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 December 27, 1997 

                                       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
December 27, l997 was 5,680,404 shares.
<PAGE>  



                            BRIDGEPORT MACHINES, INC.
                                AND SUBSIDIARIES




                                      INDEX


Part I - FINANCIAL INFORMATION                              
                              

Item l.             FINANCIAL STATEMENTS

                    Consolidated Balance Sheets as of
                    December 27, 1997 and March 29, 1997        

                    Consolidated Income Statements for
                    the three month and nine month periods
                    ended December 27, 1997 and December 28,
                    1996                                        

                    Consolidated Statements of Stockholders'
                    Equity for the nine month periods ended
                    December 27, 1997 and December 28, 1996     

                    Consolidated Statements of Cash Flows
                    for the nine month periods ended
                    December 27, 1997 and December 28, 1996     

                    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-4.           OTHER INFORMATION                           

Item 5.             OTHER INFORMATION                           

Item 6.             EXHIBITS AND REPORTS ON FORM 8-K            

Signatures                                                    


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

                           CONSOLIDATED BALANCE SHEETS
                      (In Thousands, Except Share Amounts)



                                                     December 27,      March 29,
                                                        1997            1997
                                                      ---------       ---------

          ASSETS
<S>                                                   <C>             <C>
CURRENT ASSETS:
        Cash ...................................      $   3,721       $   2,992
        Trade accounts receivable,
          less allowance of $1,621
          and $1,440, respectively .............         39,564          38,691
        Inventories ............................         62,071          63,068
        Deferred income taxes ..................          3,144           3,144
        Prepaid expenses and other current
          assets ...............................          1,512           1,944
                                                      ---------       ---------
            Total current assets ...............        110,012         109,839

NOTES RECEIVABLE - NON-CURRENT .................            292            --

PROPERTY, PLANT AND EQUIPMENT
        Land ...................................            351             345
        Buildings, improvements and
          leasehold improvements ...............          4,052           3,908
        Machinery and equipment ................         20,168          19,164
        Furniture and fixtures .................          5,637           4,732
                                                      ---------       ---------
                                                         30,208          28,149
Less:  Accumulated depreciation ................        (10,258)         (7,848)
                                                      ---------       ---------

        Property, plant and equipment,
          net ..................................         19,950          20,301
                                                      ---------       ---------

INVESTMENTS IN AFFILIATED COMPANIES ............            650           1,008

OTHER ASSETS, net of accumulated
  amortization of $1,560
        and $1,485 respectively ................            264             563
                                                      ---------       ---------
             Total assets ......................      $ 131,168       $ 131,711
                                                      =========       =========

</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)

                                                   December 27,       March 29,
                                                       l997             l997
                                                  ------------      ------------

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

CURRENT LIABILITIES:
        Bank overdrafts .....................     $      1,696      $      2,254
        Working capital revolver ............           21,998            21,910
        Accounts payable ....................           16,266            16,568
        Accrued expenses ....................           15,672            13,055
        Income taxes payable ................            1,175             3,794
        Current portion of long-term debt
          obligations .......................            2,456             2,562
                                                  ------------      ------------
             Total current liabilities ......           59,263            60,143

LONG-TERM DEBT OBLIGATIONS ..................            3,876             5,862
OTHER LONG-TERM LIABILITIES .................              120               120
                                                  ------------      ------------
             Total liabilities ..............           63,259            66,125

COMMITMENTS AND CONTINGENCIES

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;
          5,680,404 shares issued and
          outstanding, including  treasury
          stock,  at December 27, 1997 and
          5,679,361 shares issued and
          outstanding at March 29, 1997 .....               57                57
        Capital in excess of par value ......           38,293            38,285
        Retained earnings--subsequent to
          reclassification of $6,750 deficit
          as part of the quasi-reorganization
          as of January 3, l993..............           29,544            27,076         
        Cumulative translation adjustment ...              524               168
        Treasury stock at cost, 50,000 shares             (509)             --
                                                  ------------      ------------
             Total stockholders' equity .....           67,909            65,586
                                                  ------------      ------------
             Total liabilities and stock-
             holders' equity ................     $    131,168      $    131,711
                                                  ============      ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                 BRIDGEPORT MACHINES, INC.

                              CONSOLIDATED INCOME STATEMENTS
                        FOR THE THREE MONTH AND NINE MONTH PERIODS
                       ENDED DECEMBER 27, 1997 AND DECEMBER 28, 1996
                         (In Thousands, Except Per Share Amounts)


                              THREE MONTHS ENDED                  NINE MONTHS ENDED
                          December 27,     December 28,     December 27,     December 28,
                              1997             1996             1997             1996
                           ---------        ---------        ---------        ---------
<S>                        <C>              <C>              <C>              <C>
Net sales ..........       $  58,728        $  59,779        $ 158,170        $ 173,471 
Cost of sales ......          45,632           47,081          122,959          134,977
                           ---------        ---------        ---------        ---------

  Gross profit .....          13,096           12,698           35,211           38,494
Selling, general and
  administrative
  expenses .........           9,774            8,928           28,706           26,487
                           ---------        ---------        ---------        ---------

    Operating income           3,322            3,770            6,505           12,007
Interest expense ...            (654)            (755)          (1,955)          (2,181)
Other income, net ..             222               58              268              149
                           ---------        ---------        ---------        ---------

    Income before
    provision for
    income taxes ...           2,890            3,073            4,818            9,975
Provision for
  income taxes .....           1,166            1,135            2,350            3,703
                           ---------        ---------        ---------        ---------

    Net income .....       $   1,724        $   1,938        $   2,468        $   6,272
                           =========        =========        =========        =========

Basic earnings
  per share ........       $    0.30        $    0.34        $    0.44        $    1.10
                           =========        =========        =========        =========

Diluted earnings
  per share ........       $    0.30        $    0.34        $    0.43        $    1.09
                           =========        =========        =========        =========


</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 NINE MONTH PERIODS ENDED DECEMBER 27, 1997 AND DECEMBER 28, 1996
                                          (In Thousands)



                                             CAPITAL IN                  CUMULATIVE
                                 COMMON      EXCESS OF      RETAINED     TRANSLATION     TREASURY
                                  STOCK      PAR VALUE      EARNINGS     ADJUSTMENT        STOCK
                                 -------     -----------    --------     -----------     --------
<S>                              <S>           <C>           <C>           <C>            <C>
BALANCE, March 30, 1996 ..       $    57       $38,259       $19,075       $  (282)       $  --

Net income for the nine
  months ended December
  28, 1996 ...............          --            --           6,272          --             --
Translation adjustment
  for the nine months
  ended December 28, 1996           --            --            --           2,044           --
Exercise of stock options
  for common stock .......          --              26          --            --             --
                                 -------       -------       -------       -------        -------

BALANCE, December 28, 1996       $    57       $38,285       $25,347       $ 1,762        $  --
                                 =======       =======       =======       =======        =======



BALANCE, March 29, 1997 ..       $    57       $38,285       $27,076       $   168        $  --

Net income for the nine
  months ended December
  27, 1997 ...............          --            --           2,468          --             --
Translation adjustment
  for the nine months
  ended December 27, 1997           --            --            --             356           --
Exercise of stock options
  for common stock .......          --               8          --            --             --
Purchase of treasury
  stock at cost ..........          --            --            --            --             (509)
                                 -------       -------       -------       -------        -------

BALANCE, December 27, 1997       $    57       $38,293       $29,544       $   524        $  (509)
                                 =======       =======       =======       =======        =======

</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 NINE MONTH PERIODS ENDED DECEMBER 27, 1997 AND DECEMBER 28, 1996
                                 (In Thousands)


                                                          December 27,   December 28,
                                                              1997          1996
                                                          ------------   ------------


<S>                                                          <C>           <C>                                                    
CASH FLOWS PROVIDED BY (USED IN)
  OPERATING ACTIVITIES:
  Net income ..........................................        2,468         6,272
  Adjustments to reconcile net
    income to net cash provided
    by operating activities:
         Depreciation and amortization ................        2,525         2,481
         Net (gain) on sale of property,
           plant and equipment ........................         --              (3)
  Changes in operating assets and
    liabilities:
    (Increase) decrease in net trade
      accounts receivable .............................        1,311        (2,260)
    (Increase) decrease in inventories ................        4,150        (2,535)
    (Increase) decrease in prepaid
      expenses and other current assets ...............          502          (424)
    (Increase) decrease in other assets................          295           (73)
    Increase (decrease) in bank overdrafts ............         (558)         (205)
    Increase (decrease) in accounts payable
      and accrued expenses ............................       (3,744)       (4,842)
                                                              ------        ------

      Total adjustments ...............................        4,481        (7,861)
                                                              ------        ------

    Cash flows provided by (used in)
      operating activities ............................        6,949        (1,589)
                                                              ------        ------

CASH FLOWS PROVIDED BY (USED IN)
  INVESTING ACTIVITIES:
  Capital expenditures ................................       (2,210)       (1,908)
  Proceeds from sale of property,
    plant and equipment ...............................            9            71
  Purchase of certain assets of a
    distributor .......................................       (1,245)         --
                                                              ------        ------

    Cash flows (used in)
      investing activities ............................       (3,446)       (1,837)
                                                              ------        ------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                   (Continued)
                            BRIDGEPORT MACHINES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
    FOR THE NINE MONTH PERIODS ENDED DECEMBER 27, 1997 AND DECEMBER 28, 1996
                                 (In Thousands)



                                                     December 27,      December 28,
                                                         1997             1996
                                                       -------          -------


<S>                                                    <C>              <C>
CASH FLOWS PROVIDED BY (USED IN)
  FINANCING ACTIVITIES:
  Sale of common stock .......................               8               26
  Borrowings (payments) under working
    capital revolver, net ....................            (301)            (472)
  Borrowings (payments) of other debt and
    capitalized lease obligations ............          (1,927)           3,417
  Purchase of Treasury Stock .................            (509)            --
                                                       -------          -------

    Cash flows provided by (used in)
      financing activities ...................          (2,729)           2,971
                                                       -------          -------

  Effect of exchange rate changes
    on cash ..................................             (45)              69
                                                       -------          -------

    Net change in cash .......................             729             (386)
  CASH, begining of period ...................           2,992            4,960
                                                       -------          -------

  CASH, end of period ........................         $ 3,721          $ 4,574
                                                       =======          =======

  SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid ..............................         $ 1,994          $ 2,879
  Income taxes paid (received), net ..........           4,048            3,927



</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 December 27, 1997 and the related
         consolidated statements of income,  stockholders' equity and cash flows
         for the nine months ended  December 27, 1997 and December 28, 1996 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  December  27, 1997 and  December  28,  1996 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:

                  Inventory  values are  verified  annually  based  upon  actual
                  inventory  on  hand   substantiated   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
                  effective tax rate 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 establishes new
         standards for computing and presenting  Earnings Per Share. The Company
         was required to adopt the new standard in the current quarter. Earnings
         Per Share information for prior periods has been restated using the new
         guidelines.
<PAGE>
         The following table presents a computation of earnings per share:





<TABLE>
<CAPTION>
                            BASIC EARNINGS PER SHARE

                                                                       Per Share
         Period                        Net Income         Shares         Amount
         ------                        ----------         ------         ------
<S>                                     <C>              <C>              <C>
         Three months ended
         December 27, 1997              $1,724,000       5,680,000        $0.30

         Three months ended
         December 28, 1996              $1,938,000       5,679,000        $0.34

         Nine months ended
         December 27, 1997              $2,468,000       5,669,000        $0.44

         Nine months ended
         December 28, 1996              $6,272,000       5,678,000        $1.10




<CAPTION>
                           DILUTIVE EARNINGS PER SHARE

                                                                       Per Share
         Period                        Net Income         Shares         Amount
         ------                        ----------         ------         ------
<S>                                     <C>              <C>              <C>
         Three months ended
         December 27, 1997              $1,724,000       5,691,000        $0.30

         Three months ended
         December 28, 1996              $1,938,000       5,705,000        $0.34

         Nine months ended
         December 27, 1997              $2,468,000       5,678,000        $0.43

         Nine months ended
         December 28, 1996              $6,272,000       5,730,000        $1.09
</TABLE>
<PAGE>
         The difference between the shares used in the basic EPS computation and
         the  shares  used in the  dilutive  EPS  computation  is the  effect of
         dilutive  stock  options.  The table below  presents  stock  options to
         purchase  shares  of  common  stock  that  were  not  included  in  the
         computation  of dilutive  EPS because the option's  exercise  price was
         greater than the average market price of the common stock.
<TABLE>
<CAPTION>
                                     Shares Covered by
         Period                        Stock Options            Exercise Price
         ------                        -------------            --------------
<S>                                       <C>                 <C>
         Three months ended
         December 27, 1997                198,600             $10.75 - $16.25

         Three months ended
         December 28, 1996                 59,500             $12.00 - $16.25

         Nine months ended
         December 27, 1997                198,600             $10.75 - $16.25

         Nine months ended
         December 28, 1996                 36,500             $14.38 - $16.25

</TABLE>

4.       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  will pay in  installments
         approximately  $2.1 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              NINE MONTHS ENDED
                             December 27,    December 28,    December 27,    December 28,
                                 1997            1996            1997            1996
                                 ----            ----            ----            ----
<S>                             <C>             <C>             <C>             <C>
Net sales ..........            100.0%          100.0%          100.0%          100.0%
Gross profit .......             22.3            21.2            22.3            22.2
Selling, general and
  administrative
  expenses .........             16.6            14.9            18.1            15.3
Operating income ...              5.7             6.3             4.1             6.9
Interest expense ...              1.1             1.3             1.2             1.3
Other income
  (expense) ........              0.4             0.1             0.2             0.1
Income tax expense..              2.0             1.9             1.5             2.1
Net income .........              2.9             3.2             1.6             3.6

</TABLE>

COMPARISON OF THE THREE MONTHS ENDED DECEMBER 27, 1997 ("THIRD QUARTER OF FISCAL
1998") TO THE THREE  MONTHS ENDED  DECEMBER  28, 1996 ("THIRD  QUARTER OF FISCAL
1997")


         Net sales were $58.7  million in the third  quarter of fiscal  l998,  a
decrease of $1.1 million,  or 1.8%, as compared to the second  quarter of fiscal
l997.

         Backlog at December 27, 1997 was  approximately  $40.2 million compared
with $35.5 million at March 29, 1997. 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.

         Gross profit was $13.1  million in the third quarter of fiscal l998, an
increase of $0.4  million,  or 3.1%,  as compared to the third quarter of fiscal
l997.  Gross profit as a percent of net sales was 22.3%  compared  with 21.2% in
the  third  quarter  of fiscal  1997.  Gross  profit  as a percent  of net sales
increased  primarily  as a result of the effect of the  Company's  direct  sales
operations  in Germany  which did not exist in the prior  year,  cost  reduction
efforts  in the  Company's  U.S.  operations,  and  the  elimination  of a price
discounting program on manual milling machines that was in effect in the quarter
ended December 28, 1996.
<PAGE>
         These  improvements  were  offset to some  extent by a decline in gross
profit as a percent of net sales in the  Company's  European  operations  due to
price discounting offered to continental European customers to offset the higher
prices to those customers of the Company's United Kingdom manufactured  products
due to the strength of the British pound versus other European currencies.

         Selling,  general and administrative  expenses were $9.8 million in the
third quarter of fiscal l998, an increase of $0.8 million,  or 9.5%, as compared
to the third quarter of fiscal l997.  The Company's  direct sales  operations in
Germany which did not exist in the prior year accounted for  approximately  $0.7
million of the increase.  These new  operations  expenses  consist  primarily of
salary  and  salary  related  expenses,  sales  and agent  commissions  and rent
expense.  The  remaining  increase  was a result of small  increases in numerous
categories.  As a percentage of net sales,  selling,  general and administrative
expenses  were 16.6% in the third  quarter of fiscal l998,  as compared to 14.9%
for the third quarter of fiscal l997.

         Operating income was $3.3 million for the third quarter of fiscal l998,
as compared to operating  income of $3.8 million for the third quarter of fiscal
l997.

         Interest  expense was $0.7 million for the third quarter of fiscal l998
as compared to $0.8 for the third quarter of fiscal l997.

         Provision  for income  taxes was $1.2  million in the third  quarter of
fiscal  l998,  compared to a provision  for income  taxes of $1.1 million in the
third  quarter of fiscal  1997.  The  effective  tax rate was 40.3% in the third
quarter  of fiscal  1998  compared  to an  effective  rate of 36.9% in the third
quarter of fiscal 1997.  The increase in the  effective  tax rate is a result of
more income being  generated in higher tax  jurisdictions  versus the prior year
and, to a lesser  extent,  no tax benefits for losses  incurred in the Company's
German operations being established because they are not currently  recognizable
for tax return purposes.

COMPARISON  OF THE NINE MONTHS ENDED  DECEMBER 27, 1997 TO THE NINE MONTHS ENDED
DECEMBER 28, 1996

         Net sales were $158.2  million for the nine months  ended  December 27,
1997, a decrease of $15.3 million, or 8.8%, as compared to the nine months ended
December 28, 1996. The decrease in sales is due to a decline in sales in Europe.
The  decline  in  European  sales  is a  result  of weak  market  conditions  in
continental  Europe  and  higher  selling  prices in  continental  Europe of the
Company's United Kingdom manufactured products due to the increased value of the
British pound versus other European currencies.

         Gross profit was $35.2  million for the nine months ended  December 27,
1997, a decrease of $3.3 million,  or 8.5%, as compared to the nine months ended
December 28, 1996.  The gross profit as a percentage  of net sales was 22.3% for
the nine months  ended  December 27, 1997 versus 22.2% for the nine months ended
December 28, 1996.  Included in cost of sales for the nine months ended December
28,  1996 is a  $700,000  refund of import  duties for prior  periods  which had
previously  been  expensed.   In  August  1996,  the  United  States  government
retroactively  reinstated the General  System of  Preferences  which allowed the
Company to obtain a refund of import duties.  Without this refund,  gross profit
as a percent of sales was 21.8%.
<PAGE>
         The  increase  in gross  profit as a percent  of sales to 22.3% for the
nine months ended December 27, 1997 as compared to the  normalized  gross profit
as a percent of sales of 21.8% for the nine months ended  December 28, 1996 is a
result  of  improvements  in the  gross  profit  margin  in the  Company's  U.S.
operations  offset to some extent by a decline in the gross profit margin in the
Company's European operations.

         Gross profit as a percent of net sales  increased in the Company's U.S.
operations  primarily as a result of cost reduction  efforts and the elimination
of price  discounts on certain  products  that were in effect in the nine months
ended December 28, 1996. The decline in the Company's European operation's gross
profit  as a  percent  of  sales  was a  result  of weak  market  conditions  in
continental  Europe  and  price  discounting  offered  to  continental  European
customers  to offset  higher  prices to these  customers of the  Company's  U.K.
manufactured  products due to the  increased  value of the British  pound versus
other European currencies.

         Selling, general and administrative expenses were $28.7 million for the
nine months ended  December 27, 1997, an increase of $2.2  million,  or 8.4%, as
compared to the nine months ended December 28, 1996. The Company's  direct sales
operations in Germany  which did not exist in the prior year  accounted for $1.1
million of the increase.  These new  operations  expenses  consist  primarily of
salary  and  salary  related  expenses,  sales  and agent  commissions  and rent
expense.  The  remaining  increase  was a result of small  increases in numerous
categories.  As a percentage of net sales,  selling,  general and administrative
expenses were 18.1% for the nine months ended  December 27, 1997, as compared to
15.3% for the nine months ended December 28, 1996.

         Operating  income was $6.5 million for the nine months  ended  December
27, 1997,  as compared to $12.0  million for the nine months ended  December 28,
1996.

         Interest  expense was $2.0 million for the nine months  ended  December
27, 1997 and $2.2 million for the nine months ended December 28, 1996.

         Provision  for income  taxes was $2.4 million for the nine months ended
December 27, 1997, a decrease of $1.4 million or 36.5%.  The  effective tax rate
was 48.8% in the nine months ended December 27, 1997 as compared to 37.1% in the
nine months ended  December 28, 1998.  The increase in the effective tax rate is
primarily  due to no tax benefits for losses  incurred in the  Company's  German
operations being established because they are not currently recognizable for tax
return  purposes.  To a lesser  extent,  the increase in the  effective tax rate
resulted from more income being generated in higher tax jurisdictions versus the
prior year.


FOREIGN OPERATIONS:

         During the nine months ended December 27, 1997, net sales outside North
America represented approximately 41.3% of total net sales, as compared to 47.5%
for the nine months ended December 28, 1996. A substantial  portion of these net
sales were made by the Company's European operations.

         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 December  27,  1997,  the  Company did not have any  outstanding
commitments under forward purchase contracts.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:

         As of December  27,  1997,  the  Company  had working  capital of $50.7
million  compared  with $49.7  million at March 29, 1997.  The Company meets its
short-term financing needs through cash from operations and its revolving credit
facility  which  provides for maximum  borrowings  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>
                                                    NINE MONTHS ENDED
                                         December 27, 1997     December 28, 1996
                                         -----------------     -----------------
<S>                                          <C>                     <C>
Net cash provided by (used in)
  operating activities                        6,949                  (1,589)

Net cash (used in)
  investing activities                       (3,446)                 (1,837)

Net cash provided by (used in)
 financing activities                        (2,729)                  2,971
</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 cash used in investing  activities in
the nine  months  ended  December  27,  1997 is a $1.2  million  payment for the
purchase of certain  assets as discussed in Note 4 to the financial  statements.
The net cash provided by (used in) financing activities in the nine months ended
December 27, 1997 and December 28, 1996,  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
December  27,  1997.  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 December 27, 1997,  accounts  receivable  increased  $0.9 million as
compared to March 27, 1997 and inventories decreased $1.0 million as compared to
March 27, 1997.
 
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.
<PAGE>

PART II - OTHER INFORMATION

Item l   Legal Proceedings

                  On September 9, 1997, the Company settled out of court a legal
                  action in which the Company was a defendant.  The action which
                  was filed by IMS Technology,  Inc., the plaintiff,  related to
                  alleged patent  infringement.  The settlement  entered into by
                  the  Company  did not have a  material  adverse  effect on the
                  Company's financial position or results of operations.

Item 2   Changes in Securities                                          None

Item 3   Defaults Upon Senior Securities                                None

Item 4   Submission of Matters to a
         Vote of Security Holders                                       None

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                 

                           (99)  Not Applicable

                b)         There were no reports or  exhibits  on Form 8-K filed
                           during the three months ended December 27, 1997.


<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)


February 5, 1998                                   /s/ Dan L. Griffith
                                                   -------------------
                                             By:   Dan L. Griffith
                                                   President and
                                                   Chief Executive Officer



February 5, 1998                                   /s/ Walter C. Lazarcheck
                                                   ------------------------
                                             By:   Walter C. Lazarcheck
                                                   Vice President and
                                                   Chief Financial Officer