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 June 30, 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:  13,064,499 shares as of July 31, 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 and Six Months Ended June 30, 1999 and
                    June 30, 1998.........................................  3

                 Consolidated Balance Sheets (Unaudited):
                    June 30, 1999 and December 31, 1998...................  4

                 Condensed Consolidated Statements of Cash Flows
                  (Unaudited):
                   Six Months Ended June 30, 1999 and June 30, 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......................10-15


PART II. OTHER INFORMATION

         Item 4. Submission of Matters to a Vote of Security Holders...... 16
         Item 6. Exhibits and Reports on Form 8-K......................... 17


SIGNATURES................................................................ 18
































                                       2
<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      Six Months Ended
                                            June 30,              June 30,
                                        1999       1998       1999       1998
                                        ----       ----       ----       ----
Revenue                               $310,310   $317,004   $576,408   $610,961
Cost of revenue                        285,648    300,385    602,417    566,436
                                      --------   --------   --------   --------
  Gross profit (loss)                   24,662     16,619    (26,009)    44,525
General and administrative expenses     16,913     15,414     33,639     31,686
                                      --------   --------   --------   --------
Operating income (loss)                  7,749      1,205    (59,648)    12,839
Other income (expense):
  Interest income                          422        297      1,083      1,500
  Interest expense                      (1,957)      (591)    (3,915)    (1,008)
                                      --------   --------   --------   --------
Total other income (expense), net       (1,535)      (294)    (2,832)       492

Income (loss) before provision for
 income taxes                            6,214        911    (62,480)    13,331
Income tax (benefit) provision               -        260    (10,000)     5,067
                                      --------   --------   --------   --------
Net income (loss)                     $  6,214   $    651   $(52,480)  $  8,264
                                      ========   ========   ========   ========

Per share amounts:
Basic and diluted earnings per share     $0.48      $0.05     $(4.02)     $0.64
                                         =====      =====     ======      =====
Dividends declared per share             $0.15      $0.15     $ 0.30      $0.30
                                         =====      =====     ======      =====

Weighted-average number of shares
 outstanding:
  Basic                                 13,063     12,792     13,058     12,797
                                        ======     ======     ======     ======
  Diluted                               13,122     12,922     13,058     12,927
                                        ======     ======     ======     ======


     See accompanying notes to condensed consolidated financial statements.























                                       3
<PAGE>
                 Stone & Webster, Incorporated and Subsidiaries
                     Consolidated Balance Sheets (Unaudited)
                (Dollars in thousands, except per share amounts)

                                                      June 30,      December 31,
                                                        1999            1998
                                                      --------      ------------
Assets
Current assets:
 Cash and cash equivalents                            $ 29,157      $ 45,492
 Accounts receivable, principally trade, net           281,116       276,235
 Costs and revenues recognized in excess of
  billings                                              61,669        49,302
 Deferred income taxes                                  39,001        20,338
 Other                                                   1,559           638
                                                      --------      --------
Total current assets                                   412,502       392,005
Assets held for sale                                     6,744         6,744
Fixed assets, net                                      220,175       219,157
Domestic prepaid pension cost                          162,947       155,703
Note receivable                                              -        15,150
Other assets                                            49,524        45,923
                                                      --------      --------
Total assets                                          $851,892      $834,682
                                                      ========      ========

Liabilities and Shareholders' Equity
Current liabilities:
 Bank loans                                           $106,475      $106,350
 Current portion of long-term debt                       2,065         2,175
 Accounts payable, principally trade                   103,855        96,134
 Billings in excess of costs and revenues
  recognized                                           241,300       176,692
 Accrued liabilities                                    80,639        80,036
 Accrued taxes                                           7,377        12,034
                                                      --------      --------
Total current liabilities                              541,711       473,421

Long-term debt                                          21,241        22,228
Deferred income taxes                                   39,085        33,030
Other liabilities                                       13,951        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         54,671        54,625
 Retained earnings                                     311,002       367,358
 Accumulated other comprehensive income                 (9,296)       (9,707)
 Less: Common stock held in treasury, at cost
        (4,667,689 and 4,692,933 shares)               121,373       122,030
       Employee stock ownership and restricted
        stock plans                                     16,831        16,401
                                                      --------      --------
Total shareholders' equity                             235,904       291,576
                                                      --------      --------
Total liabilities and shareholders' equity            $851,892      $834,682
                                                      ========      ========

     See accompanying notes to condensed consolidated financial statements
















                                       4
<PAGE>
                 Stone & Webster, Incorporated and Subsidiaries
           Condensed Consolidated Statements of Cash Flows (Unaudited)
                                 (In thousands)


                                                            Six Months
                                                          Ended June 30,
                                                        1999          1998
                                                        ----          ----
Cash Flows from Operating Activities:
 Net income (loss)                                    $(52,480)     $  8,264
 Adjustments to reconcile net income (loss) to
  net cash used for operating activities:
   Depreciation and amortization                        11,387         7,675
   Amortization of net cost of stock plans                 918           732
   Gain from asset divestiture                               -        (3,066)
   Deferred income taxes                               (12,608)        2,766
   Domestic prepaid pension cost                        (7,244)      (10,338)
   Changes in operating assets and liabilities          45,838      (103,345)
                                                      --------      --------
 Net cash used for operating activities                (14,189)      (97,312)
                                                      --------      --------

Cash Flows from Investing Activities:
 Purchases of fixed assets                             (12,405)      (13,721)
 Proceeds from 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:              2,745        31,734
                                                      --------      --------

Cash Flows from Financing Activities:
 Repayments of long-term debt                           (1,097)         (781)
 Increase in bank loans                                    125        20,000
 Purchases of common stock for treasury                      -        (1,514)
 Dividends paid                                         (3,919)       (3,842)
                                                      --------      --------
 Net cash (used for) provided by financing
  activities                                            (4,891)       13,863)
                                                      --------      --------
Net decrease in cash and cash equivalents              (16,335)      (51,715)
Cash and cash equivalents at beginning of period        45,492        75,030
                                                      --------      --------
Cash and cash equivalents at end of period            $ 29,157      $ 23,315
                                                      ========      ========

     See accompanying notes to condensed consolidated financial statements.



























                                       5
<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 June 30, 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 are  stated at cost less  accumulated  depreciation  of
     $152.9 million at June 30, 1999 and $190.9 million at December 31, 1998.

(C)  Revenue and  operating  income by business  segment were as follows for the
     quarter and six months ended June 30, 1999 and 1998 (in thousands):

                                         Three Months           Six Months
                                        Ended June 30,        Ended June 30,
                                       1999       1998       1999       1998
                                       ----       ----       ----       ----
     Revenue:
      Engineering, construction
       and consulting services       $298,395   $309,387   $553,051   $596,484
      Cold Storage                     11,915      7,617     23,357     14,477
                                     --------   --------   --------   --------
        Total revenue                $310,310   $317,004   $576,408   $610,961
                                     ========   ========   ========   ========
     Operating income:
      Engineering, construction
       and consulting services       $  5,309   $ (1,090)  $(64,045)  $  8,259
      Cold Storage                      2,440      2,295      4,397      4,580
                                     --------   --------   --------   --------
        Total operating income
         (loss)                      $  7,749   $  1,205   $(59,648)  $ 12,839
                                     ========   ========   ========   ========

(D)  Basic earnings per share for the six-month  periods ended June 30, 1999 and
     1998 were computed  based on the weighted-average  number  of common shares
     outstanding  during the period of 13,057,529 and  12,797,455  respectively.
     Diluted  earnings per share for the  six-month  periods ended June 30, 1999
     and 1998 were computed  based on the  weighted-average  common and dilutive
     potential   shares   outstanding   during  the  period  of  13,106,518  and
     12,926,628, 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 six months ended
     June 30, 1999 and the dilutive  potential shares would be antidilutive they
     are not included in the  calculation of earnings per share as prescribed by
     FAS 128.




                                       6

<PAGE>
(E)  The Company had a valuation allowance of $43.0 million at June 30, 1999 and
     $9.1 million at December  31, 1998 for the  deferred tax assets  related to
     net operating loss carryforwards.  The valuation allowance at June 30, 1999
     comprises   $20.0   million   relating  to  federal  net   operating   loss
     carryforwards,   $9.3  million   relating  to  state  net  operating   loss
     carryforwards  and $13.7  million  relating  to the loss  carryforwards  of
     international  subsidiaries.  During the first quarter of 1999,  the annual
     tax benefit was recognized to the extent of the net deferred tax liability.
     In addition,  a valuation  allowance was established against operating loss
     carryforwards in excess of the net deferred tax liability position.  During
     the  second  quarter  of 1999,  a portion of the  valuation  allowance  was
     released and no provision for taxes was required.

(F)  Pension related items, which reduced operating costs, were $3.5 million and
     $6.8 million for the quarter and six months ended June 30, 1999 compared to
     $5.1  million  and $10.2  million  for the same  periods in the prior year.
     These items  increased net income by $3.5  million,  or $0.27 per share and
     $4.1  million or $0.31 per share for the quarter and six months  ended June
     30, 1999,  compared with $3.1 million,  or $0.24 per share and $6.2 million
     or $0.48 per share for the same  periods  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 June 30, 1999,  options for 557,375
     shares were  outstanding,  no options were  exercised,  43,375 options were
     canceled,  14,500 options were  accelerated  and  nonqualified  options for
     426,875 shares were exercisable.

     Under the Stone & Webster,  Incorporated  Long-Term Incentive  Compensation
     Plan (the  "1998  Plan") for the  six-month  period  ended  June 30,  1999,
     nonqualified and incentive stock options for 450,500 shares of common stock
     were granted to employees and nonemployee  directors at a  weighted-average
     per  share  option  price  of  $28.48.  The  options  granted  will  become
     exercisable  at various times ranging from February 1999 to May 2003. As of
     June 30, 1999, options for 668,500 shares were outstanding, no options were
     exercised,  22,000 options were canceled,  16,500 options were  accelerated
     and 213,959 options were  exercisable.  For the six-month period ended June
     30, 1999,  22,792  shares of  restricted  stock were awarded under the 1998
     Plan at a per share  weighted-average  price of  $28.77,  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 June 30, 1999.

     The  Employee  Retirement  Plan  of  Stone  &  Webster,   Incorporated  and
     Participating  Subsidiaries (the "Retirement Plan") and the Trust Agreement
     under the  Retirement  Plan have been amended,  effective  July 1, 1999, to
     permit the investment of a portion of the assets of the Retirement  Plan in
     common stock or other qualifying securities issued by the Company, provided
     that the aggregate maximum number of such securities acquired shall be less
     than five  percent (5%) of such common  stock or other  securities,  as the
     case may be, then  outstanding,  and provided  that such  investment  be in
     compliance  with the Employee  Retirement  Income  Security Act of 1974, as
     amended,  and other  applicable  laws.  The Board of Directors has directed
     that such  investment  be made in an  orderly  manner  from time to time in
     accordance  with  investment  guidelines and objectives  established by the
     Board.






                                       7

<PAGE>
(H)  The Company had three separate domestic line of credit agreements available
     totaling $105.0 million.  As of June 30, 1999,  these facilities were fully
     utilized.  The  Company  also  had a  domestic  line of  credit  through  a
     subsidiary  in the amount of $2.0  million.  Borrowings  under this line of
     credit amounted to $1.5 million as of June 30, 1999.

     Subsequent  to the  close of the  second  quarter,  the  Company  finalized
     negotiations on a $230.0 million collateralized line of credit with a group
     of banks,  which will provide  operating funds and letters of credit.  Upon
     closing the new  facility,  the  Company  repaid the bank loans and certain
     long-term debt that was outstanding as of the end of the second quarter.

(I)  Comprehensive  income  (loss) was $6.4  million and ($4.9)  million for the
     quarters ended June 30, 1999 and 1998,  respectively.  Other  comprehensive
     income  (loss)  consists of  translation  adjustments  of $0.1  million and
     ($5.6) million for the quarters ended June 30, 1999 and 1998, respectively.
     For the six months ended June 30, 1999 and 1998 comprehensive income (loss)
     was ($52.1)  million and $4.6 million,  respectively.  Other  comprehensive
     income  (loss)  consists of  translation  adjustments  of $0.4  million and
     ($3.6)   million  for  the  six  months  ended  June  30,  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)  Certain financial  statement items have been reclassified to conform to the
     current year's presentation.

(L)  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 $410.0  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,  signed a  conditional
     memorandum  of  understanding  to sell  the  plant.  Had the  project  been
     cancelled  as of June 30,  1999,  and if resale of the  olefins  plant were
     unlikely to be completed,  the Company would have recorded a pre-tax charge
     of approximately  $75.0 million  representing  project working capital plus
     current  procurement  commitments  net of the  estimated  salvage  value of
     procured equipment and materials.










                                       8

<PAGE>
     The  Company  is  currently  engaged  in two  international  projects  that
     incurred  losses in the first 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. In
     the quarter ended March 31, 1999, the Company  recognized  operating losses
     of $74.2 million on these projects.

     A joint venture,  in which the Company is a 50 percent owner, has submitted
     claims to recover in excess of $112.0 million in connection  with scope and
     specification  changes on a major petrochemical project in the Middle East.
     The Company believes that the joint venture will recover at least an amount
     sufficient to liquidate the  subcontractor  claims,  and has not recognized
     any contract revenue  associated with these claims. In addition,  the joint
     venture has been notified of claims in excess of $53.0 million,  which have
     been submitted by a  subcontractor  who has filed for  arbitration of these
     claims.  Substantially all of the subcontractor's claims have been included
     in the  claims  submitted  by the  joint  venture.  In  1997,  the  Company
     recognized losses of $25.8 million related to this contract.

     The Company recognized  approximately  $35.0 million in revenue in 1998 for
     change  orders  that  have  not yet  received  client  approval,  which  in
     management's judgment, is a conservative estimate of the probable amount to
     be realized.

(M)  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.  In June  1999,  the FASB  agreed to defer the
     effective  date  of the  Statement  for  one  year.  The  Statement  is now
     effective for fiscal years  beginning after June 15, 2000. The Company will
     adopt the new standard by January 1, 2001.  Management  is  evaluating  the
     impact this Statement may have on the Company's financial statements.


















                                       9

<PAGE>
                 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 June 30,  1999,  the Company  reported  revenue of $310.3
million,  a decrease  of 2.1  percent  from the $317.0  million  reported in the
second  quarter of 1998.  Operating  income  for the  quarter  was $7.7  million
compared  with $1.2 million for the second  quarter of 1998.  Net income for the
quarter  ended June 30, 1999 was $6.2 million or $0.48 per share,  compared with
net income of $0.7  million or $0.05 per share for the same period in 1998.  New
orders were $351.3  million for the quarter  ended June 30, 1999  compared  with
$147.9 million for the second quarter of 1998.

Revenue for the six months ended June 30, 1999 was $576.4 million  compared with
$611.0 million  reported for the same period in 1998, a decrease of 5.6 percent.
Operating loss for the first six months of 1999 was $59.6 million  compared with
operating  income of $12.8 million for the same period in 1998. Net loss for the
six months  ended June 30, 1999 was $52.5  million or $4.02 per share,  compared
with net income of $8.3 million, or $0.64 per share for the same period in 1998.
New orders were $500.1  million for the six months ended June 30, 1999  compared
with $374.4 million for the six months ended June 30, 1998 and backlog  remained
consistent  at $2.6  billion  compared to December 31, 1998 and was up from $2.4
billion at June 30, 1998.

Components  of earnings  per share for three months and six months ended June 30
were:

                                         Three Months           Six Months
                                        Ended June 30,        Ended June 30,
                                       1999       1998       1999       1998
                                       ----       ----       ----       ----
Basic and diluted earnings per
 share from:
   Operations                          $0.21     $(0.19)    $(4.33)    $0.01
   Pension related items                0.27       0.24       0.31      0.48
                                       -----     ------     ------     -----
   Ongoing operations                   0.48       0.05      (4.02)     0.49
   Asset divestiture                       -          -          -      0.15
                                       -----     ------     ------     -----
   Basic and diluted earnings per
    share                              $0.48     $ 0.05     $(4.02)    $0.64
                                       =====     ======     ======     =====

Pension  related items reduced  operating costs by $3.5 million and $6.8 million
for the  quarter  and six months  ended June 30,  1999,  respectively,  and $5.1
million  and $10.2  million  for the same  periods  in the prior  year.  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.






                                       10

<PAGE>

During the first  quarter of 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 $298.4  million in the second quarter of 1999, a decrease of 3.6 percent from
the $309.4  million  reported  for the same  period last year.  The  decrease in
revenue  is  primarily  due to  lower  revenues  in  the  Power  and  Industrial
divisions.  In addition,  the Company's  Process division  continues to feel the
effects of the economic slowdown in parts of Asia, which in 1998 and 1999 caused
projects to be either canceled or delayed. Operating income was $5.3 million for
the second  quarter  of 1999  compared  to a loss of $1.0  million in the second
quarter of 1998.  This increase is primarily due to improved  operating  margins
and  continued  reduction  of costs and  operating  expenses.  The  increase  in
operating income was partially offset by $2.3 million related to severance costs
incurred in the current quarter.

For the first six months of 1999, the  Engineering,  Construction and Consulting
segment had  revenue of $553.1  million,  a decrease of 7.3 percent  compared to
revenue of $596.5  million for the same period in 1998.  Operating  loss for the
first six months of 1999 was $64.0  million  compared with  operating  income of
$8.3 million for the same period in 1998.  The  decrease in operating  income is
primarily due to provisions in the amount of $74.2 million on two  international
projects for unanticipated cost increases.

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 $410.0 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, signed a conditional  memorandum of understanding to sell
the plant.  Had the project been cancelled as of June 30, 1999, and if resale of
the olefins plant were unlikely to be completed, the Company would have recorded
a pre-tax charge of  approximately  $75.0 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 incurred
losses in the first quarter of 1999.  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 the 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 the losses  incurred to date.  In the quarter ended March 31, 1999,
the Company recognized operating losses of $74.2 million on these projects.






                                       11

<PAGE>

A joint  venture,  in which the  Company is a 50 percent  owner,  has  submitted
claims to  recover  in excess of $112.0  million  in  connection  with scope and
specification  changes on a major petrochemical  project in the Middle East. The
Company  believes  that the  joint  venture  will  recover  at  least an  amount
sufficient to liquidate the  subcontractor  claims,  and has not  recognized any
contract revenue  associated with these claims.  In addition,  the joint venture
has been  notified  of  claims  in  excess  of $53.0  million,  which  have been
submitted by a  subcontractor  who has filed for  arbitration  of these  claims.
Substantially all of the subcontractor's claims have been included in the claims
submitted by the joint venture.  In 1997, the Company recognized losses of $25.8
million related to this contract.

The Company recognized approximately $35.0 million in revenue in 1998 for change
orders  that  have not yet  received  client  approval,  which  in  management's
judgment, is a conservative estimate of the probable amount to be realized.

New orders for the  Engineering,  Construction  and  Consulting  segment for the
quarter  and six  months  ended June 30,  1999 were  $351.3  million  and $500.1
million,  respectively,  compared with $147.9 million and $374.4 million for the
same periods in 1998.

Orders  and  backlog  for the six months  ended June 30,  1999 and 1998 were (in
thousands):

                                    Three Months              Six Months
                                   Ended June 30,            Ended June 30,
                                 1999         1998         1999         1998
                                 ----         ----         ----         ----
Beginning backlog             $2,530,343   $2,518,628   $2,636,166   $2,519,302
Orders                           351,272      147,881      500,105      374,360
Backlog acquired (BCI)                 -            -            -       59,944
Revenue                         (298,395)    (309,387)    (553,051)    (596,484)
                              ----------   ----------   ----------   ----------
Ending backlog                $2,583,220   $2,357,122   $2,583,220   $2,357,122
                              ==========   ==========   ==========   ==========

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

Cold Storage And Related Activities
-----------------------------------

The Company's Cold Storage segment reported operating income of $2.4 million and
$4.4 million for the quarter and six months  ended June 30, 1999,  respectively,
compared  with  operating  income of $2.3  million and $4.6 million for the same
periods in 1998. Revenue was $11.9 million and $23.4 million for the quarter and
six months  ended June 30,  1999,  respectively,  compared  with revenue of $7.6
million and $14.5 million for the same periods in 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 higher  nonrecurring costs associated with restructuring the Company's
pre-acquisition facilities.










                                       12

<PAGE>

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

General and  administrative  expenses  for the quarter and six months ended June
30, 1999 were $16.9 million and $33.6 million, respectively, compared with $15.4
million and $31.7 million for the same period  periods in 1998.  The increase in
general and  administrative  expenses is due to $2.5 million in severance costs,
which were partially offset by cost savings  realized from the  restructuring of
the Company's Engineering and Construction activities.  Net interest expense for
the quarter  ended June 30, 1999 was $1.5  million  compared to $0.3 million for
the same period in 1998. Net interest  expense for the first six months was $2.8
million,  compared with net interest  income of $0.5 million for the same period
in 1998. During the first quarter of 1999, the annual tax benefit was recognized
to the extent of the net  deferred  tax  liability.  In  addition,  a  valuation
allowance was established  against net operating loss carryforwards in excess of
the net deferred tax liability  position.  During the second  quarter of 1999, a
portion of the  valuation  allowance was released and no provision for taxes was
required. 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 $16.3 million during the first six months
of 1999.  Net cash used for operating  activities  of $14.1  million  reflects a
decrease in operating working capital (which consists of accounts receivable and
costs and revenue in excess of billings  less  accounts  payable and billings in
excess  of costs and  revenue  recognized)  and  depreciation  and  amortization
expense  for the six months  ended June 30,  1999.  The  decrease  in  operating
working  capital was  primarily  due to  provisions  taken on two  international
projects in the first  quarter.  The decrease in operating  working  capital was
offset by the operating  loss and deferred  income  taxes.  Net cash provided by
investing  activities of $2.7 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 $5.0 million  reflects the payment of dividends and
the repayment of long-term debt.  Total debt was $129.8 million at June 30,1999,
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. At June 30, 1999, the Company
had bank lines of credit  available  totaling $120.8 million (which  represented
both  domestic and foreign  subsidiary  banking  facilities).  In addition,  the
Company had $106.5 million  outstanding under its banking  facilities at the end
of the  quarter.  Subsequent  to the close of the second  quarter,  the  Company
finalized  negotiations on a $230.0 million collateralized line of credit with a
group of banks,  which will provide operating funds and letters of credit.  Upon
closing  the new  facility,  the  Company  repaid  the bank  loans  and  certain
long-term debt that were outstanding as of the end of the second 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.





                                       13

<PAGE>

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 that 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 June 30, 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 June 30, 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."




                                       14

<PAGE>

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. In
June 1999,  the FASB agreed to defer the effective date of the Statement for one
year. The Statement is now effective for fiscal years  beginning  after June 15,
2000. The Company will adopt the new standard by January 1, 2001.  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.



















                                       15

<PAGE>
PART II.  Other Information
Item 4.   Submission of Matters to a Vote of Security Holders.


(a)  The Annual  Meeting of  Shareholders  of the registrant was held on May 13,
     1999.

(b)  At the Annual Meeting,  John P. Merrill, Jr., Bernard W. Reznicek and Peter
     M. Wood were  re-elected as Directors for terms expiring in 2002. The terms
     of office as Directors of Donna F. Bethell,  Frank J. A. Cilluffo,  Kent F.
     Hansen,  Elvin R. Heiberg  III,  David N.  McCammon,  J. Angus McKee and H.
     Kerner Smith continued after the meeting.

(c)  At the Annual Meeting,  the Shareholders also ratified the selection of the
     firm of PricewaterhouseCoopers  LLP, independent accountants, as auditor of
     the registrant and its subsidiaries for the year ended December 31, 1999.

     The total votes cast for,  withheld  or  against,  as well as the number of
     abstentions and broker non-votes as to each such matter were as follows:

     (1)  Election of Directors

                                                           Total Votes
                Nominee                    For               Withheld

          John P. Merrill, Jr.          10,541,433          1,054,484
          Bernard W. Reznicek            9,849,922          1,745,995
          Peter M. Wood                  9,848,361          1,747,556

                         There were no broker non-votes.

     (2)  Selection of Independent Accountants.

               Total Votes For                 10,274,540
               Total Votes Against              1,206,587
               Total Abstentions                  114,790

                         There were no broker non-votes.












                                       16

<PAGE>

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 June 30, 1999,  registrant and its  subsidiaries had outstanding
          long-term debt  (excluding  current  portion)  totaling  approximately
          $21.2 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 filed the following report on Form 8-K during the period covered
     by this report.

          Date of Form 8-K        Description
          ----------------        -----------
          April 15, 1999          Submitted under Item 5, Other Events, relating
                                  to  the  preliminary  report  of first quarter
                                  results.

















                                       17

<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:  August 12, 1999         Thomas L. Langford
                                Executive Vice President
                                (Duly authorized officer and principal financial
                                  officer)

























                                       18
<PAGE>