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 September 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: 13,065,297 shares as of October 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 Nine Months Ended September 30, 1999 and
              September 30, 1998........................................   3

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

           Condensed Consolidated Statements of Cash Flows
            (Unaudited):
              Nine Months Ended September 30, 1999 and September 30,
               1998.....................................................   5

           Notes to Condensed Consolidated Financial Statements
             (Unaudited)................................................  6-10

         Item 2. Management's Discussion and Analysis of Results of
                 Operations and Financial Condition..................... 11-16


PART II. OTHER INFORMATION

         Item 6. Exhibits and Reports on Form 8-K.......................  17


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





<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       Nine Months Ended
                                       September 30,           September 30,
                                     1999        1998        1999        1998
                                     ----        ----        ----        ----
Revenue                            $286,071    $343,040    $839,122    $939,524
Cost of revenue                     279,054     324,557     862,510     881,096
                                   --------    --------    --------    --------
     Gross profit (loss)              7,017      18,483     (23,388)     58,428
General and administrative
  expenses                           13,664      16,182      47,303      47,868
                                   --------    --------    --------    --------
Operating income (loss)              (6,647)      2,301     (70,691)     10,560
Other income (expense):
  Interest income                       503         708       1,586       2,208
  Interest expense                   (2,714      (1,078)     (6,629)     (2,086)
                                   --------    --------    --------    --------

Total other income (expense), net    (2,211)       (370)     (5,043)        122

Income (loss) from continuing
  operations before provision
  for taxes                          (8,858)      1,931     (75,734)     10,682
Income tax (benefit) provision            -         665     (10,000)      3,779
                                   --------    --------    --------    --------
Income (loss) from continuing
  operations                         (8,858)      1,266     (65,734)      6,903
Income from discontinued
  operation, net of tax               2,004         902       6,401       3,529
                                   --------    --------    --------    --------
Net income (loss)                  $ (6,854)   $  2,168    $(59,333)   $ 10,432
                                   ========    ========    ========    ========

Per share amounts:
------------------
Basic and diluted earnings
  (loss) per share
    Continuing operations            $(0.67)      $0.10      $(5.03)      $0.54
    Discontinued operations            0.15        0.07        0.49        0.27
                                     ------       -----      ------       -----
      Total earnings (loss)
        per share                    $(0.52)      $0.17      $(4.54)      $0.81
                                     ======       =====      ======       =====
Dividends declared per share         $ 0.15       $0.15      $ 0.45       $0.45

Weighted-average number of
  shares outstanding:
    Basic                            13,064      12,912      13,060      12,835
                                     ======      ======      ======      ======
    Diluted                          13,064      12,957      13,060      12,932
                                     ======      ======      ======      ======


     See accompanying notes to condensed consolidated financial statements.

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

                                                    September 30,   December 31,
                                                        1999           1998
                                                        ----           ----
Assets
Current assets:
  Cash and cash equivalents                           $ 35,114       $ 45,492
  Accounts receivable, principally trade, net          264,310        276,235
  Costs and revenues recognized in excess of
    billings                                           100,033         49,302
  Deferred income taxes                                 21,560         20,338
  Other                                                  1,673            638
                                                      --------       --------
Total current assets                                   422,690        392,005

Assets held for sale                                     6,744          6,744
Fixed assets, net                                      217,344        219,157
Domestic prepaid pension cost                          166,847        155,703
Note receivable                                              -         15,150
Other assets                                            59,040         45,923
                                                      --------       --------
Total assets                                          $872,665       $834,682
                                                      ========       ========

Liabilities and Shareholders' Equity
Current liabilities:
  Bank loans                                          $129,671       $106,350
  Current portion of long-term debt                      2,261          2,175
  Accounts payable, principally trade                  138,921         96,134
  Billings in excess of costs and revenues
    recognized                                         233,013        176,692
  Accrued liabilities                                   79,214         80,036
  Accrued taxes                                          7,009         12,034
                                                      --------       --------
Total current liabilities                              590,089        473,421

Long-term debt                                          19,922         22,228
Deferred income taxes                                   21,560         33,030
Other liabilities                                       14,722         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        54,663         54,625
  Retained earnings                                    302,210        367,358
  Accumulated other comprehensive income               (11,726)        (9,707)
  Less:  Common stock held in treasury, at cost
           (4,666,891 and 4,692,933 shares)            121,352        122,030
         Employee stock ownership and restricted
           stock plans                                  15,154         16,401
Total shareholders' equity                             226,372        291,576
                                                      --------       --------
Total liabilities and shareholders' equity            $872,665       $834,682
                                                      ========       ========

      See accompanying notes to condensed consolidated financial statements

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


                                                            Nine Months
                                                        Ended September 30,
                                                          1999         1998
                                                          ----         ----

Cash Flows from Operating Activities:
  Net income (loss)                                    $(59,333)      $10,432
  Adjustments to reconcile net income (loss) to
    net cash used for operating activities:
      Depreciation and amortization                      17,038        11,770
      Amortization of net cost of stock plans             1,279         1,286
      Gain from asset divestiture                             -        (3,066)
      Deferred income taxes                             (12,692)         (828)
      Domestic prepaid pension cost                     (11,144)      (15,508)
      Changes in operating assets and liabilities        38,981       (91,260)
                                                       --------       -------
  Net cash used for operating activities                (25,871)      (87,174)
                                                       --------       -------

Cash Flows from Investing Activities:
  Purchases of fixed assets                             (15,225)      (24,831)
  Proceeds from note receivable                          15,150             -
  Proceeds from maturities of U.S. Government
    securities                                                -        31,909
  Proceeds from asset divestiture                             -        13,546
                                                       --------       -------
  Net cash (used for) provided by investing
    activities                                              (75)       20,624
                                                       ========       =======

Cash Flows from Financing Activities:
  Repayments of long-term debt                           (2,834)       (1,236)
  Acquisition of long-term debt                             614         1,627
  Increase in bank loans                                 23,321        25,850
  Issuance of common stock from treasury                      -         4,345
  Payments received from Employee Stock Ownership
    Trust                                                 1,835         1,835
  Payments to Employee Stock Ownership Trust             (1,489)       (1,342)
  Dividends paid                                         (5,879)       (5,776)
                                                       --------       -------
  Net cash provided by financing activities              15,568        25,303
                                                       --------       -------
Net decrease in cash and cash equivalents               (10,378)      (41,247)
Cash and cash equivalents at beginning of period         45,492        75,030
                                                       --------       -------
Cash and cash equivalents at end of period             $ 35,114       $33,783
                                                       ========       =======

     See accompanying notes to condensed consolidated financial statements.

<PAGE>
                 Stone & Webster, Incorporated and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)

(A)  The accompanying  unaudited condensed  consolidated financial statements of
     Stone & Webster,  Incorporated and  Subsidiaries  (the "Company") have been
     prepared in accordance with generally  accepted  accounting  principles for
     interim  financial  information and with the  instructions to Form 10-Q and
     Article 10 of Regulation S-X.  Accordingly,  they do not include all of the
     information and notes required by generally accepted accounting  principles
     for complete  financial  statements.  The  December  31, 1998  consolidated
     balance sheet data was derived from audited  financial  statements but does
     not  include all  disclosures  required by  generally  accepted  accounting
     principles.  In the opinion of management,  all adjustments  (consisting of
     normal recurring adjustments)  considered necessary for a fair presentation
     have been included.  Operating  results for the quarter ended September 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  September  30, 1999 and $190.9  million at December 31,
     1998.

(C)  On October 27, 1999, the Company announced its intention to sell the Nordic
     Refrigerated Services business unit (cold storage segment).  The Company is
     seeking a buyer and has retained  outside  consultants  to assist with this
     sale. Accordingly, the results of the Nordic Refrigerated Services business
     unit have been  classified  as a  discontinued  operation and prior periods
     have been reclassified.  The Company does not anticipate a loss on the sale
     of this segment and accordingly,  no loss provision has been recorded.  The
     continuing operations of the Company are the Engineering,  Construction and
     Consulting business.

     Revenue and income from discontinued operation are as follows:

                                       Three Months Ended      Nine Months Ended
                                           September 30,         September 30,
     (in thousands)                       1999      1998        1999       1998
                                          ----      ----        ----       ----
     Revenue                            $11,734    $7,403     $35,091    $21,880
     Operating income                     2,004     1,580       6,401      6,160
     Income tax expense                       -       678           -      2,631
     Income from discounted operation     2,004       902       6,401      3,529

     Net assets from discontinued operation are as follows:

                                                 September 30,      December 31,
     (in thousands)                                  1999               1998
                                                     ----               ----
     Current assets                                $ 12,000           $  9,897
     Property plant and equipment, net              110,981            114,795
     Other assets                                     2,677              2,165
     Current liabilities                             (3,962)            (8,487)
     Deferred taxes                                  (4,176)            (4,680)
                                                   --------           --------
     Net assets of discontinued operation          $117,520           $113,690
                                                   ========           ========

(D)  Basic  earnings per share for the nine months ended  September 30, 1999 and
     1998 were computed  based on the  weighted-average  number of common shares
     outstanding  during the period of 13,059,878 and 12,835,460,  respectively.
     Diluted earnings per share for the nine months ended September 30, 1999 and
     1998  were  computed  based on the  weighted-average  common  and  dilutive
     potential   shares   outstanding   during  the  period  of  13,062,452  and
     12,931,656, respectively. The difference between the basic and the dilutive
     shares  outstanding  represents the potential dilution from the exercise of
     stock options  during the period  assuming the  application of the treasury
     stock  method.  Since  the  Company  incurred  a loss  for the  three-  and
     nine-month  periods  ended  September  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.

(E)  The Company had a valuation  allowance of $30.2  million at  September  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
     September 30, 1999 comprises $5.0 million relating to federal net operating
     loss  carryforwards,  $9.3  million  relating to state net  operating  loss
     carryforwards  and $15.9  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;
     therefore,  no provision for taxes was required for the third  quarter.  In
     addition,  a valuation  allowance was  established  against  operating loss
     carryforwards in excess of the net deferred tax liability position.

(F)  Pension related items, which reduced operating costs, were $3.3 million and
     $10.1  million for the quarter and nine  months  ended  September  30, 1999
     compared  to $5.1  million and $15.4  million  for the same  periods in the
     prior year. These items increased net income by $3.3 million,  or $0.25 per
     share and $6.1  million or $0.46 per share for the  quarter and nine months
     ended  September 30, 1999,  compared with $3.1 million,  or $0.23 per share
     and $9.2 million or $0.71 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 September  30, 1999,  nonqualified
     options for 550,125 shares were  outstanding and options for 434,625 shares
     were exercisable.  For the nine months ended September 30, 1999, no options
     were  exercised,  50,625  options  were  canceled  and 29,000  options were
     accelerated.

     Under the Stone & Webster,  Incorporated  Long-Term Incentive  Compensation
     Plan (the "1998  Plan")  for the nine  months  ended  September  30,  1999,
     nonqualified and incentive stock options for 457,000 shares of common stock
     were granted to employees and nonemployee  directors at a  weighted-average
     per share option exercise price of $28.45.  The options granted will become
     exercisable  at times  ranging from  February  1999 to August  2003.  As of
     September 30, 1999, options for 668,750 shares were outstanding and 227,834
     options were exercisable.  For the nine months ended September 30, 1999, no
     options were  exercised,  28,250 options were canceled,  and 33,000 options
     were  accelerated.  Under the 1998 Plan for the nine months ended September
     30, 1999,  22,792  shares of  restricted  stock were awarded at a per share
     weighted-average  grant price of $28.77 with vesting of shares occurring in
     part on the  effective  date and the  balance  in  thirds  or fifths on the
     anniversaries  of the dates of grant. No shares have been forfeited for the
     quarter or for the nine months ended September 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.

(H)  During the third quarter of 1999, the Company  finalized  negotiations on a
     $230.0 million  collateralized  line of credit with a group of banks, which
     provided up to $130 million in direct  borrowing  for  operating  funds and
     $100  million in 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.  As of September 30, 1999,
     $129.7 million of direct  borrowings and $84.2 million of letters of credit
     were  outstanding  under this new agreement.  As of September 30, 1998, the
     Company had three  separate  domestic line of credit  agreements  available
     totaling  $110.0  million.  The Company also had a domestic  line of credit
     through a  subsidiary  in the  amount of $2.0  million  under  which it had
     borrowed $0.8 million.  Borrowings  under other lines of credit amounted to
     $25.1 million as of September 30, 1998.

     Because of the losses in the third quarter,  the Company  requested waivers
     from its bank group  regarding  certain  covenants in its principal  credit
     agreement  for which it is not in  compliance,  and the banks  have  waived
     those  covenants until November 29, 1999. The credit  agreement  matures at
     the end of January 2000.

(I)  Comprehensive  income  (loss) was $(9.3)  million and $2.3  million for the
     quarters   ended   September  30,  1999  and  1998,   respectively.   Other
     comprehensive  income (loss) consists of translation  adjustments of $(2.4)
     million and $0.1  million for the  quarters  ended  September  30, 1999 and
     1998,  respectively.  For the nine months ended September 30, 1999 and 1998
     comprehensive   income  (loss)  was  $(61.4)   million  and  $6.9  million,
     respectively.  Other  comprehensive  income (loss)  consists of translation
     adjustments  of $(2.0) million and $(3.5) million for the nine months ended
     September 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.  On October 27, 1999,  the Company  announced
     its  intention  to sell its  corporate  headquarters  building  in  Boston,
     Massachusetts.

(K)  Certain financial  statement items have been reclassified to conform to the
     current period'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 $401.7  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 September 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  $75.5 million  representing  project working capital plus
     current  procurement  commitments  net of the  estimated  salvage  value of
     procured equipment and materials.

     The Company was engaged in two international  projects that incurred losses
     in the first  quarter.  One of these projects is now finished and the other
     is in the final stages of  completion.  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  has   significantly   exceeded  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 first  quarter,  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 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.
     Substantially all of the  subcontractor's  claims have been included in the
     claims  submitted by the joint venture to its client.  The Company believes
     current reserves are adequate to cover these claims, and has not recognized
     any contract  revenue in anticipation  of recovery on its claims.  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  Financial  Accounting  Standards  Board  (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.


<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
---------------------

On October 27,  1999 the  Company  announced  its  intention  to sell the Nordic
Refrigerated  services  business unit (cold  storage  segment) and its corporate
headquarters  building in Boston,  Massachusetts.  The Company is seeking buyers
and has retained  outside  consultants to assist with these sales.  Accordingly,
the  results  of the  Nordic  Refrigerated  Services  business  unit  have  been
classified as a discontinued operation and prior periods have been reclassified.
The  Company's   continuing   operations   are  composed  of  the   Engineering,
Construction and Consulting business.  For this business, new orders were $219.4
million for the quarter ended  September  30, 1999 compared with $725.1  million
for the third quarter of 1998.

The Company's Engineering, Construction and Consulting business reported revenue
of $286.1  million in the third quarter of 1999, a decrease of 16.6 percent from
the $343.0  million  reported  for the same  period last year.  The  decrease in
revenue is primarily due to lower revenues in the Power,  Process and Industrial
divisions.  Operating  loss was  $6.6  million  for the  third  quarter  of 1999
compared to income of $2.3 million in the third  quarter of 1998.  This decrease
is primarily due to a provision of $10.4 million to cover  anticipated  costs to
complete three major domestic projects.

For the first nine months of 1999, the Engineering,  Construction and Consulting
business had revenue of $839.1 million,  a decrease of 10.7 percent  compared to
revenue of $939.5  million for the same period in 1998.  Operating  loss for the
first nine months of 1999 was $70.7 million  compared with  operating  income of
$10.6 million for the same period in 1998.  The decrease in operating  income is
primarily  due to  provisions  of $74.2  million to cover  anticipated  costs of
completing two international projects, as reported in the first quarter of 1999,
and $10.4  million  to cover  anticipated  costs of  completing  three  domestic
projects in the  current  quarter.  New orders were $719.5  million for the nine
months ended  September 30, 1999  compared  with  $1,099.5  million for the nine
months ended  September  30, 1998 and backlog was $2.5 billion  compared to $2.6
billion December 31, 1998 and $2.7 billion at September 30, 1998.

Components of earnings per share from continuing operations for the three months
and nine months ended September 30 were:

                                           Three Months          Nine Months
                                       Ended September 30,   Ended September 30,
                                          1999      1998       1999       1998
Basic and diluted earnings per
 share from:
  Operations                            $(0.92)   $(0.13)     $(5.49)    $(0.32)
  Pension related items                   0.25      0.23        0.46       0.71
  Ongoing operations                     (0.67)     0.10       (5.03)      0.39
  Asset divestiture                          -         -           -       0.15
                                        ------    ------      ------     ------
  Basic and diluted earnings per
    share                               $(0.67)   $ 0.10      $(5.03)    $ 0.54
                                        ======    ======      ======     ======

Pension related items reduced  operating costs by $3.3 million and $10.1 million
for the quarter and nine months ended September 30, 1999, respectively, and $5.1
million  and $15.4  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.

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.  Following  the sale of the  corporate  headquarters  building in Boston,
Massachusetts,  the Company will no longer realize net rental  income from third
party  tenants of the  building which amounted to approximately $4.3 million for
the nine months ended September 30, 1999, and may incur increased rental expense
based on market rates.

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 $401.7 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  September  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  $75.5  million  representing
project  working  capital  plus  current  procurement  commitments  net  of  the
estimated salvage value of procured equipment and materials.

The Company was engaged in two  international  projects that incurred  losses in
the first quarter of 1999.  One of these  projects is now finished and the other
is in the final stages of completion.  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 has
significantly  exceeded 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 first  quarter,  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
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.  Substantially
all of the subcontractor's  claims have been included in the claims submitted by
the joint  venture to its client.  The Company  believes  current  reserves  are
adequate to cover these claims,  and has not recognized any contract  revenue in
anticipation of recovery on its claims.  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.

Engineering,  Construction  and Consulting  business  orders and backlog for the
three  months  and nine  months  ended  September  30,  1999  and 1998  were (in
thousands):

                                   Three Months               Nine Months
                               Ended September 30,        Ended September 30,
                                1999         1998          1999         1998
                                ----         ----          ----         ----
Beginning backlog            $2,583,220   $2,357,122    $2,636,166   $2,519,302
Orders                          219,393      725,113       719,498    1,099,473
Backlog acquired (BCI)                -            -             -       59,944
Revenue                        (286,071)    (343,040)     (839,122)    (939,524)
                             ----------   ----------    ----------   ----------
Ending backlog               $2,516,542   $2,739,195    $2,516,542   $2,739,195
                             ==========   ==========    ==========   ==========

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

Discontinued Operation
----------------------

The Company's  discontinued  cold storage segment  reported  operating income of
$2.0 million and $6.4  million for the quarter and nine months  ended  September
30, 1999, respectively,  compared with operating income of $1.6 million and $6.2
million  for the same  periods  in 1998.  Revenue  was $11.7  million  and $35.1
million for the quarter and nine months ended September 30, 1999,  respectively,
compared  with revenue of $7.4 million and $21.9 million for the same periods in
1998. The  improvement in the  discontinued  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 and the effects of
hurricanes and resulting  flooding on operations.  No significant  direct damage
was experienced by the cold storage facilities.

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

General and  administrative  expenses  for the  quarter  and nine  months  ended
September 30, 1999 were $13.7 million and $47.3 million, respectively,  compared
with $16.2  million and $47.9  million for the same periods in 1998.  The second
quarter of 1999  includes a $2.5  million  charge to general and  administrative
expenses for severance costs which was partially offset by cost savings realized
from the restructuring of the Company's Engineering and Construction activities.
Net interest  expense for the quarter ended  September 30, 1999 was $2.2 million
compared to $0.4 million for the same period in 1998.  Net interest  expense for
the first nine months was $5.0  million,  compared  with net interest  income of
$0.1 million for the same period in 1998,  due to increased  bank loans.  During
the first quarter of 1999,  the annual tax benefit was  recognized to the extent
of the net  deferred  tax  liability;  therefore,  no  provision  for  taxes was
required  for  the  third  quarter.  In  addition,  a  valuation  allowance  was
established  against  net  operating  loss  carryforwards  in  excess of the net
deferred tax liability  position.  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 $10.4  million  during  the first nine
months of 1999. Net cash used for operating activities of $25.9 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 nine months ended  September 30, 1999. The decrease in operating
working  capital was  primarily  due to  provisions  taken on two  international
projects in the first quarter and three domestic  projects in the third quarter.
The decrease in operating  working  capital was offset by the operating loss and
deferred  income taxes.  Net cash used for investing  activities of $0.1 million
reflects  purchases of fixed  assets used in the  Company's  operations  and the
proceeds on a note  receivable.  Net cash  provided by financing  activities  of
$15.6 million reflects the payment of dividends, the repayment of long-term debt
and  borrowings  under bank loans.  Total debt was $151.9  million at  September
30,1999, compared to $130.8 million at December 31, 1998.

During the third quarter of 1999, the Company finalized negotiations on a $230.0
million  collateralized  line of credit with a group of banks, which provided up
to $130  million in direct  borrowing  for  operating  funds and $100 million in
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.  As of September 30, 1999,  $129.7 million of direct  borrowings
and  $84.2  million  of  letters  of  credit  were  outstanding  under  this new
agreement.  As of September 30, 1999, the Company had foreign subsidiary banking
facilities available totaling $9.9 million.

Although the Company has substantial  marketable  assets, the losses incurred in
the past 24 months have negatively  impacted the Company's cash position.  As of
the end of the third  quarter  of 1999,  the  Company  had fully  drawn the cash
available  to it  under  its  current  credit  facility  and the  amount  of the
Company's  past due trade  payables  had  increased,  as  reflected  in accounts
payable on the  Consolidated  Balance  Sheets,  with  certain  of the  Company's
vendors and subcontractors having delayed work to be performed by them.

In order to improve the  Company's  cash  liquidity,  the  Company has  retained
financial  advisors who are working with the Company to arrange both interim and
longer term financing and to restructure the Company's  balance sheet and assist
with asset sales authorized by the Board of Directors.  To enhance liquidity and
focus  on its core  competencies,  the  Company  intends  to sell its  corporate
headquarters  building  in Boston,  Massachusetts,  and its Nordic  Refrigerated
Services business unit. Sale of these assets, which are currently carried on the
Company's books for approximately  $125 million,  is expected to yield in excess
of $300 million in gross proceeds.

Because of the losses in the third quarter,  the Company  requested waivers from
its bank group regarding certain covenants in its principal credit agreement for
which it is not in compliance,  and the banks have waived those  covenants until
November 29, 1999. The credit agreement  matures at the end of January 2000. The
Company  will  require   additional   short-term   funding  to  continue  normal
operations, and it is in active discussions with its principal lenders to obtain
such funding.

In light of the Company's current liquidity needs, on October 26, 1999 the Board
of Directors decided to omit the Company's normal quarterly dividend of 15 cents
per share. The Board will re- evaluate the dividend at its meeting following the
end of the current quarter based on the Company's circumstances at that time.

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

The Company is finalizing  the upgrade of 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 complete the implementation of the systems and
programming  changes  necessary  to  address  the Year  2000  issue  during  the
remainder  of  1999.  Key  financial   systems  will  become  compliant  through
implementation of new enterprise-wide  financial systems.  The primary objective
of implementing these new systems is to improve access to financial  information
of the Company and to implement a  state-of-the-art  project  accounting system.
Therefore,  costs related to this implementation  effort are not considered Year
2000 compliance costs.

The Company is giving  consideration  to  compliance  by third party  suppliers.
Failure by third party  suppliers to become Year 2000 compliant  could result in
the Company's inability to obtain products as scheduled, which could potentially
lead to delays in meeting client orders.  The Company is also reviewing 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 September 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 is reviewing  existing  contractual  obligations with its clients to
determine  whether any Year 2000  compliance  exposure  exists to its clients or
third parties.  As of September 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."

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.


<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  September  30,  1999,  registrant  and  its  subsidiaries  had
          outstanding   long-term  debt  (excluding  current  portion)  totaling
          approximately $19.9 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.

     (10) Credit Agreement Dated as July 30, 1999 (filed herewith).

     (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:  November 15, 1999        Thomas L. Langford
                                 Executive Vice President
                                 (Duly authorized officer and principal
                                   financial officer)

<PAGE>