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, 1998
                                
                                       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: 12,792,967 shares
as of April 30, 1998.

<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, 1998 and 1997               3

                 Consolidated Balance Sheets (Unaudited):
                  March 31, 1998 and December 31, 1997                     4

                 Condensed Consolidated Statements of Cash Flows
                  (Unaudited):
                  Three Months Ended March 31, 1998 and 1997               5

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

         Item 2. Management's Discussion and Analysis of Results of
                  Operations and Financial Condition                     10-13


PART II. OTHER INFORMATION

         Item 6. Exhibits and Reports on Form 8-K                         14


SIGNATURES                                                                15

<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,
                                                      1998          1997
                                                    ---------     ---------
Revenue                                             $293,957      $349,525
Cost of revenue                                      266,229       323,670
                                                    ---------     ---------
     Gross profit                                     27,728        25,855
General and administrative expenses                   16,094        17,053
                                                    ---------     ---------
Operating income                                      11,634         8,802
Other income (expense)
     Interest income                                   1,203           830
     Interest expense                                   (417)         (427)
                                                    ---------     ---------
Total other income, net                                  786           403
                                                    ---------     ---------
Income before provision for income taxes              12,420         9,205
Income tax provision                                   4,807         3,637
                                                    ---------     ---------
Net income                                          $  7,613      $  5,568
                                                    ---------     ---------

Per share amounts:
Basic and diluted earnings per share                   $0.59         $0.43
                                                    ---------     ---------
Dividends declared per share                           $0.15         $0.15
                                                    ---------     ---------

Weighted average number of shares outstanding:
Basic                                                 12,803        12,806
                                                    ---------     ---------
Diluted                                               12,919        12,829
                                                    ---------     ---------


     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,
                                                         1998          1997
                                                      ----------    ------------
Assets
Current assets:
  Cash and cash equivalents                           $  40,944      $  75,030
  U.S. Government securities, at amortized cost,
    which approximates fair value                             -         31,909
  Accounts receivable, principally trade, net           189,984        180,057
  Costs and revenues recognized in excess of            127,935        102,476
    billings
  Deferred income taxes                                  18,940         18,835
  Other                                                     768            337
                                                      ----------    ------------
Total current assets                                    378,571        408,644

Assets held for sale                                          -         10,395
Fixed assets, net                                       144,614        140,177
Domestic prepaid pension cost                           153,324        148,155
Note receivable                                          15,000         15,000
Other assets                                             30,800         16,406
                                                      ----------    ------------
Total assets                                           $722,309       $738,777
                                                      ----------    ------------

Liabilities and Shareholders' Equity
Current liabilities:
  Current portion of long-term debt                    $  1,829       $  1,750
  Accounts payable, principally trade                    70,030         85,338
  Billings in excess of costs and revenues
    recognized                                          109,422        115,730
  Accrued liabilities                                    84,083         79,351
  Accrued taxes                                           8,835         14,689
                                                      ----------    ------------
Total current liabilities                               274,199        296,858

Long-term debt                                           22,091         22,510
Deferred income taxes                                    58,562         57,463
Other liabilities                                        16,005         16,714
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        51,465         51,426
   Retained earnings                                    430,003        424,287
   Accumulated other comprehensive income                  (270)        (2,205)
   Less:  Common stock held in treasury, at cost
            (4,944,746 and 4,908,975 shares)            128,515        127,070
          Employee stock ownership and restricted
            stock plans                                  18,962         18,937
                                                      ----------    ------------
Total shareholders' equity                              351,452        345,232
                                                      ----------    ------------
Total liabilities and shareholders' equity             $722,309       $738,777
                                                      ----------    ------------


     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,
                                                           1998           1997
                                                         ---------     --------
Cash Flows from Operating Activities:
  Net income                                             $  7,613      $  5,568
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                         3,732         3,344
      Amortization of net cost of stock plans                 318           290
      Gain from asset divestiture                          (3,066)            -
      Deferred income taxes                                   994        (4,226)
      Domestic prepaid pension cost                        (5,169)       (4,731)
      Changes in operating assets and liabilities         (72,021)       34,472
                                                         ---------      --------
  Net cash provided by (used for) operating activities    (67,599)       34,717
                                                         ---------      --------

Cash Flows from Investing Activities:
  Proceeds from maturities of U.S.                         31,909         2,003
Government securities
  Proceeds from asset divestiture                          13,546             -
  Purchases of fixed assets, net                           (8,169)       (3,980)
                                                         ---------     --------
  Net cash provided by (used for) investing activities     37,286        (1,977)
                                                         ---------     --------

Cash Flows from Financing Activities:
  Repayments of long-term debt                               (340)         (381)
  Decrease in bank loans                                        -        (5,000)
  Purchases of common stock for treasury                   (1,510)       (1,200)
  Dividends paid                                           (1,923)       (1,921)
                                                         ---------     --------
  Net cash used for financing activities                   (3,773)       (8,502)
                                                         ---------     --------
Net increase (decrease) in cash and cash equivalents      (34,086)       24,238

Cash and cash equivalents at beginning of period           75,030        57,887
                                                         ---------     --------
Cash and cash equivalents at end of period                $40,944       $82,125
                                                         ---------     --------


     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, 1997  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, 1998
     are not necessarily  indicative of the results that may be expected for the
     fiscal year ending  December 31, 1998 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, 1997.

     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 $170.5
     million at March 31, 1998 and $165.4 million at December 31, 1997.

(C)  Basic  earnings per share for the three month  periods ended March 31, 1998
     and 1997  were  computed  based on the  weighted  average  number of common
     shares   outstanding  during  the  period  of  12,803,035  and  12,806,139,
     respectively.  Diluted earnings per share for the three month periods ended
     March 31, 1998 and 1997 were computed based on the weighted  average common
     and dilutive  potential shares  outstanding during the period of 12,919,235
     and  12,829,041,  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.

(D)  Revenue and operating income by business segment were the following for the
     three month periods ended March 31, 1998 and 1997 (in thousands):

                                                             Three Months Ended
                                                                  March 31,
                                                             1998        1997
                                                           ---------   ---------
     Revenue:
       Engineering, construction and consulting services   $287,097    $344,686
       Cold storage and related activities                    6,860       4,839
                                                           ---------   ---------
          Total revenue                                    $293,957    $349,525
                                                           ---------   ---------
     Operating income:
       Engineering, construction and consulting services   $ 11,021    $  9,990
       Cold storage and related activities                    2,285       1,160
                                                           ---------   ---------
                                                             13,306      11,150
       General corporate expenses                            (1,672)     (2,348)
                                                           ---------   ---------
          Total operating income                           $ 11,634    $  8,802
                                                           ---------   ---------

(E)  The Company had a valuation allowance of $3.6 million at March 31, 1998 and
     December 31, 1997 for the deferred tax assets related to net operating loss
     carryforwards.  The valuation  allowance at March 31, 1998  comprises  $3.5
     million relating to state net operating loss carryforwards and $0.1 million
     relating to the carryforwards of international subsidiaries.

(F)  Pension related items, which reduced operating costs, were $5.1 million for
     the quarter  ended March 31,  1998  compared to $4.5  million for the prior
     year. These items increased net income by $3.1 million,  or $0.24 per share
     for the first quarter of 1998,  compared  with $2.7  million,  or $0.21 per
     share for the same  period in 1997.  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  and
     income from the amortization of Statement of Financial Accounting Standards
     No.  87 net  transition  asset.  The plan is  overfunded  primarily  due to
     favorable asset  performance.  The transition asset will be fully amortized
     in 1998.

(G)  As of March 31,  1998,  options for 187,125  shares  were  exercisable  and
     112,375  shares were  available for grant under the 1995 Stock Option Plan.
     The total number of shares in the Stock Option Plan was increased by 75,000
     shares by the Board of Directors on April 21, 1997.

     During the three month period ended March 31, 1998,  non-qualified  options
     for 12,000  shares of common stock were granted to employees at a per share
     option price of $41.25.  Twenty-five  percent of the  nonqualified  options
     granted become  exercisable on each of the first four anniversary  dates of
     the grant.  Options with respect to 500 shares were  exercised  and options
     for 23,375  shares were canceled  during the three month  period.  The 1995
     Stock Option Plan will be replaced by the Long-Term Incentive  Compensation
     Plan if that plan is  approved  by the  shareholders  of the Company at its
     annual  meeting  scheduled  to be held on May 14, 1998.

(H)  In July 1995 and  January  1998,  the  Board of  Directors  of the  Company
     authorized an increase in the share repurchase  program from 1.0 million to
     2.5  million   shares  and  from  2.5   million  to  3.0  million   shares,
     respectively,  of the Company's common stock in open market transactions at
     prevailing  prices.  During the quarter  ended March 31, 1998,  the Company
     acquired  38,312  shares  (at a  cost  of  $1.5  million),  bringing  total
     purchases to 2,274,721 shares under this program.  The amount and timing of
     stock repurchases will depend upon market conditions,  share price, as well
     as other  factors.  The  Company  reserves  the  right to  discontinue  the
     repurchase program at any time.

(I)  Effective  January 1, 1998,  the Company  adopted  Statement  of  Financial
     Accounting Standards No. 130, Reporting  Comprehensive Income ("SFAS 130").
     SFAS 130 establishes  standards for reporting and display of  comprehensive
     income and its  components  (revenues,  expenses,  gains and  losses).  The
     adoption of this  statement  only  changes the  display and  disclosure  of
     information and does not impact amounts previously  reported for net income
     or  shareholders'  equity.  Comprehensive  income was $9.5 million and $5.1
     million for the quarters ended March 31, 1998 and 1997, respectively. Other
     comprehensive  income  is  comprised  of  translation  adjustments  of $1.9
     million and ($0.5)  million for the quarters ended March 31, 1998 and 1997,
     respectively.

(J)  During  the  quarter  ended  March 31,  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).  In 1996,  the carrying value of the
     building  was written  down to fair value and the loss,  per  Statement  of
     Financial  Accounting Standards No. 121, was recorded as an operating loss.
     Therefore,  the gain is  recorded as  operating  income.  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 quarter ended March 31, 1998,  the Company  purchased the assets
     of Belmont  Constructors  Company,  Inc.  ("BCI").  The  purchase  price is
     contingent  upon the results of certain  long-term  contracts which will be
     completed  by the end of 1998.  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, 1998.

(L)  The  Company  has signed an  agreement,  subject to the  approval  of Power
     Technologies,  Inc. ("PTI") shareholders, to acquire all of the outstanding
     stock  of 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 will be paid in common  stock of the  Company
     having a value of $9 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
     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.

(M)  Certain financial  statement items have been reclassified to conform to the
     current year's presentation.  In the first quarter of 1998 the Company made
     reclassifications  between general and administrative  expenses and cost of
     revenue.

(N)  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 payment 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. In the past, the Company has
     entered  into joint  ventures  which may  require  certain  future  capital
     contributions  to be made.  The timing and amounts of  significant  capital
     contributions required, if any, are undetermined at this time.

<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 1997 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, 1998,  the Company  reported  revenue of $294.0
million,  a decrease of 15.9  percent  from the $349.5  million  reported in the
first  quarter of 1997.  Operating  income  for the  quarter  was $11.6  million
compared  with $8.8  million for the first  quarter of 1997.  Net income for the
quarter ended March 31, 1998 was $7.6 million or $0.59 per share,  compared with
net income of $5.6  million or $0.43 per share for the same period in 1997.  New
orders were $226.5  million for the quarter  ended March 31, 1998  compared with
$649.9  million for the first quarter of 1997 and backlog  remained  constant at
$2.5  billion  compared to December  31, 1997 and was down from $2.8  billion at
March 31, 1997.

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

                                                         Three Months
                                                        Ended March 31,
                                                       1998         1997
                                                      -------      ------
     Basic and diluted earnings per share from:
          Operations                                   $0.20       $0.22
          Pension related items                         0.24        0.21
                                                      -------      ------
          Ongoing operations                            0.44        0.43
          Asset divestiture                             0.15           -
                                                      -------      ------
          Basic and diluted earnings per share         $0.59       $0.43
                                                      -------      ------

Pension  related items reduced  operating costs by $5.1 million and $4.5 million
for the three  months  ended  March 31,  1998 and  1997,  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 and income from the amortization of Statement of Financial Accounting
Standards No. 87 net transition  asset. The plan is overfunded  primarily due to
favorable  asset  performance.  The transition  asset will be fully amortized in
1998.

During the quarter 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).  In 1996, the carrying
value of the building was written down to fair value and the loss, per Statement
of  Financial  Accounting  Standards  No. 121 ("SFAS  121") was  recorded  as an
operating  loss.  Since the gain on the sale is less than the loss  recorded  in
1996, the gain is recorded as operating  income.  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 $287.1 in the first  quarter of 1998,  a decrease  of 16.7  percent  from the
$344.7  million  reported for the same period last year. The decrease in revenue
is primarily  attributable to lower  procurement  costs on lump sum contracts in
the Power Division and lower workload in the Industrial  Division.  The decrease
was partially offset by revenue from Belmont Constructors Company, Inc. ("BCI"),
the assets of which the Company acquired in the first quarter of 1998. Operating
income was $11.0 for the first  quarter of 1998 compared to $10.0 million in the
first quarter of 1997. The increase in operating income was due primarily to the
favorable results of the Company's Power Division and, as previously  discussed,
the $3.1  million  gain on the  sale of its  Cherry  Hill,  New  Jersey,  office
building.  These items were partially  offset by a decrease in operating  income
from  the  Process   Division  due  to  the  suspension  of  the   Trans-Pacific
Petrochemical  Indotama  ("TPPI")  project  in  Indonesia.  The TPPI  project is
anticipated to start beyond the end of this calendar year pending  resolution of
financial issues by TPPI. With the continuation of the financial  instability in
Asia, the Company has taken action to reduce  overhead and has  reorganized  the
Process Division.

New orders for the  Engineering,  Construction  and  Consulting  segment for the
first quarter were $226.5  compared with $649.9 million in 1997. The decrease in
new orders reflects the slowdown in the Asian economies that began in the second
half  of  1997.  Major  new  awards  for the  quarter  include  engineering  and
procurement  for a $125 million power plant in Vietnam and a contract to provide
engineering, procurement, construction and management services for a 2.8 billion
pound per year ethylene plant in Canada. The ethylene project will be undertaken
by the recently formed Stone & Webster/Fluor Daniel Petrochemical Joint Venture.
Backlog  for the  quarter,  which  included  the TPPI  project at $0.5  billion,
remained  constant at $2.5  billion  compared to December  31, 1997 and was down
from $2.8 billion one year ago.

Orders and backlog for the three  months  ended March 31, 1998 and 1997 were (in
thousands):

                                                   Three Months
                                                 Ended March 31,
                                               1998          1997
                                            -----------   -----------
     Beginning backlog                      $2,519,302    $2,487,552
     Orders                                    226,479       649,935
     Backlog acquired (BCI)                     59,944             -
     Revenue                                  (287,097)     (344,686)
                                            -----------   -----------
     Ending backlog                         $2,518,628    $2,792,801
                                            -----------   -----------

Cold Storage And Related Activities

The Company's Cold Storage segment reported operating income of $2.3 million and
revenue of $6.9  million  for the  quarter,  compared  to $1.2  million and $4.8
million for the quarter ended March 31, 1997. The improvement in Cold Storage is
the result of expansion in the customer base coupled with increased  volume from
existing customers.

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

General and administrative expenses were $16.1 million compared to $17.1 million
in 1997.  Interest  income,  net of interest  expense,  for the quarter was $0.8
million  compared  to  $0.4  million  in  1997.  The  decrease  in  general  and
administrative  expenses is  primarily  attributable  to lower  occupancy  costs
resulting from the Company's divestiture of unused office space. The increase in
other  income  is from  interest  on a note  receivable.  The note was  received
through the sale of an office building in the fourth quarter of 1997. During the
three months ended March 31, 1998, the tax rate increased in accordance with the
expected annual earnings mix among domestic and  international  subsidiaries and
in 1997 the Company utilized a foreign net operating loss  carryforward that was
fully utilized by the end of the year.

Financial Condition

Cash and cash  equivalents  decreased  by $34.1  million  during the first three
months of 1998.  Net cash used for  operating  activities  of $67.6  reflected a
decrease in operating working capital (which consists of accounts receivable and
costs and revenues  recognized in excess of billings  less accounts  payable and
billings in excess of costs and  revenues  recognized)  and payments of purchase
commitments  or  open  existing  contracts  and  the  start-up  of  several  new
contracts.  Net cash provided by investing  activities of $37.3 million reflects
maturities  of U.S.  Government  securities  and  proceeds  from the sale of its
Cherry Hill,  New Jersey,  office  building  offset by purchases of fixed assets
used in the Company's operations. Net cash used for financing activities of $3.8
million  reflects the payment of  dividends,  repayment  of  long-term  debt and
purchases of common stock under the Company's  ongoing share repurchase  program
as explained in Note H to the condensed consolidated financial statements. Total
debt was $23.9 million at March  31,1998,  compared to $24.3 million at year-end
1997.

As of March 31,  1998,  the cash and  government  securities  balance  was $40.9
million compared with $106.9 million at December 31, 1997.

The Company believes that the types of businesses in which it is engaged require
that it maintain a strong financial  condition.  The Company has on hand and has
access  to  sufficient  sources  of  funds to meet  its  anticipated  operating,
dividend and capital  expenditure needs. Cash on hand and temporary  investments
provide adequate operating  liquidity.  Additional liquidity is provided through
lines of credit and revolving credit  facilities  which total $33.7 million.  At
March 31, 1998, there were no amounts outstanding under these facilities.

Other Accounting Matters

The  Company  is in  the  process  of  evaluating  and  upgrading  its  computer
applications  to ensure  their  functionality  with  respect to the "year  2000"
millennium  change.  At present,  the Company does not anticipate  that material
incremental costs will be incurred in any single future year.

In June 1997,  the  Financial  Accounting  Standards  Board (the "FASB")  issued
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of  an  Enterprise  and  Related  Information."  This  Statement  specifies  new
guidelines  for   determining  a  company's   operating   segments  and  related
requirements  for  disclosure.  The Company is in the process of evaluating  the
impact of the new standard on the  presentation of the financial  statements and
the disclosures  therein.  The Statement is effective for fiscal years beginning
after  December 15, 1997. The Company will adopt the new standard for the fiscal
year ending December 31, 1998.

In February 1998, the FASB issued  Statement of Financial  Accounting  Standards
No.  132,  "Employers'  Disclosures  about  Pensions  and  Other  Postretirement
Benefits." This Statement revises employers' disclosures about pension and other
postretirement  benefit plans. It does not change the measurement or recognition
of those plans.  The  statement is effective  for fiscal years  beginning  after
December 15,  1997.  The Company will adopt the new standard for the fiscal year
ending December 31, 1998.


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 major  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.

<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, 1998,  registrant and its  subsidiaries had outstanding
         long-term debt (excluding current portion) totaling approximately $22.1
         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 12, 1998       Thomas L. Langford
                           Executive Vice President
                           (Duly authorized officer and Chief Financial Officer)


                           /S/  DANIEL P. LEVY
                           Daniel P. Levy
                           Corporate Controller
                           (Principal Accounting Officer)