<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549



                                   FORM 10-Q



                  QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934



     For Quarter Ended June 30, 1999       Commission File No. 1-8719
     -------------------------------       --------------------------



                            THE TURNER CORPORATION
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)



             DELAWARE                                  13-3209884
--------------------------------------------------------------------------------
     (State or other jurisdiction of        (I.R.S.Employer Identification No.)
     incorporation or organization)



     375 Hudson Street, New York, New York               10014
--------------------------------------------------------------------------------
   (Address of principal executive offices)            (Zip Code)



Registrant's telephone number, including area code:      (212) 229-6000
                                                         --------------



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X]   No [   ]



Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 6, 1999: 9,178,156.
<PAGE>

                SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER
                  THE SECURITIES LITIGATION REFORM ACT OF 1995

  Except for historical information contained herein, this Form 10-Q contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 which involve certain risks and uncertainties.
When used on this Form 10-Q, the words "estimate," "anticipate," "expect,"
"believe," and similar expressions are intended to identify forward-looking
statements.  These forward-looking statements are subject to risks,
uncertainties and assumptions including, among other things, the following:

 .  the accuracy of our estimates as to future revenues from and future costs to
   be incurred on construction projects;
 .  our dependence on construction activity in the markets we serve; and
 .  the impact of competition and economic conditions on our business.

  We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this report might not occur.



                         PART I - FINANCIAL INFORMATION

Item 1  Financial Statements
------

Company or group of companies for which report is filed:

              THE TURNER CORPORATION AND CONSOLIDATED SUBSIDIARIES

  The consolidated balance sheet as of June 30, 1999, the consolidated
statements of operations for the six months and three months ended June 30, 1999
and 1998, the consolidated statement of stockholders' equity for the six months
ended June 30, 1999 and the consolidated statements of cash flows for the six
months ended June 30, 1999 and 1998 are unaudited, but in the opinion of the
company's management reflect all adjustments, consisting only of normal
recurring adjustments, which are necessary to present fairly the financial
condition and results of operations at those dates and for those periods.  The
results of operations for any six month and three month period are not
necessarily indicative of results for a full year.  It is suggested that these
financial statements be read in conjunction with the audited financial
statements and notes thereto included in Turner's latest annual report.

                                       2
<PAGE>

                    The Turner Corporation and Subsidiaries
                          Consolidated Balance Sheets
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                      (unaudited)
                                                                                       June 30,         December 31,
                                                                                         1999                  1998
-----------------------------------------------------------------------------------------------------------------------

<S>                                                                                    <C>              <C>
Assets

Cash and cash equivalents                                                               $  245,378           $  168,879
Marketable securities                                                                      127,965              112,766
Construction receivables:
  Due on contracts                                                                         468,086              358,502
  Retainage                                                                                215,641              188,148
  Unbilled construction costs and related earnings                                         175,542              159,093
Real estate                                                                                 39,686               40,494
Property and equipment, net                                                                 22,890               22,298
Prepaid pension cost                                                                        68,537               67,066
Other assets                                                                                13,880               11,817
                                                                                  ----------------      ---------------
Total assets                                                                            $1,377,605           $1,129,063
                                                                                  ================      ===============

Liabilities

Construction accounts payable and accrued expenses:
  Trade                                                                                 $  628,182           $  540,435
  Retainage                                                                                251,526              216,077
  Billings in excess of construction costs and related earnings                            188,253              128,029
Notes payable                                                                               19,398               18,891
Deferred income taxes                                                                       18,237               18,417
Other liabilities                                                                          167,521              118,448
                                                                                  ----------------      ---------------
Total liabilities                                                                        1,273,117            1,040,297

Stockholders' Equity

Series C, 8.5% cumulative convertible preferred stock, $1 par value                              9                    9
Series D, 8.5% cumulative convertible preferred stock, $1 par value                              6                    6
Series B cumulative convertible preferred stock, $1 par value                                    -                  839
Common stock, $1 par value                                                                   9,717                8,383
Paid in capital                                                                             48,295               45,392
Retained earnings                                                                           58,921               44,113
                                                                                  ----------------      ---------------
                                                                                           116,948               98,742
Less:     Loan to Employee Stock Ownership Plan                                               (859)              (1,832)
          Unearned compensation                                                             (2,606)                   -
          Treasury stock, at cost                                                           (8,995)              (8,144)
                                                                                  ----------------      ---------------
Total stockholders' equity                                                                 104,488               88,766
                                                                                  ----------------      ---------------
Total liabilities and stockholders' equity                                              $1,377,605           $1,129,063
                                                                                  ================      ===============
</TABLE>

See Notes to Consolidated Financial Statements.

                                       3
<PAGE>

                    The Turner Corporation and Subsidiaries
                     Consolidated Statements of Operations
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                             (unaudited)                     (unaudited)
                                                          Six Months Ended               Three Months Ended
                                                              June 30,                        June 30,
                                                          1999             1998           1999           1998
----------------------------------------------------------------------------------------------------------------

<S>                                                  <C>                <C>            <C>            <C>
Value of construction completed (see below)              $2,215,178     $1,940,054     $1,287,166     $1,033,616
----------------------------------------------------------------------------------------------------------------


Revenue from construction contracts                      $2,111,792     $1,737,854     $1,237,656     $  923,419
Cost of construction contracts                            2,050,687      1,694,031      1,204,341        901,172
                                                   ----------------   ------------   ------------   ------------
Earnings from construction contracts                         61,105         43,823         33,315         22,247
Construction operating expenses                              31,404         27,765         16,267         14,094
General and administrative expenses                           7,204          5,213          3,632          2,630
                                                   ----------------   ------------   ------------   ------------
Income from construction operations                          22,497         10,845         13,416          5,523
Losses from real estate operations (see below)                 (376)          (305)          (228)          (126)
Interest expense                                               (411)          (458)          (217)          (240)
Interest and other income, net                                5,337          3,894          2,803          2,320
                                                   ----------------   ------------   ------------   ------------
Income before income taxes                                   27,047         13,976         15,774          7,477
Income tax provision                                         11,630          6,289          6,783          3,364
                                                   ----------------   ------------   ------------   ------------
Net income                                               $   15,417     $    7,687     $    8,991     $    4,113
                                                   ================   ============   ============   ============

Earnings per common share:
  Basic                                                  $     1.88     $     0.81     $     1.09    $      0.44
  Diluted                                                $     1.22     $     0.58     $     0.71    $      0.31

Weighted average common shares outstanding                7,896,322      8,042,785      7,898,628      8,090,513
Weighted average common and common equivalent
  shares outstanding                                     12,129,485     12,345,591     12,132,367     12,392,495

----------------------------------------------------------------------------------------------------------------


Value of construction completed consists
 of the following:
Revenue from construction contracts                      $2,111,792     $1,737,854     $1,237,656     $  923,419
Construction costs incurred by owners in
 connection with work under construction
 management and similar contracts                           103,386        202,200         49,510        110,197
                                                   ----------------   ------------   ------------   ------------
Value of construction completed                          $2,215,178     $1,940,054     $1,287,166     $1,033,616
                                                   ================   ============   ============   ============

Real estate operations consist of the following:
Rental and other income                                  $      929     $      952     $      471     $      494
Cost of operations                                             (550)          (503)          (321)          (243)
Depreciation and amortization expense                          (755)          (754)          (378)          (377)
                                                   ----------------   ------------   ------------   ------------
Losses from real estate operations                       $     (376)    $     (305)    $     (228)    $     (126)
                                                   ================   ============   ============   ============
</TABLE>

See Notes to Consolidated Financial Statements.

                                       4
<PAGE>

                    The Turner Corporation and Subsidiaries
                 Consolidated Statement of Stockholders' Equity
                     For the Six Months Ended June 30, 1999
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                              (unaudited)
                                                                                      Shares               Amount
---------------------------------------------------------------------------------------------------------------------

<S>                                                                             <C>                  <C>
Convertible preferred stock, Series C
Balance as of January 1 and June 30                                                       9,000              $      9
                                                                                ---------------      ----------------

Convertible preferred stock, Series D
Balance as of January 1 and June 30                                                       6,000                     6
                                                                                ---------------      ----------------

Convertible preferred stock, Series B
Balance as of January 1                                                                 838,731                   839
Preferred stock retired                                                                  (1,601)                   (2)
Conversion of Series B preferred stock to common stock                                 (837,130)                 (837)
                                                                                ---------------      ----------------
Balance as of June 30                                                                         -                     -
                                                                                ---------------      ----------------

Common stock
Balance as of January 1                                                               8,382,581                 8,383
Common stock issued                                                                      78,320                    78
Conversion of Series B preferred stock to common stock                                1,255,695                 1,256
                                                                                ---------------      ----------------
Balance as of June 30                                                                 9,716,596                 9,717
                                                                                ---------------      ----------------

Paid in capital
Balance as of January 1                                                                                        45,392
Excess of proceeds over par value of common stock issued                                                          658
Conversion of Series B preferred stock to common stock                                                           (419)
Retirement of Series B preferred stock                                                                            (43)
Tax benefits from stock options exercised                                                                         101
Issuance of stock awards                                                                                        2,606
                                                                                                     ----------------
Balance as of June 30                                                                                          48,295
                                                                                                     ----------------

Retained earnings
Balance as of January 1                                                                                        44,113
Net income                                                                                                     15,417
Dividends on Series B preferred stock                                                                          (1,050)
Tax benefits on Series B preferred stock dividends                                                                441
                                                                                                     ----------------
Balance as of June 30                                                                                          58,921
                                                                                                     ----------------

Loan to Employee Stock Ownership Plan (ESOP)
Balance as of January 1                                                                                        (1,832)
Repayment from loan to ESOP                                                                                       973
                                                                                                     ----------------
Balance as of June 30                                                                                            (859)
                                                                                                     ----------------

Unearned compensation
Balance as of January 1                                                                                             -
Issuance of stock awards                                                                                       (2,606)
                                                                                                     ----------------
Balance as of June 30                                                                                          (2,606)
                                                                                                     ----------------

Treasury stock
Balance as of January 1                                                                 503,434                (8,144)
Purchases of treasury stock                                                              55,932                  (866)
Treasury stock issued                                                                      (976)                   15
                                                                                ---------------      ----------------
Balance as of June 30                                                                   558,390                (8,995)
                                                                                ---------------      ----------------

Total stockholders' equity                                                                                   $104,488
                                                                                                     ================
</TABLE>

See Notes to Consolidated Financial Statements.

                                       5
<PAGE>

                    The Turner Corporation and Subsidiaries
                     Consolidated Statements of Cash Flows
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                  (unaudited)
                                                                                Six Months Ended
                                                                                    June 30,
                                                                          1999                    1998
----------------------------------------------------------------------------------------------------------

<S>                                                                 <C>                    <C>
Cash flows from operating activities:
    Net income                                                            $ 15,417                $  7,687
    Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization expense                                    4,527                   4,635
    Net periodic pension charge (credit)                                    (1,471)                    700
    Changes in operating assets and liabilities:
     Increase in construction receivables                                 (153,526)                (21,597)
     Increase in construction accounts payable and accrued expenses        183,420                  71,686
     Increase in other assets                                               (2,761)                 (2,772)
     Increase in other liabilities                                          49,405                   7,356
                                                                    --------------          --------------
    Net cash provided by operating activities                               95,011                  67,695
                                                                    --------------          --------------

Cash flows from investing activities:
    Purchases of marketable securities                                     (55,230)               (24,391)
    Proceeds from sale of marketable securities                             40,031                  14,944
    Distributions from real estate joint ventures                                -                      18
    Purchases of property & equipment                                       (2,991)                 (2,204)
    Proceeds from sale of property & equipment                                 297                      27
    Repayments on notes receivable                                             692                     458
                                                                    --------------          --------------
    Net cash used in investing activities                                  (17,201)                (11,148)
                                                                    --------------          --------------

Cash flows from financing activities:
    Common stock issued                                                        736                   1,585
    Cash dividends to preferred stockholders                                (1,050)                 (1,547)
    Principal payments under capital lease obligations                      (1,104)                 (1,001)
    Purchases of treasury stock                                               (866)                 (2,014)
    Repayments from loan to ESOP                                               973                     762
                                                                    --------------          --------------
    Net cash used in financing activities                                   (1,311)                (2,215)
                                                                    --------------          --------------

     Net increase in cash and cash equivalents                              76,499                  54,332
     Cash and cash equivalents at beginning of period                      168,879                 153,241
                                                                    --------------          --------------
     Cash and cash equivalents at end of period                           $245,378                $207,573
                                                                    ==============          ==============

----------------------------------------------------------------------------------------------------------


Supplemental disclosures of cash flow information:
    Cash paid during the period for:
     Interest                                                             $    345                $    378
     Income taxes, net                                                      12,116                   6,982
    Noncash investing activities:
     Note receivable from sale of net assets of construction
      affiliate                                                                  -                   1,200
    Noncash financing activities:
     Conversion of Series B convertible preferred stock to common
      stock                                                                  1,256                       -
     Treasury stock issued under stock-based compensation plans                  -                     869
     Issuance of stock awards                                                2,606                       -
     Capital lease obligations incurred by the company                       1,611                   1,284
</TABLE>

See Notes to Consolidated Financial Statements.

                                       6
<PAGE>

                    The Turner Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
                (in thousands, except share amounts; unaudited)

1.    Earnings Per Share

The following table reconciles the components of basic and diluted earnings per
common share for the six months ended June 30, 1999 and 1998.

<TABLE>
<CAPTION>

                                                                                        1999              1998
                                                                                   ---------------   ---------------
<S>                                                                                <C>               <C>
Numerator:
  Net income                                                                              $15,417            $7,687
  Preferred stock dividends, net of tax benefits                                             (609)           (1,165)
                                                                                   ---------------   ---------------
  Income available to common stockholders - Basic                                          14,808             6,522
                                                                                   ---------------   ---------------

  Effect of dilutive securities:
    Series C preferred stock dividends                                                          -               383
    Series D preferred stock dividends                                                          -               255
    Series B preferred stock dividends, net of tax benefits                                   609               527
    Series B preferred stock dividend differential                                           (609)             (527)
                                                                                   ---------------   ---------------
                                                                                                -               638
                                                                                   ---------------   ---------------

  Income available to common stockholders - Diluted                                       $14,808            $7,160
                                                                                   ===============   ===============

Denominator:
  Weighted average common shares outstanding - Basic                                    7,896,322         8,042,785
                                                                                   ---------------   ---------------

  Effect of dilutive securities:
    Stock-based compensation plans                                                        582,898           638,538
    Series C convertible preferred stock                                                1,500,000         1,500,000
    Series D convertible preferred stock                                                  900,000           900,000
    Series B convertible preferred stock                                                1,250,265         1,264,268
                                                                                   ---------------   ---------------
                                                                                        4,233,163         4,302,806
                                                                                   ---------------   ---------------
  Weighted average common and common equivalent shares
    outstanding - Diluted                                                              12,129,485        12,345,591
                                                                                   ===============   ===============

Basic earnings per common share                                                           $  1.88           $  0.81
Diluted earnings per common share                                                         $  1.22           $  0.58
</TABLE>


2.  Comprehensive Income

  In 1998, Turner adopted SFAS No. 130, "Reporting Comprehensive Income."  This
statement establishes standards for reporting and display of comprehensive
income and its components in a separate financial statement.  Comprehensive
income includes net income plus other comprehensive income, which includes
unrealized gains and losses on marketable securities that are "available for
sale," changes in additional minimum pension liabilities and changes in foreign
currency translation adjustments.  Turner has not presented statements of
comprehensive income, as other comprehensive income was not material.

                                       7
<PAGE>

3.  Operating Segment Information

  Turner's one reportable operating segment is our construction segment;
however, information regarding the real estate segment is also presented.  The
construction segment provides general contracting, construction management, and
consulting services.

  The Consolidated Statements of Operations provides information regarding
segment profit/loss and segment revenues.  The value of construction completed
related to Turner's products and services provided by our construction segment
was:

<TABLE>
<CAPTION>
                                                               Six Months Ended
                                                                   June 30,
                                                            1999             1998
                                                       -------------    -------------
<S>                                                      <C>              <C>
General contracting                                       $2,096,529       $1,699,953
Construction management                                      105,285          230,236
Consulting                                                    13,364            9,865
                                                       -------------    -------------
  Construction segment total                              $2,215,178       $1,940,054
                                                       =============    =============
</TABLE>

  Turner's revenue and assets predominantly relate to our United States
operations, with immaterial amounts related to foreign operations.

  In 1998, Turner adopted Statement of Financial Accounting Standard ("SFAS")
No. 131, "Disclosures about Segments of an Enterprise and Related Information,"
which revised the disclosures about our operating segments.  Turner has
presented quarterly information to conform to the new disclosure requirements.

4.  Conversion of the Series B Preferred Stock

  On June 30, 1999, the Series B convertible preferred stock, held by our ESOP,
was converted into common stock.  The number of shares of common stock issued
was 1,255,695.  The loan to fund the ESOP was repaid to Turner.  Additionally,
Turner repaid the bank loan used to fund Turner's loan to the ESOP. Final
payments on both loans were made on July 7, 1999.

  We plan to terminate the ESOP after all regulatory approvals have been
obtained.  In connection with the termination, the plan will distribute to
plan participants the common stock to which they are entitled.  We anticipate
that participants, in turn, will have the opportunity to roll-over their
distribution into our Section 401(k) tax deferred savings plan.

                                       8
<PAGE>

Item 2          Management's Discussion & Analysis of Financial Condition
------          and Results of Operations

Results of Operations

  The following table summarizes the consolidated results of operations and the
related percentages of revenues for the three months ended June 30, 1999 and
1998.
<TABLE>
<CAPTION>

                                                                  1999                                  1998
                                                   -------------------------------       -------------------------------
                                                                           (Dollars in thousands)

<S>                                                <C>               <C>                 <C>               <C>
Revenue from construction contracts                     $1,237,656          100.00%             $923,419          100.00%
Cost of construction contracts                           1,204,341           97.31%              901,172           97.59%
                                                   -------------------------------       -------------------------------
  Earnings from construction contracts                      33,315            2.69%               22,247            2.41%
Construction operating expenses                             16,267            1.32%               14,094            1.53%
General and administrative expenses                          3,632            0.29%                2,630            0.28%
                                                   -------------------------------       -------------------------------
  Income from construction operations                       13,416            1.08%                5,523            0.60%
Losses from real estate operations                            (228)          (0.02%)                (126)          (0.01%)
Interest expense                                              (217)          (0.02%)                (240)          (0.03%)
Interest and other income, net                               2,803            0.23%                2,320            0.25%
                                                   -------------------------------       -------------------------------
  Income before income taxes                                15,774            1.27%                7,477            0.81%
Income tax provision                                         6,783            0.54%                3,364            0.36%
                                                   -------------------------------       -------------------------------
  Net income                                            $    8,991            0.73%             $  4,113            0.45%
                                                   ===============================       ===============================
</TABLE>


  Revenue from construction contracts was $1.2 billion for the second quarter of
1999 versus $923 million for the same period in 1998, an increase of 34%.  For
the first six months of 1999, revenue from construction contracts was $2.1
billion versus $1.7 billion for the first six months of 1998, an increase of
22%.  These results not only reflect the continuation of a strong general
building construction market across the United States but also our efforts in
penetrating those regions and industry sectors which offer significant growth
potential.  The value of construction completed was $2.2 billion for the first
six months of 1999 versus $1.9 billion for the first six months of 1998, an
increase of 14%.

  Earnings from construction contracts were $33.3 million for the second quarter
of 1999 versus $22.2 million for the same period in 1998, an increase of 50%.
For the first six months of 1999, earnings from construction contracts were
$61.1 million versus $43.8 million for the first six months of 1998, an increase
of 39%.  The increase in earnings reflects the current favorable market
conditions as well as the improvement in margins for new contracts secured over
the past several years.  As a percentage of revenue, earnings from construction
contracts increased to 2.69% for the second quarter of 1999 from 2.41% for the
same period in 1998.

  Construction operating expenses, which are costs incurred by Turner's
construction operating units and subsidiaries that are not directly attributable
and charged to construction contracts, were $16.3 million for the second quarter
of 1999 versus $14.1 million for the same period in 1998, an increase of 15%.
For the first six months of 1999, construction operating expenses were $31.4
million versus $27.8 million for the first six months of 1998, an increase of
13%.  We attribute the increase primarily to an increase in expenses related to
Turner's incentive compensation plan as a result of improved earnings.

  General and administrative expenses, representing corporate overhead expenses,
were $3.6 million for the second quarter of 1999 versus $2.6 million for the
same period in 1998, an increase of 38%.  For the first six months of 1999,
general and administrative expenses were $7.2 million versus $5.2 million for
the first six months of 1998, an increase of 38%.  The increase is also due
primarily to an increase in expenses related to Turner's incentive compensation
plan as a result of improved earnings.

  Income from construction operations, reflecting the factors discussed above,
was $13.4 million for the second quarter of 1999 versus $5.5 million for the
same period in 1998, an increase of 143%.  For the first six months of 1999,
income from construction operations was $22.5 million versus $10.8 million for
the first six months of 1998, an increase of 107%.  As a percentage of earnings
from construction contracts, income from construction operations was 40% for the
second quarter of 1999 versus 25% for the same period in 1998.

                                       9
<PAGE>

  Losses from real estate operations were $0.2 million for the second quarter of
1999 versus $0.1 million for the same period in 1998.  For the first six months
of 1999, losses from real estate operations were $0.4 million versus $0.3
million for the first six months of 1998.  Losses from real estate operations
included depreciation and amortization expense of $0.4 million for the second
quarter of 1999 and the second quarter of 1998.  Because these are non-cash
expenses, Turner's real estate operations generated positive cash flow after
payments of interest on real estate debt for each of these quarters.

  Interest expense was $0.2 million for the second quarter of 1999 virtually
unchanged compared to the same period in 1998.  For the first six months of
1999, interest expense was $0.4 million versus $0.5 million for the first six
months of 1998.

  Interest and other income, net was $2.8 million for the second quarter of 1999
versus $2.3 million for the same period in 1998, an increase of 21%.  For the
first six months of 1999, interest and other income, net was $5.3 million versus
$3.9 million for the first six months of 1998, an increase of 37%.  This
increase is due to higher investment balances of cash and cash equivalents and
marketable securities.  We have been able to maintain these higher investment
balances due to increased construction activity, higher levels of profitability
and cash management practices.

  Net income was $9.0 million for the second quarter of 1999 versus $4.1 million
for the same period in 1998, an increase of 119%.  For the first six months of
1999, net income was $15.4 million versus $7.7 million for the first six months
of 1998, an increase of 101%.  Basic earnings per share were $1.09 for the
second quarter of 1999 versus $0.44 for the same period in 1998; both after
taking into account  preferred stock dividends.  Diluted earnings per share were
$0.71 for the second quarter of 1999 versus $0.31 for the same period in 1998.

  Value of new contracts secured was $1.4 billion for the second quarter of 1999
versus $1.5 billion for the same period in 1998.  New contracts secured in the
second quarter included the new Denver Broncos Stadium in Denver, Colorado; a
major fit-out assignment for the Metropolitan Transportation Authority at 2
Broadway in New York City; multiple biotech research projects for the Genzyme
Corporation at their Framingham, Massachusetts campus, and Wayne State
University Fitness Center in Detroit Michigan.

  The backlog of value of construction to be completed was $5.0 billion as of
June 30, 1999 versus $4.5 billion as of December 31, 1998, an increase of 12%.
Anticipated earnings associated with backlog from construction contracts stood
at a record $128.1 million as of June 30, 1999 versus $113.2 million as of
December 31, 1998, an increase of 13%.  We attribute the improvement to our
increased market penetration in various general building market sectors in which
we compete and our enhanced sales and marketing effort.

  Estimated earnings from construction contracts, which represents the
anticipated earnings associated with the estimated value of construction to be
completed, cannot and should not be used as the basis for predicting future
operating results.  In addition, because of the varying proportion of general
contracting, construction management, and construction consulting contracts, the
relationship of value of work completed and earnings from construction contracts
are not necessarily meaningful in the short run.

Financial Condition

  As of June 30, 1999, Turner had cash, cash equivalents and marketable
securities of $373.3 million, compared with $281.6 million as of December 31,
1998 and $172.1 million as of December 31, 1997.  Management believes Turner's
current cash position, in addition to cash flows from construction activities,
its $45.0 million revolving credit facility and amounts available from overnight
credit facilities, will be sufficient to support Turner's short-term and
foreseeable long-term requirements.

  Cash flows for the six months ended June 30, 1999 resulted in a net increase
of funds of $76.5 million.  Cash flows provided by operating activities amounted
to $95.0 million due primarily to an increase in construction activity and the
timing of associated receipts and disbursements.  Cash flows used in investing
activities amounted to $17.2 million, principally due to purchases and sales of
marketable securities.  Cash used in financing activities amounted to $1.3
million and was primarily attributable to principal payments under capital lease
obligations.

                                       10
<PAGE>

  Turner has a $45.0 million unsecured revolving credit facility that can be
used for borrowings for general corporate purposes.  The facility matures in
2001 and contains two one-year extension options.  Turner also maintains $8.5
million of overnight credit facilities with various banks.  Turner had no
borrowings under these facilities during 1997, 1998 or the first six months of
1999.

Year 2000

  The Year 2000 issue results from computer programs and circuitry that do not
differentiate between the year 1900 and the year 2000 because they are written
using two- rather than four-digit dates to define the applicable year.  If not
corrected, many computer applications and date-sensitive devices could fail or
create erroneous results before, on or after January 1, 2000.  The Year 2000
issue affects virtually all companies and organizations, including Turner.

  Turner has developed, and is implementing a plan, the goal of which is to
assure that Turner will achieve Year 2000 readiness in time to avoid significant
Year 2000 failures.  We are proceeding with our assessment of the Year 2000
readiness issues for our computer systems, business processes, facilities and
equipment to assure their continued functionality.  We are also continuing our
assessment of the readiness of external entities, including subcontractors,
suppliers, vendors, and customers that interface with us.  To that end, Turner
has taken the following actions:

  .  Computer Systems.  Turner periodically upgrades its computer systems as its
     needs require.  We have substantially completed upgrading our software for
     our financial, project management and human resources computer systems.
     Vendors of our new computer systems certified them to be Year 2000
     compliant.  Turner's computer hardware is limited to stand-alone and
     networked desk-top systems.  Turner has assessed the Year 2000 readiness of
     its computer hardware and potential risks to Turner's operations, and
     intends to replace those systems that may pose a risk to Turner's
     operations in 1999.  With regard to computer equipment that is not Year
     2000 compliant, but does not pose a risk to Turner, as, for example, a
     desk-top computer used for word processing, Turner intends in 1999 to
     replace that equipment as part of routine upgrading.

  .  Business Processes.  Turner has and continues to assess the potential
     impact of Year 2000 on its business processes.  Internally, Turner has
     prepared and distributed a memorandum outlining a plan of preparedness to
     all of Turner's financial managers in our headquarters and business units.
     The plan requires each manager to assess the risks of Year 2000 issues at
     his or her business unit or department, and it describes Turner's policies
     on testing, upgrading, and dealing with third parties as they relate to
     Year 2000.  Each manager is required to report back to headquarters on his
     or her assessment of the unit's readiness.  We have modified our contract
     terms for any subcontractor hired to install or construct structures or
     provide equipment that may be affected by Year 2000 issues.  The contract
     terms require the subcontractor or vendor to represent and warrant that the
     work performed by the subcontractor or the equipment sold by the vendor is
     Year 2000 compliant.  The subcontractor or the vendor also must agree to
     indemnify Turner and the owner of the building from any claims arising out
     of the breach of such representation and warranty.  Turner is in the
     process of contacting its key suppliers and subcontractors regarding their
     Year 2000 readiness.

  .  Facilities and Equipment.  Turner does not actually own or operate
     significant construction machinery, but we have implemented a policy of
     inquiring as to the Year 2000 compliance of subcontractors' equipment.  We
     are also assessing computer related facilities and equipment in our New
     York headquarters and other offices.  The cost of our phone switch upgrade
     was under $50,000.  Although Turner has substantially completed upgrading
     its e-mail and networking software and hardware, we will still be
     vulnerable to any Year 2000 problems incurred by third-party
     telecommunications companies.

  The costs incurred for upgrading our computer systems are being funded with
cash flows from operations.  The costs incurred principally relate to new
systems being implemented to improve business functionality rather than solely
to address Year 2000 issues.  These costs have not been and are not expected to
be material in relation to Turner's overall results of operations or financial
position.

                                       11
<PAGE>

  Turner believes that its internal computer systems, facilities, and equipment
will be Year 2000 compliant.  However, there is no assurance that all of the
planned upgrades will be completed in time or function as intended.  As we have
no contingency plan other than to deal as expeditiously as possible with
situations if and when they arise, we may experience significant disruptions,
the cost of which we are unable to estimate at this time.  We also believe that
disruptions in some of our subcontractors' operations will not significantly
affect our projects because we have relationships with other subcontractors with
similar expertise.  We cannot assume, however, that an adequate supply of
subcontractors will be available.

                                       12
<PAGE>

                          Part II - OTHER INFORMATION




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

  (a)   Exhibits:

<TABLE>
<CAPTION>
        No.          Description
        --           -----------
        <S>          <C>                                        <C>

        10(d)(iii)   Agreement, dated as of April 22,1999,      Incorporated herin by reference to exhibits filed
                     among Karl Steiner Holding AG ("KSH"),     with Amendment No. 4 to Schedule 13D, filed
                     EBS Holding AG, PSW Holding AG,            July 6, 1999, by EBSPSW Holding AG and others.
                     EBSPSW Holding AG and Turner.

        10(d)(iv)    Letter Agreement, dated April 8, 1999,     Incorporated herin by reference to exhibits filed
                     between KSH and Turner.                    with Amendment No. 4 to Schedule 13D, filed
                                                                July 6, 1999, by EBSPSW Holding AG and others.

        11           Computation of earnings per share.         Incorporated herein by reference to Note 1 to the
                                                                Company's Consolidated Financial Statements.
</TABLE>

  (b)   During the six months ended June 30, 1999, no Form 8-K was filed.

                                       13
<PAGE>

                                   SIGNATURES
                                   ----------



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:


                                             THE TURNER CORPORATION
                                             ----------------------
                                                    (Registrant)



Date:  August 10, 1999                       /s/ R. E. Fee
                                             -------------------------------
                                             (Signature)
                                             R. E. Fee
                                             President and
                                             Chief Operating Officer



Date:  August 10, 1999                       /s/ D. G. Sleeman
                                             -------------------------------
                                             (Signature)
                                             D. G. Sleeman
                                             Senior Vice President,
                                             Chief Financial Officer and
                                             Chief Accounting Officer

                                       14