UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549
                                   -----------

                                    FORM 10-Q



[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT 
    OF 1934

                 For the Quarterly Period Ended October 3, 1998

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

              For the transition period from         to

                        Commission file number 000-25l02

                            BRIDGEPORT MACHINES, INC.
             (exact name of registrant as specified in its charter)

         Delaware                                     06-ll69678
(State of Incorporation)                   (IRS Employer Identification No.)

   500 Lindley Street, Bridgeport, CT                   06606
(Address of principal executive offices)              (zip code)

               Registrant's telephone number, including area code:
                                 (203) 367-365l

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                          if changed since last report)


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 [   ]


The number of shares of Issuer's  Common Stock,  $.0l par value,  outstanding on
October 3, l998 was 5,634,404 shares.
<PAGE>
                            BRIDGEPORT MACHINES, INC.
                                AND SUBSIDIARIES




                                      INDEX


Part I - FINANCIAL INFORMATION                              
 
Item l.             FINANCIAL STATEMENTS

                    Consolidated Balance Sheets as of
                    October 3, 1998 and March 28, 1998            

                    Consolidated Statements of Operations for
                    the three month and six month periods
                    ended October 3, 1998 and
                    September 27, 1997                            

                    Consolidated Statements of Stockholders'
                    Equity for the six month periods ended
                    October 3, 1998 and September 27, 1997        

                    Consolidated Statements of Cash Flows
                    for the six month periods ended
                    October 3, 1998 and September 27, 1997        

                    Notes to Consolidated Financial Statements    

Item 2.             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF
                    OPERATIONS.                                   


Part II - OTHER INFORMATION

Item l-5.           OTHER INFORMATION                          

Item 6.             EXHIBITS AND REPORTS ON FORM 8-K              

Signatures                                                     
<PAGE>


                            BRIDGEPORT MACHINES, INC.

                           FORWARD LOOKING STATEMENTS



         The  Private  Securities  Litigation  Reform of 1995  provides  a "safe
harbor" for forward-looking  statements.  Certain  information  included in this
Quarterly Report on Form 10-Q and the Company's  previously filed Annual Reports
on Form 10-K is forward-looking,  such as information  relating to the expansion
of the use of the Company's products into the factory floor market, expansion of
the Company's  marketing efforts into foreign markets,  the Company's ability to
develop  additional  sources of supply,  the  Company's  shipment of its current
backlog,  the Company's  expected  expenditures on  environmental  matters,  the
Company's  use of  cash  in  operating  activities,  the  Company's  ability  to
satisfactorily resolve any outstanding litigation, the ability of the Company to
meet  working  capital  needs,  and the effect on the Company of the adoption of
certain  accounting   standards.   Such  forward-looking   information  involves
important  risks and  uncertainties  that could  significantly  affect  expected
results in the future from those  expressed  in any  forward-looking  statements
made by, or on behalf of, the Company.  These risks and  uncertainties  include,
but are not limited to,  uncertainties  relating to general economic conditions,
product  introductions,  contingent  liabilities,  changes in currency  exchange
rates,  the  mix  of  products  sold  and  the  profit  margins  thereon,  order
cancellations  or reduced  bookings by  customers or  distributors,  discounting
necessitated by price competition, and general market conditions.



<PAGE>
<TABLE>
<CAPTION>
                            BRIDGEPORT MACHINES, INC.

                           CONSOLIDATED BALANCE SHEETS
                      (In Thousands, Except Share Amounts)


                                                      October 3,       March 28,
                                                         l998            l998
                                                      ---------       ---------
<S>                                                   <C>             <C>        
                        ASSETS
CURRENT ASSETS:
        Cash ...................................      $   5,838       $   4,892
        Trade accounts receivable,
          less allowance of $1,630
          and $1,551, respectively .............         33,567          39,236
        Inventories ............................         65,420          66,707
        Deferred income taxes ..................          3,100           3,100
        Prepaid expenses and other current
        assets .................................          1,058           1,190
                                                      ---------       ---------

            Total current assets ...............        108,983         115,125

PROPERTY, PLANT AND EQUIPMENT
        Land ...................................            353             351
        Buildings, improvements and
          leasehold improvements ...............          4,222           4,081
        Machinery and equipment ................         20,970          19,880
        Furniture and fixtures .................          6,154           5,979
                                                      ---------       ---------
                                                         31,699          30,291


Less:  Accumulated depreciation ................        (11,785)        (10,586)
                                                      ---------       ---------

             Property, plant and equipment,
             net ...............................         19,914          19,705
                                                      ---------       ---------

INVESTMENTS IN AND ADVANCES TO AFFILIATES ......          1,035             859

OTHER ASSETS, net of accumulated
  amortization of $1,634
  and $1,585 respectively ......................            317             421
                                                      ---------       ---------

             Total assets ......................      $ 130,249       $ 136,110
                                                      =========       =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
                            BRIDGEPORT MACHINES, INC.

                           CONSOLIDATED BALANCE SHEETS
                      (In Thousands, Except Share Amounts)

                                                     October 3,         March 28,
                                                        1998              l998
                                                    ------------      ------------

<S>                                                 <C>               <C>         
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
        Bank overdrafts .......................     $      1,057      $      2,386
        Working capital revolver ..............           24,215            23,106
        Accounts payable ......................           13,134            20,153
        Accrued expenses ......................           15,386            14,396
        Income taxes payable ..................              762             1,001
        Current portion of long-term debt
          obligations .........................            2,571             2,483
                                                    ------------      ------------

             Total current liabilities ........           57,125            63,525

LONG-TERM DEBT OBLIGATIONS ....................            1,924             3,142
OTHER LONG-TERM LIABILITIES ...................              120               120
                                                    ------------      ------------

             Total liabilities ................           59,169            66,787

STOCKHOLDERS' EQUITY
        Preferred stock, $.0l par value,
          2,000,000 shares authorized,
          no shares issued ....................             --                --
        Common stock, $.0l par value,
          13,000,000 shares authorized;
          5,704,404 shares issued at October 3,
          1998 and 5,702,404 shares issued
          at March 28, 1998 ...................               57                57
        Capital in excess of par value ........           38,533            38,513
        Retained earnings--subsequent to
          reclassification of $6,750
          deficit as part of the quasi-
          reorganization as of January 3,
          l993 ................................           31,597            30,991
        Other comprehensive income:
          Cumulative translation adjustment ...            1,589               271
        Treasury stock at cost, 70,000 shares .             (696)             (509)
                                                    ------------      ------------

             Total stockholders' equity .......           71,080            69,323
                                                    ------------      ------------
             Total liabilities and stock-
             holders' equity ..................     $    130,249      $    136,110
                                                    ============      ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                 BRIDGEPORT MACHINES, INC.

                           CONSOLIDATED STATEMENTS OF OPERATIONS
                         FOR THE THREE MONTH AND SIX MONTH PERIODS
                       ENDED OCTOBER 3, 1998 AND SEPTEMBER 27, 1997
                         (In Thousands, Except Per Share Amounts)


                               THREE MONTHS ENDED                 SIX MONTHS ENDED
                            -----------------------------    ----------------------------
                            October 3,     September 27,     October 3,     September 27,
                               1998            1997             1998             1997
                            --------         --------         --------         --------
<S>                         <C>              <C>              <C>              <C>     
Net sales ..........        $ 48,447         $ 44,896         $ 99,533         $ 99,442
Cost of sales ......          38,748           35,393           78,691           77,327
                            --------         --------         --------         --------

  Gross profit .....           9,699            9,503           20,842           22,115

Selling, general and
  administrative
  expenses .........           9,199            9,653           18,766           18,932
                            --------         --------         --------         --------

   Operating income
   (loss) ..........             500             (150)           2,076            3,183

Interest expense ...            (649)            (657)          (1,279)          (1,301)
Other income
  (expense), net ...              87              176                5               46
                            --------         --------         --------         --------

   Income (loss)
   before provision
   (benefit) for
   income taxes ....             (62)            (631)             802            1,928
Provision (benefit)
   for income taxes             (121)             126              196            1,184
                            --------         --------         --------         --------

   Net income (loss)        $     59         $   (757)        $    606         $    744
                            ========         ========         ========         ========

Basic Earnings Per
 Share .............        $   0.01         $  (0.13)        $   0.11         $   0.13
                            ========         ========         ========         ========

Diluted Earnings Per
 Share .............        $   0.01         $  (0.13)        $   0.11         $   0.13
                            ========         ========         ========         ========

</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                                      BRIDGEPORT MACHINES, INC.

                                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                               FOR THE SIX MONTH PERIODS ENDED OCTOBER 3, 1998 AND SEPTEMBER 27, 1997
                                                           (In Thousands)
 
                                                                                  ACCUMULATED
                                                                                    OTHER
                                                                                 COMPENHENSIVE
                                                                                    INCOME:
                                                   CAPITAL IN                     CUMULATIVE                            TOTAL
                                       COMMON       EXCESS OF       RETAINED      TRANSLATION        TREASURY        STOCKHOLDERS'
                                       STOCK        PAR VALUE       EARNINGS       ADJUSTMENT          STOCK            EQUITY
                                     --------        --------        --------        --------         ----             --------
<S>                                  <C>             <C>             <C>             <C>              <C>              <C>     
BALANCE, March 29, 1997 .....        $     57        $ 38,285        $ 27,076        $    168         $   --           $ 65,586
                                                                                                                       --------

Comprehensive Income:
  Net income for the six
    months ended September
    27, 1997 ................              --              --             744              --             --                744
  Other Comprehensive Income:
    Translation adjustment
      for the six months
      ended September 27,
      1997                                 --              --              --            (540)            --               (540)
                                                                                                                       --------
        Total Comprehensive
        Income ..............                                                                                               204

Purchase of Common Stock
    for treasury ............              --              --              --              --             (509)            (509)
                                     --------        --------        --------        --------         --------         --------

BALANCE, September 27, 1997 .        $     57        $ 38,285        $ 27,820        $   (372)        $   (509)        $ 65,281
                                     ========        ========        ========        ========         ========         ========

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                      BRIDGEPORT MACHINES, INC.

                                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                               FOR THE SIX MONTH PERIODS ENDED OCTOBER 3, 1998 AND SEPTEMBER 27, 1997
                                                           (In Thousands)
                                                             (continued)
 
                                                                                  ACCUMULATED
                                                                                    OTHER
                                                                                 COMPENHENSIVE
                                                                                    INCOME:
                                                   CAPITAL IN                     CUMULATIVE                            TOTAL
                                       COMMON       EXCESS OF       RETAINED      TRANSLATION        TREASURY        STOCKHOLDERS'
                                       STOCK        PAR VALUE       EARNINGS       ADJUSTMENT          STOCK            EQUITY
                                     --------        --------        --------        --------         ----             --------
<S>                                  <C>             <C>             <C>             <C>              <C>              <C>   
BALANCE, March 28, 1998 .....        $     57        $ 38,513        $ 30,991        $    271         $   (509)        $ 69,323
                                                                                                                       --------
Comprehensive Income:
  Net income for the six
    months ended October 3,
    l998 ....................              --              --             606              --               --              606
  Other Comprehensive Income:
    Translation adjustment
      for the six months
      ended October 3, 1998 .              --              --              --           1,318               --            1,318
                                                                                                                       --------
          Total Comprehensive
          Income ............                                                                                             1,924
                                                                                                                       --------

Exercise of stock options
  for common stock ..........              --              20              --              --               --               20

Purchase of Common Stock
  for treasury ................            --              --              --              --             (187)            (187)   
                                     --------        --------        --------        --------         --------         --------

BALANCE, October 3, 1998 ....        $     57        $ 38,533        $ 31,597        $  1,589         $   (696)        $ 71,080
                                     ========        ========        ========        ========         ========         ========

</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
                            BRIDGEPORT MACHINES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
     FOR THE SIX MONTH PERIODS ENDED OCTOBER 3, 1998 AND SEPTEMBER 27, 1997
                                 (In Thousands)


                                                        October 3,    September 27,
                                                           1998           1997
                                                         -------        -------
<S>                                                      <C>            <C>    
CASH FLOWS PROVIDED BY (USED IN)
  OPERATING ACTIVITIES:
  Net income .....................................       $   606        $   744
  Adjustments to reconcile net
    income to net cash provided
    by operating activities:
         Depreciation and amortization ...........         1,755          1,600
         Net (gain) on sale of property,
           plant and equipment ...................          (124)            (3)
  Changes in operating assets and
      liabilities:
      Decrease (increase) in net trade
        accounts receivable ......................         6,089          7,248
      Decrease (increase) in inventories .........         1,699            862
      Decrease (increase) in prepaid expenses
        and other current assets .................           172            551
      Decrease (increase) in other assets ........           (66)           310
      (Decrease) increase in bank overdrafts .....        (1,329)          (606)
      Increase (decrease) in accounts payable
        and accrued expenses .....................        (6,092)        (3,667)
                                                         -------        -------

        Total adjustments ........................         2,104          6,295
                                                         -------        -------

  Cash flows provided by (used in)
    operating activities .........................         2,710          7,039
                                                         -------        -------

CASH FLOWS PROVIDED BY (USED IN)
  INVESTING ACTIVITIES:
  Capital expenditures ...........................        (1,194)        (1,505)
  Proceeds from sale of property,
    plant and equipment ..........................           128              9
  Purchase of certain assets of a distributor ....          --           (1,245)
  Purchase of treasury stock .....................          (187)          (509)
                                                         -------        -------

    Cash flows provided by (used in)
      investing activities .......................        (1,253)        (3,250)
                                                         -------        -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                            BRIDGEPORT MACHINES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
     FOR THE SIX MONTH PERIODS ENDED OCTOBER 3, 1998 AND SEPTEMBER 27, 1997
                                 (In Thousands)

                                                       October 3,    September 27,
                                                           1998           1997
                                                         -------        -------

<S>                                                      <C>            <C>  
CASH FLOWS PROVIDED BY (USED IN)
  FINANCING ACTIVITIES:

  Sale of common stock ...........................       $    20        $  --
  Borrowings (payments) under working
    capital revolver, net ........................           606             17
  Borrowings (payments) of other debt and
    capitalized lease obligations ................        (1,556)        (1,233)
                                                         -------        -------

    Cash flows provided by (used in)
      financing activities .......................          (930)        (1,216)
                                                         -------        -------

  Effect of exchange rate changes
    on cash ......................................           419            (90)
                                                         -------        -------

    Net change in cash ...........................           946          2,483
  CASH, beginning of period ......................         4,892          2,992
                                                         -------        -------

  CASH, end of period ............................       $ 5,838        $ 5,475
                                                         =======        =======

  SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid ..................................       $ 1,332        $ 1,307
  Income taxes paid, net .........................           474          1,093


</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
                            BRIDGEPORT MACHINES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       THE COMPANY AND BASIS OF PRESENTATION

         Bridgeport  Machines,  Inc.  and  subsidiaries  (the  "Company")  is  a
         manufacturer  and  distributor  of  metal  cutting  machine  tools  and
         accessories.  The Company  manufactures  its  products in the U.S.  and
         Europe.   Sales  are  principally  in  North  America  and  Europe.   A
         substantial  portion  of the end users of the  Company's  products  are
         small and medium sized independent job shops who produce machined parts
         for customers in a wide variety of industries.

         The  consolidated  balance  sheet as of October 3, 1998 and the related
         consolidated  statements of operations,  stockholders'  equity and cash
         flows for the six months ended  October 3, 1998 and  September 27, 1997
         have been  prepared by the  Company  without  audit.  In the opinion of
         management,  all adjustments  necessary to present fairly the financial
         position, results of operations and cash flows as of or for the periods
         ended  October  3, 1998 and  September  27,  1997 have been  made.  The
         accounting  principles  followed  during interim  periods are generally
         consistent  with those applied for annual  periods and are described in
         the Company's financial statements included in its Form 10-K filed with
         the Securities and Exchange Commission (the "SEC").


2.       INTERIM STATEMENTS

         The following  accounting policies which are applied in the preparation
         of the interim financial statements are different from those applied in
         the year-end financial statements:

         Inventories:

                  Inventories are valued at year-end based upon actual inventory
                  on hand verified by a physical count. Inventories are adjusted
                  during interim periods for purchases, production and shipments
                  based upon standard costs for material, labor and overhead.

         Income Taxes:

                  The income tax provision is calculated based upon an estimated
                  tax rate for the year for each tax jurisdiction.


3.       EARNINGS PER SHARE

         In February 1997,  Statement of Financial Accounting Standards No. 128,
         "Earnings Per Share" ("FAS 128"),  was issued.  FAS 128 established new
         standards for computing and presenting EPS. The Company adopted the new
         standard  in the third  quarter  of  fiscal  1998.  Earnings  per share
         information   for  prior  periods  has  been  restated  using  the  new
         guidelines.
<PAGE>
         Basic  earnings  per common  share for the three and six  months  ended
         October 3, 1998 and September  27, 1997 are  calculated by dividing net
         income by weighted average common shares outstanding during the period.
         Diluted  earnings  per common  share for the three and six months ended
         October 3, 1998 and September  27, 1997 are  calculated by dividing net
         income by weighted average common shares  outstanding during the period
         plus dilutive potential common shares which are determined as follows:


<TABLE>
<CAPTION>
                                       THREE MONTHS ENDED       SIX MONTHS ENDED
                                      -------------------    --------------------
                                      Oct. 3,   Sept. 27,    Oct. 3,    Sept. 27,
                                       1998        1997        1998        1997
                                       -----       -----       -----       -----
                                               (amounts in thousands)
<S>                                    <C>         <C>         <C>         <C>  
Weighted average common
  shares outstanding ...........       5,647       5,663       5,651       5,671
Effect of dilutive
  options to purchase
  common stock .................           9           0          21          10
Adjusted weighted
  average common shares ........       5,656       5,663       5,672       5,681
</TABLE>


         Stock options to purchase 347,510 and 259,620 shares of common stock at
         October 3, 1998 and September 27, 1997, respectively, at prices ranging
         from  $9.50  to  $16.25  and from  $10.00  to  $16.25  per  share  were
         outstanding  at October 3, 1998 and  September 27, 1997,  respectively,
         and did not meet the  requirements to be included in the computation of
         diluted  earnings per share for the three month periods.  These options
         expire in fiscal years 2000 to 2003.

         Dilutive  potential common shares are calculated in accordance with the
         treasury  stock method which assumes that proceeds from the exercise of
         all options are used to repurchase  common stock at market  value.  The
         number of shares remaining after the proceeds are exhausted  represents
         the potentially dilutive effect of the securities.
<PAGE>
4.       COMPREHENSIVE INCOME

         In June 1997,  Statement of  Financial  Accounting  Standards  No. 130,
         "Reporting  Comprehensive  Income"  ("FAS  130")  was  issued.  FAS 130
         requires the disclosure of  comprehensive  income to reflect changes in
         equity that result from transactions and economic events from non-owner
         sources.  Comprehensive  income  for the  three  and six  months  ended
         October 3, 1998 and September 27, 1997 presented  below include foreign
         currency  translation  items.  There was no tax  expense or tax benefit
         associated with the foreign currency translation items.

<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED       SIX MONTHS ENDED
                                   ---------------------    --------------------
                                     Oct. 3,   Sept. 27,     Oct. 3,   Sept. 27,
                                     1998        1997        1998        1997
                                   -------     -------      -------     -------
                                                (amounts in thousands)
<S>                                <C>         <C>          <C>         <C>    
Net income (loss) ............     $    59     $  (757)     $   606     $   744
Foreign currency
  translation adjustments ....       1,524        (720)       1,318        (540)
                                   -------     -------      -------     -------
Comprehensive income .........     $ 1,583     $(1,477)     $ 1,924     $   204
                                   =======     =======      =======     =======
</TABLE>

5.       RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In June 1997, the Financial  Accounting Standards Board ("FASB") issued
         SFAS No. 131,  "Disclosures about Segments of an Enterprise and Related
         Information"  ("SFAS No. 131"),  which changes the way public companies
         report information about segments.  SFAS No. 131, which is based on the
         management  approach to segment  reporting,  includes  requirements  to
         report  selected  segment   information   quarterly,   and  entity-wide
         disclosures  about  products and  services,  major  customers,  and the
         material  countries  in which  the  entity  holds  assets  and  reports
         revenues.  The first  disclosure  required by this statement will be in
         the Company's annual financial  statements for the year ending April 3,
         1999.  The Company does not expect  adoption of the statement to have a
         significant impact on the presentation of its financial statements.

         In June  1998,  the  FASB  issued  Statement  of  Financial  Accounting
         Standards No. 133,  "Accounting for Derivative  Instruments and Hedging
         Activities" which provides new guidelines for accounting for derivative
         instruments.  The Company is currently  analyzing  what, if any, impact
         the new  guideline  will have on the  Company.  This new  statement  is
         effective for financial periods beginning after June 15, 1999.

6.       ACQUISITION

         On August 1, 1997,  the  Company  acquired  certain  assets and assumed
         certain  liabilities of its German  distributor.  The  acquisition  was
         accounted  for  as  a  purchase.   The  Company  paid  in  installments
         approximately  $1.8 million in cash for the assets acquired and assumed
         approximately   $2.5  million  of   liabilities.   The  purchase  price
         approximated  book value.  The  purchase  did not meet the  significant
         subsidiary rules of SEC reporting requirements.
<PAGE>
                   BRIDGEPORT MACHINES, INC. AND SUBSIDIARIES


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS:

         The  following  table  sets  forth,  for  the  periods  indicated,  the
percentage of net sales  represented by certain items reflected in the Company's
consolidated financial statements:
<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED                        SIX MONTHS ENDED
                                         --------------------------------         -------------------------------
                                         October 3,         September 27,          October 3,       September 27,
                                            1998                 1997                1998                1997
                                           -----                -----               -----               ----- 
<S>                                        <C>                  <C>                 <C>                 <C>   
Net sales                                  100.0%               100.0%              100.0%              100.0%
Gross profit                                20.0                 21.2                20.9                22.2
Selling, general and
  administrative
  expenses                                  19.0                 21.5                18.8                19.0
Operating income (loss)                      1.0                 (0.3)               2.1                  3.2
Interest expense                             1.3                  1.5                1.3                  1.3
Other income                                 0.2                  0.4                0.0                  0.0
  (expense)
Income tax expense
  (benefit)                                 (0.2)                 0.3                0.2                  1.2
Net income (loss)                            0.1                 (1.7)               0.6                  0.7
</TABLE>

FISCAL CALENDAR

         The Company's  fiscal year is the 52 or 53 week period ending  Saturday
nearest to March 31.  Fiscal  1998 was a 52 week year while  fiscal 1999 is a 53
week year. The additional  week in fiscal 1999 is included in the second quarter
of fiscal  1999.  As a result,  the second  quarter  of fiscal  1999 and the six
months ended October 3, 1998 include 14 weeks and 27 weeks, respectively,  while
the second  quarter of fiscal 1998 and the six months ended  September  27, 1997
include 13 weeks and 26 weeks, respectively.


COMPARISON OF THE THREE MONTHS ENDED OCTOBER 3, 1998 ("SECOND  QUARTER OF FISCAL
1999") TO THE THREE MONTHS ENDED  SEPTEMBER 27, 1997 ("SECOND  QUARTER OF FISCAL
1998")


         Net sales were $48.4  million in the second  quarter of fiscal l999, an
increase of $3.6 million,  or 7.9%, as compared to the second  quarter of fiscal
l998.  The  increase  in sales  consists  of an  increase  in sales in Europe of
approximately $9.3 million offset to some extent by a decrease in sales in North
America of $5.3  million and the Pacific Rim of $0.6  million.  The  increase in
European  sales is  predominately  a  result  of  better  market  conditions  in
continental  Europe.  The decrease in sales in North America and the Pacific Rim
is a result of weaker market conditions.
<PAGE>
         During the second quarter of fiscal 1999, the Company's incoming orders
in North America and Europe were  approximately 25% and 60% less,  respectively,
than the incoming  orders in the second  quarter of fiscal 1998.  These declines
appear to  represent  a  cyclical  trend in the  United  States  and the  United
Kingdom,  the  Company's  two  principal  markets,  of  declining  purchases  by
customers for machine tools in the segment of the machine tool industry in which
the Company participates. The Company cannot predict for what period of time the
low end of the  purchasing  cycle could  continue or the level at which incoming
orders will be.

         Backlog at October 3, 1998 was  approximately  $28.3  million  compared
with approximately  $38.1 million at June 27, 1998. Of the backlog at October 3,
1998,  approximately  $6.8  million  relates  to  sales  in  North  America  and
approximately  $21.5 million relates to sales in Europe and the Middle East. The
Company's  backlog  balances  fluctuate  as a result of many  factors  including
length  of time to  deliver  products,  new  product  introductions  and  market
conditions.  At the current levels of backlog,  the Company is more dependent on
future  incoming  orders than it has been in the recent past.  During the second
quarter of fiscal  1999,  the  Company's  incoming  orders in North  America and
Europe were  approximately  25% and 60% less,  respectively,  than the  incoming
orders in the second quarter of fiscal 1998.

         Gross profit was $9.7 million in the second  quarter of fiscal l999, an
increase of $0.2 million,  or 2.1%, as compared to the second  quarter of fiscal
l998.  Gross profit  declined  approximately  $1.6 million in the Company's U.S.
operations due to decreased North American sales.  This decline was offset by an
approximate  $1.8  million  increase in gross profit in the  Company's  European
operations due primarily to increased  continental  European sales. Gross profit
as a percent of net sales was 20.0% compared with 21.2% in the second quarter of
fiscal 1998. The decline in gross profit as a percent of sales was predominately
due to a change in product mix. As sales in Europe  increased,  machining center
products  represented  a larger  portion of total  sales than in the prior year.
These  products have a lower gross profit as a percent of sales than some of the
other products the Company sells.

         Selling,  general and administrative  expenses were $9.2 million in the
second quarter of fiscal l999, a decrease of $0.5 million,  or 4.7%, as compared
to the second  quarter of fiscal l998.  As a percentage  of net sales,  selling,
general and  administrative  expenses were 19.0% in the second quarter of fiscal
l999, as compared to 21.5% for the second quarter of fiscal l998.

         Operating  income was $0.5  million  for the  second  quarter of fiscal
l999,  as compared to operating  loss of $0.1 million for the second  quarter of
fiscal l998.

         Interest expense was $0.6 million for the second quarter of fiscal l999
as compared to $0.7 million for the second quarter of fiscal l998.

         Benefit  for income  taxes was $0.1  million  in the second  quarter of
fiscal  l999,  compared to a provision  for income  taxes of $0.1 million in the
second  quarter of fiscal 1998.  The tax benefit in the second quarter of fiscal
1999 is  primarily a result of a tax benefit  recorded in the  Company's  United
Kingdom  operations.  During the second  quarter of fiscal 1999 the Company also
utilized net operating  loss  carryforwards  in its German  operations.  The tax
provision  in the  second  quarter of fiscal  1998  primarily  represents  a tax
provision for the U.S.  operating  results offset  somewhat by a tax benefit for
the Company's  United Kingdom  results.  Tax benefits for losses incurred in the
Company's German operations were not established in the second quarter of fiscal
1998 because they were not currently recognizable for tax return purposes.
<PAGE>
COMPARISON  OF THE SIX MONTHS  ENDED  OCTOBER  3, 1998 TO THE SIX  MONTHS  ENDED
SEPTEMBER 27, 1997

         Net sales were $99.5  million for the six months ended October 3, 1998,
an  increase of $0.1  million,  or 0.1%,  as  compared  to the six months  ended
September 27, 1997. Net sales in Europe increased by approximately $13.5 million
in the six months  ended  October 3, 1998 as  compared  to the six months  ended
September  27, 1997.  Net sales in North  America and the Pacific Rim  decreased
approximately  $11.2 million and $2.4 million,  respectively,  in the six months
ended  October 3, 1998 as compared to the six months ended  September  27, 1997.
The  increase  in sales in Europe was a result of better  market  conditions  in
continental Europe, while the decrease in sales in North America and the Pacific
Rim is due to weaker market conditions.

         Gross  profit was $20.8  million  for the six months  ended  October 3,
1998, a decrease of $1.3  million,  or 5.8%, as compared to the six months ended
September  27, 1997.  Gross profit  declined  approximately  $4.1 million in the
Company's U.S.  operations due to decreased North American  sales.  This decline
was offset somewhat by an approximate  $2.8 million  increase in gross profit in
the  Company's  European  operations  due  primarily  to  increased  continental
European sales.  The gross profit as a percentage of net sales was 20.9% for the
six months ended October 3, 1998 versus 22.2% for the six months ended September
27, 1997.  Gross profit as a percent of sales declined due to a decline in sales
in North  America  and a change in product  mix.  As sales in Europe  increased,
machining  center  products  represented a larger portion of total sales than in
the prior year.  These  products have a lower gross profit as a percent of sales
than some of the other products the Company sells.

         Selling, general and administrative expenses were $18.8 million for the
six months  ended  October 3, 1998,  a decrease  of $0.2  million,  or 0.9%,  as
compared to the six months  ended  September  27, 1997.  As a percentage  of net
sales,  selling,  general  and  administrative  expenses  were 18.8% for the six
months  ended  October 3, 1998,  as compared  to 19.0% for the six months  ended
September 27, 1997.

         Operating  income was $2.1 million for the six months ended  October 3,
1998, as compared to $3.2 million for the six months ended September 27, 1997.

         Interest  expense was $1.3 million for the six months ended  October 3,
1998 and $1.3 million for the six months ended September 27, 1997.

         Provision  for income  taxes was $0.2  million for the six months ended
October 3, 1998,  compared to a tax provision of $1.2 million for the six months
ended  September 27, 1997. The tax provision for the six months ended October 3,
1998 reflects a benefit in the Company's  German  operations for the utilization
of net operating loss  carryforwards.  The tax provision in the six months ended
September 27, 1997 primarily  represents a tax provision for the U.S.  operating
results offset by a tax benefit for the Company's  United Kingdom  results.  Tax
benefits  for losses  incurred in the  Company's  German  operations  in the six
months  ended  September  27, 1997 were not  established  because  they were not
currently recognizable for tax return purposes.

FOREIGN OPERATIONS:

         During the six months ended  October 3, 1998,  net sales  outside North
America represented approximately 51% of total net sales, as compared to 40% for
the six months ended  September  27, 1997.  A  substantial  portion of these net
sales were made by the Company's European operations.
<PAGE>
         Generally,  from time to time, the Company enters into forward exchange
contracts to provide  economic  hedges  against  foreign  currency  fluctuations
primarily  on its  intercompany  sales  transactions  between its U.S.  and U.K.
operations.  At  October  3,  1998,  the  Company  did not have any  outstanding
commitments under forward purchase contracts.

LIQUIDITY AND CAPITAL RESOURCES:

         As of October 3, 1998, the Company had working capital of $51.9 million
compared with $51.6 million at March 28, 1998.  The Company meets its short-term
financing needs through cash from  operations and its revolving  credit facility
which provides for maximum borrowings,  subject to certain limitations, of up to
$24.5 million in the United States and $19.5 million in the United Kingdom.

         The table  below  presents  the  summary  of cash flow for the  periods
indicated:
<TABLE>
<CAPTION>
                                                        SIX MONTHS ENDED
                                         -------------------------------------------
                                         October 3, 1998          September 27, 1997
                                         ---------------          ------------------
                                                     (amounts in thousands)
<S>                                          <C>                       <C>     
Net cash provided by (used in)
  operating activities                       $  2,710                  $  7,039
Net cash provided by (used in)
  investing activities                         (1,253)                   (3,250)
Net cash provided by (used in)
  financing activities                           (930)                   (1,216)        
         
</TABLE>


         Net cash provided by (used in) operating activities  fluctuates between
periods  primarily as a result of differences  in net income,  the timing of the
collection of accounts  receivable,  purchase of  inventory,  level of sales and
payment  of  accounts  payable.  Included  in net cash  provided  by  (used  in)
investing  activities  in the six  months  ended  September  27,  1997 is a $1.2
million payment for the purchase of certain assets as discussed in Note 6 to the
financial statements. The net cash provided by (used in) financing activities in
the six  months  ended  October  3,  1998 and  September  27,  1997,  represents
primarily net borrowings or repayments of debt.

         The Company believes that cash generated from operations and borrowings
available  under the  revolving  credit  facility will be sufficient to meet its
working capital and capital expenditure requirements for at least 12 months from
October 3, 1998. Such facility,  together with cash from operations, is expected
to be sufficient  to enable the Company to meet its working  capital and capital
expenditure needs for the longer term.  However,  there can be no assurance that
liquidity  would not be  adversely  impacted  by a decline in  general  economic
conditions or other factors, or that future credit facilities will be available.


CHANGES IN FINANCIAL POSITION:

         At October 3, 1998, accounts receivable and inventories  decreased $5.7
million and $1.3 million,  respectively, as compared to March 28, 1998 primarily
due to lower sales.
<PAGE>
ECONOMIC CYCLES:

         The overall market for machine tools is cyclical,  reflecting  economic
conditions, production capacity utilization, changes in tax and fiscal policies,
corporate  profitability and financial condition as well as the general level of
business  confidence.  During the second  quarter of fiscal 1999,  the Company's
incoming orders in North America and Europe were approximately 25% and 60% less,
respectively,  than the  incoming  orders in the second  quarter of fiscal 1998.
These declines appear to represent a cyclical trend in the United States and the
United Kingdom,  the Company's two principal markets,  of declining purchases by
customers for machine tools in the segment of the machine tool industry in which
the Company  participates.  The Company  cannot predict for which period of time
the low end of the  purchasing  cycle  could  continue  or the  level  at  which
incoming orders will be.


YEAR 2000 READINESS DISCLOSURE:

         Many companies may face potential  serious  business  problems  because
software  applications  and  business  equipment  developed  in the past may not
properly  recognize  future calendar dates due to Year 2000  limitations.  These
problems  could  cause  systems  to become  unstable,  stop  working  or provide
incorrect data based upon dates.

         The Company is continuing its assessment of the impact on the Year 2000
issue on its operations. Based upon its assessment to date, the Company believes
that the  majority  of its  significant  internal  computer  operating  and date
sensitive  systems  are Year 2000  compliant.  Part of this belief is based upon
third party representations. Discussions to date with third party suppliers have
not indicated that any  significant  problems will occur as a result of the Year
2000 that would materially effect the Company's ability to operate.  Many of the
Company's  suppliers  are still  working on ensuring that they will be Year 2000
compliant.  Based on the current  status of the Company's  Year 2000  compliance
assessment,  the estimated total costs to be incurred for all the Company's Year
2000 related projects are not expected to exceed  approximately  $100,000.  Such
expenses  will be  expensed  as  incurred  and are  exclusive  of systems  being
replaced or upgraded in the normal course of business.

         In addition,  the Company's  customer base may also be facing  problems
related to Year 2000.  Such problems  could affect their spending plans and thus
potentially impact the Company's future sales.

         Due to the intricate  nature of the Year 2000 problems that could arise
if the Company and other  businesses  with which it transacts  business  fail to
address this issue,  such problems could result in a material  financial risk to
the Company.
<PAGE>
PART II - OTHER INFORMATION

Item l   Legal Proceedings                            None

Item 2   Changes in Securities                        None

Item 3   Defaults Upon Senior Securities              None

Item 4   Submission of Matters to a
         Vote of Security Holders

                  a)       Election of Directors:

                           Bhikhaji M. Maneckji
                              Votes For                      5,478,650
                              Votes Withheld                    17,960

                  b)       Ratification  of the selection of Arthur Andersen LLP
                           as independent public accountants for fiscal 1999.

                              Votes For                      5,483,910
                              Votes Against                     12,065
                              Abstained                            635

Item 5   Other Information              None

Item 6   Exhibits and Reports on Form 8-K                            Exhibit No.
         --------------------------------                            -----------
                  a)       Exhibits

                           (2)   Not Applicable

                           (4)   Not Applicable

                           (l0)  Not Applicable

                           (ll)  Statement regarding computation
                                 of per share earnings is not
                                 required because the relevant  
                                 computation can be determined
                                 from the material contained in
                                 the Financial Statements
                                 included herein.

                           (l5)  Not Applicable

                           (18)  Not Applicable

                           (l9)  Not Applicable

                           (22)  Not Applicable

                           (23)  Not Applicable

                           (24)  Not Applicable

                           (27)  Financial Data Schedule                   27

                           (99)  Not Applicable

                b)         There were no reports or  exhibits  on Form 8-K filed
                           during the three months ended October 3, 1998.
<PAGE>



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  l934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereto duly authorized.


                                                      BRIDGEPORT MACHINES, INC.
                                                          (Registrant)


November 13, 1998                                     /s/ Dan L. Griffith
                                                      -------------------
                                                  By: Dan L. Griffith
                                                      President and
                                                      Chief Executive Officer



November 13, 1998                                     /s/ Walter C. Lazarcheck
                                                      ------------------------
                                                  By: Walter C. Lazarcheck
                                                      Vice President and
                                                      Chief Financial Officer