UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                
                                
                                    FORM 10-Q
                                
                                
           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                                
                  For the quarterly period ended March 31, 1999
                                
                                       OR
                                
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                                
       For the transition period from ............... to ...............
                                
                          Commission File Number 1-1228
                                
                                
                          Stone & Webster, Incorporated
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)
                                
                   Delaware                         13-5416910
    -------------------------------       ---------------------------------
    (State of other jurisdiction of       (IRS Employer Identification No.)
     Incorporation or organization)
                                
                245 Summer Street, Boston, MA              02210
           ----------------------------------------      ----------
           (Address of Principal Executive Offices)      (Zip Code)

                                 (617) 589-5111
              ----------------------------------------------------
              (Registrant's telephone number, including area code)




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  issuer's  classes of
common stock, as of the latest practicable date.
Common Stock: 13,062,244 shares as of April 30, 1999.

<PAGE>
                 Stone & Webster, Incorporated and Subsidiaries
                                
                                
                                    Form 10-Q
                                
                                
                                      Index
                                      -----

                                                                        Page No.
                                                                        --------
PART I.  FINANCIAL INFORMATION

         Item 1. Financial Statements

                 Consolidated Statements of Operations (Unaudited):
                  Three Months Ended March 31, 1999 and 1998               3

                 Consolidated Balance Sheets (Unaudited):
                  March 31, 1999 and December 31, 1998                     4

                 Condensed Consolidated Statements of Cash Flows
                  (Unaudited):
                  Three Months Ended March 31, 1999 and 1998               5

                 Notes to Condensed Consolidated Financial
                  Statements (Unaudited)                                  6-9

         Item 2. Management's Discussion and Analysis of Results
                  of Operations and Financial Condition                  10-14


PART II. OTHER INFORMATION

         Item 6. Exhibits and Reports on Form 8-K                         15


SIGNATURES                                                                16

<PAGE>

PART I.  Financial Information
Item 1.   Financial Statements


                 Stone & Webster, Incorporated and Subsidiaries
                Consolidated Statements of Operations (Unaudited)
                    (In thousands, except per share amounts)


                                                           Three Months Ended
                                                                 March 31,
                                                            1999         1998
                                                            ----         ----
Revenue                                                   $266,098     $293,957
Cost of revenue                                            316,769      266,051
                                                          --------     --------
     Gross profit (loss)                                   (50,671)      27,906
General and administrative expenses                         16,726       16,272
                                                          --------     --------
Operating income (loss)                                    (67,397)      11,634
Other income (expense)
     Interest income                                           661        1,203
     Interest expense                                       (1,958)        (417)
                                                          --------     --------
Total other income (expense), net                           (1,297)         786
                                                          --------     --------
Income before provision for income taxes                   (68,694)      12,420
Income tax (benefit) provision                             (10,000)       4,807
                                                          --------     --------
Net income (loss)                                         $(58,694)    $  7,613
                                                          ========     ========

Per share amounts:
Basic and diluted earnings per share                        $(4.50)       $0.59
                                                            ======        =====
Dividends declared per share                                $ 0.15        $0.15
                                                            ======        =====
Weighted average number of shares outstanding:
Basic                                                       13,053       12,803
                                                            ======       ======
Diluted                                                     13,053       12,919
                                                            ======       ======


     See accompanying notes to condensed consolidated financial statements.

<PAGE>
                 Stone & Webster, Incorporated and Subsidiaries
                     Consolidated Balance Sheets (Unaudited)
                    (In thousands, except per share amounts)

                                                       March 31,    December 31,
                                                         1999           1998
                                                       ---------    ------------
Assets
Current assets:
  Cash and cash equivalents                            $ 45,017       $ 45,492
  Accounts receivable, principally trade, net           267,836        276,235
  Costs and revenues recognized in excess of
    billings                                             58,226         49,302
  Deferred income taxes                                  31,766         20,338
  Other                                                   1,081            638
                                                       --------       --------
Total current assets                                    403,926        392,005
Assets held for sale                                      6,744          6,744
Fixed assets, net                                       219,730        219,157
Domestic prepaid pension cost                           159,325        155,703
Note receivable                                               -         15,150
Other assets                                             49,599         45,923
                                                       --------       --------
Total assets                                           $839,324       $834,682
                                                       ========       ========

Liabilities and Shareholders' Equity
Current liabilities:
  Bank loans                                           $105,975       $106,350
  Current portion of long-term debt                       2,135          2,175
  Accounts payable, principally trade                   100,493         96,134
  Billings in excess of costs and revenues
    recognized                                          243,891        176,692
  Accrued liabilities                                    80,063         80,036
  Accrued taxes                                           6,954         12,034
                                                       --------       --------
Total current liabilities                               539,511        473,421

Long-term debt                                           21,736         22,228
Deferred income taxes                                    33,253         33,030
Other liabilities                                        13,325         14,427

Shareholders' equity:
  Preferred stock, no par value; authorized
    2,000,000 shares; none issued                             -              -
  Common stock, $1 par value; authorized
    40,000,000 shares; 17,731,488 shares issued
    including shares held in treasury                    17,731         17,731
  Capital in excess of par value of common stock         54,676         54,625
  Retained earnings                                     306,726        367,358
  Accumulated other comprehensive income                 (9,445)        (9,707)
  Less:  Common stock held in treasury, at cost
           (4,669,944 and 4,692,933 shares)             121,432        122,030
         Employee stock ownership and restricted
           stock plans                                   16,757         16,401
                                                       --------       --------
Total shareholders' equity                              231,499        291,576
                                                       --------       --------
Total liabilities and shareholders' equity             $839,324       $834,682
                                                       ========       ========

     See accompanying notes to condensed consolidated financial statements.

<PAGE>
                 Stone & Webster, Incorporated and Subsidiaries
           Condensed Consolidated Statements of Cash Flows (Unaudited)
                                 (In thousands)


                                                              Three Months
                                                             Ended March 31,
                                                             ---------------
                                                           1999          1998
                                                           ----          ----
Cash Flows from Operating Activities:
  Net income (loss)                                      $(58,694)     $  7,613
  Adjustments to reconcile net income (loss) to net
    cash provided by (used for) operating activities:
     Depreciation and amortization                          6,066         3,732
     Amortization of net cost of stock plans                  562           318
     Gain from asset divestiture                                -        (3,066)
     Deferred income taxes                                (11,205)          994
     Domestic prepaid pension cost                         (3,622)       (5,169)
     Changes in operating assets and liabilities           60,773       (72,021)
                                                         --------      --------
  Net cash provided by (used for) operating activities     (6,120)      (67,599)

Cash Flows from Investing Activities:
  Purchases of fixed assets                                (6,639)       (8,169)
  Proceeds on note receivable                              15,150             -
  Proceeds from maturities of U.S. Government
    securities                                                  -        31,909
  Proceeds from asset divestiture                               -        13,546
                                                         --------      --------
  Net cash provided by investing activities                 8,511        37,286

Cash Flows from Financing Activities:
  Repayments of long-term debt                               (532)         (340)
  Repayment of bank loans                                    (375)            -
  Purchases of common stock for treasury                        -        (1,510)
  Dividends paid                                           (1,959)       (1,923)
                                                         --------      --------
  Net cash used for financing activities                   (2,866)       (3,773)
                                                         --------      --------
Net decrease in cash and cash equivalents                    (475)      (34,086)
Cash and cash equivalents at beginning of period           45,492        75,030
                                                         --------      --------
Cash and cash equivalents at end of period               $ 45,017      $ 40,944
                                                         ========      ========


     See accompanying notes to condensed consolidated financial statements.

<PAGE>

                 Stone & Webster, Incorporated And Subsidiaries
        Notes To Condensed Consolidated Financial Statements (Unaudited)


(A)  The accompanying  unaudited condensed  consolidated financial statements of
     Stone & Webster,  Incorporated and  Subsidiaries  (the "Company") have been
     prepared in accordance with generally  accepted  accounting  principles for
     interim  financial  information and with the  instructions to Form 10-Q and
     Article 10 of Regulation S-X.  Accordingly,  they do not include all of the
     information and notes required by generally accepted accounting  principles
     for complete  financial  statements.  The  December  31, 1998  consolidated
     balance sheet data was derived from audited  financial  statements but does
     not  include all  disclosures  required by  generally  accepted  accounting
     principles.  In the opinion of management,  all adjustments  (consisting of
     normal recurring adjustments)  considered necessary for a fair presentation
     have been included.  Operating results for the quarter ended March 31, 1999
     are not necessarily  indicative of the results that may be expected for the
     fiscal year ending  December 31, 1999 or for any other future  period.  For
     further  information,  refer to the consolidated  financial  statements and
     notes included in the  Company's  Annual Report on Form 10-K for the fiscal
     year ended December 31, 1998.

     The  preparation  of  condensed   consolidated   financial   statements  in
     conformity  with  generally   accepted   accounting   principles   requires
     management  to make  estimates  and  assumptions  that  affect the  amounts
     reported in the consolidated  financial  statements and accompanying notes.
     Actual results could differ from those estimates.

(B)  Fixed assets, net is stated at cost less accumulated depreciation of $148.2
     million at March 31, 1999 and $190.9 million at December 31, 1998.

(C)  Revenue and operating income by business segment were the following for the
     three-month periods ended March 31, 1999 and 1998 (in thousands):

                                                              Three Months
                                                             Ended March 31,
                                                            1999         1998
     Revenue:                                               ----         ----
       Engineering, Construction and Consulting           $254,656     $287,097
         services
       Cold Storage                                         11,442        6,860
                                                          --------     --------
          Total revenue                                   $266,098     $293,957
                                                          ========     ========
    Operating income:
      Engineering, Construction and Consulting
        services    `                                     $(69,353)    $  9,349
      Cold Storage                                           1,956        2,285
                                                          --------     --------
          Total operating income (loss)                   $(67,397)    $ 11,634
                                                          ========     ========

(D)  Basic earnings per share for the  three-month  periods ended March 31, 1999
     and 1998  were  computed  based on the  weighted  average  number of common
     shares   outstanding  during  the  period  of  13,052,578  and  12,803,035,
     respectively.  Diluted earnings per share for the three-month periods ended
     March 31, 1999 and 1998 were computed based on the weighted  average common
     and dilutive  potential shares  outstanding during the period of 13,052,578
     and  12,919,235,  respectively.  The  difference  between the basic and the
     dilutive  shares  outstanding  represents  the potential  dilution from the
     exercise of stock options during the period assuming the application of the
     treasury  stock  method.  Since the  Company  incurred a loss for the three
     months  ended  March 31,  1999 and the common  share  equivalents  would be
     antidilutive they are not included in the calculation of earnings per share
     as prescribed by FAS 128.

(E)  The Company had a valuation  allowance  of $27.0  million at March 31, 1999
     and $9.1 million at December  31, 1998 for the deferred tax assets  related
     to net operating loss  carryforwards.  The valuation allowance at March 31,
     1999  comprises  $15.0  million  relating  to federal  net  operating  loss
     carryforwards,   $8.9  million   relating  to  state  net  operating   loss
     carryforwards  and  $3.1  million  relating  to the loss  carryforwards  of
     international subsidiaries.

(F)  Pension related items, which reduced operating costs, were $3.3 million for
     the quarter  ended March 31,  1999  compared to $5.1  million for the prior
     year. These items increased net income by $2.0 million,  or $0.15 per share
     for the first quarter of 1999,  compared  with $3.1  million,  or $0.24 per
     share for the same  period in 1998.  Pension  related  items  include a net
     pension credit for the Company's  domestic  subsidiaries  and a net pension
     cost for its foreign  subsidiaries.  The pension  credit is the result of a
     plan that is funded in excess of the projected benefit obligation, which is
     primarily due to favorable asset performance.

(G)  Under the 1995 Stock Option Plan, as of March 31, 1999, options for 581,375
     shares were  outstanding,  no options were  exercised,  19,375 options were
     canceled, and nonqualified options for 342,875 shares were exercisable.

     Under the Stone & Webster,  Incorporated  Long-Term Incentive  Compensation
     Plan (the "1998  Plan") for the  three-month  period  ended March 31, 1999,
     nonqualified and incentive stock options for 234,000 shares of common stock
     were granted to  employees at a weighted  average per share option price of
     $31.81.  The options  granted  will  become  exercisable  at various  times
     ranging from February  1999 to January 2003. As of March 31, 1999,  options
     for 456,500  shares were  outstanding,  no options were  exercised,  17,500
     options  were  canceled  and  133,334  options  were  exercisable.  For the
     three-month  period ended March 31, 1999, 21,792 shares of restricted stock
     were  awarded  under  the 1998 Plan at a per share  price of  $28.88,  with
     vesting of one-third  of the shares  occurring  on the  effective  date and
     one-third  of  the  shares   vesting  on  each  of  the  first  and  second
     anniversaries  of the  effective  date of the  grant.  No shares  have been
     forfeited for the quarter ended March 31, 1999.

(H)  The Company has three separate domestic line of credit agreements  totaling
     $105.0 million. As of March 31, 1999, these facilities were fully utilized.
     In  addition,  the  Company  has a line of  credit  in the  amount of $30.0
     million,  against  which no amount has been  borrowed,  and as to which the
     Company must satisfy certain  conditions,  which it is presently  unable to
     meet, before it can borrow.  The Company also has a domestic line of credit
     through a subsidiary in the amount of $2.0 million.  Borrowings  under this
     line of credit  amounted to $1.0 million as of March 31, 1999.  As a result
     of losses  experienced  in the fourth quarter of 1998 and the first quarter
     of 1999,  the Company  currently is not in  compliance  with certain of its
     credit facility covenants, and is in negotiations to restructure its credit
     facilities.

(I)  Comprehensive  (loss)  income was $(58.4)  million and $9.5 million for the
     quarters ended March 31, 1999 and 1998,  respectively.  Other comprehensive
     income comprises  translation  adjustments of $0.3 million and $1.9 million
     for the quarters ended March 31, 1999 and 1998, respectively.

(J)  During the first quarter of 1998, the Company  completed its divestiture of
     underutilized  office space with the sale of its Cherry  Hill,  New Jersey,
     office building for $13.5 million in cash. The Company recognized a gain on
     the sale of this  property of $3.1 million ($2.0 million after tax or $0.15
     per share). The Company also completed the disposal of its remaining unused
     office space in its former New York corporate offices.  The provisions made
     in 1996 for losses on sublease or lease cancellation of this space have, in
     aggregate,  not been materially different from the actual costs incurred in
     disposal of the excess space.

(K)  During  the first  quarter of 1998,  the  Company  purchased  the assets of
     Belmont Constructors  Company,  Inc. ("BCI"). BCI is principally engaged in
     providing  construction and construction  management  services to a diverse
     group of clients in the hydrocarbons,  water, industrial and power markets.
     The  Company  recorded  this  transaction  using  the  purchase  method  of
     accounting  for business  combinations.  The results of BCI are included in
     the Company's  condensed  consolidated  financial  statements for the three
     months ended March 31, 1999 and 1998.

(L)  During the second quarter of 1998, the Company  acquired  ownership of S.C.
     Wood,  LLC (SC Wood) in settlement of claims against a client who failed to
     fulfill  certain  contractual  obligations.  The assets of SC Wood  consist
     primarily  of a petroleum  products  pumping  station.  The Company  paid a
     nominal amount as the purchase price.  The assets of SC Wood are carried at
     $6.7 million representing the net book value of services and other advances
     in connection with the project. The Company plans to sell the operations of
     SC Wood and therefore the net assets of SC Wood are  classified as an asset
     held for sale in the  Company's  Consolidated  Balance  Sheet at March  31,
     1999.

(M)  During 1998,  Nordic  Holdings,  Inc.  merged with Commercial Cold Storage,
     Inc. (each a subsidiary of Stone & Webster,  Incorporated),  which acquired
     the  shares  of  seven   companies  which  comprise  The  Nordic  Group,  a
     multi-location, privately-owned cold storage company. The purchase price of
     approximately  $75.0 million in cash  plus  $3.5 million in working capital
     and  approximately  $1.5 million in other  adjustments,  subject to certain
     post-closing adjustments,  was financed through lines of credit. The Nordic
     Group is operated as part of the Company's Cold Storage segment.

(N)  During 1998, the Company  completed the acquisition of Power  Technologies,
     Inc.  ("PTI").  PTI  provides  engineering  consulting  services,  develops
     computer  software  for use by utility  companies,  develops  and  conducts
     educational  courses and  develops  customized  computer  hardware.  At the
     closing,  the purchase price was paid in common stock of the Company having
     a  value  of  $9.0  million.  Along  with  certain  other  contingent  cash
     considerations  related to a specific  project,  the PTI  shareholders  may
     receive  additional  shares of the Company's  stock having a value of up to
     $8.0 million based on meeting  certain  performance  requirements  over the
     next five years. In the event of a contingent  payout, the number of shares
     of common stock issued will be based on the stock price used in  connection
     with the initial closing and will be recorded as an adjustment to goodwill.

(O)  Certain financial  statement items have been reclassified to conform to the
     current year's presentation.

(P)  Although the Company  continues  to have  possible  liabilities  related to
     environmental  pollution and other legal actions,  management believes,  on
     the basis of its assessment of these matters,  including  consultation with
     counsel,  that  none of these  pending  legal  actions  nor  such  possible
     liabilities  will result in payments of amounts,  if any, that would have a
     material  adverse effect on the Company's  financial  position,  results of
     operations or earnings per share calculations.

     The Trans-Pacific Petrochemical Indotama ("TPPI") project remains suspended
     pending  resolution of financing issues by the client.  The TPPI project is
     included  in the  Company's  backlog in the amount of $426.0  million.  The
     Company has  obtained  approval to resell or use  committed  materials  and
     procured equipment to reduce costs of project  suspension.  The Company has
     also had substantive  discussions with potential  purchasers of the olefins
     plant  which  constitutes  the  majority  of the  Company's  scope  for the
     project,  and during the first  quarter of 1999,  has signed a  conditional
     memorandum  of  understanding  to sell  the  plant.  Had the  project  been
     cancelled  as of March 31,  1999,  and if resale of the olefins  plant were
     unlikely to be completed,  the Company would have recorded a pre-tax charge
     of approximately  $72.3 million  representing  project working capital plus
     current  procurement  commitments  net of the  estimated  salvage  value of
     procured equipment and materials.

     The Company is currently  engaged in two  international  projects that have
     incurred losses in the current quarter.  Due to various factors,  including
     owner directed  technical and schedule  changes,  increases in scope of the
     currently  authorized  contracts  and other  factors,  the cost to complete
     these contracts will significantly exceed each contract's value. Management
     believes that it has valid  contractual  and  equitable  grounds for change
     orders providing additional compensation under these contracts. The Company
     has or expects to submit  claims  greater  than  losses  incurred  to date.
     Negotiations  with the owners are  continuing  and the  Company  expects to
     reach  agreement on the change  orders in 1999.  In the quarter ended March
     31, 1999, the Company recognized operating losses of $74.2 million on these
     projects.

(Q)  In June 1998, the FASB issued Statement of Financial  Accounting  Standards
     No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities."
     This Statement  provides a  comprehensive  and consistent  standard for the
     recognition  and  measurement of  derivatives  and hedging  activities.  It
     requires  that an entity  recognize  all  derivatives  as either  assets or
     liabilities  in the  statement  of  financial  position  and measure  those
     instruments  at fair value.  The  Statement is  effective  for fiscal years
     beginning  after June 15, 1999.  The Company will adopt the new standard by
     January 1, 2000.  Management  is evaluating  the impact this  Statement may
     have on the Company's financial statements.

<PAGE>

Item 2.  Management's Discussion and Analysis of Results of
         Operations and Financial Condition

                 Stone & Webster, Incorporated and Subsidiaries
                     Management's Discussion and Analysis of
                  Results of Operations and Financial Condition


The following is  management's  discussion  and analysis of certain  significant
factors that have affected the financial  condition and results of operations of
Stone & Webster,  Incorporated and Subsidiaries  (the "Company") for the periods
noted.  This  discussion  and analysis  should be read in  conjunction  with the
Company's 1998 Annual Report on Form 10-K. Unless noted otherwise,  earnings per
share calculations disclosed are basic and diluted.

Results of Operations
---------------------

For the quarter  ended March 31, 1999,  the Company  reported  revenue of $266.1
million, a decrease of 9.5 percent from the $294.0 million reported in the first
quarter of 1998.  Operating loss for the quarter was $67.4 million compared with
operating  income of $11.6 million for the first  quarter of 1998.  Net loss for
the quarter ended March 31, 1999 was $58.7 million or $4.50 per share,  compared
with net income of $7.6  million or $0.59 per share for the same period in 1998.
New orders were $148.8  million  for the quarter  ended March 31, 1999  compared
with $226.5 million for the first quarter of 1998 and backlog remained  constant
at $2.5  billion  compared to March 31,  1998 and was down from $2.6  billion at
December 31, 1998.

Components of earnings per share for the three months ended March 31 were:

                                                              Three Months
                                                             Ended March 31,
                                                            1999         1998
                                                            ----         ----
     Basic and diluted earnings per share from:
          Operations                                       $(4.65)      $0.20
          Pension related items                              0.15        0.24
                                                           ------       -----
          Ongoing operations                                (4.50)       0.44
          Asset divestiture                                     -        0.15
                                                           ------       -----
          Basic and diluted earnings per share             $(4.50)      $0.59
                                                           ======       =====

Pension  related items reduced  operating costs by $3.3 million and $5.1 million
for the three  months  ended  March 31,  1999 and  1998,  respectively.  Pension
related  items  include  a  net  pension  credit  for  the  Company's   domestic
subsidiaries  and a net pension cost for its foreign  subsidiaries.  The pension
credit is the result of a plan that is funded in excess of the projected benefit
obligation, which is primarily due to favorable asset performance.

During 1998, the Company completed the divestiture of underutilized office space
with the sale of its Cherry Hill, New Jersey,  office building for $13.5 million
in cash.  The  Company  recognized  a gain on the sale of this  property of $3.1
million ($2.0 million after tax or $0.15 per share).  The Company also completed
the  disposal  of its  remaining  unused  office  space in its  former  New York
corporate  offices.  The provisions made in 1996 for losses on sublease or lease
cancellation  of this space have, in aggregate,  not been  materially  different
from the actual costs incurred in disposal of the excess space.

Engineering, Construction and Consulting
----------------------------------------

The Company's Engineering,  Construction and Consulting segment reported revenue
of $254.7  million in the first quarter of 1999, a decrease of 11.3 percent from
the $287.1  million  reported  for the same  period last year.  The  decrease in
revenue is primarily  attributable to lower revenues in the Power division.  The
Company's  Process  division  continues  to feel  the  negative  effects  of the
economic  slowdown in parts of Asia,  which in 1998 and 1999 caused  projects to
either be  canceled  or  delayed.  In  addition  low oil prices  have  adversely
affected  the demand in the  petrochemical  industry.  Operating  loss was $69.4
million  for the first  quarter of 1999  compared  to  operating  income of $9.3
million in the first quarter of 1998.  The decrease in operating  income was due
primarily  to  provisions  in the amount of $74.2  million on two  international
projects for unanticipated cost increases.  Absent the anticipated resolution of
these  contract  costs with the clients,  no offsetting  revenue for these items
could be recorded in the quarter.  New orders for the Engineering,  Construction
and Consulting  segment for the first quarter were $148.8 million  compared with
$226.5  million in 1998.  Backlog  for the  quarter  remained  constant  at $2.5
billion  compared to one year ago and was down from $2.6 billion at December 31,
1998.

The  Trans-Pacific  Petrochemical  Indotama  ("TPPI") project remains  suspended
pending  resolution  of  financing  issues by the  client.  The TPPI  project is
included in the Company's  backlog in the amount of $426.0 million.  The Company
has  obtained  approval  to  resell  or use  committed  materials  and  procured
equipment  to reduce  costs of  project  suspension.  The  Company  has also had
substantive  discussions  with  potential  purchasers of the olefins plant which
constitutes the majority of the Company's scope for the project,  and during the
first quarter of 1999, has signed a conditional  memorandum of  understanding to
sell the plant.  Had the project been  cancelled  as of March 31,  1999,  and if
resale of the olefins  plant were  unlikely to be  completed,  the Company would
have  recorded a pre-tax  charge of  approximately  $72.3  million  representing
project  working  capital  plus  current  procurement  commitments  net  of  the
estimated salvage value of procured equipment and materials.

The  Company  is  currently  engaged  in two  international  projects  that have
incurred losses in the current quarter. Due to various factors,  including owner
directed  technical  and schedule  changes,  increases in scope of the currently
authorized  contracts and other factors,  the cost to complete  these  contracts
will significantly exceed each contract's value. Management believes that it has
valid contractual and equitable  grounds for change orders providing  additional
compensation under these contracts.  The Company has or expects to submit claims
greater  than  losses  incurred  to  date.  Negotiations  with  the  owners  are
continuing  and the Company  expects to reach  agreement on the change orders in
1999.  In the quarter  ended March 31, 1999,  the Company  recognized  operating
losses of $74.2 million on these projects.

Orders and backlog for the three  months  ended March 31, 1999 and 1998 were (in
thousands):

                                                            Three Months
                                                           Ended March 31,
                                                        1999            1998
                                                        ----            ----
     Beginning backlog                               $2,636,166      $2,519,302
     Orders                                             148,833         226,479
     Backlog acquired (BCI)                                   -          59,944
     Revenue                                           (254,656)       (287,097)
                                                     ----------      ----------
     Ending backlog                                  $2,530,343      $2,518,628
                                                     ==========      ==========

Orders represent the net amount of new orders, cancellations and scope changes.

Cold Storage
------------

The Company's Cold Storage segment reported operating income of $2.0 million and
revenue of $11.4  million for the  quarter,  compared  to $2.3  million and $6.9
million  for the quarter  ended  March 31,  1998.  The  improvement  in the Cold
Storage  segment revenue is the result of the acquisition of The Nordic Group in
the fourth  quarter of 1998.  The  decrease in  operating  income is a result of
lower revenue  together with higher related  operating costs associated with the
Company's pre-acquisition facilities.

General and Administrative Expenses, Other Income (Expenses) and Income Taxes
-----------------------------------------------------------------------------

General and administrative  expenses for the quarter were $16.7 million compared
to $16.3 million in 1998. Net interest  expense for the quarter was $1.3 million
compared to net interest income of $0.8 million in 1998. During the three months
ended March 31, 1999,  the maximum annual tax benefit was recognized by reducing
the net deferred tax  liability.  In 1998,  the tax provision was based upon the
expected annual earnings among domestic and international subsidiaries, prior to
loss provisions recorded at year end.

Financial Condition
-------------------

Cash and cash  equivalents  decreased  by $0.5  million  during the first  three
months of 1999.  Net cash  provided by operating  activities  of $(6.1)  million
reflects a decrease in operating  working  capital  (which  consists of accounts
receivable and cost and revenues in excess of billings less accounts payable and
billings in excess of costs and revenues recognized). This decrease in operating
working capital was primarily due to the provisions  taken on two  international
projects and depreciation and amortization expense for the period. The operating
loss offset the decreases in the working capital  amounts.  Net cash provided by
investing  activities of $8.5 million reflects purchases of fixed assets used in
the Company's  operations and the proceeds on a note  receivable.  Net cash used
for financing  activities of $2.9 million  reflects the payment of dividends and
the repayment of bank loans and long-term debt. Total debt was $129.8 million at
March 31,1999, compared to $130.8 million at December 31, 1998.

Management  believes that the types of businesses in which it is engaged require
that it maintain a strong financial  condition.  Management believes that it has
on hand and has access to  sufficient  sources of funds to meet its  anticipated
operating, dividend and capital expenditure needs. The Company has bank lines of
credit  totaling  $123.4  million  (which  represents  both domestic and foreign
subsidiary banking facilities).  As a result of losses experienced in the fourth
quarter of 1998 and the first quarter of 1999,  the Company  currently is not in
compliance with certain of its credit facility  covenants and is in negotiations
to  restructure  its credit  facilities.  In  addition,  the  Company had $106.0
million outstanding under its banking facilities at the end of the quarter.

Year 2000 Compliance
--------------------

The Company is in the process of upgrading its computer  applications in part to
ensure their functionality with respect to the Year 2000.

The Company has  substantially  completed  its  evaluation  of all  software and
information  systems  which  it  uses  and  are to be  validated  as  Year  2000
compliant.  The Company expects to implement the systems and programming changes
necessary to address the Year 2000 issue during 1999. Key financial systems will
become  compliant  through  implementation  of  new  enterprise-wide   financial
systems.  The primary objective of implementing  these new systems is to improve
access  to   financial   information   of  the  Company   and  to   implement  a
state-of-the-art  project  accounting system.  Therefore,  costs related to this
implementation effort are not considered Year 2000 compliance costs.

The Company is giving  consideration  to  compliance  by third party  suppliers.
Failure by third party  suppliers to become Year 2000 compliant  could result in
the Company's inability to obtain products as scheduled, which could potentially
lead to delays in meeting client  orders.  The Company will also review the Year
2000 readiness of clients which are material to the Company's business,  if any.
Failure by material  customers to become Year 2000 compliant could result in the
Company's  inability  to  obtain  or  perform  work on a timely  basis  for such
customers, leading to delays in receipt of revenue.

The Company is taking  protective  measures  regarding the purchases  from third
party  suppliers of software,  hardware and computer  information  systems.  The
Company  is  obtaining  assurances  that the  information  systems  and  related
products supplied will be Year 2000 compliant. As of March 31, 1999, the Company
has identified and contacted a substantial  number of its significant  suppliers
in  regards  to Year 2000  compliance.  No  definitive  conclusions  can be made
regarding  whether the software or systems of third party  suppliers will have a
materially  adverse effect on the Company's  business,  results of operations or
financial condition. However, at this time, management does not believe that the
Company will experience  significant exposure related to the software or systems
of third party suppliers.

The  Company  has  initiated  a  process  of  reviewing   existing   contractual
obligations  with its  clients to  determine  whether  any Year 2000  compliance
exposure  exists to its clients or third parties.  As of March 31, 1999, no such
exposure had been determined.  The Company  currently  believes that systems and
equipment  purchased by it for delivery to third  parties will be made Year 2000
compliant during 1999.

A formal  contingency plan will not be formulated unless the Company  identifies
specific areas where there is substantial risk of Year 2000 problems  occurring,
and no such areas have been  identified as of this date. The Company has not yet
developed an estimate of material lost revenue due to Year 2000 issues in a most
likely worst case Year 2000 scenario because it has not yet completed all of the
necessary  reviews.  To date,  the cost of the reviews and analysis have totaled
less than  $0.3  million.  The Year  2000  review is  intended  to  correct  the
remaining  internal systems that are not Year 2000 compliant and to identify any
client or other  external  situations  in which the Company or its vendors  have
provided  systems  that  are not Year  2000  compliant.  The cost of  correcting
external Year 2000 compliance  situations,  if any,  cannot be determined  until
such cases,  if any exist,  are identified  and  evaluated.  The cost to correct
internal systems and review external systems is estimated to be $0.5 million.

Readers are cautioned that forward-looking statements contained in the Year 2000
Issue disclosure  should be read in conjunction  with the Company's  disclosures
under the heading: "Forward-Looking Information."

Other Accounting Matters
------------------------

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133,  "Accounting  for  Derivative  Instruments  and Hedging  Activities."  This
Statement  provides a comprehensive and consistent  standard for the recognition
and  measurement  of  derivatives  and hedging  activities.  It requires that an
entity  recognize  all  derivatives  as  either  assets  or  liabilities  in the
statement of financial position and measure those instruments at fair value. The
Statement  is  effective  for fiscal years  beginning  after June 15, 1999.  The
Company will adopt the new standard by January 1, 2000. Management is evaluating
the impact this Statement may have on the Company's financial statements.


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

Any of the  statements or comments in this Form 10-Q that refer to the Company's
estimated  or future  results are  forward-looking  and  reflect  the  Company's
current analysis of existing trends and information. The Company cautions that a
variety of factors  including,  but not  limited to, the  following  could cause
business  conditions and results to differ  materially from what is contained in
forward-looking statements: changes in the rate of economic growth in the United
States and other international  economies,  changes in investment by the energy,
power  and  environmental  industries,   the  uncertain  timing  of  awards  and
contracts,  changes in  regulatory  environment,  changes in project  schedules,
changes in trade, monetary and fiscal policies worldwide, currency fluctuations,
outcomes of pending and future  litigation,  protection  and validity of patents
and other intellectual  property rights,  and increasing  competition by foreign
and  domestic  companies  and  other  risks  detailed  from  time to time in the
Company's filings with the Securities and Exchange Commission.

The statements under the caption "Year 2000 Compliance" describing the Company's
plans and objectives for handling the Year 2000 issue and the expected impact of
the Year  2000  issue  on the  Company  are  forward-looking  statements.  Those
statements  involve risks and  uncertainties  that could cause actual results to
differ  materially from the results  discussed  above.  Factors that might cause
such a difference include,  but are not limited to, delays in executing the plan
outlined  above  and  unforeseen  or  increased   costs   associated   with  the
implementation of the plan and any necessary  changes to the Company's  systems.
Any inability  experienced by the Company during  implementation  resulting from
necessary  changes not completed in a timely manner could have an adverse effect
on the  results  of  operations.  Moreover,  even  if the  Company  successfully
implements the changes necessary to address the Year 2000 issue, there can be no
assurances  that the Company  will not be  adversely  affected by the failure of
others, including vendors and clients, to become Year 2000 compliant.

<PAGE>

PART II.  Other Information
Item 6.   Exhibits and Reports on Form 8-K


                 Stone & Webster, Incorporated and Subsidiaries
                        Exhibits and Reports on Form 8-K.


(a)  Exhibit Index

     (4)  Instruments  defining  the  rights  of  security  holders,   including
          indentures.

          As of March 31, 1999,  registrant and its subsidiaries had outstanding
          long-term debt  (excluding  current  portion)  totaling  approximately
          $21.7 million,  principally in connection with a mortgage  relating to
          real  property for a  subsidiary's  office  building and in connection
          with  capitalized  lease  commitments  for the  acquisition of certain
          office equipment.  None of these agreements are filed herewith because
          the amount of indebtedness  authorized  under each such agreement does
          not exceed 10 percent of the total  assets of the  registrant  and its
          subsidiaries on a consolidated basis; the registrant hereby undertakes
          to furnish copies of such agreements to the Commission upon request.

     (27) Financial Data Schedule.

(b)  Reports on Form 8-K

     Registrant  did  not file any reports on  Form  8-K  during the quarter for
     which this report is filed.

<PAGE>

                 Stone & Webster, Incorporated and Subsidiaries
                                
                                
                                    FORM 10-Q
                                
                                
                                   SIGNATURES


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

                             STONE & WEBSTER, INCORPORATED




                             By:  /S/  THOMAS L. LANGFORD
                                  ----------------------------------------------
Dated:  May 13, 1999              Thomas L. Langford
                                  Executive Vice President and Chief Financial
                                   Officer
                                  (Duly authorized officer and Principal
                                   Financial Officer)
<PAGE>