass and coke oven customers.  A significant
               increase in Chinese  imports  has also  negatively  impacted  the
               Company's silica business.

               U.S.  refractory sales volumes  increased 1.1%, with increases in
               specialties,  LTI and  INTOGREEN  products  partially  offset  by
               declines  in  brick  and  ceramic  fiber,   with  precast  shapes
               essentially flat for the comparable periods.  Price increases for
               specialties,  precast  shapes and  ceramic  fiber were  partially
               offset by brick  price  reductions  for a net price  increase  of
               0.8%.  U.S.  export sales declined 21.8% to $15.3 million for the
               nine-month period ended September 30, 1997 from $19.6 million for
               the comparable 1996 period, due primarily to reduced sales to the
               Far  East,  Europe  and the  Middle  East,  partially  offset  by
               increased  sales to South America.  Reduced U.S.  export sales to
               Mexico and the Caribbean were offset with  increased  sales by A.
               P. Green de Mexico.

               Sales at the Canadian subsidiary  increased 5.7% to $19.1 million
               for the nine months ended  September  30, 1997 from $18.1 million
               for the  comparable  1996  period.  Increased  volumes  in brick,
               ceramic fiber, crucibles and precast shapes were partially offset
               by a decline in specialties  volume for a net volume  increase of
               7.9%.   Prices  increased  across  all  product  lines  with  the
               exception  of  precast  shapes,  resulting  in an  overall  price
               increase of 1.9%.

               Improved  production  efficiencies  at  the  Canadian  subsidiary
               resulted  in a 24%  improvement  in gross  profit,  resulting  in
               pre-tax  income of $218,000 for the nine months  ended  September
               30, 1997 compared to $50,000 for the comparable 1996 period. Also
               contributing  to the  improved  Canadian  earnings  were  reduced
               salaries  and  related  costs,  property  taxes and  pension  and
               freight expense  compared to 1996,  partially offset by increased
               equipment maintenance, a higher provision for doubtful

                                       15

<PAGE>

               accounts  and  higher  currency  exchange  losses on U.S.  dollar
               denominated accounts.

               Sales by the  United  Kingdom  subsidiary  declined  7.3% to $6.5
               million  for the  first  nine  months  of 1997  compared  to $7.1
               million   for  the  same  period  of  1996  due  to  weak  market
               conditions.  Planned  inventory  reductions  contributed to lower
               volume levels which resulted in reduced production  efficiencies,
               contributing  to a pre-tax  loss of $40,000 in 1997  compared  to
               pre-tax  earnings of $428,000 in 1996.  Also  contributing to the
               reduced earnings were increased  depreciation  expense and higher
               salary and related costs.

               A. P. Green de Mexico's sales for the nine months ended September
               30, 1997 increased 32.1% to $7.6 million compared to $5.8 million
               in 1996. Increased  maintenance,  royalty and freight costs and a
               weakening  Mexican  peso  contributed  to a  decline  in  pre-tax
               earnings to $801,000  for the first nine months of 1997  compared
               to $823,000 for the same period of 1996.

               Sales at PT AP Green  Indonesia were $665,000 for the nine months
               ended  September 30, 1997, with a pre-tax loss of $698,000 due to
               the relatively  high fixed costs at the low initial volume level.
               This  operation  is  expected  to be near break even on a monthly
               basis by the end of the first  quarter  of 1998.  The  Indonesian
               operation  incurred a pre-tax  start-up  loss of $238,000 for the
               nine months ended September 30, 1996.

               Total refractory  products cost of sales as a percentage of sales
               decreased to 82.4% in 1997 from 83.6% in 1996.  This  improvement
               was primarily  due to greater  production  efficiencies,  reduced
               equipment  maintenance  expense  and  reduced  costs in Canada as
               discussed above.  Partially  offsetting these  improvements  were
               increased  raw  materials,  workers  compensation  insurance  and
               employee  relocation  costs in the U.S. and high  relative  fixed
               costs  at PT  AP  Green  Indonesia.  Total  refractory  operating
               profits  increased  28.5% to $10.1  million  from $7.9 million in
               1997 and 1996, respectively,  primarily due to the improved gross
               profit partially offset by increased  selling and  administrative
               costs at LTI and PT AP Green Indonesia.

Industrial Lime
---------------

               Industrial lime sales increased 25.6% to $37.6 million from $29.9
               million for the nine-month  periods ended  September 30, 1997 and
               1996,  respectively,  including  $7.5 million from the Ripplemead
               plant acquired  December 31, 1996. A decline in quicklime  volume
               was partially  offset by increases in Cal-Dol and hydrate volumes
               for a net volume  decline of 2.1% at the Kimballton  plant.  Also
               contributing  to the volume decline at Kimballton was a strike at
               one of the plant's major customers.  Kimballton  prices increased
               an average of 1.4% across all major product lines. Volumes at the
               New  Braunfels  plant  improved  2.7%,  with  increases  in  road
               stabilization  and  building  lime  partially  offset by  reduced
               industrial  lime  volume.  Prices  were  essentially  flat at New
               Braunfels, with increased industrial lime pricing

                                       16

<PAGE>

               offset by price  reductions  in road  stabilization  and building
               lime.

               Industrial  lime gross profit  increased  2.4% to $7.2 million or
               19.2% of sales for 1997 from $7.1  million  or 23.6% of sales for
               1996. The decline in gross profit percentage was due primarily to
               the relatively high operating costs and  depreciation  related to
               the newly acquired Ripplemead plant.  Improvements continue to be
               made at this facility, which generated a small net profit for the
               nine-month period, and the impact of these improvements,  coupled
               with increased synergies with the nearby Kimballton plant, should
               result in improved gross profit percentages in future periods.

               Also  contributing to the decline in gross profit percentage were
               increased  workers  compensation  costs at New Braunfels,  higher
               power, processing fuel and depreciation expense at Kimballton and
               increased  purchased material and group health insurance costs at
               both plants. Partially offsetting these increases were reductions
               in maintenance, power and processing fuel costs at New Braunfels,
               lower  workers  compensation  insurance  cost at  Kimballton  and
               improved production efficiencies at both plants.  Industrial lime
               operating  profit  increased  1.0% to $6.2  million for the first
               nine months of 1997  compared to $6.1 million for the  comparable
               1996 period primarily due to the improvement in gross profit.

Expenses and Other Income
-------------------------

               Selling  and  administrative  expenses  increased  3.1% to  $27.8
               million in 1997 from  $27.0  million in 1996.  The  increase  was
               primarily  due  to  higher  management  incentive,  group  health
               insurance and workers compensation  insurance costs and increased
               expenses at LTI and PT AP Green  Indonesia,  partially  offset by
               reduced sales incentives and LTI research costs.

               Interest expense increased 5.1% to $2.5 million in 1997 from $2.3
               million  in 1996,  due to  interest  associated  with  borrowings
               against the  Company's  U.S.  long-term  line of credit offset by
               reduced  interest on the unsecured notes associated with the 1994
               General  acquisition.  Daily  average bank line  borrowings  were
               approximately  $3.1 million during the first nine months of 1997,
               while there were no bank line  borrowings  during the same period
               of 1996. Interest income decreased 17.5% to $731,000 in 1997 from
               $885,000 in 1996 due to reduced funds  available  for  investing.
               Other income  declined 66.2% to $200,000 in 1997 from $591,000 in
               1996, due primarily to increased  currency  conversion  losses on
               U.S.  dollar  denominated  accounts  at  the  Company's  Canadian
               subsidiary  and  currency   conversion  losses  on  Mexican  peso
               accounts at the Company's Mexican subsidiary during 1997 compared
               to gains during 1996. Also contributing to the reduction of other
               income were gains on the sale of the Pueblo,  Colorado  plant and
               certain  equipment  at the closed  Warren,  Ohio plant during the
               third quarter of 1996.

               The  Company and its  Canadian  and U.K.  subsidiaries  typically
               transact business in their own currencies and accordingly are not
               subject to significant currency

                                       17

<PAGE>

               conversion  gains and  losses.  A. P.  Green de Mexico  and PT AP
               Green Indonesia transact a significant  portion of their business
               in U.S.  dollars and, as such, use the dollar as their functional
               currency. This results in currency conversion gains and losses on
               Mexican peso and Indonesian  rupiah  transactions,  A. P. Green's
               portion of which was not significant to the consolidated results.

Income Taxes
------------

               The 1997  effective tax rate was 34.8% compared to 36.0% in 1996.
               The  higher  1996  effective  rate was due  primarily  to limited
               recognition  of tax benefits  from the pre-tax start up losses of
               LTI. A portion of those benefits were recognized during the third
               quarter of 1996,  as  long-term  projections  of LTI's  operating
               results  indicated  future  earnings should be adequate to ensure
               realization  of the benefits of the  estimated tax loss in future
               periods. The balance of those benefits were recognized during the
               fourth quarter of 1996.

Equity in Net Income of Affiliates
----------------------------------

               The Company's  share of income from its two Colombian  affiliates
               was  $174,000  for the  nine  months  ended  September  30,  1997
               compared  to  $379,000  for  the  comparable  1996  period.   The
               reduction  was due to a recession in the  Colombian  construction
               industry, political uncertainty and a general decline in economic
               conditions in Colombia.

Accounting Standards Not Yet Implemented
----------------------------------------

               The Company is  required  to  implement  Statement  of  Financial
               Accounting  Standards  No.  128,  "Earnings  per  Share," for the
               quarter and year ending December 31, 1997. The standard  requires
               presentation of both basic and diluted  earnings per share on the
               face  of  the  consolidated  statement  of  earnings,  using  the
               treasury  stock  method to  calculate  the net impact of dilutive
               securities.  In addition,  a reconciliation of both the numerator
               and  denominator  of the  two  calculations  is  required  in the
               footnotes  to the  financial  statements.  Implementation  of the
               standard  would cause basic  earnings per share to be the same as
               primary  earnings  per share  reported  herein,  whereas  diluted
               earnings per share would be $.26 and $.04 for the quarters  ended
               September 30, 1997 and 1996, respectively,  and $.68 and $.60 per
               share for the nine  months  ended  September  30,  1997 and 1996,
               respectively.

               In February 1997, the Financial Accounting Standards Board issued
               Statement of Financial  Accounting Standards No. 129, "Disclosure
               of  Information  about Capital  Structure",  which the Company is
               required to implement  for the year ending  December 31, 1997. In
               June  1997  the  Board  issued  Statement  No.  130,   "Reporting
               Comprehensive  Income", and No. 131,  "Disclosures about Segments
               of an Enterprise and Related  Information",  which the Company is
               required to  implement  for the year ending  December  31,  1998.
               Although the implementation of these statements will

                                       18

<PAGE>

               have no impact on the  financial  results of the  Company,  it is
               assessing  the  impact  of these  statements  on the  disclosures
               provided in its quarterly and annual reports.



                                       19

<PAGE>

                                INDUSTRY SEGMENTS
                                 (In thousands)

                                                 Nine Months Ended September 30,
                                                 -------------------------------
                                                        1997             1996
                                                        ----             ----
Net Sales

Refractory products and services                   $ 170,030         $ 165,887
Industrial lime                                       37,601            29,933
Intersegment eliminations                               (266)             (100)
                                                    --------          -------- 

                                                   $ 207,365         $ 195,720
                                                    ========          ========

Gross Profit

Refractory products and services                   $  29,981         $  27,153
Industrial lime                                        7,224             7,056
                                                    --------          --------
                                                   $  37,205         $  34,209
                                                    ========          ========
Gross Profit Percentage

Refractory products and services                        17.6%             16.4%
Industrial lime                                         19.2%             23.6%

                                                        17.9%             17.5%
                                                    ========          ========
Operating Profit

Refractory products and services                   $  10,108         $   7,864
Industrial lime                                        6,192             6,132
                                                    --------          --------
                                                      16,300            13,996
                                                    --------          --------
Other Charges to Income

General corporate expenses, net                        6,532             6,135
Interest expense                                       2,463             2,343
Interest income                                         (731)             (885)
                                                    --------          --------
  Total other charges                                  8,264             7,593
                                                    --------          --------
Earnings Before Income Taxes                       $   8,036         $   6,403
                                                    ========          ========



                                       20

<PAGE>

                                                 Nine Months Ended September 30,
                                                 -------------------------------
                                                        1997             1996
                                                        ----             ----
Identifiable Assets (at period end)

Refractory products and services                      $252,064         $292,639
Industrial lime                                         59,082           47,127
Corporate                                                8,755            8,381
                                                       -------          -------
                                                      $319,901         $348,147
                                                       =======          =======
Depreciation, Depletion and Amortization

Refractory products and services                      $  5,263         $  5,050
Industrial lime                                          3,251            2,100
Corporate                                                  500              752
                                                       -------          -------
                                                      $  9,014         $  7,902
                                                       =======          =======
Capital Expenditures

Refractory products and services                      $  3,725         $  7,275
Industrial lime                                          2,358            1,832
Corporate                                                  515              267
                                                       -------          -------
                                                      $  6,598         $  9,374
                                                       =======          =======



                               GEOGRAPHIC SEGMENTS
                                 (In thousands)

                                                 Nine Months Ended September 30,
                                                 -------------------------------
                                                        1997             1996
                                                        ----             ----

United States                                        $ 180,609        $ 172,128
Canada                                                  19,122           18,089
United Kingdom                                           6,545            7,058
Mexico                                                   7,629            5,776
Far East                                                   665                -
Intersegment transfers (primarily U.S.)                 (7,205)          (7,331)
                                                      --------         --------
                                                     $ 207,365        $ 195,720
                                                      ========         ========

                                       21

<PAGE>

                                                 Nine Months Ended September 30,
                                                 -------------------------------
                                                        1997             1996
                                                        ----             ----

Earnings (Loss) Before Income Taxes

United States                                        $   7,755        $   5,340
Canada                                                     218               50
United Kingdom                                             (40)             428
Mexico                                                     801              823
Far East                                                  (698)            (238)
                                                      --------         --------
                                                     $   8,036        $   6,403
                                                      ========         ========

Identifiable Assets (at period end)

United States                                        $ 274,953        $ 304,651
Canada                                                  17,521           19,348
United Kingdom                                           4,684            4,865
Mexico                                                   6,601            5,851
Far East                                                 7,387            5,051
Corporate                                                8,755            8,381
                                                      --------         --------

                                                     $ 319,901        $ 348,147
                                                      ========         ========


                              PRICE/VOLUME SUMMARY
                            1997 AS COMPARED TO 1996
                           PERCENT INCREASE (DECREASE)

                                          Three                     Nine
                                          Months                   Months
                                          Ended                     Ended
                                    September 30, 1997       September 30, 1997
                                    ------------------       ------------------


U.S. Refractory Products Sales


  Volume                                    4.6%                     1.1%

  Price                                     3.5                      0.8

Industrial Lime Sales
   (excluding impact of Eastern
      Ridge acquisition)

  Volume                                    6.1                     (0.2)

  Price                                     0.2                      0.7


                                       22

<PAGE>

FINANCIAL CONDITION
-------------------

         The Company continues to maintain a strong balance sheet.

                               Summary Information
                             (Dollars in thousands)

                                 September 30,            December 31,
                                 -------------            ------------
                             1997             1996            1996
                             ----             ----            ----

Working capital           $ 69,592         $ 75,383        $ 75,541

Current ratio                2.6:1            3.0:1           2.7:1

Total assets              $319,901         $348,147        $355,129

Current maturities of
 long-term debt              6,599            2,942           4,168

Long-term debt              30,680           31,804          40,109

Stockholders' equity      $123,343         $118,017        $118,384

Debt to total
 capitalization (1)           23.2%            22.7%          27.2%

           (1) Calculated  as  total  Debt  (long-term  debt  including  current
               maturities) divided  by  total  stockholders'  equity  plus total
               Debt.


               Working capital declined 7.7%, or $5.8 million,  to $69.6 million
               at September  30, 1997 from $75.4  million at September 30, 1996,
               while  the  ratio  of  current  assets  to  current   liabilities
               decreased  to 2.6:1  from  3.0:1.  Excluding  the  impact  of the
               acquisition of the Eastern Ridge Lime facility,  working  capital
               decreased $7.5 million, primarily due to a $4.1 million reduction
               in  reimbursement  due on paid asbestos claims and a $3.5 million
               increase in current portion of long-term debt.

               Working  capital  declined 7.9%, or $5.9 million,  since December
               31, 1996,  primarily due to a decline in cash of $3.9 million,  a
               $3.9 million  reduction  in  reimbursement  due on paid  asbestos
               claims  and a $2.4  million  increase  in current  maturities  of
               long-term debt,  partially offset by a $4.2 million  reduction in
               accounts payable.

               The reduction in reimbursement  due on paid asbestos claims since
               both September 30, 1996 and December 31, 1996 was due to asbestos
               claim settlements with the

                                       23

<PAGE>

               Company's  insurance  carriers and the Center and  reimbursements
               from them.

               The increase in current  maturities of long-term  debt since both
               September  30, 1996 and December 31, 1996 was due  primarily to a
               $2.5 million reclassification from long-term debt for a scheduled
               increase in the payment due against the unsecured  notes payable.
               Long-term  debt decreased $9.4 million from December 31, 1996 due
               primarily to this  reclassification,  a scheduled payment of $2.5
               million  against the  unsecured  notes payable and a $5.0 million
               reduction in outstanding  borrowings  against the U.S.  long-term
               line of  credit.  Partially  offsetting  these  reductions  was a
               ten-year  capital lease on a warehouse in Houston,  Texas,  which
               bears an  interest  rate of 10.9% and  expires  December 1, 2006.
               Approximately  $3.6 million of the U.S.  long-term line of credit
               was being utilized at September 30, 1997 for outstanding  letters
               of credit and $4.0 million of  borrowings  remained  outstanding,
               leaving an available balance of approximately $22.4 million.

               Projected  insurance  recovery on asbestos  claims  declined $8.4
               million and  projected  asbestos  claims  declined  $10.0 million
               since  December  31,  1997  due to  asbestos  claim  payments  by
               insurance  carriers  and  settlements  by the Company  with those
               carriers  during the first nine months of 1997. The net projected
               asbestos  liability  included  in  the  Company's   statement  of
               financial  position has been reduced to zero as a result of final
               settlements  with  the  Company's  insurance   carriers.   Future
               payments of asbestos  claims will be made  directly to the Center
               by those carriers.

               An  additional  $19.4  million  reduction  in both the  projected
               asbestos  claims and  projected  insurance  recovery  on asbestos
               claims  since both  September  30, 1996 and December 31, 1996 was
               due to a change in the  information  available  to the Company to
               make  these  projections,  as  discussed  in Note 4 of  Notes  to
               Consolidated Financial Statements.  Included in the $38.8 million
               reduction in total assets since  September 30, 1996 (exclusive of
               the  impact  from  the  Eastern  Ridge  acquisition)  was a $35.4
               million  reduction  in projected  insurance  recovery on asbestos
               claims due to payments by insurance  carriers and revision to the
               estimated recovery as discussed.

               Deferred  income tax  liabilities  declined  $2.4  million due to
               reductions  in  prepaid  pension  costs and  depreciation  method
               differences.

               Capital  expenditures  for the first nine months of 1997  totaled
               $6.6  million  compared  to $9.4  million  for the same period of
               1996, with capital  expenditures  for the  refractories  business
               declining  $3.6 million.  This reduction was primarily due to the
               completion  of the new plant in  Indonesia  and the  movement  of
               operations  previously  at  Weston,  Ontario  to the  Smithville,
               Ontario plant during 1996.

Forward-Looking Information
---------------------------

               The statements contained in Management's  Discussion and Analysis
               concerning  the  Company's  future   profitability,   outcome  of
               lawsuits, utilization of tax loss

                                       24

<PAGE>

               carryforwards,   currency   fluctuation   effects,   adequacy  of
               insurance   proceeds  and  market   demand  are   forward-looking
               statements  made  pursuant to the safe harbor  provisions  of the
               Private  Securities  Litigation Reform Act of 1995. The Company's
               actual  results in the future  may differ  materially  from those
               projected in the  forward-  looking  statements  due to risks and
               uncertainties that exist in the Company's operations and business
               environment  including,  but not limited to:  delivery  delays or
               defaults by customers;  performance issues with key suppliers and
               subcontractors;  the Company's  successful  execution of internal
               operating plans; global monetary policies and trends;  collective
               bargaining labor disputes; litigation claims filed and judgements
               or  settlements  paid  that are of a greater  magnitude  than the
               Company has experienced in the past; and the continued  financial
               stability  of the  Company's  insurance  carriers  covering  such
               claims.

Subsequent Event
----------------

               In October 1997 the Hitchins,  Kentucky plant and Kentucky timber
               property were sold. The combined net gain after all closing costs
               and expenses on the sales of these  properties  is  approximately
               $400,000.




                                       25

<PAGE>

A. P. GREEN INDUSTRIES, INC.

PART II.  OTHER INFORMATION

Item 6.           EXHIBITS AND REPORTS ON FORM 8-K
                  --------------------------------

       (a)        Exhibits:
                  ---------

                  Exhibit No.
                  -----------
          
                  27     Financial  Data  Schedule as of and for the Nine Months
                         Ended September 30, 1997.

       (b)        Reports on Form 8-K: 
                  -------------------- 
                  No reports  on  Form 8-K  were  filed during the quarter ended
                  September 30, 1997


                                       26

<PAGE>

                                    SIGNATURE
                                    ---------

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

                                               A. P. Green Industries, Inc.
                                                       (Registrant)



                                                By:/s/Gary L. Roberts
                                                   ------------------
                                                      Gary L. Roberts
                                                Vice President, Chief Financial
                                                     Officer and Treasurer



Date: November 14, 1997
      -----------------










                                       27

<PAGE>