Exhibit 13




















                             THERMO REMEDIATION INC.

                        Consolidated Financial Statements

                                   Fiscal 1997
PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                      Consolidated Statement of Operations


                                                         Year Ended
                                               -----------------------------
                                               March 29, March 30,  April 1,
    (In thousands except per share amounts)         1997      1996      1995
    ------------------------------------------------------------------------
    Revenues (Note 11)                          $114,849  $ 66,957  $ 51,504
                                                --------  --------  --------
    Costs and Operating Expenses:
      Cost of revenues                            96,901    49,114    33,764
      Selling, general, and administrative 
        expenses (Note 8)                         12,058     8,903     8,299
      New business development expenses            1,040     1,084       883
      Nonrecurring costs (Note 12)                 7,800         -         -
                                                --------  --------  --------
                                                 117,799    59,101    42,946
                                                --------  --------  --------

    Operating Income (Loss)                       (2,950)    7,856     8,558

    Interest Income                                1,896     2,539     1,002
    Interest Expense (includes $103, $149,
      and $171 to related party; Notes 3 and 6)   (2,251)   (1,999)     (239)
    Gain on Sale of Investments, Net (Note 2)        136       180         -
    Equity in Earnings of Unconsolidated
      Subsidiary (Note 13)                           865         -         -
                                                --------  --------   -------
    Income (Loss) Before Provision for Income
      Taxes and Minority Interest                 (2,304)    8,576     9,321
    Provision for Income Taxes (Note 5)              377     3,132     3,576
    Minority Interest Expense                          -         -     2,102
                                                --------  --------  --------
    Net Income (Loss)                           $ (2,681) $  5,444  $  3,643
                                                ========  ========  ========

    Earnings (Loss) per Share:
      Primary                                   $   (.21) $    .44  $    .36
                                                ========  ========  ========
      Fully diluted                             $   (.21) $    .42  $    .35
                                                ========  ========  ========

    Weighted Average Shares:
      Primary                                     12,821    12,394    10,234
                                                ========  ========  ========
      Fully diluted                               12,821    13,156    10,559
                                                ========  ========  ========


    The accompanying notes are an integral part of these consolidated
    financial statements.
                                        2PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                           Consolidated Balance Sheet


                                                      March 29,    March 30,
    (In thousands)                                         1997         1996
    ------------------------------------------------------------------------
    Assets
    Current Assets:
      Cash and cash equivalents                        $ 18,600     $ 26,247
      Short-term available-for-sale investments,
        at quoted market value (amortized cost
        of $4,096 and $7,007; Note 2)                     4,101        7,004
      Accounts receivable, less allowances of
        $1,557 and $786                                  21,631       15,115
      Unbilled contract costs and fees                    5,685        2,094
      Prepaid income taxes (Note 5)                       3,348        2,836
      Prepaid expenses                                    1,820        2,196
      Due from parent company and Thermo Electron           321          564
                                                       --------     --------
                                                         55,506       56,056
                                                       --------     --------

    Property, Plant, and Equipment, at Cost, Net         36,514       37,603
                                                       --------     --------

    Long-term Available-for-sale Investments,
      at Quoted Market Value (amortized cost of
      $2,108 in fiscal 1996; Note 2)                          -        2,098
                                                       --------     --------

    Other Assets (Note 13)                               13,403       11,724
                                                       --------     --------
    Cost in Excess of Net Assets of Acquired
      Companies (Notes 3 and 12)                         29,588       28,321
                                                       --------     --------
                                                       $135,011     $135,802
                                                       ========     ========




                                        3PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                     Consolidated Balance Sheet (continued)


                                                      March 29,    March 30,
    (In thousands except share amounts)                    1997         1996
    ------------------------------------------------------------------------
    Liabilities and Shareholders' Investment
    Current Liabilities:
      Accounts payable                                 $  7,359     $  3,362
      Accrued payroll and employee benefits               3,566        2,539
      Deferred revenue                                    1,391          936
      Billings in excess of revenues earned                 879          630
      Accrued interest                                      784          776
      Accrued income taxes                                  286           57
      Other accrued expenses                              2,281        1,413
                                                       --------     --------
                                                         16,546        9,713
                                                       --------     --------

    Deferred Income Taxes (Note 5)                        3,035        2,137
                                                       --------     --------

    Long-term Obligations (Note 6):
      4 7/8% Subordinated convertible debentures         37,950       37,950
      3 7/8% Subordinated convertible note, due to
        parent company                                    2,650        2,650
                                                       --------     --------
                                                         40,600       40,600
                                                       --------     --------

    Commitments and Contingencies (Note 7)

    Shareholders' Investment (Notes 4 and 9):
      Common stock, $.01 par value, 50,000,000
        shares authorized; 13,388,073 and 12,800,189
        shares issued                                       134          128
      Capital in excess of par value                     85,402       81,353
      Retained earnings (accumulated deficit)            (3,328)       1,910
      Treasury stock at cost, 823,741 and 2,154
        shares                                           (7,382)         (31)
      Net unrealized gain (loss) on available-for-
        sale investments (Note 2)                             4           (8)
                                                       --------     --------
                                                         74,830       83,352
                                                       --------     --------
                                                       $135,011     $135,802
                                                       ========     ========


    The accompanying notes are an integral part of these consolidated
    financial statements.

                                        4PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                      Consolidated Statement of Cash Flows


                                                        Year Ended
                                              ------------------------------
                                              March 29, March 30,   April 1,
    (In thousands)                                 1997      1996       1995
    ------------------------------------------------------------------------
    Operating Activities:
      Net income (loss)                        $ (2,681) $  5,444   $  3,643
      Adjustments to reconcile net income
        (loss) to net cash provided by
        operating activities:
          Nonrecurring costs (Note 12)            7,800         -          -
          Depreciation and amortization           5,417     4,392      3,411
          Equity in earnings of unconsolidated
            subsidiary (Note 13)                   (865)        -          -
          Gain on sale of investments (Note 2)     (136)     (180)         -
          Minority interest expense                   -         -      2,102
          Provision for losses on accounts
            receivable                              162      (184)        15
          Other noncash expenses                  1,398     1,669      1,264
          Increase (decrease) in deferred
            income taxes                              -       328        (70)
          Changes in current accounts, excluding
            the effects of acquisitions:
              Accounts receivable                (6,008)    4,755      1,458
              Other current assets               (3,055)      860       (705)
              Billings in excess of revenues
                earned                              249        59     (1,312)
              Due to (from) parent company and 
                Thermo Electron                     243    (3,570)      (117)
              Accounts payable                    2,456       505        306
              Other current liabilities          (1,333)   (6,699)      (336)
                                               --------  --------   --------
    Net cash provided by operating activities     3,647     7,379      9,659
                                               --------  --------   --------

    Investing Activities:
      Acquisitions, net of cash acquired
        (Note 3)                                 (1,681)  (17,713)   (13,391)
      Purchases of available-for-sale
        investments                             (15,753)  (30,863)         -
      Proceeds from sale and maturities of
        available-for-sale investments           20,908    37,795      1,012
      Purchases of property, plant, and
        equipment                                (6,036)   (9,489)    (4,806)
      Proceeds from sale of property, plant,
        and equipment                               113       579          -
      Issuance of note receivable                     -         -       (700)
      Purchase of other assets                     (788)   (1,090)         -
      Other                                           -      (130)      (739)
                                               --------  --------   --------
    Net cash used in investing activities      $ (3,237) $(20,911)  $(18,624)
                                               --------  --------   --------

                                        5PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                Consolidated Statement of Cash Flows (continued)


                                                        Year Ended
                                              ------------------------------
                                              March 29, March 30,   April 1,
    (In thousands)                                 1997      1996       1995
    ------------------------------------------------------------------------
    Financing Activities:
      Net proceeds from issuance of
        subordinated convertible debentures
        (Note 6)                               $      -  $ 36,889   $      -
      Purchase of Company common stock           (8,317)        -          -
      Net proceeds from issuance of Company
        common stock (Note 9)                       313     6,908        752
      Proceeds from issuance (repayment) of
        obligations to Thermo Electron (Note 3)       -    (4,000)     4,000
      Repayment of debt                               -         -       (975)
      Dividends paid (Note 9)                      (847)     (810)      (685)
      Other                                         794         -         82
                                               --------  --------   --------
    Net cash provided by (used in) financing
      activities                                 (8,057)   38,987      3,174
                                               --------  --------   --------

    Increase (Decrease) in Cash and Cash
      Equivalents                                (7,647)   25,455     (5,791)
    Cash and Cash Equivalents at Beginning
      of Year                                    26,247       792      6,583
                                               --------  --------   --------
    Cash and Cash Equivalents at End of Year   $ 18,600  $ 26,247   $    792
                                               ========  ========   ========

    Cash Paid For:
      Interest                                 $  2,031  $  1,060   $    239
      Income taxes                             $  1,490  $  2,809   $  3,110

    Noncash Activities:
      Fair value of assets of acquired
        companies                              $  6,961  $ 39,349   $ 15,187
      Cash paid for acquired companies           (1,705)  (18,462)   (13,391)
      Issuance of common stock, stock options,
        and warrants for acquired companies      (2,006)  (11,210)         -
                                               --------  --------   --------
        Liabilities assumed of acquired
          companies                            $  3,250  $  9,677   $  1,796
                                               ========  ========   ========
      Dividends reinvested in Company common
        stock (Note 9)                         $  1,710  $  1,681   $  1,327
      Issuance of common stock to parent
        company for acquired companies (Note 3)$      -  $  7,713   $    840


    The accompanying notes are an integral part of these consolidated
    financial statements.

                                        6PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

               Consolidated Statement of Shareholders' Investment


                                                        Year Ended
                                              ------------------------------
                                              March 29,  March 30,  April 1,
    (In thousands)                                 1997       1996      1995
    ------------------------------------------------------------------------
    Common Stock, $.10 Par Value
      Balance at beginning of year              $   128   $   118   $    66
      Dividends declared and partially
        reinvested in Company common
        stock (Note 9)                                2         1         1
      Issuance of stock under employees' and
        directors' stock plans                        1         2         -
      Net proceeds from private placement
        of common stock (Note 9)                      -         5         -
      Issuance of common stock to parent
        company                                       -         -         1
      Issuance of common stock for acquired
        companies (Note 3)                            3         2        16
      Effect of three-for-two stock split             -         -        34
                                                -------   -------   -------
      Balance at end of year                        134       128       118
                                                -------   -------   -------
    Capital in Excess of Par Value
      Balance at beginning of year               81,353    61,333    50,368
      Dividends declared and partially
        reinvested in Company common
        stock (Note 9)                            1,708     1,680     1,326
      Activity under employees' and
        directors' stock plans                     (654)      312        37
      Tax benefit related to employees'
        and directors' stock plans                  198       200       385
      Net proceeds from private placement
        of common stock (Note 9)                      -     6,620       715
      Issuance of common stock to parent
        company                                       -         -       839
      Issuance of common stock for acquired
        companies (Note 3)                        2,003    11,208     7,697
      Capital contribution from parent company      794         -         -
      Effect of three-for-two stock split             -         -       (34)
                                                -------   -------   -------
      Balance at end of year                     85,402    81,353    61,333
                                                -------   -------   -------

    Retained Earnings (Accumulated Deficit)
      Balance at beginning of year                1,910    (1,043)   (2,674)
      Net income (loss)                          (2,681)    5,444     3,643
      Dividends declared and partially
        reinvested in Company common
        stock (Note 9)                           (2,557)   (2,491)   (2,012)
                                                -------   -------   -------
      Balance at end of year                    $(3,328)  $ 1,910   $(1,043)
                                                -------   -------   -------

                                        7PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

         Consolidated Statement of Shareholders' Investment (continued)


                                                        Year Ended
                                              ------------------------------
                                              March 29,  March 30,  April 1,
    (In thousands)                                 1997       1996      1995
    ------------------------------------------------------------------------
    Treasury Stock
      Balance at beginning of year              $   (31)  $     -   $     -
      Activity under employees' and
        directors' stock plans                      966       (31)        -
      Purchases of Company common stock          (8,317)        -         -
                                                -------   -------   -------
      Balance at end of year                     (7,382)      (31)        -
                                                -------   -------   -------
 
    Net Unrealized Gain (Loss) on Available-
      for-sale Investments
      Balance at beginning of year                   (8)      (88)     (122)
      Change in net unrealized gain (loss) on
        available-for-sale investments (Note 2)      12        80        34
                                                -------   -------   -------
      Balance at end of year                          4        (8)      (88)
                                                -------   -------   -------
    Total Shareholders' Investment              $74,830   $83,352   $60,320
                                                =======   =======   =======


    The accompanying notes are an integral part of these consolidated
    financial statements.









                                        8PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    1.  Nature of Operations and Summary of Significant Accounting Policies

    Nature of Operations
        Thermo Remediation Inc. (the Company) is a national provider of
    environmental services, including industrial, nuclear, and soil
    remediation, as well as waste-fluids recycling. 

    Principles of Consolidation and Relationship with Thermo TerraTech Inc.
        The Company was incorporated in November 1991 and commenced operation
    in June 1992. As of March 29, 1997, Thermo TerraTech Inc. (Thermo
    TerraTech) owned 8,621,968 shares of the Company's common stock,
    representing 69% of such stock outstanding. Thermo TerraTech is an
    82%-owned subsidiary of Thermo Electron Corporation (Thermo Electron). As
    of March 29, 1997, Thermo Electron owned 185,400 shares of the Company's
    common stock, representing 1.5% of such stock outstanding.
        The accompanying financial statements include the accounts of the
    Company and its subsidiaries. All material intercompany accounts and
    transactions have been eliminated. The Company accounts for its
    investment in a business in which it owns 50% using the equity method
    (Note 13).

    Presentation
        The historical financial information presented for fiscal 1995,
    except for weighted average shares, was restated in fiscal 1996 to
    reflect the acquisition of Thermo Nutech (formerly the Nuclear Services
    Group) from Thermo TerraTech (Note 3). The acquisition has been accounted
    for in a manner similar to a pooling-of-interests. Prior to April 2,
    1995, Thermo Nutech was held in a joint venture resulting in the
    allocation of its operating results to a minority partner. The
    consolidated results in the accompanying statement of operations reflect
    such allocation as minority interest through the date the joint venture
    was dissolved and Thermo Nutech became wholly owned by Thermo TerraTech.
        Certain amounts in fiscal 1996 and 1995 have been reclassified to
    conform to the fiscal 1997 financial statement presentation.

    Fiscal Year
        The Company has adopted a fiscal year ending the Saturday nearest
    March 31. References to fiscal 1997, 1996, and 1995 are for the fiscal
    years ended March 29, 1997, March 30, 1996, and April 1, 1995,
    respectively.

    Revenue Recognition
        Revenues from soil-remediation services are recognized as soil is
    processed, and revenues from environmental and nuclear-remediation
    services are recognized upon completion of services rendered. With
    respect to soil-remediation services, the Company bills customers upon
    receipt of the contaminated soil at its remediation centers. Amounts
    billed in excess of revenues recognized are classified as billings in
    excess of revenues earned in the accompanying balance sheet. The
    Company's industrial and nuclear services businesses perform services
    pursuant to long-term contracts. Revenues and profits on substantially
    all contracts are recognized using the percentage-of-completion method. 
                                        9PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    1.  Nature of Operations and Summary of Significant Accounting Policies
        (continued)

    Revenues recorded under the percentage-of-completion method were
    $65,217,000 in fiscal 1997 and $2,278,000 in fiscal 1996. The percentage
    of completion is determined by relating either the actual costs or actual
    labor incurred to date to management's estimate of total costs or total
    labor, respectively, to be incurred on each contract. If a loss is
    indicated on any contract in process, a provision is made currently for
    the entire loss. The Company's contracts generally provide for billing of
    customers upon the attainment of certain milestones specified in each
    contract. Revenues earned on contracts-in-process in excess of billings
    are classified as unbilled contract costs and fees in the accompanying
    balance sheet. There are no significant amounts included in the
    accompanying balance sheet that are not expected to be recovered from
    existing contracts at current contract values, or that are not expected
    to be collected within one year.

    New Business Development Expenses
        Costs classified as new business development expenses in the
    accompanying statement of operations represent costs associated with the
    development of the Company's soil-remediation business.

    Stock-based Compensation Plans
        The Company applies Accounting Principles Board Opinion (APB) No. 25,
    "Accounting for Stock Issued to Employees" and related interpretations in
    accounting for its stock-based compensation plans (Note 4). Accordingly,
    no accounting recognition is given to stock options granted at fair
    market value until they are exercised. Upon exercise, net proceeds,
    including tax benefits realized, are credited to equity.

    Income Taxes
        In accordance with Statement of Financial Accounting Standards (SFAS)
    No. 109, "Accounting for Income Taxes," the Company recognizes deferred
    income taxes based on the expected future tax consequences of differences
    between the financial statement basis and the tax basis of assets and
    liabilities calculated using enacted tax rates in effect for the year in
    which the differences are expected to be reflected in its tax returns.

    Earnings per Share
        Earnings per share have been computed based on the weighted average
    number of shares outstanding during the year. Weighted average shares in
    fiscal 1996 and 1995 include the assumed exercise of stock options and
    warrants that were computed using the treasury stock method. Because the
    effect of the assumed exercise of stock options and warrants would be
    antidilutive in fiscal 1997, they have been excluded from the earnings
    per share calculation. Fully diluted earnings per share has been
    computed, where material and dilutive, assuming the exercise of stock
    options and warrants and assuming the effect of the conversion of the
    Company's subordinated convertible obligations.

                                       10PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    1.  Nature of Operations and Summary of Significant Accounting Policies
        (continued)

    Stock Split
        All share and per share information was restated in fiscal 1995 to
    reflect a three-for-two stock split, effected in the form of a 50% stock
    dividend, that was distributed in March 1995.

    Cash and Cash Equivalents
        As of March 29, 1997, the Company's cash equivalents were invested in
    a repurchase agreement with Thermo Electron. Under this agreement, the
    Company in effect lends excess cash to Thermo Electron, which Thermo
    Electron collateralizes with investments principally consisting of U.S.
    government agency securities, corporate notes, commercial paper, money
    market funds, and other marketable securities, in the amount of at least
    103% of such obligation. The Company's funds subject to the repurchase
    agreement are readily convertible into cash by the Company. The
    repurchase agreement earns a rate based on the 90-day Commercial Paper
    Composite Rate plus 25 basis points, set at the beginning of each
    quarter. Cash equivalents are carried at cost, which approximates fair
    market value.

    Property, Plant, and Equipment
        The costs of additions and improvements are capitalized, while
    maintenance and repairs are charged to expense as incurred. The Company
    provides for depreciation and amortization primarily using the
    straight-line method over the estimated useful lives of the property as
    follows: buildings and improvements, 20 to 30 years; machinery and
    equipment, 3 to 12 years; and leasehold improvements, the shorter of the
    term of the lease or the life of the asset. Soil-remediation units, which
    account for 41% and 46% of the Company's machinery and equipment at
    fiscal year-end 1997 and 1996, respectively, are depreciated based on an
    hourly rate that is computed by estimating total hours of operation for
    each unit. Property, plant, and equipment consists of the following:

    (In thousands)                                          1997        1996
    ------------------------------------------------------------------------
    Land                                                 $ 4,592     $ 4,216
    Buildings and leasehold improvements                  17,833      14,245
    Machinery and equipment                               32,533      33,658
                                                         -------     -------
                                                          54,958      52,119
    Less: Accumulated depreciation and amortization       18,444      14,516
                                                         -------     -------
                                                         $36,514     $37,603
                                                         =======     =======

    Other Assets
        Other assets in the accompanying balance sheet includes the costs of
    acquired technology and other specifically identifiable intangible assets
    that are being amortized using the straight-line method over their
    estimated useful lives, which range from 5 to 12 years. These assets were

                                       11PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

     1. Nature of Operations and Summary of Significant Accounting Policies
        (continued)

    $6,137,000 and $9,492,000, net of accumulated amortization of $5,654,000
    and $4,785,000, at fiscal year-end 1997 and 1996, respectively.

    Cost in Excess of Net Assets of Acquired Companies
        The excess of cost over the fair value of net assets of acquire
    companies is amortized using the straight-line method over periods not
    exceeding 40 years. Accumulated amortization was $1,899,000 and
    $1,314,000 at fiscal year-end 1997 and 1996, respectively. The Company
    assesses the future useful life of this asset whenever events or changes
    in circumstances indicate that the current useful life has diminished
    (Note 12). The Company considers the future undiscounted cash flows of
    the acquired companies in assessing the recoverability of this asset. If
    impairment has occurred, any excess of carrying value over fair value is
    recorded as a loss.

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

    2.  Available-for-sale Investments

        In accordance with SFAS No. 115, "Accounting for Certain Investments
    in Debt and Equity Securities," the Company's debt and marketable equity
    securities are considered available-for-sale investments in the
    accompanying balance sheet and are carried at market value, with the
    difference between cost and market value, net of related tax effects,
    recorded as a component of shareholders' investment titled "Net
    unrealized gain (loss) on available-for-sale investments."

                                       12PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    2.  Available-for-sale Investments (continued)

        The aggregate market value, cost basis, and gross unrealized gains
    and losses of short- and long-term available-for-sale investments by
    major security type are as follows:
                                                           Gross       Gross
                                  Market       Cost   Unrealized  Unrealized
    (In thousands)                 Value      Basis        Gains      Losses
    ------------------------------------------------------------------------
    1997
    Corporate bonds               $4,021    $4,016        $    5     $    -
    Other                             80        80             -          -
                                  ------    ------        ------     ------
                                  $4,101    $4,096        $    5     $    -
                                  ======    ======        ======     ======
    1996
    Tax-exempt securities         $5,009    $4,998        $   11     $    -
    Corporate bonds                1,985     2,000             -        (15)
    Money market preferred stock   2,098     2,107             -         (9)
    Other                             10        10             -          -
                                  ------    ------        ------     ------
                                  $9,102    $9,115        $   11     $  (24)
                                  ======    ======        ======     ======

        Short-term available-for-sale investments in the accompanying fiscal
    1997 balance sheet include $2,090,000 with contractual maturities of one
    or less and $2,011,000 with contractual maturities of one year through
    five years. Actual maturities may differ from contractual maturities as a
    result of the Company's intent to sell these securities prior to maturity
    and as a result of put and call options that enable the Company, the
    issuer, or both to redeem these securities at an earlier date.
        The cost of available-for-sale investments that were sold was based
    on specific identification in determining realized gains and losses
    recorded in the accompanying statement of operations. "Gain on sale of
    investments, net" resulted from gross realized gains of $145,000 and
    $180,000 in fiscal 1997 and 1996, respectively, and gross realized losses
    of $9,000 in fiscal 1997, relating to the sale of available-for-sale
    investments.

    3.  Acquisitions

        In September 1996, the Company acquired IEM Sealand Corporation (IEM
    Sealand) for 311,040 shares of the Company's common stock, valued at
    $2,006,000, and $1,705,000 in cash. The shares of the Company's common
    stock issued in connection with the acquisition are subject to certain
    restrictions on transfer. The restrictions lapse with respect to
    one-third of the shares on each of the third, fourth, and fifth
    anniversaries of the closing. IEM Sealand performs cleanup of hazardous
    waste sites for government and industry as a prime construction
    contractor and completes predesigned remedial action contracts at sites
    containing hazardous, toxic, and radioactive waste.

                                       13PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    3.  Acquisitions (continued)

        In December 1995, the Company acquired Remediation Technologies, Inc.
    (ReTec), a provider of integrated environmental services such as the
    remediation of industrial sites contaminated with organic wastes and
    residues. The purchase price of $29,672,000 consisted of $18,462,000 in
    cash, 227,250 shares of the Company's common stock and 75,750 warrants to
    purchase shares of the Company's common stock at $14.85 per share, valued
    in the aggregate at $3,716,000, and approximately $7,494,000 attributable
    to the conversion of outstanding ReTec stock options into Company stock
    options of equivalent intrinsic value at the date of the acquisition.
        In December 1994, the Company acquired a soil-remediation facility in
    Baltimore County, Maryland (renamed TPST Maryland) from the principals of
    Bryn Awel Corporation (Bryn Awel). The purchase price for TPST Maryland
    was $6,820,000 in cash and the assumption of $686,000 of a net liability.
    In October 1994, the Company acquired a soil-remediation facility in
    South Tacoma, Washington (renamed TPST Woodworth) from Woodworth &
    Company, Inc. for $4,701,000 in cash. The Company entered into a land
    lease with the former owners of TPST Woodworth for the land on which TPST
    Woodworth operates the business. During fiscal 1995, the Company made two
    other acquisitions for a total of $1,870,000 in cash. In connection with
    the financing of acquisitions, during fiscal 1995 the Company issued to
    Thermo Electron a $4,000,000 promissory note bearing interest at the
    90-day Commercial Paper Composite Rate plus 25 basis points, set at the
    beginning of each quarter. The promissory note had an average interest
    rate of 6.4% and 6.5% in fiscal 1996 and 1995, respectively. The Company
    repaid the note payable to Thermo Electron in June 1995.
        These acquisitions have been accounted for using the purchase method
    of accounting and their results of operations have been included in the
    accompanying financial statements from their respective dates of
    acquisition. The aggregate cost of the acquisitions in fiscal 1997, 1996,
    and 1995 exceeded the estimated fair value of the acquired net assets by
    $24,633,000, which is being amortized over 40 years. Allocation of the
    purchase price for these acquisitions was based on estimates of the fair
    value of the net assets acquired and, for acquisitions completed in
    fiscal 1997, is subject to adjustment upon finalization of the purchase
    price allocation.
        Based on unaudited data, the following table presents selected
    financial information for the Company and ReTec on a pro forma basis,
    assuming the companies had been combined since the beginning of fiscal
    1995. The effect on the Company's financial statements of the
    acquisitions not included in the pro forma data was not material to the
    Company's results of operations.

    (In thousands except per share amounts)                  1996      1995
    -----------------------------------------------------------------------
    Revenues                                              $98,183   $93,176
    Net income                                              5,855     4,987
    Earnings per share:
      Primary                                                 .47       .45
      Fully diluted                                           .45       .45


                                       14PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    3.  Acquisitions (continued)

        The pro forma results are not necessarily indicative of future
    operations or the actual results that would have occurred had the
    acquisition been made at the beginning of fiscal 1995.
        On June 30, 1995, the Company acquired Thermo Nutech from Thermo
    TerraTech in exchange for 1,583,360 shares of the Company's common stock,
    with a fair market value of $24,740,000 as of such date. Thermo Nutech
    provides services to remove radioactive contaminants from sand, gravel,
    and soil, as well as health physics services, radiochemistry laboratory
    services, radiation dosimetry services, radiation instrument calibration
    and repair services, and radiation source production. During the fiscal
    year ended April 1, 1995, Thermo Nutech's assets were held in a joint
    venture (the Joint Venture) between Thermo TerraTech and Thermo
    Instrument Systems Inc. (Thermo Instrument). Thermo TerraTech's financial
    statements consolidated the assets and liabilities of the Joint Venture
    and its results of operations, net of minority interest related to Thermo
    Instrument's allocable share of operations. Effective April 2, 1995,
    Thermo TerraTech and Thermo Instrument agreed to dissolve the Joint
    Venture and Thermo TerraTech purchased the businesses formerly operated
    by the Joint Venture from Thermo Instrument.
         Because the Company and Thermo Nutech were deemed for accounting
    purposes to be under control of their common majority owner, Thermo
    TerraTech, the transaction has been accounted for at historical cost in a
    manner similar to a pooling-of-interests, with the accounting followed by
    the Company conforming to that of Thermo TerraTech. Accordingly, all
    historical financial information presented, except for weighted average
    shares, has been restated to reflect the acquisition of Thermo Nutech.
        The 1,583,360 shares of the Company's common stock issued in exchange
    for Thermo Nutech are considered to be outstanding as of April 2, 1995,
    for purposes of computing weighted average shares. Revenues and net
    income for the separate entities are as follows:

    (In thousands)                                                      1995
    ------------------------------------------------------------------------
    Revenues:
      Historical                                                    $29,871
      Thermo Nutech                                                  21,633
                                                                    -------
                                                                    $51,504
                                                                    =======
    Net income:
      Historical                                                    $ 3,643
      Thermo Nutech                                                   2,102
      Minority interest expense not previously reported              (2,102)
                                                                    -------
                                                                    $ 3,643
                                                                    =======


                                       15PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    3.  Acquisitions (continued)

        Had the Company acquired 100% of the Joint Venture as of April 3,
    1994, the Company would have reported the following net income and
    earnings per share:

    (In thousands except per share amount)                             1995
    -----------------------------------------------------------------------
    Pro forma net income                                            $ 5,745
    Pro forma earnings per share                                        .49

    4.   Employee Benefit Plans

    Stock-based Compensation Plans

    Stock Option Plans
    ------------------
        The Company has an equity incentive plan for key employees,
    directors, and others, adopted in October 1993. In February 1997, the
    Company also adopted an employee equity incentive plan, similar to its
    equity incentive plan adopted in 1993, except that neither executive
    officers nor directors are eligible to participate in the plan. Both
    plans permit the grant of a variety of stock and stock-based awards as
    determined by the human resources committee of the Company's Board of
    Directors (the Board Committee), including restricted stock, stock
    options, stock bonus shares, or performance-based shares. To date, only
    nonqualified stock options have been awarded under these plans. The
    option recipients and the terms of options granted under these plans are
    determined by the Board Committee. Generally, options granted to date are
    exercisable immediately, but are subject to certain transfer restrictions
    and the right of the Company to repurchase shares issued upon exercise of
    the options at the exercise price, upon certain events. The restrictions
    and repurchase rights generally lapse ratably over a five to ten year
    period, depending on the term of the option, which may range from seven
    to twelve years. Nonqualified stock options may be granted at any price
    determined by the Board Committee, although incentive stock options must
    be granted at not less than the fair market value of the stock on the
    date of grant. The Company also has a directors' stock option plan,
    adopted in October 1993, which provides for the grant of stock options to
    outside directors pursuant to a formula approved by the Company's
    shareholders. Options awarded under this plan are exercisable six months
    after the date of grant and expire three to seven years after the date of
    grant. In addition to the Company's stock-based compensation plans,
    certain officers and key employees may also be granted options under the
    stock-based compensation plans of Thermo Electron or its majority-owned
    subsidiaries.
         In connection with the acquisition of ReTec in December 1995, the
    Company assumed certain outstanding options granted under ReTec's
    nonqualified and incentive stock option plans. Such options were
    converted into options to purchase shares of the Company's common stock,
    in accordance with the original terms of the options. Options issued in
    connection with the acquisition of ReTec vest ratably over three years
    from their original date of grant, and expire ten years from the date of
    grant.
                                       16PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    4.  Employee Benefit Plans (continued)

        No accounting recognition is given to options granted at fair market
    value until they are exercised. Upon exercise, net proceeds, including
    tax benefits realized, are credited to equity. A summary of the Company's
    stock option information is as follows:

                           1997                1996                1995
                     ----------------    ----------------    ----------------
                                                                     Range of
                             Weighted            Weighted              Option
                     Number   Average    Number   Average    Number    Prices
    (Shares in           of  Exercise        of  Exercise        of       per
    thousands)       Shares     Price    Shares     Price    Shares     Share
    -------------------------------------------------------------------------
    Options
      outstanding,
      beginning                                                      $ 6.93-
      of year        1,559     $ 6.95       695    $ 7.62       605  $ 9.43

       Assumed upon
         acquisition                                            
         of ReTec        -          -       897      4.25         -       -
                                                                       9.09-
       Granted         556       8.65       144      5.74       114   11.43
       Exercised      (168)      1.47      (149)     1.59        (5)   6.93
       Forfeited       (50)      7.43       (28)     6.96       (19)   6.93
                     -----                -----               -----
    Options
      outstanding,                                                   $ 6.93-
      end of year    1,897     $ 7.92     1,559    $ 6.95       695  $11.43
                     =====                =====               =====
    Options                                                          $ 6.93-
      exercisable    1,826     $ 7.79     1,416    $ 6.58       670  $11.43
                     =====                =====               =====
    Options
      available
      for grant      1,364                  449                 575
                     =====                =====               =====
    Weighted average
      fair value per
      share of options
      granted during
      year                     $ 3.58              $ 5.58
                               ======              ======


                                       17PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    4.  Employee Benefit Plans (continued)

        A summary of the status of the Company's stock options at March 29,
    1997, is as follows:

                                                Options Outstanding
                                         ----------------------------------
                                                                   Weighted
                                         Number  Weighted Average   Average
                                             of         Remaining  Exercise
    Range of Exercise Prices             Shares  Contractual Life     Price
    -----------------------------------------------------------------------
    (Shares in thousands)
    $ 0.68-$ 4.15                           309         3.0 years    $ 3.22
      4.16-  7.90                           907         4.8 years      6.87
      7.91- 11.65                           477         8.6 years     10.27
     11.66- 15.40                           204         6.7 years     14.20
                                          -----
    $ 0.68-$15.40                         1,897         5.7 years    $ 7.92
                                          =====

        The information disclosed above for options outstanding at March 29,
    1997, does not differ materially for options exercisable.

    Employee Stock Purchase Program
    -------------------------------
        Substantially all of the Company's full-time employees are eligible
    to participate in an employee stock purchase program sponsored by the
    Company and Thermo Electron. Under this program, shares of the Company's
    and Thermo Electron's common stock can be purchased at the end of a
    12-month period at 95% of the fair market value at the beginning of the
    period, and the shares purchased are subject to a six-month resale
    restriction. Prior to November 1, 1995, the applicable shares of common
    stock could be purchased at 85% of the fair market value at the beginning
    of the period, and the shares purchased were subject to a one year resale
    restriction. Shares are purchased through payroll deductions of up to 10%
    of each participating employee's gross wages. During fiscal 1997 and
    1996, the Company issued 5,792 and 9,040 shares, respectively, of its
    common stock under this program. Prior to November 1994, the Company's
    eligible employees participated in an employee stock purchase program
    sponsored by Thermo TerraTech. Employees of Thermo Nutech participated in
    an employee stock purchase program sponsored by Thermo Instrument through
    November 1994 and participated in an employee stock purchase program
    sponsored by Thermo TerraTech through November 1996.

    Pro Forma Stock-based Compensation Expense
        In October 1995, the Financial Accounting Standards Board issued SFAS
    No. 123, "Accounting for Stock-based Compensation," which sets forth a
    fair-value based method of recognizing stock-based compensation expense.
    As permitted by SFAS No. 123, the Company has elected to continue to
    apply APB No. 25 to account for its stock-based compensation plans. Had
    compensation cost for awards in fiscal 1997 and 1996 under the Company's
    stock-based compensation plans been determined based on the fair value at

                                       18PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    4.  Employee Benefit Plans (continued)

    the grant dates consistent with the method set forth under SFAS No. 123,
    the effect on the Company's net income and earnings per share would have
    been as follows:

    (In thousands except per share amounts)                   1997      1996
    ------------------------------------------------------------------------
    Net income (loss):
      As reported                                         $(2,681)  $ 5,444
      Pro forma                                            (2,946)    5,352

    Earnings (loss) per share:
      Primary:
        As reported                                          (.21)      .44
        Pro forma                                            (.23)      .43
      Fully diluted:
        As reported                                          (.21)      .42
        Pro forma                                            (.23)      .41

        Because the method prescribed by SFAS No. 123 has not been applied to
    options granted prior to April 2, 1995, the resulting pro forma
    compensation expense may not be representative of the amount to be
    expected in future years. Compensation expense for options granted is
    reflected over the vesting period; therefore, future pro forma
    compensation expense may be greater as additional options are granted.
        The fair value of each option grant was estimated on the grant date
    using the Black-Scholes option-pricing model with the following
    weighted-average assumptions:

                                                         1997           1996
    ------------------------------------------------------------------------
    Volatility                                           29%            29%
    Risk-free interest rate                             6.3%           5.9%
    Expected life of options                       5.9 years      5.1 years

       The Black-Scholes option-pricing model was developed for use in
    estimating the fair value of traded options which have no vesting
    restrictions and are fully transferable. In addition, option-pricing
    models require the input of highly subjective assumptions including
    expected stock price volatility. Because the Company's employee stock
    options have characteristics significantly different from those of traded
    options, and because changes in the subjective input assumptions can
    materially affect the fair value estimate, in management's opinion, the
    existing models do not necessarily provide a reliable single measure of
    the fair value of its employee stock options.

    401(k) Savings Plan and Employee Stock Ownership Plan
        The majority of the Company's full-time employees are eligible to
    participate in Thermo Electron's 401(k) savings plan and, prior to
    January 1, 1995, in Thermo Electron's employee stock ownership plan
    (ESOP). Contributions to the 401(k) savings plan are made by both the
    employee and the Company. Company contributions are based upon the level

                                       19PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    4.  Employee Benefit Plans (continued)

    of employee contributions. ReTec also offers a 401(k) savings plan, and a
    subsidiary of Thermo Nutech offers a 401(k) savings plan, separate from
    the Company's plan. The Company contributed and charged to expense for
    these plans $704,000, $639,000, and $472,000 in fiscal 1997, 1996, and
    1995, respectively. Effective December 31, 1994, the ESOP was split into
    two plans: ESOP I, covering employees of Thermo Electron's corporate
    office and its wholly owned subsidiaries and ESOP II, covering employees
    of certain of Thermo Electron's majority-owned subsidiaries, including
    the Company. Also, effective December 31, 1994, the ESOP II plan was
    terminated and as a result, the Company's employees are no longer
    eligible to participate in an ESOP.

    5.  Income Taxes

        The components of the provision for income taxes are as follows:

    (In thousands)                                    1997    1996     1995
    ------------------------------------------------------------------------
    Currently (refundable) payable:
      Federal                                      $ (510)  $3,400   $3,245
      State                                           285      590      658
                                                   ------   ------   ------

                                                     (225)   3,990    3,903
                                                   ------   ------   ------
    Deferred (prepaid), net:
      Federal                                         491     (708)    (263)
      State                                           111     (150)     (64)
                                                   ------   ------   ------
                                                      602     (858)    (327)
                                                   ------   ------   ------
                                                   $  377   $3,132   $3,576
                                                   ======   ======   ======

        The Company receives a tax deduction upon exercise of nonqualified
    stock options by employees for the difference between the exercise price
    and the market price of the Company's stock on the date of exercise. The
    provision for income taxes that is currently payable does not reflect
    $198,000, $200,000, and $385,000 of such benefits of the Company
    allocated to capital in excess of par value in fiscal 1997, 1996, and
    1995, respectively.




                                       20PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    5.  Income Taxes (continued)

        The provision for income taxes in the accompanying statement of
    operations differs from the amounts calculated by applying the statutory
    federal income tax rate of 34% to income (loss) before income taxes and
    minority interest due to the following:

    (In thousands)                                   1997     1996     1995
    ------------------------------------------------------------------------
    Income tax provision (benefit) at statutory 
      rate                                         $ (783)  $2,916   $3,169
    Differences resulting from:
      Amortization and write-off of cost in
        excess of net assets of acquired
        companies                                     979      140       47
      State income taxes, net of federal tax          261      290      392
      Tax-exempt investment income                    (33)    (185)    (180)
      Nondeductible expenses                           27       21       49
      Other                                           (74)     (50)      99
                                                   ------   ------   ------
                                                   $  377   $3,132   $3,576
                                                   ======    ======   ======

        Prepaid and deferred income taxes in the accompanying balance sheet
    consist of the following:

    (In thousands)                                   1997     1996
    --------------------------------------------------------------
    Prepaid income taxes:
      Reserves and accruals                        $2,750   $  682
      Allowance for doubtful accounts                 315      756
      Accrued compensation                            357    1,446
      Available-for-sale investments                   (2)       7
      Net operating loss carryforward                 103      106
      Federal tax credit carryforward                  25       39
                                                   ------   ------
                                                    3,548    3,036
      Less: Valuation allowance                       200      200
                                                   ------   ------
                                                   $3,348   $2,836
                                                   ======   ======
    Deferred income taxes:
      Depreciation                                 $3,035   $2,137
                                                   ======   ======

        The valuation allowance relates to the uncertainty surrounding the
    realization of the tax benefits attributable to federal operating losses,
    credit carryforwards, and purchase accounting reserves related to various
    acquisitions. The valuation allowance will be used to reduce cost in
    excess of net assets of acquired companies when any portion of the
    related deferred tax asset is recognized.

                                       21PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    6.  Long-term Obligations

        In May 1995, the Company issued and sold in Europe $37,950,000
    principal amount of 4 7/8% subordinated convertible debentures due 2000.
    The debentures are convertible into shares of the Company's common stock
    at a conversion price of $17.92 per share and are guaranteed on a
    subordinated basis by Thermo Electron. Thermo TerraTech has agreed to
    reimburse Thermo Electron in the event Thermo Electron is required to
    make a payment under the guarantee. 
        In fiscal 1994, in connection with the acquisition of Thermo Fluids,
    the Company issued to Thermo TerraTech a $2,650,000 principal amount of  
    3 7/8% subordinated convertible note due 2000. The note is convertible
    into shares of the Company's common stock at a conversion price of $9.83
    per share.
        See Note 10 for fair value information pertaining to the Company's
    long-term obligations.

    7.  Commitments and Contingencies

    Operating Leases
        The Company leases land, office facilities, and equipment under
    operating leases expiring at various dates through fiscal 2006. The
    accompanying statement of operations includes expenses from operating
    leases of $1,943,000, $1,319,000, and $543,000 in fiscal 1997, 1996, and
    1995, respectively. Future minimum payments due under noncancellable
    operating leases at March 29, 1997, are $1,647,000 in fiscal 1998;
    $1,315,000 in fiscal 1999; $804,000 in fiscal 2000; $387,000 in fiscal
    2001; $285,000 in fiscal 2002; and $460,000 in fiscal 2003 and
    thereafter. Total future minimum lease payments are $4,898,000.
        In March 1991, the Company's TPST Virginia affiliate entered into a
    seven-year agreement, terminable at the Company's option with 90 days'
    notice, to operate one or more of its soil-remediation units at a site
    owned by a third party. Under the terms of the agreement, the Company
    pays a fee based on the gross remediation revenues generated from the
    operations at the site, less certain operating costs incurred by the
    Company. The accompanying statement of operations includes expenses
    relating to this agreement of $79,000, $147,000, and $307,000 in fiscal
    1997, 1996, and 1995, respectively. Any future expenses related to this
    agreement will not be material as this facility will be closed (Note 12).

    Contingencies
        The Company is contingently liable with respect to lawsuits and other
    matters that arose in the ordinary course of business. In the opinion of
    management, these contingencies will not have a material effect upon the
    financial position of the Company or its results of operations.

    8.  Related-party Transactions

    Corporate Services Agreement
        The Company and Thermo Electron have a corporate services agreement
    under which Thermo Electron's corporate staff provides certain
    administrative services, including certain legal advice and services,

                                       22PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    8.  Related-party Transactions (continued)

    risk management, certain employee benefit administration, tax advice and
    preparation of tax returns, centralized cash management, and certain
    financial and other services, for which the Company pays Thermo Electron
    annually an amount equal to 1.0% of the Company's revenues. Prior to
    January 1, 1996, the Company paid an annual fee equal to 1.20% of the
    Company's revenues. Prior to January 1, 1995, the Company paid an annual
    fee equal to 1.25% of the Company's revenues. The annual fee is reviewed
    and adjusted annually by mutual agreement of the parties. For these
    services, the Company was charged $1,148,000, $767,000, and $637,000 in
    fiscal 1997, 1996, and 1995, respectively. The corporate services
    agreement is renewed annually but can be terminated upon 30 days' prior
    notice by the Company or upon the Company's withdrawal from the Thermo
    Electron Corporate Charter (the Thermo Electron Corporate Charter defines
    the relationship among Thermo Electron and its majority-owned
    subsidiaries). Management believes that the service fee charged by Thermo
    Electron is reasonable and that such fees are representative of the
    expenses the Company would have incurred on a stand-alone basis. For
    additional items such as employee benefit plans, insurance coverage, and
    other identifiable costs, Thermo Electron charges the Company based upon
    costs attributable to the Company.

    Short- and Long-term Obligations
         See Notes 3 and 6 for obligations of the Company held by Thermo
    Electron and Thermo TerraTech, respectively.

    Repurchase Agreement
        The Company invests excess cash in a repurchase agreement with Thermo
    Electron as discussed in Note 1.

    9.  Common Stock

        During fiscal 1996, the Company issued 500,000 shares of its common
    stock at $13.25 per share in a private placement for net proceeds of
    $6,625,000.
        During fiscal 1995, the Company issued 75,000 shares of its common
    stock at $9.67 per share in a private placement for net proceeds of
    $715,000.
        Dividends to common shareholders of the Company of $2,557,000 were
    declared in fiscal 1997, of which $1,710,000, including $1,694,000 paid
    to Thermo TerraTech, was reinvested in 196,806 shares of the Company's
    common stock pursuant to the Company's Dividend Reinvestment Plan,
    adopted in fiscal 1995. Dividends to common shareholders of the Company
    of $2,491,000 were declared in fiscal 1996, of which $1,681,000,
    including $1,667,000 paid to Thermo TerraTech, was reinvested in 118,778
    shares of the Company's common stock. Dividends to common shareholders of
    the Company of $2,012,000 were declared in fiscal 1995, of which
    $1,327,000, including $1,316,000 paid to Thermo TerraTech, was reinvested
    in 113,491 shares of the Company's common stock.

                                       23PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    9.  Common Stock (continued)

        At March 29, 1997, the Company had reserved 4,892,565 unissued shares
    of its common stock for possible issuance under stock-based compensation
    plans, outstanding warrants, and possible issuance upon conversion of the
    Company's convertible obligations.

    10. Fair Value of Financial Instruments

        The Company's financial instruments consist mainly of cash and cash
    equivalents, available-for-sale investments, accounts receivable, due
    from parent company and Thermo Electron, accounts payable, and long-term
    obligations. The carrying amounts of these financial instruments, with
    the exception of available-for-sale investments and long-term
    obligations, approximates fair value due to their short-term nature.
        Available-for-sale investments are carried at fair value in the
    accompanying balance sheet. The fair values were determined based on
    quoted market prices. See Note 2 for fair value information pertaining to
    these financial instruments.
        Based on quoted market prices and on borrowing rates available to
    the Company, the fair value of the Company's long-term obligations was
    $37,674,000 and $42,877,000 at fiscal year-end 1997 and 1996,
    respectively.

    11. Significant Customers and Concentration of Credit Risk

        A substantial portion of the Company's nuclear services has been
    provided to the U.S. government. One subcontract for the U.S. government
    accounted for approximately 5%, 10%, and 4% of the Company's total
    revenues in fiscal 1997, 1996, and 1995, respectively. All other U.S.
    government agencies accounted for 25%, 16%, and 26% of the Company's
    total revenues in fiscal 1997, 1996, and 1995, respectively. Management
    does not believe that this concentration of credit risk has or will have
    a significant negative impact on the Company.

    12. Nonrecurring Costs

        During the fourth quarter of fiscal 1997, the Company recorded
    $7,800,000 of nonrecurring costs to write-down certain capital equipment
    and intangible assets, including cost in excess of net assets of acquired
    companies, in response to a recent severe downturn in the Company's
    soil-recycling business which will result in the closure of two
    soil-remediation sites. In addition, the Company's analysis indicates
    that the future undiscounted cash flows from certain other
    soil-remediation sites that will remain open will be insufficient to
    recover the Company's investment in these business units, thus requiring
    a write-down of certain assets included in the $7,800,000 charge. Of the
    total charge, $2,206,000 is nondeductible for tax purposes.


                                       24PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    13. Equity in Earnings of Unconsolidated Subsidiary

        The Company's equity in earnings of unconsolidated subsidiary in the
    accompanying statement of operations represents the Company's
    proportionate share of income from a 50% investment in ReTec Tetra L.C.
    (ReTec Tetra), acquired in December 1995 through the acquisition of
    ReTec. The carrying value of this investment was $5,650,000, which is
    included in other assets in the accompanying fiscal 1997 balance sheet.
        Summary financial information for ReTec Tetra is as follows:

                                                       December 31,
                                                   -------------------
    (In thousands)                                    1996        1995
    ------------------------------------------------------------------
    Current assets                                 $ 3,072     $ 2,163
    Noncurrent assets                               12,644      11,653
                                                   -------     -------
      Total assets                                 $15,716     $13,816
                                                   =======     =======

    Current liabilities                            $ 2,016     $ 2,342
    Noncurrent liabilities                           2,635       2,465
    Members' equity                                 11,065       9,009
                                                   -------     -------
      Total liabilities and members' equity        $15,716     $13,816
                                                   =======     =======

                                                Year Ended
                                                  Dec. 31,
    (In thousands)                                    1996
    ------------------------------------------------------
    Revenues                                       $12,066
    Cost of revenues                                 9,040
                                                   -------
    Gross profit                                   $ 3,026
                                                   =======
    Net income                                     $   981
                                                   =======


                                       25PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                   Notes to Consolidated Financial Statements

    14. Unaudited Quarterly Information

    (In thousands except per share amounts)

    1997                               First    Second     Third(a) Fourth(b)
    -------------------------------------------------------------------------
    Revenues                        $23,520   $27,913   $34,252   $29,164
    Gross profit                      4,482     4,428     4,714     4,324
    Net income (loss)                 1,028       974       620    (5,303)
    Earnings (loss) per share:
      Primary                           .08       .08       .05      (.42)
      Fully diluted                     .08       .07       .05      (.42)

    1996                               First    Second     Third(c) Fourth
    -------------------------------------------------------------------------
    Revenues                        $13,181   $14,466   $16,308   $23,002
    Gross profit                      4,024     4,244     4,540     5,035
    Net income                        1,180     1,330     1,533     1,401
    Earnings per share:
      Primary                           .10       .11       .12       .11
      Fully diluted                     .09       .11       .12       .11

    (a) Reflects the September 1996 acquisition of IEM Sealand.
    (b) Reflects $7,800,000 of nonrecurring costs.
    (c) Reflects the December 1995 acquisition of ReTec.




                                       26PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                    Report of Independent Public Accountants

    To the Shareholders and Board of Directors of Thermo Remediation Inc.:

        We have audited the accompanying consolidated balance sheet of Thermo
    Remediation Inc. (a Delaware corporation and 69%-owned subsidiary of
    Thermo TerraTech Inc.) and subsidiaries as of March 29, 1997, and March
    30, 1996, and the related consolidated statements of operations,
    shareholders' investment and cash flows for each of the three years in
    the period ended March 29, 1997. These consolidated financial statements
    are the responsibility of the Company's management. Our responsibility is
    to express an opinion on these consolidated financial statements based on
    our audits.
        We conducted our audits in accordance with generally accepted
    auditing standards. Those standards require that we plan and perform the
    audit to obtain reasonable assurance about whether the financial
    statements are free of material misstatement. An audit includes
    examining, on a test basis, evidence supporting the amounts and
    disclosures in the financial statements. An audit also includes assessing
    the accounting principles used and significant estimates made by
    management, as well as evaluating the overall financial statement
    presentation. We believe that our audits provide a reasonable basis for
    our opinion.
        In our opinion, the consolidated financial statements referred to
    above present fairly, in all material respects, the financial position of
    Thermo Remediation Inc. and subsidiaries as of March 29, 1997, and March
    30, 1996, and the results of their operations and their cash flows for
    each of the three years in the period ended March 29, 1997, in conformity
    with generally accepted accounting principles.




                                            Arthur Andersen LLP




    Boston, Massachusetts
    May 6, 1997

                                       27PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

        Forward-looking statements, within the meaning of Section 21E of the
    Securities Exchange Act of 1934, are made throughout this Management's
    Discussion and Analysis of Financial Condition and Results of Operations.
    For this purpose, any statements contained herein that are not statements
    of historical fact may be deemed to be forward-looking statements.
    Without limiting the foregoing, the words "believes," "anticipates,"
    "plans," "expects," "seeks," "estimates," and similar expressions are
    intended to identify forward-looking statements. There are a number of
    important factors that could cause the results of the Company to differ
    materially from those indicated by such forward-looking statements,
    including those detailed immediately after this Management's Discussion
    and Analysis of Financial Condition and Results of Operation under the
    caption "Forward-looking Statements."

    Overview

        The Company is a national provider of environmental services,
    including industrial, nuclear, and soil remediation, as well as waste-
    fluids recycling.
        The Company's Remediation Technologies, Inc. (ReTec) subsidiary,
    acquired in December 1995, is a provider of consulting, engineering, and
    on-site services to help clients manage problems associated with
    environmental compliance, waste management, and the remediation of
    industrial sites contaminated with organic wastes and residues.
        In September 1996, the Company acquired IEM Sealand Corporation (IEM
    Sealand; Note 3). IEM Sealand performs cleanup of hazardous waste sites
    for government and industry as a prime construction contractor and also
    completes predesigned remedial action contracts at sites containing
    hazardous, toxic, and radioactive waste. IEM Sealand's business is
    traditionally strongest during the summer and fall seasons.
        The Company's Thermo Nutech subsidiary provides services to remove
    radioactive contaminants from sand, gravel, and soil, and also provides
    health physics, radiochemistry laboratory, and radiation dosimetry
    services.
        The Company, through its TPS Technologies Inc. subsidiary, designs
    and operates facilities for the remediation of nonhazardous soil and
    operates a network of such facilities along the East and West Coasts.
        The Company's Thermo Fluids Inc. subsidiary collects, tests,
    processes, and recycles used motor oil and other industrial fluids.
        The Company's businesses are affected by several factors, parti-
    cularly extreme weather variations, government spending, enactment and
    enforcement of environmental legislation, economic cycles, regulation and
    enforcement of remediation activities, the availability of federal and
    state funding for environmental cleanup, and local competition.


                                       28PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

    Results of Operations

    Fiscal 1997 Compared With Fiscal 1996
        Revenues in fiscal 1997 increased 72% to $114,849,000 from
    $66,957,000 in fiscal 1996. Revenues increased due to the inclusion of
    $50,033,000 of revenues from ReTec and IEM Sealand, acquired in December
    1995 and September 1996, respectively (Note 3). Revenues from
    soil-remediation services decreased 21% in response to a severe downturn
    in this business, which resulted in a decline in the volume of soil
    processed due to overcapacity in the industry and competitive pricing
    pressures. The Company also believes that several states have reduced
    their compliance requirements and/or relaxed their enforcement
    activities. The Company expects this trend to continue for the
    foreseeable future. Revenues from nuclear and fluids-recycling services
    increased $3,652,000 in fiscal 1997.
        The gross profit margin decreased to 16% in fiscal 1997 from 27% in
    fiscal 1996, primarily due to lower margins on soil processed as a result
    of competitive pricing pressures and, to a lesser extent, lower volumes
    of soil processed at the Company's traditionally higher-margin
    soil-remediation centers. The gross profit margin also decreased due to
    the inclusion of lower-margin revenues from ReTec and IEM Sealand.
        Selling, general, and administrative expenses as a percentage of
    revenues decreased to 10% in fiscal 1997 from 13% in fiscal 1996,
    primarily due to lower expenses as a percentage of revenues at acquired
    companies.
        During fiscal 1997, the Company recorded $7,800,000 of nonrecurring
    costs to write-down certain capital equipment and intangible assets,
    including cost in excess of net assets of acquired companies (Note 12).
    The write-down was in response to the downturn in the Company's
    soil-recycling business discussed above, which will result in the closure
    of two soil-remediation sites. In addition, the Company's analysis
    indicates that the future undiscounted cash flows from certain other
    soil-remediation sites that will remain open will be insufficient to
    recover the Company's investment in these business units, thus requiring
    a write-down of certain assets, which is included in the $7,800,000
    charge. The recent severe downturn in the Company's soil-recycling
    business and relaxed compliance requirements and enforcement activities
    resulted in overcapacity in the industry and competitive pricing
    pressures. The Company expects that closure of two sites with small
    operating losses and a write-down of certain assets at two other sites,
    at which current volumes of soil being processed were insufficient to
    recover the Company's investment, will improve the operating results of
    the soil-recycling business beginning in fiscal 1998. Revenues and
    operating losses, exclusive of the write-down, at the two sites being
    closed aggregated $2,871,000 and $553,000, respectively, in fiscal 1997.
        Interest income decreased to $1,896,000 in fiscal 1997 from
    $2,539,000 in fiscal 1996 as a result of lower average invested balances
    following the acquisition of ReTec in December 1995 (Note 3) and the use
    of $8,317,000 to repurchase Company common stock in fiscal 1997. Interest
    expense increased to $2,251,000 in fiscal 1997 from $1,999,000 in fiscal
    1996, primarily due to the issuance of the 4 7/8% subordinated
    convertible debentures in May 1995 (Note 6).

                                       29PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

    Fiscal 1997 Compared With Fiscal 1996 (continued)
        Equity in earnings of unconsolidated subsidiary represents ReTec's
    proportionate share of income from a joint venture (Note 13).
        The Company recorded an income tax provision on a pretax loss in
    fiscal 1997 primarily due to the amortization and write-off of
    nondeductible cost in excess of net assets of acquired companies and, to
    a lesser extent, the impact of state income taxes. The effective tax rate
    in fiscal 1996 was higher than the statutory federal income tax rate
    primarily due to the impact of state income taxes and the amortization of
    nondeductible cost in excess of net assets of acquired companies, offset
    in part by tax-exempt investment income.

    Fiscal 1996 Compared With Fiscal 1995
        Revenues in fiscal 1996 were $66,957,000, compared with $51,504,000
    in fiscal 1995, an increase of 30%. Revenues increased due to the
    inclusion of $21,304,000 in revenues from ReTec, acquired in December
    1995, and the inclusion of revenues from soil-remediation businesses
    acquired or constructed in late fiscal 1995 and in fiscal 1996. These
    increases were offset in part by lower revenues from the Company's
    soil-remediation services resulting from a decrease in the volume and
    price of soil processed as a result of regulatory uncertainties at
    several sites, competitive pricing pressures, and severe weather
    conditions primarily in the fourth quarter of fiscal 1996. Revenues from
    nuclear services declined due to a decrease in radiochemistry laboratory
    work, reflecting a reduction in spending at the U.S. Department of Energy
    (DOE) and delays in federal government budget appropriations, largely
    offset by increased revenues from a long-term environmental restoration
    contract for the DOE's Hanford site (Hanford), which began in the second
    quarter of fiscal 1995.
        The gross profit margin decreased to 27% in fiscal 1996 from 34% in
    fiscal 1995. The gross profit margin on soil-remediation services
    revenues decreased primarily due to competitive pricing pressures, offset
    in part by operational savings. The gross profit margin on nuclear
    services decreased primarily due to lower revenues from higher-margin
    radiochemistry laboratory work and increased revenues from the
    lower-margin Hanford contract. The gross profit margin on
    fluids-recycling services improved to 40% during fiscal 1996 from 29% in
    fiscal 1995, primarily due to operational efficiencies.
        Selling, general, and administrative expenses as a percentage of
    revenues decreased to 13% in fiscal 1996 from 16% in fiscal 1995, due to
    an increase in total revenues and, to a lesser extent, operational
    efficiencies.
        Interest income increased to $2,539,000 in fiscal 1996 from
    $1,002,000 in fiscal 1995 as a result of interest income earned on
    invested proceeds from the issuance of the 4 7/8% subordinated
    convertible debentures and the issuance of shares of the Company's common
    stock in May 1995 (Notes 6 and 9). Interest expense increased to
    $1,999,000 in fiscal 1996 from $239,000 in fiscal 1995 primarily due to
    the issuance of the subordinated convertible debentures in May 1995.
        The effective tax rate was 37% in fiscal 1996, compared with 38% in
    fiscal 1995. The effective tax rates were higher than the statutory
    federal income tax rate primarily due to the impact of state income
    taxes, offset in part by tax-exempt investment income.
                                       30PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

    Fiscal 1996 Compared With Fiscal 1995 (continued)
        Minority interest expense in fiscal 1995 represents Thermo Nutech's
    net income which was allocated to the joint venture partner (Note 3).

    Liquidity and Capital Resources

        Consolidated working capital, including cash, cash equivalents, and
    short-term available-for-sale investments, was $38,960,000 at March 29,
    1997, compared with $46,343,000 at March 30, 1996. Cash, cash
    equivalents, and short- and long-term available-for-sale investments were
    $22,701,000 at March 29, 1997, compared with $35,349,000 at March 30,
    1996. During the year ended March 29, 1997, cash provided by operating
    activities was $3,647,000. The Company used cash to fund an increase in
    accounts receivable and unbilled contract costs and fees of $6,008,000
    and $3,055,000, respectively, as a result of higher revenues at its IEM
    Sealand, ReTec, and Thermo Fluids businesses.
        Excluding purchases, sales, and maturities of available-for-sale
    investments, the Company's investing activities in fiscal 1997 primarily
    consisted of an acquisition and capital additions. During fiscal 1997,
    the Company acquired IEM Sealand for 311,040 shares of the Company's
    common stock, valued at $2,006,000, and $1,681,000 in net cash. The
    Company also expended $6,036,000 for purchases of property, plant, and
    equipment in fiscal 1997.
        In fiscal 1997, the Company's financing activities used $7,859,000 of
    cash. The Company's Board of Directors has authorized the repurchase,
    through September 10, 1997, of up to $10.0 million of its own securities.
    Through March 29, 1997, the Company had expended $8,317,000 under this
    authorization. All such purchases are funded from working capital. In
    fiscal 1997, the Company paid $847,000 in cash dividends. The amount of
    cash dividends ultimately paid by the Company was dependent on the number
    of shareholders participating in the Company's Dividend Reinvestment
    Plan.
        In May 1997, the Company acquired TriTechnics Corporation, an
    environmental consulting and engineering firm, which provides
    comprehensive consulting and remedial services at refinery and chemical-
    plant sites, for approximately $1,600,000 in cash. Although the Company
    has no other material commitments for capital expenditures, such
    expenditures will largely be affected by the number of fluid-collection
    or other environmental service businesses that can be developed or
    acquired during the year. The Company believes that it has adequate
    resources to meet its financial needs for the foreseeable future.
                                       31PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                           Forward-looking Statements

        In connection with the "safe harbor" provisions of the Private
    Securities Litigation Reform Act of 1995, the Company wishes to caution
    readers that the following important factors, among others, in some cases
    have affected, and in the future could affect, the Company's actual
    results and could cause its actual results in fiscal 1998 and beyond to
    differ materially from those expressed in any forward-looking statements
    made by, or on behalf of, the Company.

        Dependence on Environmental Regulation. Federal, state, and local
    environmental laws govern each of the markets in which the Company
    conducts business, as well as many of the Company's operations. The
    markets for each of the Company's services, including industrial
    remediation services, nuclear remediation services, hazardous waste
    remedial construction services, soil-remediation services, and
    waste-fluids recycling services, and the standards governing most aspects
    of the construction and operation of the Company's facilities were
    directly or indirectly created by, and are dependent on, the existence
    and enforcement of those laws. There can be no assurance that these laws
    and regulations will not change in the future, requiring new technologies
    or stricter standards with which the Company must comply. In addition,
    there can be no assurance that these laws and regulations will not be
    made more lenient in the future, thereby reducing the size of the markets
    addressed by the Company. Any such change in such federal, state, and
    local environmental laws and regulations may have a material adverse
    effect on the Company's business.
        Responsibility for establishing and enforcing certain federal
    policies, such as the federal underground storage tank policy, has been
    delegated to the states, which are not only required to establish
    regulatory programs, but also are permitted to mandate more stringent
    requirements than are otherwise required by federal law. Currently, many
    states are considering adopting a "risk-based" approach to prioritizing
    site cleanups and setting cleanup standards, which attempt to balance the
    costs of remediation against the potential harm to human health and the
    environment from leaving sites unremediated. There can be no assurance
    that these policies, if implemented, will not reduce the size of the
    potential market addressed by the Company.

        Uncertainty of Funding. Remediation compliance requirements and
    attendant costs are often beyond the financial capabilities of many
    individuals and small companies. To address this problem, some states
    have established tax-supported trust funds to assist in the financing of
    compliance and site remediation. As a consequence, in many of the states
    in which the Company markets its soil-remediation services, the majority,
    and in some cases virtually all, of the soil remediated by the Company is
    paid for by large companies and/or state trust funds. Any substantial
    decrease in this funding could have a material adverse effect on the
    Company's business and financial performance. Many states have realized
    that the number of sites requiring remediation and the costs of
    compliance are substantially higher than were originally estimated. As a
    result, several states have relaxed enforcement activities and others
    have reduced compliance requirements in order to reduce the costs of
    cleanup. These factors have already resulted in lower levels of cleanup
    activity in some states and have a material adverse effect on the

                                       32PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                           Forward-looking Statements

    Company's business. Continued de-emphasis on enforcement activities
    and/or further reductions in compliance requirements will have a more
    severe material adverse effect on the Company's business.
        The Company depends on funding from the federal and state
    governments, and their agencies and instrumentalities, for compensation
    for its services. For example, Thermo Nutech provides a large portion of
    its services directly or indirectly to the U.S. Department of Energy
    (DOE). Declines in spending by the DOE and other governmental agencies
    could have a material adverse effect on the Company's business.

        Potential Environmental Regulatory Liability. The Company's
    operations are subject to comprehensive laws and regulations related to
    the protection of the environment. Among other things, these laws and
    regulations impose requirements to control air, soil, and water
    pollution, and regulate health, safety, zoning, land use, and the
    handling and transportation of hazardous and nonhazardous materials. Such
    laws and regulations also impose liability for remediation and cleanup of
    environmental contamination, both on-site and off-site, resulting from
    past and present operations. These requirements may also be imposed as
    conditions of operating permits or licenses that are subject to renewal,
    modification, or revocation. Existing laws and regulations, and new laws
    and regulations, may require the Company to modify, supplement, replace
    or curtail its operating methods, facilities, or equipment at costs which
    may be substantial, without any corresponding increase in revenue. The
    Company is also potentially subject to monetary fines, penalties,
    remediation, cleanup or stop orders, injunctions, or orders to cease, or
    suspend certain of its practices. The outcome of any proceedings and
    associated costs and expenses could have a materials adverse impact on
    the Company's business. In addition, the Company's divisions are subject
    to numerous laws and regulations related to the protection of human
    health and safety. Such laws and regulations may impose liability on the
    Company for exposure of its employees to radiation or other hazardous
    contamination or failure to isolate and remove radioactive or other
    hazardous contaminants from soil.
        The Company endeavors to operate its business to minimize its
    exposure to environmental and other regulatory liabilities. Although no
    claims giving rise to such liabilities have been asserted by the
    Company's customers or employees to date, there can be no assurance that
    such claims cannot or will not be asserted against the Company.

        Competition. The markets for many of the Company's services are
    regional and are characterized by intense competition from numerous local
    competitors. Some of the Company's competitors have greater technical and
    financial resources than those of the Company. As a result, they may be
    able to adapt more quickly to new or emerging technologies and changes in
    customer requirements, or to devote greater resources to the promotion
    and sale of their services than the Company. Competition could increase
    if new companies enter the market or if existing competitors expand their
    service lines. There can be no assurance that the Company's current
    technology, technology under development, or ability to develop new
    technologies will be sufficient to enable it to compete effectively with
    its competitors.

                                       33PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                           Forward-looking Statements

        Seasonal Influences. A majority of the Company's businesses
    experience seasonal fluctuations. A majority of the Company's
    soil-remediation sites, as well as the company's fluids-recycling sites,
    experience declines in severe weather conditions. Site remediation work
    and certain environmental testing services, such as the services provided
    by ReTec, IEM Sealand, and Thermo Nutech, may decline in winter months as
    a result of severe weather conditions. 

        Possible Obsolescence Due to Technological Change. Technological
    developments are expected to continue at a rapid pace in the
    environmental services industry. The Company's technologies could be
    rendered obsolete or uneconomical by technological advances by one or
    more companies that address the Company's markets or by future entrants
    into the industry. There can be no assurance that the Company would have
    the resources to, or otherwise would be successful in, developing
    responses to technological advances by others.
        Risks Associated with Acquisition Strategy. The Company's strategy
    includes the acquisition of businesses that complement or augment the
    Company's existing services. Promising acquisitions are difficult to
    identify and complete for a number of reasons, including competition
    among prospective buyers and the need for regulatory approvals. Any
    acquisitions completed by the Company may be made at substantial premiums
    over the fair value of the net assets of the acquired companies. There
    can be no assurance that the Company will be able to complete future
    acquisitions or that the Company will be able to successfully integrate
    any acquired businesses. In order to finance such acquisitions, it may be
    necessary for the Company to raise additional funds through public or
    private financings. Any equity or debt financing, if available at all,
    may be on terms which are not favorable to the Company and, in the case
    of equity financing, may result in dilution to the Company's
    stockholders.

        No Assurance of Development and Commercialization of Technology Under
    Development. The Company is currently engaged in the development of
    several technologies which may ultimately be commercialized to provide
    services to customers. There are a number of technological challenges
    that the Company must successfully address to complete any of its
    development efforts. Technology development involves a high degree of
    risk, and returns to investors are dependent upon successful development
    and commercialization of such technology. There can be no assurance that
    any of the technologies currently being developed by the Company, or
    those to be developed in the future, will be technologically feasible or
    accepted by the marketplace, or that any such development will be
    completed in any particular timeframe.



                                       34PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements

                         Selected Financial Information

    (In thousands except
    per share amounts)      1997(a)   1996(b)   1995(c)    1994(d,e)  1993(e)
    -------------------------------------------------------------------------
    Statement of Operations Data:
    Revenues            $114,849  $ 66,957  $ 51,504   $ 43,488   $ 34,615
    Income (loss)
      before cumulative
      effect of change
      in accounting
      principle           (2,681)    5,444     3,643      2,510      1,868
    Net income (loss)     (2,681)    5,444     3,643      2,567      1,868
    Earnings (loss) per
      share:
        Primary             (.21)      .44       .36
        Fully diluted       (.21)      .42       .35

    Balance Sheet Data:
    Working capital     $ 38,960  $ 46,343  $  3,384   $ 12,676   $  7,052
    Total assets         135,011   135,802    79,156     68,939     43,637
    Long-term
      obligations         40,600    40,600     2,650      2,650          -
    Shareholders'
      investment          74,830    83,352    60,320     47,638     26,600

    Other Data:
      Cash dividends
        declared        $  2,557  $  2,491  $  2,012   $  2,127   $  1,586

    (a) Reflects the September 1996 acquisition of IEM Sealand and $7.8
        million of nonrecurring costs.
    (b) Reflects the May 1995 issuance of $38 million principal amount of
        4 7/8% subordinated convertible debentures and a private placement
        of 500,000 shares of the Company's common stock for net proceeds of
        $6.6 million. Also reflects the December 1995 acquisition of ReTec.
    (c) Reflects the October 1994 acquisition of TPST Woodworth and the
        December 1994 acquisition of TPST Maryland.
    (d) Reflects the December 1993 initial public offering of the Company's
        common stock for net proceeds of $13.5 million, the November 1993
        acquisition of Thermo Fluids, and issuance of a $2.7 million
        principal amount 3 7/8% subordinated convertible note. Also reflects
        the adoption of Statement of Financial Accounting Standards No. 115,
        "Accounting for Certain Investments in Debt and Equity Securities."
    (e) Financial data has been restated to reflect the June 1995
        acquisition of Thermo Nutech, accounted for in a manner similar to a
        pooling-of-interests.


                                       35PAGE
<PAGE>
    Thermo Remediation Inc.                         1997 Financial Statements


    Common Stock Market Information
        The following table shows the market range for the Company's common
    stock based on reported sales prices on the American Stock Exchange
    (symbol THN).

                                     Fiscal 1997            Fiscal 1996
                                --------------------   ---------------------
    Quarter                        High         Low        High         Low
    ------------------------------------------------------------------------
    First                       $15         $11 7/8     $17 3/8     $12 7/8
    Second                       13 1/4       9 7/8      16 5/8      14
    Third                        11 1/2       7 7/8      15 1/2      13 1/8
    Fourth                        8 7/8       6 3/4      16 1/4      13 1/4
  
        As of May 23, 1997, the Company had 172 holders of record of its
    common stock. This does not include holdings in street or nominee names.
    The closing market price on the American Stock Exchange for the Company's
    common stock on May 23, 1997, was $7 per share.

    Shareholder Services
        Shareholders of Thermo Remediation Inc. who desire information about
    the Company are invited to contact John N. Hatsopoulos, Chief Financial
    Officer, Thermo Remediation Inc., 81 Wyman Street, P.O. Box 9046,
    Waltham, Massachusetts 02254-9046, (617) 622-1111. A mailing list is
    maintained to enable shareholders whose stock is held in street name, and
    other interested individuals, to receive quarterly reports, annual
    reports, and press releases as quickly as possible. Beginning in 1997,
    quarterly distribution of printed reports will be limited to the second
    quarter report only. All quarterly reports and press releases are
    available through the Internet at Thermo Electron's home page on the
    World Wide Web (http://www.thermo.com/subsid/thn.html).

    Stock Transfer Agent
        Bank of Boston is the stock transfer agent and maintains shareholder
    activity records. The agent will respond to questions on issuance of
    stock certificates, change of ownership, lost stock certificates, and
    change of address. For these and similar matters, please direct inquires
    to:

        Bank of Boston
        c/o Boston EquiServe Limited Partnership
        P.O. Box 8040
        Boston, Massachusetts 02102-8040
        (617) 575-3120

    Dividend Policy
        The Company intends to pay cash dividends from time to time to the
    holders of the Company's common stock out of funds legally available
    therefor. The Company currently expects that such dividends will be paid
    semiannually. No assurance can be given, however, as to whether the
    Company will continue to pay dividends in the future. On August 7, 1996,
    and February 12, 1997, the Board of Directors declared semiannual
    dividends of $.10 per share, which were paid on September 5, 1996, and
    March 24, 1997, to shareholders of record on August 22, 1996, and March
    3, 1997, respectively.
                                       36PAGE
<PAGE>

    Thermo Remediation Inc.                         1997 Financial Statements


    Dividend Reinvestment Plan
        The Thermo Remediation Inc. Dividend Reinvestment Plan permits
    shareholders to have their dividends reinvested automatically in
    additional shares of the Company's common stock without paying service
    charges or brokerage fees. For more details about this service, please
    write to:

        Bank of Boston
        c/o Boston EquiServe Limited Partnership
        Investor Relations Department
        P.O. Box 8040
        Boston, Massachusetts 02102-8040

    Form 10-K Report
        A copy of the Annual Report on Form 10-K for the fiscal year ended
    March 29, 1997, as filed with the Securities and Exchange Commission, may
    be obtained without charge by writing to John N. Hatsopoulos, Chief
    Financial Officer, Thermo Remediation Inc., 81 Wyman Street, P.O. Box
    9046, Waltham, Massachusetts 02254-9046.

    Annual Meeting
        The annual meeting of shareholders will be held on Wednesday,
    September 24, 1997, at 10:00 a.m. at Thermo Electron Corporation, 81
    Wyman Street, Waltham, Massachusetts.