SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

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

                                    FORM 10-Q

    (mark one)

    [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the Quarter Ended January 3, 1998.

    [   ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934.

                         Commission File Number 1-10573

                            THERMO POWER CORPORATION
             (Exact name of Registrant as specified in its charter)

    Massachusetts                                                  04-2891371
    (State or other jurisdiction of                          (I.R.S. Employer
    incorporation or organization)                        Identification No.)

    81 Wyman Street, P.O. Box 9046
    Waltham, Massachusetts                                         02254-9046
    (Address of principal executive offices)                       (Zip Code)

       Registrant's telephone number, including area code: (781) 622-1000

         Indicate by check mark whether the Registrant (1) has filed
         all reports required to be filed by Section 13 or 15(d) of the
         Securities Exchange Act of 1934 during the preceding 12 months
         (or for such shorter period that the Registrant was required
         to file such reports), and (2) has been subject to such filing
         requirements for the past 90 days. Yes [ X ] No [   ]

         Indicate the number of shares outstanding of each of the
         issuer's classes of Common Stock, as of the latest practicable
         date.

                    Class                Outstanding at January 30, 1998
         ----------------------------    -------------------------------
         Common Stock, $.10 par value              11,819,973
PAGE
<PAGE>
    PART I - FINANCIAL INFORMATION

    Item 1 - Financial Statements

                            THERMO POWER CORPORATION

                           Consolidated Balance Sheet
                                   (Unaudited)

                                     Assets

                                                   January 3,  September 27,
    (In thousands)                                       1998           1997
    ------------------------------------------------------------------------
    Current Assets:
      Cash and cash equivalents                      $ 39,667       $ 19,347
      Available-for-sale investments, at quoted
        market value (amortized cost of $9,132
        and $9,129)                                     9,169          9,171
      Accounts receivable, less allowances of 
        $13,699 and $757                               57,975         21,012
      Unbilled contract costs and fees                  9,743          4,856
      Inventories:
        Raw materials                                  31,346         17,570
        Work in process                                 4,893          1,077
        Finished goods                                  6,407          1,237
      Prepaid income taxes                              4,376          3,118
      Other current assets                              2,112            219
      Due from parent company and affiliated
        companies, net (Note 3)                        18,794              -
                                                     --------       --------
                                                      184,482         77,607
                                                     --------       --------
    Rental Assets, at Cost                             13,620         13,645
      Less: Accumulated depreciation and
            amortization                                3,459          3,369
                                                     --------       --------
                                                       10,161         10,276
                                                     --------       --------
    Property, Plant, and Equipment, at Cost            33,935         19,637
      Less: Accumulated depreciation and
            amortization                                9,313          9,046
                                                     --------       --------
                                                       24,622         10,591
                                                     --------       --------
    Long-term Available-for-sale Investments, at
      Quoted Market Value (amortized cost of
      $2,301 in fiscal 1997; Note 3)                        -          2,200
                                                     --------       --------
    Other Assets                                          261            236
                                                     --------       --------
    Cost in Excess of Net Assets of Acquired
      Companies (Note 3)                              156,932          7,082
                                                     --------       --------
                                                     $376,458       $107,992
                                                     ========       ========

                                        2PAGE
<PAGE>
                            THERMO POWER CORPORATION

                     Consolidated Balance Sheet (continued)
                                   (Unaudited)

                    Liabilities and Shareholders' Investment


                                                   January 3,  September 27,
    (In thousands except share amounts)                  1998           1997
    ------------------------------------------------------------------------
    Current Liabilities:
      Notes payable (Note 3)                         $ 25,692       $      -
      Accounts payable                                 36,697          9,622
      Accrued payroll and employee benefits             9,721          3,133
      Billings in excess of contract costs and fees     6,000          1,353
      Accrued income taxes (Note 3)                     3,568          1,620
      Accrued warranty costs                            5,343          3,435
      Common stock of subsidiary subject to
        redemption ($18,450 redemption value)          18,138              -
      Accrued acquisition expenses (Note 3)            14,892              -
      Other accrued expenses (Note 3)                  28,131          3,240
      Due to parent company and affiliated
        companies                                           -            496
                                                     --------       --------
                                                      148,182         22,899
                                                     --------       --------
    Deferred Income Taxes                                 993            114
                                                     --------       --------
    Long-term Obligations (in fiscal 1998 includes
      $160,000 due to parent company; Note 3)         160,392            252
                                                     --------       --------
    Common Stock of Subsidiary Subject to
      Redemption ($18,450 redemption value)                 -         18,059
                                                     --------       --------
    Shareholders' Investment:
      Common stock, $.10 par value, 30,000,000
        shares authorized; 12,493,371 shares issued     1,249          1,249
      Capital in excess of par value                   55,332         55,283
      Retained earnings                                14,866         13,811
      Treasury stock at cost, 680,148 and
        578,124 shares                                 (4,631)        (3,636)
      Cumulative translation adjustment                    51              -
      Net unrealized gain (loss) on available-
        for-sale investments                               24            (39)
                                                     --------       --------
                                                       66,891         66,668
                                                     --------       --------
                                                     $376,458       $107,992
                                                     ========       ========


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



                                        3PAGE
<PAGE>
                            THERMO POWER CORPORATION

                        Consolidated Statement of Income
                                   (Unaudited)


                                                      Three Months Ended
                                                  -------------------------
                                                  January 3,   December 28,
    (In thousands except per share amounts)             1998           1996
    -----------------------------------------------------------------------
    Revenues                                         $63,562        $28,786
                                                     -------        -------
    Costs and Operating Expenses:
      Cost of revenues                                45,249         24,533
      Selling, general, and administrative expenses   13,435          3,780
      Research and development expenses                1,729            644
                                                     -------        -------
                                                      60,413         28,957
                                                     -------        -------

    Operating Income (Loss)                            3,149           (171)

    Interest Income (includes $180 from related
      party in fiscal 1998; Note 3)                      589            451
    Interest Expense (includes $1,175 to related 
      party in fiscal 1998; Note 3)                   (1,425)            (5)
                                                     -------        -------
    Income Before Provision for Income Taxes and
      Minority Interest                                2,313            275
    Provision for Income Taxes                         1,069            193
    Minority Interest Expense                            189             78
                                                     -------        -------
    Net Income                                       $ 1,055        $     4
                                                     =======        =======
    Basic and Diluted Earnings per Share (Note 2)    $   .09        $     -
                                                     =======        =======
    Weighted Average Shares (Note 2):
      Basic                                           11,898         12,489
                                                     =======        =======
      Diluted                                         11,912         12,504
                                                     =======        =======


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



                                        4PAGE
<PAGE>
                            THERMO POWER CORPORATION

                      Consolidated Statement of Cash Flows
                                   (Unaudited)

                                                     Three Months Ended
                                                  -------------------------
                                                  January 3,   December 28,
    (In thousands)                                      1998           1996
    -----------------------------------------------------------------------
    Operating Activities:
      Net income                                   $   1,055      $       4
      Adjustments to reconcile net income to net
        cash provided by (used in) operating
        activities:
          Depreciation and amortization                2,534            523
          Minority interest expense                      189             78
          Increase in deferred income taxes             (671)             -
          Other noncash items                            (17)           (68)
          Changes in current accounts, excluding
            the effects of acquisition:
              Accounts receivable                     (3,354)          (386)
              Inventories                              7,333          2,009
              Unbilled contract costs and fees        (1,587)        (1,154)
              Other current assets                       (38)          (351)
              Accounts payable                         1,457         (2,438)
              Other current liabilities                1,177            975
                                                   ---------      ---------
    Net cash provided by (used in) operating
      activities                                       8,078           (808)
                                                   ---------      ---------
    Investing Activities:
      Acquisition, net of cash acquired (Note 3)    (143,743)             -
      Proceeds from sale and maturities of 
        available-for-sale investments                     -          1,000
      Increase in rental assets                         (389)          (529)
      Proceeds from sale of rental assets                314            878
      Purchases of property, plant, and equipment     (1,497)          (786)
      Proceeds from sale of property, plant,
        and equipment                                  1,210              -
      Other                                               (9)             -
                                                   ---------      ---------
    Net cash provided by (used in) investing
      activities                                    (144,114)           563
                                                   ---------      ---------
    Financing Activities:
      Issuance of long-term obligation to parent
        company (Note 3)                             160,000              -
      Decrease in short-term notes payable            (2,924)             -
      Purchases of Company common stock               (1,129)             -
      Net proceeds from issuance of Company
        common stock                                     183             71
      Repayment of long-term obligations                 (44)           (14)
                                                   ---------      ---------
    Net cash provided by financing activities      $ 156,086      $      57
                                                   ---------      ---------
                                        5PAGE
<PAGE>
                            THERMO POWER CORPORATION

                Consolidated Statement of Cash Flows (continued)
                                   (Unaudited)


                                                     Three Months Ended
                                                  -------------------------
                                                  January 3,   December 28,
    (In thousands)                                      1998           1996
    -----------------------------------------------------------------------
    Exchange Rate Effect on Cash                   $     270      $       -
                                                   ---------      ---------
    Increase (Decrease) in Cash and Cash 
      Equivalents                                     20,320           (188)
    Cash and Cash Equivalents at Beginning of 
      Period                                          19,347         29,852
                                                   ---------      ---------
    Cash and Cash Equivalents at End of Period     $  39,667      $  29,664
                                                   =========      =========
    Noncash Activities (Note 3):
      Fair value of assets of acquired company     $ 271,109      $       -
      Cash paid for acquired company                (159,324)             -
      Cash paid in prior year for acquired company    (2,301)             -
      Cash to be paid for remaining outstanding
        shares of tender offer                        (5,111)             -
                                                   ---------      ---------
          Liabilities assumed of acquired company  $ 104,373      $       -
                                                   =========      =========
      Sale of acquired business to related party   $  19,117      $       -
                                                   =========      =========


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





                                        6PAGE
<PAGE>
                            THERMO POWER CORPORATION

                   Notes to Consolidated Financial Statements


    1.  General

        The interim consolidated financial statements have been prepared by
    Thermo Power Corporation (the Company) without audit and, in the opinion
    of management, reflect all adjustments of a normal recurring nature
    necessary for a fair statement of the financial position at January 3,
    1998, and the results of operations and cash flows for the three-month
    periods ended January 3, 1998, and December 28, 1996. The Company's
    results of operations for the three-month periods ended January 3, 1998,
    and December 28, 1996, include 14 weeks and 13 weeks, respectively.
    Interim results are not necessarily indicative of results for a full
    year.

        The consolidated balance sheet presented as of September 27, 1997,
    has been derived from the consolidated financial statements that have
    been audited by the Company's independent public accountants. The
    consolidated financial statements and notes are presented as permitted by
    Form 10-Q and do not contain certain information included in the annual
    financial statements and notes of the Company. The consolidated financial
    statements and notes included herein should be read in conjunction with
    the financial statements and notes included in the Company's Annual
    Report on Form 10-K for the fiscal year ended September 27, 1997, filed
    with the Securities and Exchange Commission.

    2.  Earnings per Share

        During the first quarter of fiscal 1998, the Company adopted
    Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
    Share." As a result, all previously reported earnings per share have been
    restated; however, basic and diluted earnings per share equals the
    Company's previously reported earnings per share for the fiscal 1997
    period. Basic earnings per share have been computed by dividing net
    income by the weighted average number of shares outstanding during the
    period. Diluted earnings per share have been computed assuming the
    exercise of stock options and their related income tax effect. 






                                        7PAGE
<PAGE>
                            THERMO POWER CORPORATION

    2.  Earnings per Share (continued)

        Basic and diluted earnings per share were calculated as follows:

                                                      Three Months Ended
                                                   ------------------------
                                                   January 3,  December 28,
    (In thousands except per share amounts)              1998          1996
    -----------------------------------------------------------------------
    Basic
    Net income                                        $ 1,055       $     4
                                                      -------       -------
    Weighted average shares                            11,898        12,489
                                                      -------       -------
    Basic earnings per share                          $   .09       $     -
                                                      =======       =======
    Diluted
    Net income                                        $ 1,055       $     4
                                                      -------       -------
    Weighted average shares                            11,898        12,489
    Effect of stock options                                14            15
                                                      -------       -------
    Weighted average shares, as adjusted               11,912        12,504
                                                      -------       -------
    Diluted earnings per share                        $   .09       $     -
                                                      =======       =======

        The computation of diluted earnings per share excludes the effect of
    assuming the exercise of certain outstanding stock options because the
    effect would be antidilutive. As of January 3, 1998, there were 874,999
    of such options outstanding, with exercise prices ranging from $9.05 to
    $17.53 per share.

    3.  Acquisition

        On November 6, 1997, the Company declared unconditional in all
    respects its cash tender offer for the outstanding ordinary shares of
    Peek plc (Peek). The aggregate cost to acquire all outstanding Peek
    ordinary shares, including related expenses, is estimated at
    approximately $166,736,000. The purchase price includes $2,301,000 that
    was paid for shares acquired in fiscal 1997, classified as "Long-term
    available-for-sale investments" in the accompanying September 27, 1997,
    balance sheet, and $5,111,000 accrued for the purchase of the remaining
    Peek ordinary shares outstanding, classified as "Other accrued expenses"
    in the accompanying January 3, 1998, balance sheet. The Company made
    payments for the remaining Peek ordinary shares outstanding in the second
    quarter of fiscal 1998. Peek develops, markets, installs, and services
    equipment to monitor and regulate traffic flow in cities and towns around
    the world. In addition, through its Field Data business, Peek develops
    and markets field measurement products.


                                        8PAGE
<PAGE>
                            THERMO POWER CORPORATION

    3.  Acquisition (continued)

        To finance the acquisition of Peek, the Company borrowed $160,000,000
    from Thermo Electron Corporation pursuant to a promissory note due
    November 1999, and bearing interest at the 90-day Commercial Paper
    Composite Rate plus 25 basis points, set at the beginning of each
    quarter.

        Subsequent to Peek's acquisition by the Company, the Company reached
    an agreement with ONIX Systems Inc., a majority-owned subsidiary of
    Thermo Instrument Systems Inc., to sell Peek's Field Data business,
    effective November 6, 1997, for $19,117,000, which was classified as "Due
    from parent company and affiliated companies" in the accompanying January
    3, 1998, balance sheet. Thermo Instrument is a majority-owned subsidiary
    of Thermo Electron. The Company received payment from ONIX for the sale
    of the Field Data business in January 1998. The components of the sales
    price for the Field Data business consist of the net tangible book value
    of the Field Data business, cost in excess of net assets of acquired
    company, and the estimated tax liability relating to the sale. The cost
    in excess of net assets of acquired company was determined based upon a
    percentage of the Company's total cost in excess of net assets of
    acquired company associated with its acquisition of Peek, based on the
    1997 revenues of the Field Data business relative to Peek's total 1997
    consolidated revenues.

        The acquisition has been accounted for using the purchase method of
    accounting and its results have been included in the accompanying
    financial statements from the date of acquisition. The cost of the
    acquisition exceeded the estimated fair value of the acquired net assets
    by $150,710,000, which is being amortized over 40 years. Allocation of
    the purchase price was based on estimates of the fair value of the net
    assets acquired and 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 Peek on a pro forma basis,
    assuming the companies had been combined since the beginning of fiscal
    1997. The results of Peek exclude the results of businesses sold by Peek
    prior to its acquisition by the Company and Peek's Field Data business,
    which was sold to ONIX effective November 6, 1997.

                                                      Three Months Ended
                                                   -------------------------
                                                   January 3,   December 28,
    (In thousands except per share amounts)              1998           1996
    ------------------------------------------------------------------------
    Revenues                                         $ 81,648       $108,579
    Net income                                            376         10,072
    Basic and diluted earnings per share                  .03            .81

        The pro forma results are not necessarily indicative of future
    operations or the actual results that would have occurred had the
    acquisition of Peek been made at the beginning of fiscal 1997.

                                        9PAGE
<PAGE>
                            THERMO POWER CORPORATION

    3.  Acquisition (continued)

        In connection with the acquisition of Peek, the Company has
    undertaken a restructuring of the acquired business. The restructuring
    activities will primarily include reductions in staffing levels and
    abandonment of excess facilities. In connection with these restructuring
    activities the Company established reserves totaling $15,101,000 for
    estimated severance, excess facilities, and other exit costs associated
    with the acquisition, none of which was expended during the first quarter
    of fiscal 1998. This amount was recorded as a cost of the acquisition of
    Peek in accordance with Emerging Issues Task Force Pronouncement 95-3
    (EITF 95-3). As of January 3, 1998, unresolved matters related to the
    restructuring of Peek include completing the identification of specific
    employees for termination and locations to be abandoned or consolidated,
    as well as other decisions concerning the integration of the acquired
    businesses into the Company. In accordance with EITF 95-3, finalization
    of the Company's plan for restructuring Peek will not occur beyond one
    year from the date of acquisition. Any changes to estimates of these
    costs will be recorded as adjustments to cost in excess of net assets of
    acquired companies.

        Notes payable in the accompanying January 3, 1998, balance sheet
    includes $25,060,000 of borrowings at Peek. As of January 3, 1998, Peek
    had outstanding promissory notes aggregating $17,470,000 and borrowings
    under a line of credit totaling $7,590,000. The promissory notes bear
    interest at variable rates and are due on demand as a result of Peek's
    violations of certain debt covenants. The weighted average interest rate
    on the promissory notes outstanding as of January 3, 1998, was 6.40%. The
    Company expects to repay the promissory notes during the second quarter
    of fiscal 1998. Borrowings under the line of credit are payable on demand
    and are denominated in British pounds sterling. As of January 3, 1998,
    the remaining amount available under the line of credit was 400,000
    British pounds sterling. Borrowings under the line of credit bear
    interest at applicable London interbank market rates plus 45 basis points
    (6.89% at January 3, 1998). Borrowings under the line of credit are
    guaranteed by Thermo Electron. 

        Peek enters into forward contracts to hedge certain firm purchase and
    sale commitments denominated in currencies other than its subsidiaries'
    local currencies. The purpose of Peek's foreign currency hedging
    activities is to protect Peek's local currency cash flows related to
    these commitments from fluctuations in foreign exchange rates. Because
    Peek's forward contracts are entered into as hedges against existing
    foreign currency exposures, there generally is no effect on the income
    statement since gains or losses on the customer contract offset gains or
    losses on the forward contract.


                                       10PAGE
<PAGE>
                            THERMO POWER CORPORATION

    Item 2 - 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 under the heading "Forward-looking Statements"
    in Exhibit 13 to the Company's Annual Report on Form 10-K for the fiscal
    year ended September 27, 1997, filed with the Securities and Exchange
    Commission.

    Overview

        The Company's business is divided into four segments: Traffic
    Control, Industrial Refrigeration Systems, Engines, and Cooling and
    Cogeneration Systems. Through the Company's Peek subsidiary, acquired
    November 1997, the Traffic Control segment develops, markets, installs,
    and services equipment to monitor and regulate traffic flow in cities and
    towns around the world. Peek offers a wide range of products, including
    hardware, such as detectors, counter classifiers, traffic signals and
    controllers, and variable message signs, as well as traffic management
    systems that integrate these products to ease roadway congestion, improve
    safety, and collect data. Traffic management systems include variable
    message systems to advise drivers of accidents and other roadway hazards,
    traffic signal-timing systems that adapt continuously to changing
    conditions to minimize delays, video systems to give real-time analysis
    of traffic flows at intersections and on highways, and automatic
    toll-collection systems. The Company also offers high-resolution video
    equipment to aid police officers in capturing the information necessary
    to charge individuals with motor vehicle violations such as speeding and
    red light violations. The Company's results of operations and financial
    position for fiscal 1998 are expected to be affected significantly by the
    acquisition of Peek.

        Funding patterns of governmental entities, as well as seasonality,
    are expected to result in fluctuations in quarterly revenues and income
    of the Traffic Control segment. As a result of these factors, Peek has
    historically experienced relatively higher sales and net income in the
    second and fourth calendar quarters and relatively lower sales and net
    income in the first and third calendar quarters. Additionally, a portion
    of the Traffic Control segment's revenues result from the sale of large
    systems, the timing of which can lead to variability in the Company's
    quarterly revenues and income. 

                                       11PAGE
<PAGE>
                            THERMO POWER CORPORATION

    Overview (continued)

        A significant portion of the Traffic Control segment's revenues
    originate outside the U.S., principally in Europe. Foreign divisions and
    subsidiaries principally sell in their local currencies and generally
    seek to charge their customers in the same currency as their operating
    costs. However, the Company's financial performance and competitive
    position can be affected by currency exchange rate fluctuations affecting
    the relationship between the U.S. dollar and foreign currencies. The
    Company reduces its exposure to currency fluctuations through the use of
    forward contracts. Since the operations of the Traffic Control segment
    are conducted principally in Europe, the Company's operating results
    could be adversely affected by capital spending and economic conditions
    in Europe. 

        Through the Company's FES division, the Industrial Refrigeration
    Systems segment supplies standard and custom-designed industrial
    refrigeration systems used primarily by the food-processing,
    petrochemical, and pharmaceutical industries. NuTemp, Inc. is a supplier
    of both remanufactured and new industrial refrigeration and commercial
    cooling equipment for sale or rental. NuTemp's industrial refrigeration
    equipment is used primarily in the food-processing, petrochemical, and
    pharmaceutical industries, and its commercial cooling equipment is used
    primarily in institutions and commercial buildings, as well as by service
    contractors. The demand for NuTemp's equipment is typically highest in
    the summer months and can be adversely affected by cool summer weather.

        Within the Engines segment, the Company's Crusader Engines division
    manufactures gasoline engines for recreational boats; propane and
    gasoline engines for lift trucks; and natural gas engines for vehicular,
    cooling, pumping, refrigeration, and other industrial applications.

        The Cooling and Cogeneration Systems segment consists of the
    Company's Tecogen division and the Company's ThermoLyte Corporation
    subsidiary. Tecogen designs, develops, markets, and services packaged
    cooling and cogeneration systems fueled principally by natural gas for
    sale to a wide range of commercial, institutional, industrial, and
    multi-unit residential users. Certain large-capacity cooling systems are
    manufactured for Tecogen by FES, and the cogeneration systems are
    manufactured for Tecogen by Crusader. Tecogen also conducts research and
    development of natural gas-engine technology and on applications of
    thermal energy. ThermoLyte is developing and commercializing various
    gas-powered lighting products.


                                       12PAGE
<PAGE>
                            THERMO POWER CORPORATION

    Overview (continued)

        The Company's revenues by industry segment are as follows:

                                                     Three Months Ended
                                                  -------------------------
                                                  January 3,   December 28,
    (In thousands)                                      1998           1996
    -----------------------------------------------------------------------
    Traffic Control                                  $38,752        $     -
    Industrial Refrigeration Systems                  17,009         19,146
    Engines                                            5,124          5,407
    Cooling and Cogeneration Systems                   2,958          4,616
    Intersegment sales elimination                      (281)          (383)
                                                     -------        -------
                                                     $63,562        $28,786
                                                     =======        =======

        The Company will be required to modify or replace portions of its
    software and hardware, including the software and hardware of Peek, so
    that it will function properly in the year 2000. Costs associated with
    purchasing software and hardware that is year 2000 compliant, excluding
    costs associated with Peek, is included in estimated capital expenditures
    for the remainder of fiscal 1998, disclosed in liquidity and capital
    resources. The cost of such new software and hardware will be capitalized
    and amortized over it's useful life, and is not expected to have a
    material effect on the Company's results of operations. The Company is in
    the process of assessing the impact of the year 2000 issue on the
    operations of Peek, including the development of cost estimates for, and
    the extent of any programming changes that might be required to address,
    this issue. At this time, the Company is unable to determine the
    materiality of the year 2000 issue at Peek.

    Results of Operations

    First Quarter Fiscal 1998 Compared With First Quarter Fiscal 1997

        Total revenues increased to $63,562,000 in the first quarter of
    fiscal 1998 from $28,786,000 in the first quarter of fiscal 1997, due to
    the inclusion of $38,752,000 of revenues from Peek, acquired November
    1997. Peek's revenues are not necessarily indicative of future quarterly
    operating results due to funding patterns of governmental entities and
    seasonality. Industrial Refrigeration Systems segment revenues decreased
    to $17,009,000 in fiscal 1998 from $19,146,000 in fiscal 1997, primarily
    due to lower demand for standard industrial refrigeration packages at FES
    and lower demand for reconditioned cooling equipment at NuTemp. Engines
    segment revenues decreased to $5,124,000 in fiscal 1998 from $5,407,000
    in fiscal 1997, primarily due to decreased sales of marine-engine related
    products. Cooling and Cogeneration Systems segment revenues decreased to
    $2,958,000 in fiscal 1998 from $4,616,000 in fiscal 1997, principally due
    to decreased revenues from gas-fueled cooling systems.

                                       13PAGE
<PAGE>
                            THERMO POWER CORPORATION

    First Quarter Fiscal 1998 Compared With First Quarter Fiscal 1997
    (continued)

        The gross profit margin increased to 29% in the first quarter of
    fiscal 1998 from 15% in the first quarter of fiscal 1997, primarily due
    to a 35% gross profit margin at Peek. The gross profit margin at Peek is
    not necessarily indicative of future quarterly operating results for the
    reasons discussed above. The gross profit margin for the Industrial
    Refrigeration Systems segment increased to 22% in fiscal 1998 from 18% in
    fiscal 1997, primarily due to lower warranty expenses and manufacturing
    efficiencies at FES. The gross profit margin for the Engines segment
    increased to 8% in fiscal 1998 from 3% in fiscal 1997, primarily due to a
    decrease in sales of lower-margin marine-engine related products. The
    gross profit margin for the Cooling and Cogeneration Systems segment
    increased to 19% in fiscal 1998 from 18% in fiscal 1997, primarily due to
    a decrease in sales of lower-margin gas-fueled cooling systems.

        Selling, general, and administrative expenses as a percentage of
    revenues increased to 21% in the first quarter of fiscal 1998 from 13% in
    the first quarter of fiscal 1997, principally due to relatively higher
    selling, general, and administrative expenses as a percentage of revenues
    at Peek. Research and development expenses increased to $1,729,000 in
    fiscal 1998 from $644,000 in fiscal 1997, due to the inclusion of
    $1,154,000 of research and development expenses at Peek.

        Interest income increased to $589,000 in the first quarter of fiscal
    1998 from $451,000 in the first quarter of fiscal 1997, principally due
    to interest earned on the receivable from ONIX Systems Inc. relating to
    the sale of Peek's Field Data business (Note 3). Interest expense
    increased $1,420,000 due to borrowings in November 1997 from Thermo
    Electron Corporation to finance the acquisition of Peek (Note 3), and the
    inclusion of $245,000 of interest expense at Peek.

        The effective tax rate decreased to 46% in the first quarter of
    fiscal 1998 from 70% in the first quarter of fiscal 1997. These rates
    exceeded the statutory federal income tax rate primarily due to
    nondeductible amortization of cost in excess of net assets of acquired
    companies, an increase in the valuation allowance for net operating loss
    carryforwards and other tax assets of the Company's ThermoLyte
    subsidiary, and the impact of state income taxes. The effective tax rate
    declined from fiscal 1997 to fiscal 1998 principally due to the smaller
    relative effect of the valuation allowance required at ThermoLyte.

        Minority interest expense increased to $189,000 in the first quarter
    of fiscal 1998 from $78,000 in the first quarter of fiscal 1997 due to
    minority interest expense on Peek's earnings relating to Peek shares
    tendered after November 6, 1997, through January 16, 1998. As of January
    16, 1998, the Company had acquired all of the Peek outstanding ordinary
    shares.



                                       14PAGE
<PAGE>
                            THERMO POWER CORPORATION

    Liquidity and Capital Resources

        Consolidated working capital was $36,300,000 at January 3, 1998,
    compared with $54,708,000 at September 27, 1997. Included in working
    capital are cash, cash equivalents, and available-for-sale investments of
    $48,836,000 at January 3, 1998, compared with $28,518,000 at
    September 27, 1997. Of the $48,836,000 balance at January 3, 1998,
    $15,037,000 was held by ThermoLyte, and the remainder was held by the
    Company and its wholly owned subsidiaries. At January 3, 1998,
    $13,611,000 of the Company's cash and cash equivalents was held by its
    foreign subsidiaries. While this cash can be used outside of the United
    States, repatriation of this cash into the United States would be subject
    to a United States tax. Additionally, working capital at January 3, 1998,
    was reduced by common stock of subsidiary subject to redemption of
    $18,138,000, which represents ThermoLyte's common stock, redeemable in
    December 1998 or 1999, the redemption value of which is $18,450,000.

        During the first quarter of fiscal 1998, $8,078,000 of cash was
    provided by operating activities. Cash provided by the Company's
    operating results was improved by a reduction in inventories of
    $7,333,000, offset in part by an increase in accounts receivable of
    $3,354,000. The decrease in inventories and increase in accounts
    receivable resulted primarily at Peek, due to the timing of shipments.
    The increase in accounts receivable at Peek was offset in part by a
    decrease in accounts receivable principally at Crusader, NuTemp, and FES,
    due to a decrease in sales.

        During the first quarter of fiscal 1998, the Company's primary
    investing activities included $143,743,000 expended for the Peek
    acquisition (Note 3), net of cash acquired, $1,886,000 expended for
    purchases of rental assets and property, plant, and equipment, and
    $1,524,000 in proceeds received from the sale of rental assets and
    property, plant, and equipment. At January 3, 1998, $5,111,000 was
    accrued for Peek shares acquired in the second quarter of fiscal 1998 in
    completion of the Company's acquisition of Peek (Note 3). The Company
    received payment of $19,117,000, relating to the sale of Peek's Field
    Data business, from ONIX in January 1998 (Note 3). During the remainder
    of fiscal 1998, the Company expects to make capital expenditures for the
    purchase of rental assets and property, plant, and equipment of
    approximately $13,600,000, including approximately $550,000 for software
    and hardware that is year 2000 compliant.

        The Company's financing activities provided $156,086,000 of cash in
    the first quarter of fiscal 1998. The Company borrowed $160,000,000 from
    Thermo Electron to finance the acquisition of Peek (Note 3) and expended
    $1,129,000 of cash for the purchase of Company common stock. The
    Company's Board of Directors has authorized the repurchase, through March
    17, 1998, of up to $5,000,000 of its own securities. Any such purchases
    would be funded from working capital. As of January 3, 1998, $258,000
    remained under the Company's authorization.


                                       15PAGE
<PAGE>
                            THERMO POWER CORPORATION

    Liquidity and Capital Resources (continued)

        The Company's $160,000,000 promissory note to Thermo Electron is due
    in November 1999. Thermo Electron has indicated its intention to require
    that the Company's indebtedness to Thermo Electron be repaid only to the
    extent the Company's liquidity and cash flow permit. The Company believes
    its existing resources are sufficient to meet the capital requirements of
    its existing operations for the foreseeable future, except for repayment
    of the promissory note to Thermo Electron as discussed above.


    PART II - OTHER INFORMATION

    Item 6 - Exhibits and Reports on Form 8-K

    (a) Exhibits

        See Exhibit Index on the page immediately preceding the exhibits.

    (b) Reports on Form 8-K

        On November 21, 1997, the Company filed a Current Report on Form 8-K
    pertaining to its tender offer for all of the outstanding shares of Peek
    plc. On January 20, 1998, the Company filed an amendment on Form 8-K/A,
    the purpose of which was to file the financial information required by
    Form 8-K concerning this acquisition.





                                       16PAGE
<PAGE>
                            THERMO POWER CORPORATION

                                   SIGNATURES


        Pursuant to the requirements of the Securities Exchange Act of 1934,
    the Registrant has duly caused this report to be signed on its behalf by
    the undersigned thereunto duly authorized as of the 5th day of February
    1998.

                                              THERMO POWER CORPORATION



                                              Paul F. Kelleher
                                              ---------------------------
                                              Paul F. Kelleher
                                              Chief Accounting Officer



                                              John N. Hatsopoulos
                                              ---------------------------
                                              John N. Hatsopoulos
                                              Chief Financial Officer and
                                                Senior Vice President
                                                

















                                       17PAGE
<PAGE>
                            THERMO POWER CORPORATION

                                  EXHIBIT INDEX


    Exhibit
    Number        Description of Exhibit
    ------------------------------------------------------------------------

      2.1         Share Purchase Agreement dated as of January 29, 1998,
                  among the Company, ONIX Systems Inc., Radley Services Ltd.,
                  and Peek Corporation.

     10.1         Amended and Restated Master Guarantee Reimbursement and
                  Loan Agreement dated as of December 10, 1997, between the
                  Company and Thermo Electron Corporation.

     27           Financial Data Schedule.