<PAGE>

                                 UNITED STATES
                       SECURITES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q


[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934
     For the Quarterly period ended June 30, 1999

[_]  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 0-15512.


                                 ALPNET, Inc.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


              Utah                                              87-0356708
----------------------------------------                ------------------------
  (State or other jurisdiction of                          (I.R.S. Employer
  Incorporation or Organization)                           Identification No.)


4460 South Highland Drive, Suite #100
        Salt Lake City, Utah                                    84124-3543
----------------------------------------                ------------------------
(Address of principal executive offices)                         (Zip Code)


                                (801) 273-6600
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)


                                Not applicable
--------------------------------------------------------------------------------
             (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filled 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 such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filling
requirements for the past 90 days.
                                                       Yes  X    No ___
                                                           ---
The number of shares outstanding of the registrant's no par value Common Stock
as of August 5, 1999 was 27,577,187.
<PAGE>

ALPNET, INC. AND SUBSIDIARIES

                                     INDEX

<TABLE>
<S>                                                                             <C>
PART I.  FINANCIAL INFORMATION
------------------------------

Item 1.  Consolidated Financial Statements (Unaudited):

         Consolidated Statements of Income--Three months ended June 30, 1999
          and 1998 and Six months ended June 30, 1999 and 1998................   3

         Consolidated Balance Sheets--June 30, 1999 and December
          31, 1998............................................................   4

         Consolidated Statements of Cash Flows--Six months ended
          June 30, 1999 and 1998..............................................   6

         Notes to Consolidated Financial Statements--June 30, 1999............   7

Item 2.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations...............................................  12

PART II. OTHER INFORMATION
----------------------------

Item 1.  Legal Proceedings....................................................  23

Item 6.  Exhibits and Reports on Form 8-K.....................................  23

SIGNATURES....................................................................  24
----------
</TABLE>

                                       2
<PAGE>

Item 1:  Consolidated Financial Statements (Unaudited)
------   ---------------------------------------------

ALPNET, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

<TABLE>
<CAPTION>
                                              Three Months Ended        Six Months Ended
                                                    June 30                 June 30
Thousands of dollars and shares               1999         1998         1999         1998
-----------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>         <C>
Sales of services                          $12,516      $13,226      $24,978      $25,547

Operating expenses:
  Cost of services sold                      9,435        9,912       19,392       19,086
  Selling, general and administrative
     expenses                                2,355        1,934        4,452        3,734
  Development costs                             30          170           78          294
  Amortization of goodwill                      94           89          191          186
                                           -------      -------      -------      -------

Total operating expenses                    11,914       12,105       24,113       23,300
                                           -------      -------      -------      -------

Operating income                               602        1,121          865        2,247

Interest expense, net                           93           75          188          151
                                           -------      -------      -------      -------

Income before income taxes                     509        1,046          677        2,096

Income taxes                                   152          320          216          560
                                           -------      -------      -------      -------

Net income                                 $   357      $   726      $   461      $ 1,536
                                           =======      =======      =======      =======

Income per share - basic                   $  .015      $  .031      $  .019      $  .065
                                           =======      =======      =======      =======

Income per share - assuming dilution       $  .014      $  .027      $  .018      $  .058
                                           =======      =======      =======      =======
</TABLE>

See accompanying notes.

                                       3
<PAGE>

ALPNET, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)

<TABLE>
<CAPTION>
                                                       June 30   December 31
Thousands of dollars                                     1999           1998
----------------------------------------------------------------------------
<S>                                                   <C>        <C>
Assets

Current assets:
 Cash and cash equivalents                            $ 1,275        $ 1,499
 Trade accounts receivable, less allowance of
   $373 in 1999 and $424 in 1998                        9,369         10,124
 Work-in-process                                        3,427          1,675
 Prepaid expenses and other                               928            636
                                                      -----------  ---------

Total current assets                                   14,999         13,934

Property, equipment and leasehold improvements:
 Office facilities and leasehold improvements             242            258
 Equipment                                              7,426          6,634
                                                      -----------  ---------

                                                        7,668          6,892

 Less accumulated depreciation and amortization         4,358          4,133
                                                      -----------  ---------

Net property, equipment and leasehold improvements      3,310          2,759


Other assets:
 Goodwill, less accumulated amortization of
   $3,926 in 1999 and $4,025 in 1998                    5,799          5,428
 Other                                                    296            302
                                                      -----------  ---------

Total other assets                                      6,095          5,730
                                                      -----------  ---------

Total assets                                          $24,404        $22,423
                                                      ===========  =========
</TABLE>

See accompanying notes.

                                       4
<PAGE>

ALPNET, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)--continued

<TABLE>
<CAPTION>
                                                June 30   December 31
Thousands of dollars and shares                    1999          1998
----------------------------------------------------------------------------
<S>                                            <C>        <C>
Liabilities and Shareholders' Equity

Current liabilities:
 Notes payable to banks                        $  3,224      $  3,631
 Accounts payable                                 4,440         2,671
 Accrued payroll and related benefits             1,380         1,222
 Other accrued expenses                           1,288         2,110
 Deferred revenue                                   148           189
 Income taxes payable                               855           724
 Current portion of long-term debt                1,040           400
                                               -----------   --------

Total current liabilities                        12,375        10,947

Long-term debt to affiliates                        323             -

Long-term debt, less current portion                694           454

Commitments and contingencies                         -             -

Shareholders' equity:
 Convertible Preferred Stock, no par value;
   authorized 2,000 shares; issued and
   outstanding 87 shares in 1999 and 1998           242           242
 Common Stock, no par value; authorized
   40,000 shares; issued and outstanding
   24,536 shares in 1999 and 24,287
   shares in 1998                                42,800        42,546
 Accumulated deficit                            (29,502)      (29,963)
 Accumulated other comprehensive income          (2,528)       (1,803)
                                               -----------   --------

Total shareholders' equity                       11,012        11,022
                                               -----------   --------

Total liabilities and shareholders' equity     $ 24,404      $ 22,423
                                               ===========   ========
</TABLE>

See accompanying notes.

                                       5
<PAGE>

ALPNET, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>
                                                        Six Months Ended June 30
Thousands of dollars                                       1999          1998
--------------------------------------------------------------------------------
<S>                                                  <C>              <C>
Operating activities:
  Net income                                            $   461       $ 1,536
  Adjustments to reconcile net income to
    net cash provided by operating activities:
     Depreciation and amortization of property,
       equipment and leasehold improvements                 529           401
     Amortization of goodwill                               191           186
     Other                                                   96            22
     Changes in operating assets and liabilities:
      (net of effect of acquisition)
       Trade accounts receivable                            394        (1,256)
       Work-in-process                                   (1,607)         (243)
       Other operating assets and liabilities              (371)         (383)
       Accounts payable and accrued expenses              1,130           939
       Income tax payable                                   123           343
       Deferred revenue                                     (85)         (554)
                                                        ----------    -------
Net cash provided by operating activities                   861           991

Investing activities:
  Purchase of property, equipment and leasehold
     improvements                                        (1,270)         (984)
  Payment for acquisition (see note 2 on page 8)            (98)            -
                                                        ----------    -------
Net cash used in investing activities                    (1,368)         (984)

Financing activities:
  Proceeds from notes payable to banks                        3           664
  Principal payments on notes payable to banks             (571)         (542)
  Proceeds from long-term notes to affiliates               190             -
  Proceeds from long-term debt                              848           136
  Principal payments on long-term debt                     (268)         (178)
  Proceeds from exercise of stock options                   143           321
                                                        ----------    -------
Net cash provided by financing activities                   345           401

Effect of exchange rate changes on cash                     (62)            2
                                                        ----------    -------
Net increase (decrease) in cash and cash equivalents       (224)          410

Cash and cash equivalents at beginning of period          1,499         1,711
                                                        ----------    -------

Cash and cash equivalents at end of period              $ 1,275       $ 2,121
                                                        ==========    =======
Cash paid during the period for:
  Interest                                              $   191       $   153
  Income taxes                                               92           219
</TABLE>

                                       6
<PAGE>

ALPNET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

June 30, 1999

1.   BASIS OF PRESENTATION

     ALPNET, Inc. (the "Company") is a United States publicly-owned
     multinational corporation which was incorporated in the state of Utah in
     1980. The Company provides services and solutions in the global information
     services sector to businesses engaged in international trade. These
     services include translation, software localization, information
     development and content creation. ALPNET also provides a range of
     information consultancy services which include information analysis,
     development of information strategies, advice on information standards and
     benchmarking and evaluation of available language products including
     information and documentation management systems, authoring and translation
     tools and publishing software and browsers. The principal markets for the
     Company's services are North America, Europe and Asia.

     The accompanying unaudited consolidated financial statements have been
     prepared in accordance with the rules and regulations of the U.S.
     Securities and Exchange Commission. Accordingly, they do not include all of
     the information and footnote disclosures required by generally accepted
     accounting principles for complete financial statements. 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 periods presented are not necessarily indicative of the
     results that may be expected for the respective complete years. For further
     information, refer to the Consolidated Financial Statements and notes
     thereto included in the Company's Annual Report on Form 10-K for the year
     ended December 31, 1998.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent liabilities at the date of the financial
     statements, and the reported amounts of revenues and expenses during the
     reporting periods. Actual results could differ from those estimates.

                                       7
<PAGE>

2.   ACQUISITION

     On June 30, 1999 the Company acquired the entire outstanding share capital
     of EP Electronic Publishing Partners GmbH ("EP"), a German corporation
     based in Nuremburg, Germany. EP designs and develops custom built computer
     software systems for document, information, knowledge and translation
     management. The acquisition cost of approximately $937,000 was paid as
     follows:

<TABLE>
          <S>                                                        <C>
          Cash (funded from working capital)                         $ 98,000
          8% unsecured note due in one year                           320,000
          8% unsecured notes due 1/3rd each in 36, 48 and 60 months,
           convertible to common shares                               133,000
          49,518 shares of ALPNET, Inc. common stock                  112,000
          Assumption of net liabilities and acquisition costs         274,000
                                                                     --------
          Total                                                      $937,000
                                                                     ========
</TABLE>

     The acquisition is accounted for using the purchase method and the
     resulting goodwill is being amortized on the straight-line method over 12
     years.

3.   COMPREHENSIVE INCOME

     As of January 1, 1998, the Company adopted Statement of Financial
     Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS 130").
     FAS 130 establishes new rules for the reporting and display of
     comprehensive income and its components; however, the adoption of this
     Statement had no impact on the Company's net income or shareholders'
     equity. FAS 130 requires the Company's foreign currency translation
     adjustments, which prior to adoption were reported separately in
     shareholders' equity, to be included in other comprehensive income.
     Accumulated other comprehensive income is entirely accumulated foreign
     currency translation adjustments.

4.   INCOME PER SHARE

     The Company presents basic and diluted income per share on the face of the
     consolidated statements of income. Basic income per share is computed by
     dividing net income by the weighted average number of common shares
     outstanding during the accounting period excluding any dilutive effects of
     options and convertible securities. Diluted income per share includes the
     potential dilution as a result of stock options and convertible securities.

     The following table sets forth the computation of basic and diluted income
     per share.

                                       8
<PAGE>

<TABLE>
<CAPTION>
                                         Three Months Ended  Six Months Ended
                                                June 30           June 30
Thousands of dollars and shares              1999     1998     1999     1998
------------------------------------------------------------------------------
<S>                                      <C>       <C>      <C>      <C>

  Numerator for basic and diluted
    income per share - net income            $357     $726     $461   $1,536
                                          ====================================
  Denominator:
    Denominator for basic income per
      share - weighted-average shares      24,434   23,679   24,372   23,500
       Effect of dilutive securities:
         Convertible Preferred Stock          786      786      786      786
         Employee stock options               788    2,475      871    2,279
                                          ------------------------------------
    Dilutive potential common shares        1,574    3,261    1,657    3,065
                                          ------------------------------------
    Denominator for diluted income per
    share - adjusted weighted-average
    shares and assumed conversions         26,008   26,940   26,029   26,565
                                          ====================================

  Income per share - basic                  $.015    $.031    $.019    $.065
                                          ====================================
  Income per share - assuming
    dilution                                $.014    $.027    $.018    $.058
                                          ====================================
</TABLE>

5.   INCOME TAXES

     The Company files a consolidated U.S. Federal income tax return, which
     includes all domestic operations. Tax returns for states within the U.S.
     and for foreign subsidiaries are filed in accordance with applicable laws.
     Fluctuations in the amount of income taxes arise primarily from the varying
     combinations of income and losses of the Company's subsidiaries in the
     various domestic and foreign tax jurisdictions, including the utilization
     of net operating loss carryforwards in many of these jurisdictions.

6.   COMMITMENTS AND CONTINGENCIES

     In 1997, the Company's French subsidiary terminated certain of its
     employees, some of whom initiated immediate legal actions in the French
     legal system which handles employment-related matters. Subsequently, other
     former employees also initiated similar actions. In 1997 and 1996, $270,000
     was expensed related to statutorily-required costs of termination and the
     legal actions taken by specific employees. Approximately $16,000 remains
     accrued at June 30, 1999.

     The Company believes it has complied with all aspects of applicable French
     labor regulations in terminating the employees and intends to defend its
     actions vigorously. A preliminary judgement ruled in favor of the Company
     but an appeal is pending. While the ultimate outcome of this matter cannot
     be determined, management, based on the opinion of its French legal
     counsel, does not expect that the outcome of the legal actions will have a
     material adverse effect on the Company's results of operations or financial
     position.

                                       9
<PAGE>

     On February 23, 1998, the Company was named as one of several defendants in
     three civil actions. In these actions, each of the named plaintiffs, all of
     whom are German nationals, seek to recover monetary damages, in amounts to
     be proven at trial, including punitive damages, interest, and costs
     allegedly sustained as a result of securities transactions the plaintiffs
     entered into with several of the other named defendants. The Company is
     vigorously defending the lawsuits. An estimate of the possible loss or
     range of loss from these actions cannot be made. No expense has been
     accrued in the financial statements for these actions; however, legal costs
     have been expensed as incurred.

     The Company has committed to purchase approximately $1.1 million of
     software and related computer equipment during 1999 for a new enterprise
     and knowledge management system, which it is developing, of which $793,000
     was acquired under capital leases in the six-month period ended June 30,
     1999.

7.   GEOGRAPHICAL AND SEGMENT DATA

     The Company operates in one segment, global information services. Within
     this segment, the Company also evaluates its performance internally by
     significant geographic regions.

     The following selected financial data summarizes the Company's domestic and
     foreign operations for financial reporting purposes. Allocations of
     corporate and country overheads to domestic and foreign operations are
     based upon the Company's policies for financial reporting consistently
     applied during the periods. Intercompany sales are normally billed on a
     margin-sharing basis. All intercompany sales are eliminated in determining
     the totals. Since the Company's last annual report, financial data for the
     United States and Canada have been combined under North America as these
     two countries' operations are now under common management and are measured
     internally as a single region.

<TABLE>
<CAPTION>
                                           Three Months Ended             Six Months Ended
                                                30 June                        30 June
Thousands of dollars                     1999             1998            1999        1998
---------------------------------------------------------------------------------------------------
<S>                                   <C>              <C>             <C>         <C>
  Net external sales:
   North America                      $ 5,587          $ 4,392         $ 9,818     $ 8,611
   Europe                               6,243            8,116          13,881      15,646
   Asia                                   686              718           1,279       1,290
                                      -------          -------         -------     -------
                                      $12,516          $13,226         $24,978     $25,547
                                      =======          =======         =======     =======
  Intercompany sales:
   North America                      $   509          $   404         $   816     $   698
   Europe                               3,006            1,913           4,587       3,652
   Asia                                 1,265              809           1,832       1,387
                                      -------          -------         -------     -------
                                      $ 4,780          $ 3,126         $ 7,235     $ 5,737
                                      =======          =======         =======     =======
  Income before income taxes:
   North America /(a)/                $  (264)         $  (133)        $  (582)    $   (91)
   Europe                                 414            1,043             707       1,892
   Asia                                   359              136             552         295
                                      -------          -------         -------     -------
                                      $   509          $ 1,046         $   677     $ 2,096
                                      =======          =======         =======     =======
</TABLE>

  /(a)/  Includes corporate general and administrative expenses.

                                       10
<PAGE>

8.   NEW ACCOUNTING STANDARD

     During 1998, Financial Accounting Standards No 133, "Accounting for
     Derivative Instruments and Hedging Activities" ("FAS 133") was issued which
     requires the Company to record all derivative instruments as assets or
     liabilities, measured at fair value. The Company will adopt FAS 133 in the
     third quarter of 1999. It is not anticipated that the adoption of this
     statement will have a material affect on the financial statements of the
     Company.

9.   SUBSEQUENT EVENTS

     On July 30, 1999, the Company completed the acquisition of Technical
     Publications Services (TPS) B.V., formerly Stork TPS. TPS is active in
     industrial information consulting and translation services and in providing
     high-end SGML publishing solutions to international corporations. The TPS
     transaction is valued at approximately $6.6 million and was paid with 3
     million unregistered, restricted shares of ALPNET common stock and the
     assumption of $600,000 due from TPS to its former parent company. The
     agreement provides that additional shares of ALPNET common stock (up to a
     maximum of 1.8 million shares) will be issued if the Company's per share
     price is less than $2.50 on July 30, 2000. The agreement also provides that
     the former parent company will loan ALPNET $850,000 due in one year, with
     interest at 5%. Approximately $600,000 of the proceeds of this loan was
     used to pay the amount due to the former parent company and the remaining
     $250,000 will be used for working capital for TPS. This loan was made on
     July 30, 1999.

     The Company has issued a series of convertible, unsecured loan notes to
     several private investors, totaling $1,190,000. $190,000 was issued just
     prior to June 30, 1999 and the balance has been issued subsequently. These
     notes have a variable interest rate of two percent over a US prime rate and
     are repayable in three equal installments 36, 48 and 60 months from the
     date of issue. The outstanding principal is convertible, at the option of
     the lender, at any time after issuance, prior to the payment of the note in
     full, into restricted shares of common stock of the Company. The Conversion
     price is the average market value of the Company's stock for the 5 trading
     days prior to issuance. The lender has the right to have the common stock
     obtained upon conversion registered under certain specified conditions. The
     Company has the right to repay the notes prior to maturity. The proceeds of
     the notes will be used to provide working capital for the Company and its
     newly acquired subsidiaries and to fund development of the ALPNET Planet
     system. Three of the notes, totaling $440,000, are held by affiliates of
     the Company. The Company may continue to seek additional funds by issuing
     similar notes depending on the Company's cash requirements and expansion
     plans.

                                       11
<PAGE>

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


     The following Management's Discussion and Analysis should be read in
     conjunction with the accompanying unaudited Consolidated Financial
     Statements and Notes thereto.

     Results of Operations

     The following paragraphs discuss the results of operations for the three
     month periods ended June 30, 1999 and 1998 ("second quarter 1999 and 1998"
     respectively) and the six month periods ended June 30, 1999 and 1998
     ("half-year 1999 and 1998" respectively).

     Sales of services for the second quarter were $12.5 million for 1999
     compared to $13.2 million for 1998 and the Company reported net income of
     $357,000 in 1999 compared to net income of $726,000 in 1998. Sales of
     services for the half-year were $25.0 million for 1999 compared with $25.5
     million for 1998 and the Company reported net income of $ 461,000 in 1999
     compared with $1.5 million in 1998.

     Sales of services for the second quarter 1999 are the second highest ever
     recorded by the Company and approximately 5% below second quarter 1998,
     which was a record quarter. Margins are at approximately the same level in
     both quarters. Margins had fallen in the second half of 1998 as a result of
     extremely competitive trading conditions and consequently the restoration
     of margins to previous levels is a positive development. While margins can
     fluctuate with the mix of the Company's revenues, management has
     aggressively sought to improve margins by eliminating ineffective
     production and excess capacity as part of the Company's restructuring which
     commenced in November 1998. This is explained more fully below.

     Sales of services for the half-year 1999 show a slight decrease compared to
     1998. Margins are approximately 3% lower in 1999 as a result of reduced
     margins in the first quarter 1999 but the trend is positive. The half-year
     1998 was a record half-year for the Company in terms of sales of services
     and net income.

     Also in the quarter and half-year 1999, the Company has added capabilities
     to enable it to expand into the higher margin global information services
     market. This includes the addition of management, technical and support
     services in the area of information consulting services. Management
     believes that this action will position the Company for a changing business
     environment where there is a significant opportunity to leverage the
     Company's translation and localization capabilities and client
     relationships through providing additional higher value services.

     The Company has now restored revenues in the first half-year 1999 to
     approximately the same levels as 1998 and re-established profitable
     operations. Management is committed to further improve sales and increase
     profitability during the rest of the year.

                                       12
<PAGE>

     Sales of Services by Geographic Segment

     The value of revenues, costs and net income reported in US dollars have
     been impacted somewhat by the effects of fluctuations in foreign currencies
     against the US dollar. This is described in more detail in the section
     "Foreign Exchange Risk."

     North America total sales were $5.6 million for the second quarter 1999
     compared with $4.4 million in 1998 and were $9.8 million for the half-year
     1999 compared with $8.6 million in 1998. Virtually all of the increase
     occurred in the second quarter 1999. Sales in Canada increased 32% where
     demand, especially in automotive and financial sectors, remains strong. In
     the United States, sales were at approximately the same level as in 1998
     but with a stronger second quarter. Management expects this general
     restoration of growth to continue in the United States but the amount and
     timing of actual orders is variable. Since the Company's reorganization,
     North America is under common management which maximizes the region's sales
     opportunities and production efficiency.

     Total sales in Europe were $6.2 million in the second quarter 1999 compared
     with $8.1 million in 1998. In the half-year 1999, sales of services in
     Europe were $13.9 million (56% of total Company sales) compared with $15.6
     million (61%) in 1998. The European operations have been unified under a
     new management structure during the quarter which is aggressively
     addressing the region's trading difficulties. Most of the decrease in sales
     is attributable to continued difficult trading conditions in the UK,
     especially in traditional translation services. Other European operations
     are trading at approximately the same levels as 1998. The UK operation has
     been extensively reorganized during the half-year with a reduction in the
     number of offices from six to three. This reorganization is now complete
     and management expects an improvement in sales during the remainder of
     1999. The closure of the Company's production facility in Belgium is also
     complete.

     Asia's reported sales of services for the half-year 1999 were $1.3,
     approximately the same level as 1998. The Company's presence in Asia has
     been significantly expanded in recent years by opening offices in new
     countries and expanding the capacities of existing offices. Despite the
     recent economic trends in Asia, demand for translation and localization for
     Asian markets from the business communities in the United States and Europe
     remains at a relatively high level.

     The Company's business can be impacted dramatically by changes in the
     strength of the economies of the countries in which it has a presence, and
     results of operations are highly influenced by general economic trends.
     Moreover, sales and profitability are increasingly affected by the number
     and size of larger and more complex multi-language projects. The Company
     experiences fluctuations in quarterly sales and profitability levels
     largely as a result of the increase or decrease in the number of such
     projects. Management expects this trend to continue. Nevertheless, the
     Company expects to be able to capture increased sales in an expanding
     market which is expected to result in overall long-term sales growth.

     Cost of Services Sold

     Cost of services sold for the half-year 1999 were $19.4 million, 78% of
     sales, compared with $19.1 million, 75% of sales, in half-year 1998. Cost
     of services sold as a percentage of sales of services has increased
     primarily as a result of competition in the marketplace and the volume and
     nature of direct production costs of large projects in each period. In
     common with the entire industry, 1999 margins have been negatively affected
     by downward price pressure from clients and competitors. Management

                                       13
<PAGE>

     expects competitive pricing pressures to continue in the foreseeable
     future. The Company is continuing its efforts to control costs to offset
     the effects of these pricing pressures. Management believes that margins
     will improve as the impact of the restructuring and the focus on improved
     processes and technology are fully established, as evidenced by the margin
     improvement in the second quarter 1999. Actions being taken include the
     development and implementation of a new enterprise and knowledge management
     system, more effective utilization of technology on a broader range of
     projects to improve the productivity of translators, and the development of
     stronger partnerships with clients to enable the Company to provide higher-
     margin, higher-value, information consultancy services to clients.

     Other Costs and Expenses

     Selling, general and administrative expenses were $4.4 million in the half-
     year 1999, an increase of $718,000 over 1998. Management has extended its
     sales and marketing efforts and capabilities in substantially all of the
     Company's markets and has added capabilities, resources and support
     services to enable it to expand its range of services in the higher value
     line of information consultancy services. The Company believes that it can
     leverage its translation and localization capabilities and major client
     relationships by expanding into the broader field of global information
     services. There has also been an increase in 1999 expenses compared with
     1998 as the Company has organized its new operations group, at the
     Corporate level, charged with directing the operations function of the
     Company.

     Development costs were $78,000 in the half-year 1999 compared to $294,000
     in half-year 1998, a decrease of $216,000. The acquisition of EP Publishing
     Partners gives the Company access to new technology that will substantially
     enhance and compliment the Company's existing tools. In 1999, ongoing
     development costs have been reduced and the Company expects to fund major
     future development jointly with clients and partners.

     Any fluctuations in the amount of goodwill amortization charged against
     income result primarily from foreign currency exchange rate fluctuations
     from period to period, but this was not a significant factor in either the
     quarter or half-year 1999.

     Net interest expense was $93,000 in the second quarter 1999, an increase of
     $18,000 compared to 1998, and for the half-year 1999 was $188,000 an
     increase of $37,000. The increase was due to higher average balances
     outstanding under bank-lines of credit, and increases in long-term debt
     used to finance certain equipment and software purchases.

     The US parent company and each of its subsidiaries are separate legal and
     taxable entities subject to domestic or foreign taxes pertaining to
     operations in their respective jurisdictions. For tax purposes, the US
     parent company, and certain of its subsidiaries, have unused net operating
     losses from prior years which can be utilized to reduce future years'
     taxable income of the respective entities. The availability of these net
     operating losses is governed by applicable domestic and foreign tax rules
     and regulations, some of which limit the utilization of such losses due to
     minimum tax requirements and other provisions. Income tax expense, as
     presented in the Consolidated Financial Statements, represents the combined
     income tax expense and income tax credits of all of the entities of the
     Company.

                                       14
<PAGE>

     After the utilization of net operating loss carryforwards, income tax
     expense was $152,000 in the second quarter 1999, compared with $320,000 in
     1998, and for the half-year 1999 was $216,000, compared with $560,000 in
     1998. Fluctuations in the amount of income taxes arise primarily from the
     varying combinations of income and losses of the Company's subsidiaries in
     the various domestic and foreign tax jurisdictions, including the
     utilization of net operating loss carryforwards in many of these
     jurisdictions. The US parent company has a net operating loss carryforward
     for US Federal tax purposes but has no net operating loss carryforwards for
     state income tax purposes.

     Restructuring

     In response to volatile global market conditions, the Company implemented a
     reorganization of the Company's structure and operations in November 1998.
     The plan included centralization of production operations, elimination of
     production capacity including personnel, facilities and other support costs
     and the re-organization of the sales function.

     The total restructuring costs of $1,291,000, charged against income in
     1998, comprised planned employee termination costs and lease cancellation
     costs in four principal areas:

<TABLE>
<CAPTION>
          Thousands of dollars          No. of        Employee          Lease         Total
         (except employee no.'s)       Employees     Termination     Cancellation
     ------------------------------------------------------------------------------------------
     <S>                               <C>           <C>             <C>              <C>
       USA restructure                        42            $212            $158      $  370
       Belgium production facility            16             106              50         156
       Executive terminations                  3             340                         340
       Europe restructure                     21             235             190         425
     ------------------------------------------------------------------------------------------
       Total                                  82            $893            $398      $1,291
     ------------------------------------------------------------------------------------------
</TABLE>

     The operations in the USA and Belgium relate to offices established by the
     Company and consequently have no attributable goodwill. The operations in
     the UK and Spain were acquired by the Company in 1988 as part of the
     purchase of Interlingua Group Ltd, a group of translation companies that
     also included operations in Asia. The future prospects of both of the
     restructured businesses have been enhanced by these actions. Management has
     reviewed the future projected revenue from these businesses and concluded
     that no impairment of goodwill has occurred.

                                       15
<PAGE>

     The restructuring costs summarized above represent costs paid during 1998,
     1999 and accrued at June 30, 1999.

<TABLE>
<CAPTION>
          Thousands of dollars           No. of        Employee          Lease         Total
                                        Employees     Termination     Cancellation
                                      -------------------------------------------------------------
     <S>                              <C>             <C>             <C>              <C>
     Total                                      82          $ 893            $ 398        $1,291
     Paid Prior to March 31, 1999               65           (630)             (94)         (724)
                                      -------------------------------------------------------------
     Outstanding as of March 31, 1999           17            263              304           567
     Paid in the second quarter 1999            16           (158)            (106)         (264)
                                      -------------------------------------------------------------
     Outstanding at June 30, 1999                1          $ 105            $ 198        $  303
                                      -------------------------------------------------------------
</TABLE>

     Employee termination costs are payable according to the relevant local law
     which often provides for payments to be made over a number of months. Lease
     cancellation costs represent the full cost of terminating leases according
     to the terms of the lease contracts less expected sub-lease income, if any.

     Enterprise and Knowledge Management System

     Based upon concepts developed in 1998, in 1999 management of the Company
     has commenced the design, development and preparation for installation of
     an enterprise and knowledge management system which will be installed
     throughout the Company's operations and will provide for flexible and
     informed analysis of operations, provide wide and timely dissemination of
     information, facilitate rapid decision making and will allow all managers
     to be focused on common goals for improved performance and profitability.
     This enterprise system is known as ALPNET Planet.

     ALPNET Planet will encompass all front and back office functions as well as
     strategic management needs. It will also monitor and validate processes by
     measuring how work is being performed against established policies and
     procedures. Management expects the implementation of this system, upon its
     completion, to have a significant, positive effect upon the operating
     performance of the Company.

     The most valuable component of ALPNET Planet will be its knowledge
     management package which will capture and manage the Company's information,
     knowledge and expertise. It will centralize and leverage all translation
     memories, terminology databases and localization know-how in one highly
     organized data warehouse.

     ALPNET Planet will be developed, tested and prepared for installation
     throughout 1999, with full implementation of all modules by the year 2000.
     The Company will lease the major hardware and software components of the
     system which will then be adapted by the Company according to its design
     specifications.

                                       16
<PAGE>

  In conformity with the FASB Statement of Position 98-1, "Accounting for the
  Costs of Computer Software Developed or Obtained for Internal Use", the
  Company will capitalize the costs to develop ALPNET Planet.  Total costs of
  the computer software, computer hardware and other costs of the Planet system
  are expected to be approximately $2.35 million, approximately $1.1 million of
  which represents purchased software and equipment and $1.25 million represents
  costs of customization and development.  The system costs will be amortized
  over a 48-month period commencing in the year 2000 as each module of the
  system becomes fully functional and ready for its intended use.  Total ALPNET
  Planet system costs of $313,000 have been capitalized for the second quarter
  1999, and $943,000 for the half-year 1999.

  Liquidity and Sources of Capital

  In the half-year 1999, the Company had a positive cash flow from operations of
  approximately $861,000 compared with positive cash flows from operations in
  1998 of $991,000. In 1998, the Company's investing activities consisted
  primarily of the acquisition of equipment needed to maintain or upgrade
  production capability.  In 1999, equipment acquisitions of $1,270,000 included
  $943,000 of software and related equipment for ALPNET Planet. The cash
  component of the acquisition of EP Electronic Publishing Partners GmbH was
  $98,000. The acquisition is described more fully in note 2 to the financial
  statements.

  Financing activities for both half-years included fluctuations in the amounts
  utilized under bank lines of credit to finance the Company's working capital
  needs and changes in outstanding debt used to finance equipment purchases.

  At June 30, 1999, the Company's cash and cash equivalents were approximately
  $1.3 million, which represented a decrease of $200,000 during 1999.  At June
  30, 1999, the Company had working capital of approximately $2.6 million,
  compared to working capital of approximately $3.0 million at December 31,
  1998.

  The Company's primary working capital requirements relate to the funding of
  accounts receivable and work-in-process.  The Company funds some of its
  working capital needs with credit facilities with financial institutions in
  the US, Canada, the UK, Germany, Spain and The Netherlands.  Most of the
  credit facilities are secured by accounts receivable and other assets of the
  Company or its subsidiaries.  As of June 30, 1999, the Company had unused
  amounts under these credit facilities of approximately $1.2 million.

  The Company's only significant commitments for capital expenditures are
  approximately $900,000 for ALPNET Planet software and related computer
  equipment which will be acquired primarily under capital leases during 1999.
  $793,000 of software was acquired in the half-year 1999.  Capital expenditures
  in future periods are expected to vary according to the overall growth of the
  Company.  The Company plans to acquire and place additional translation
  services workstations and other related software and computer equipment in its
  offices in connection with future orders from customers, as such orders are
  received.  The Company expects to finance a certain portion of future
  equipment costs with terms similar to the financing arrangements entered into
  in recent years.

                                       17
<PAGE>

  In November 1998, the Company commenced implementation of an aggressive and
  fundamental restructuring of the Company's organization and operations, as
  discussed more fully in Management's Discussion and Analysis of Financial
  Condition and Results of Operations.  This restructuring had a negative effect
  on cash flow of approximately $661,000 in the half-year 1999. Additional
  negative cash flows related to this reorganization in the amount of
  approximately $303,000 is estimated for the remainder of 1999.

  During the half-year 1999, the Company issued a convertible loan note of
  $190,000 to an affiliate of the Company and subsequently an additional $1.0
  million of similar notes were issued, $250,000 of which were issued to
  affiliates, as discussed more fully in note 9 to the financial statements.
  The proceeds of the notes will be used to provide working capital for the
  Company and its newly acquired subsidiaries and provide funding for the
  development of the ALPNET Planet system.  The Company may continue to seek
  additional funds by issuing similar notes or other sources of funding in
  accordance with the Company's cash requirements and expansion plans.

  Most of the Company's credit facilities are subject to annual renewals and the
  Company expects them to be renewed on substantially the same terms as those
  which currently exist.  In addition, the Company expects to be able to
  increase the maximum amounts which can be borrowed under credit facilities.
  Some of the financial institutions, which have loaned funds to the Company's
  subsidiaries under the credit facilities referred to above, have placed
  certain limits on the flow of cash outside the respective countries.  Such
  limitations have not been an undue burden to the Company in the past, nor are
  they expected to be unduly burdensome in the foreseeable future.

  The Company believes it has the ability to issue additional equity securities
  if necessary.  In certain past years, the Company has relied on major
  shareholders of the Company to fund some obligations, but the Company
  currently has no firm commitments from, nor are there any obligations of, any
  such shareholders to provide any debt or equity funds to the Company.

  It is more difficult to assess cash flows beyond 1999, and the ability of the
  Company to meet its commitments without additional sources of capital is
  directly related to the Company's operations providing a positive cash flow.
  Should the Company's operations fail to provide adequate funds to enable it to
  meet its future financial obligations, management has the option, because of
  the Company's organizational structure, to cut costs by selectively
  eliminating operations which are not contributing to the Company financially.

  Inflation has not been a significant factor in the Company's operations.
  Competition, however, has been and is expected to remain a major factor.  To
  the extent permitted by competition, general economic and market conditions,
  the Company will pass on increased costs from inflation and operations to
  clients by increasing prices.

  Due to prior years' operating losses, the Company and certain of its
  subsidiaries have net operating loss carryforwards available to offset future
  taxable income in the various countries in which the Company operates.  As a
  result, the Company historically has not had income tax liabilities requiring
  the significant expenditure of cash.  The Company expects this general trend
  to continue into the future for certain offices which sustained large losses
  in previous years.  The levels of net operating losses available to offset
  future taxable income are generally much lower for the new offices opened in
  recent years.

                                       18
<PAGE>

  Substantially all of the Company's deferred tax assets at June 30, 1999 and
  December 31, 1998 were comprised of net operating loss carryforwards for which
  the Company has provided allowances.  The ability of the Company to utilize
  these loss carryforwards in the future is dependent on profitable operations
  in the various countries in which loss carryforwards exist, and the specific
  rules and regulations governing the utilization of such losses, including the
  dates by which the losses must be used.

  Foreign Exchange Risk

  The Company serves its customers from more than 15 countries.  The majority of
  the Company's operations are located outside the US and, consequently, the
  Company is exposed to fluctuations of the dollar against the foreign
  currencies of those countries in which the Company has a substantial presence.
  For all of the Company's foreign subsidiaries, the functional currency has
  been determined to be the local currency.  Accordingly, assets and liabilities
  are translated at year-end exchange rates, and operating statement items are
  translated at weighted-average exchange rates prevailing during the years
  presented. The principal currencies to which the Company is exposed are the
  Canadian dollar, the British Pound, the German Mark and the Dutch Guilder.

  Fluctuations against the dollar can produce significant differences in the
  reported value of revenues and expenses.

  The following table shows a comparison of sales of services in each of the
  Company's significant geographic segments for the half-year 1999 and 1998,
  along with the effect of foreign currency exchange rate fluctuations on sales
  between periods.

<TABLE>
<CAPTION>
                                           Increase (Decrease) in
                             Six Months   Sales of Services due to  Total
                           Ended June 30   Sales      Currency     Increase
  Thousands of dollars     1999     1998   Volume   Fluctuations  (Decrease)
  --------------------------------------------------------------------------
  <S>                     <C>      <C>    <C>       <C>             <C>

  North America         $ 9,818  $ 8,611  $ 1,369         $(162)    $ 1,207
  Europe                 13,881   15,646   (1,605)         (160)     (1,765)
  Asia                    1,279    1,290      (27)           16         (11)
                        ----------------------------------------------------

  Total Sales           $24,978  $25,547  $  (263)        $(306)    $  (569)
                        ====================================================
</TABLE>

  The revenue mix of the Company's operations and the effect of foreign currency
  exchange rate fluctuations on costs and expenses generally mitigate the
  consolidated net income impact.  For revenues in the US which are produced
  outside of the US, any weakening of the US dollar against a particular
  country's currency reduces the amount of net income reported in US dollars.
  Conversely, the same weakening of the US dollar generates an offsetting
  increase in the dollar value of profits arising from revenues within that
  country.  This natural currency effect reduces the net foreign exchange risk
  to the Company.

  Total sales for the half-year 1999 of $25.0 million were negatively affected
  by $306,000 as a result of fluctuations in foreign currencies.  Total
  operating expenses and interest expense were positively affected by $213,000
  resulting in a net negative impact on net income of $93,000 as a result of
  fluctuations in foreign currency exchange rates.  The Company does not
  currently use any financial

                                       19
<PAGE>

  instruments to manage or hedge foreign exchange risk either for trading or
  other purposes. The revenue mix and currency trends are monitored on an
  ongoing basis to identify any changes that might significantly affect the
  Company's net results.

  The translation of foreign denominated assets and liabilities at year-end
  exchange rates results in an unrealized foreign currency translation
  adjustment recorded as a separate component of shareholders' equity and
  reported as other comprehensive income.  The foreign currency adjustment to
  shareholders' equity for the half-year 1999 was an increase of $725,000
  compared to a reduction of $4,000 in 1998.  As of June 30, 1999, the
  cumulative net effect to the Company of the equity adjustment from movements
  in foreign currency exchange rates was a reduction of approximately $2.5
  million in shareholders' equity.  A significant portion of the cumulative
  foreign currency adjustment relates to changes in the carrying value of
  goodwill, which is denominated entirely in foreign currencies.

  Year 2000 Issue

  The Year 2000 Issue is the result of computer programs being written using two
  digits rather than four to define the applicable year. The Company's computer
  programs or hardware that have date-sensitive software or embedded chips may
  recognize a date using "00" as the year 1900 rather than the year 2000. This
  could result in a system failure or miscalculations causing disruptions of
  operations, including, among other things, a temporary inability to process
  transactions, send invoices, or engage in similar normal business activities.

  Based upon recent assessments, the Company has determined that it will need to
  modify or replace the operations administration system for one of the
  Company's foreign subsidiaries. This system will be replaced in 1999 during
  the first phase of the implementation of ALPNET Planet. As part of the
  implementation of this new system, the entire accounting and information
  systems of the Company will be replaced. The Company's proprietary translation
  software system, TSS, has been Year 2000 compliant since its development in
  the mid-80's.

  The Company's plan to resolve the Year 2000 Issue involves the following four
  phases: assessment, remediation, testing and implementation. The Company has
  completed its assessment of all of its systems that could be significantly
  affected by the Year 2000. The Company is primarily in the business of
  providing services but those services are supported by the use of computer
  hardware and software systems in the production of a substantial portion of
  those services. The Company's vendors consist primarily of individual
  translators and other service professionals who are not expected to be
  materially impacted by the Year 2000 Issue. The Company is also dependent upon
  third party suppliers for utility services and telecommunications
  capabilities. The Company has its primary locations in geographically diverse
  locations in North America, Europe and Asia. If one of the Company's locations
  should be unable to operate due to the Year 2000 Issue affecting one of its
  third party suppliers, the Company believes that replacement services can be
  rendered from another of the Company's locations.

  The Company has not yet completed a comprehensive study as to whether its
  third party suppliers are Year 2000 compliant. It is in the process of
  gathering information about the Year 2000 status of suppliers and will
  continue to assess and monitor their compliance.

                                       20
<PAGE>

  Status

  The Company has completed a full evaluation of all its systems and has
  completed the remediation phase of its Year 2000 plan. The Company has
  replaced all critical systems and hardware that is not Year 2000 compliant
  with the exception of the systems that ALPNET Planet will replace. ALPNET
  Planet, which is fully Year 2000 compliant, is expected to have replaced all
  remaining non-compliant systems by October 31, 1999.

  The Company has begun to test all equipment and software. The testing phase
  will be completed no later than September 30, 1999 with the exception of
  ALPNET Planet, which is being tested as it is developed and implemented.
  During the period of testing the critical systems, any system or piece of
  equipment that is found to be non-compliant will be retired and replaced. The
  Company does not expect the cost to replace such equipment to be material.

  Third Parties

  The Company has queried its significant suppliers and subcontractors that do
  not share information systems with the Company (external agents), but has not
  received answers to all of its queries. To date, the Company is not aware of
  any external agents with a Year 2000 Issue that would materially impact the
  Company's results of operations, liquidity, or capital resources. However, the
  Company has no means of ensuring that external agents will be Year 2000 ready.
  The inability of external agents to complete their Year 2000 resolution
  process in a timely fashion is not expected to materially impact the Company.
  The Company believes that it could partially compensate for the failure of
  external agents to comply by utilizing its operations in other geographic
  locations to meet client requirements or by using alternate suppliers.

  The company has contracted with Equant NV to provide a secure, Year 2000
  compliant Wide Area Network to facilitate the exchange of electronic
  information between all ALPNET offices.  Parts of the network are currently
  operational and the entire network will be operational by September 30, 1999.

  Costs

  The Company will utilize primarily internal resources to reprogram, replace,
  test and implement the software and operating equipment for required Year 2000
  modifications. The total costs of the Year 2000 project is estimated at
  $200,000 of which $100,000 ($30,000 expensed and $70,000 capitalized for new
  equipment) was incurred in the year ended December 31, 1998. Of the total
  estimated remaining project costs, approximately $30,000 for replacement
  equipment was paid in the second quarter and approximately $30,000 will be
  paid in the third quarter for testing and monitoring of the new systems.
  Approximately $40,000 is related to the replacement of the operations
  administration system in the Company's UK subsidiary in the third quarter.

                                       21
<PAGE>

  Risks

  Management of the Company believes it has an effective program in place to
  address the Year 2000 Issue in a timely manner. As noted above, the Company
  has not yet completed all necessary phases of its Year 2000 program. In the
  event that the Company does not complete any additional phases, the Company's
  ability to produce certain orders may be negatively impacted. More
  importantly, disruptions resulting from Year 2000 Issues in the world economy
  in geographies where the Company or its clients have significant operations
  could adversely affect the Company. The Company may be unable to meet services
  commitments due to computer systems failure. The amount of potential
  liability, lost revenue and damages cannot be reasonably estimated at this
  time.

  Contingency Plans

  The Company is currently in the process of determining what contingency plans,
  if any, will be necessary to mitigate the impact of the Year 2000 issue.

  Recent Acquisition

  The ALPNET Planet system will be implemented at Electronic Publishing Partners
  GmbH., ALPNET's recent acquisition, on the same schedule as the Company's
  other offices.  The Company is evaluating the Year 2000 status of the systems
  that ALPNET Planet will not replace.  When the evaluation is complete, a plan
  will be put in place to address any remaining Year 2000 issues within
  Electronic Publishing Partners GmbH.

  Cautionary Statement

  The statements in this Management's Discussion and Analysis that are not based
  on historical data are forward looking, including for example, information
  about future sales growth in various markets in future periods; expected
  changes in the levels of various expenses, including income taxes; the
  Company's plans for future investments in new offices, services, or products;
  and financing plans and expectations.

  Forward looking statements contained in this Management's Discussion and
  Analysis involve numerous risks and uncertainties that could cause actual
  results to be materially different from estimated or expected results.  Such
  risks and uncertainties include, among many others, fluctuating foreign
  currency exchange rates, the Year 2000 Issue, changing levels of demand for
  the Company's services, the effect of constantly changing general economic and
  political conditions in all of the various countries in which the Company has
  operations, the impact of competitive services and pricing, uncertainties
  caused by clients (including the timing of projects and changes in the scope
  of services requested), or other risks and uncertainties that may be disclosed
  from time to time in future public statements or in documents filed with the
  Securities and Exchange Commission.  As a result, no assurance can be given as
  to future results.

                                       22
<PAGE>

                          PART II: OTHER INFORMATION

Item 1.   Legal Proceedings
-------   -----------------

          Reference is made to "Item 3: Legal Proceedings" in the Company's
          Annual Report on Form 10-K for the year ended December 31, 1998, filed
          on March 27, 1999.

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

(a)       The following exhibits are included herein:

          27  Financial Data Schedule

(b)       On July 14, 1999, the Company filed a Form 8-K in respect of the
          acquisition of EP Electronic Publishing Partners GmbH. The approximate
          acquisition cost reported in the Form 8-K differs from the actual
          acquisition cost reported in this Form 10-Q as a result of foreign
          currency exchange differences and other adjustments. This difference
          is not material and will be disclosed in a subsequent Form 8-K/A.

          On August 11, 1999, the Company filed a Form 8-K in respect of the
          acquisition of Technical Publications Services (TPS) B.V., formerly
          Stork TPS .

                                       23
<PAGE>

                                  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.


                                    ALPNET, Inc.
                                    ------------
                                    Registrant



  Date: 11 August 1999              /s/ Michael F. Eichner
        --------------              ---------------------------------
                                    Michael F. Eichner
                                    Chairman of the Board



  Date: 11 August 1999              /s/ John W. Wittwer
        --------------              ---------------------------------
                                    John W. Wittwer
                                    Vice President Finance

                                       24