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         
             December 28, 1996.

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

                          Commission File Number 1-9549

                              THERMO TERRATECH INC.
             (Exact name of Registrant as specified in its charter)

    Delaware                                                       04-2925807
    (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: (617) 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 24, 1997
         ----------------------------   -------------------------------
         Common Stock, $.10 par value             18,100,828
PAGE
<PAGE>
    PART I - FINANCIAL INFORMATION

    Item 1 - Financial Statements


                              THERMO TERRATECH INC.

                           Consolidated Balance Sheet
                                   (Unaudited)

                                     Assets


                                                    December 28,   March 30,
    (In thousands)                                          1996        1996
    ------------------------------------------------------------------------
    Current Assets:
      Cash and cash equivalents                         $ 60,350    $ 31,182
      Short-term available-for-sale investments,
        at quoted market value (amortized cost
        of $23,266 and $7,007)                            23,308       7,004
      Accounts receivable, less allowances of
        $3,079 and $2,861                                 53,543      44,397
      Unbilled contract costs and fees                    27,892      21,113
      Inventories:
        Raw materials and supplies                         2,404       3,822
        Work in process and finished goods                   533          61
      Prepaid and refundable income taxes                  7,909       9,556
      Prepaid expenses                                     4,217       4,442
                                                        --------    --------
                                                         180,156     121,577
                                                        --------    --------

    Property, Plant and Equipment, at Cost               136,679     126,129

      Less: Accumulated depreciation and amortization     48,830      43,173
                                                        --------    --------
                                                          87,849      82,956
                                                        --------    --------

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

    Long-term Held-to-maturity Investments,
      at Amortized Cost (quoted market value
      of $26,083 and $24,963)                             25,594      24,251
                                                        --------    --------

    Other Assets                                          18,569      12,931
                                                        --------    --------

    Cost in Excess of Net Assets of Acquired Companies    92,992      89,843
                                                        --------    --------
                                                        $405,160    $333,656
                                                        ========    ========
                                        2PAGE
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                              THERMO TERRATECH INC.

                     Consolidated Balance Sheet (continued)
                                   (Unaudited)

                    Liabilities and Shareholders' Investment


                                                    December 28,  March 30,
    (In thousands except share amounts)                     1996       1996
    -----------------------------------------------------------------------
    Current Liabilities:
      Accounts payable                                  $ 16,320   $ 10,922
      Notes payable and current maturities of
        long-term obligations (includes $38,000 and
        $15,000 due to parent company)                    39,690     19,711
      Billings in excess of revenues earned                2,889      2,076
      Accrued payroll and employee benefits               10,898      9,930
      Accrued income taxes                                 1,742          -
      Other accrued expenses                               9,605      7,871
      Due to parent company                                1,677      5,059
                                                        --------   --------
                                                          82,821     55,569
                                                        --------   --------
    Deferred Income Taxes                                  3,830      3,558
                                                        --------   --------
    Other Deferred Items                                     919        980
                                                        --------   --------
    Long-term Obligations:
      4 5/8% Subordinated convertible debentures
        (Note 2)                                         111,850          -
      6 1/2% Subordinated convertible debentures          13,370     18,182
      4 7/8% Subordinated convertible debentures          37,950     37,950
      Other (includes $73,000 due to parent
        company in fiscal 1996; Note 2)                   29,508     99,252
                                                        --------   --------
                                                         192,678    155,384
                                                        --------   --------
    Minority Interest                                     33,933     32,295
                                                        --------   --------
    Shareholders' Investment:
      Common stock, $.10 par value, 75,000,000
        shares authorized; 18,304,424 and 17,598,013
        shares issued                                      1,830      1,760
      Capital in excess of par value                      62,462     59,419
      Retained earnings                                   28,018     24,474
      Treasury stock at cost, 139,796 and 34,531 shares   (1,360)      (410)
      Cumulative translation adjustment                        3        635
      Net unrealized gain (loss) on available-for-sale
        investments                                           26         (8)
                                                        --------   --------
                                                          90,979     85,870
                                                        --------   --------
                                                        $405,160   $333,656
                                                        ========   ========

    The accompanying notes are an integral part of these consolidated
    financial statements.
                                        3PAGE
<PAGE>
                              THERMO TERRATECH INC.

                        Consolidated Statement of Income
                                   (Unaudited)


                                                     Three Months Ended
                                                 ---------------------------
                                                 December 28,   December 30,
    (In thousands except per share amounts)              1996           1995
    ------------------------------------------------------------------------
    Revenues:
      Service revenues                                $68,417       $50,822
      Product revenues                                  7,281         4,756
                                                      -------       -------
                                                       75,698        55,578
                                                      -------       -------

    Costs and Operating Expenses:
      Cost of service revenues                         56,651        38,930
      Cost of product revenues                          6,217         4,012
      Selling, general and administrative expenses      9,273         7,620
      Product and new business development expenses       239           259
                                                      -------       -------
                                                       72,380        50,821
                                                      -------       -------

    Operating Income                                    3,318         4,757

    Interest Income                                     1,795         1,236
    Interest Expense (includes $554 and $1,331
      to parent company)                               (3,090)       (2,801)
    Equity in Earnings of Unconsolidated Subsidiary       118             -
    Gain on Sale of Investments                            31           100
    Other Income                                          159             -
                                                      -------       -------

    Income Before Provision for Income Taxes
      and Minority Interest                             2,331         3,292
    Provision for Income Taxes                          1,321         1,399
    Minority Interest Expense                             108           295
                                                      -------       -------
    Net Income                                        $   902       $ 1,598
                                                      =======       =======
    Earnings per Share                                $   .05       $   .09
                                                      =======       =======
    Weighted Average Shares                            18,231        18,313
                                                      =======       =======


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


                                        4PAGE
<PAGE>
                              THERMO TERRATECH INC.

                        Consolidated Statement of Income
                                   (Unaudited)


                                                      Nine Months Ended
                                                 ---------------------------
                                                 December 28,   December 30,
    (In thousands except per share amounts)              1996           1995
    ------------------------------------------------------------------------
    Revenues:
      Service revenues                               $191,404       $147,440
      Product revenues                                 19,181         13,364
                                                     --------       --------
                                                      210,585        160,804
                                                     --------       --------

    Costs and Operating Expenses:
      Cost of service revenues                        157,454        110,810
      Cost of product revenues                         15,837         11,770
      Selling, general and administrative expenses     27,547         24,269
      Product and new business development expenses       813            817
      Write-off of cost in excess of net assets of
        acquired company                                    -          4,995
                                                     --------       --------
                                                      201,651        152,661
                                                     --------       --------

    Operating Income                                    8,934          8,143

    Interest Income                                     5,442          4,002
    Interest Expense (includes $1,936 and $4,229
      to parent company)                               (9,660)        (8,033)
    Equity in Earnings of Unconsolidated Subsidiary       677              -
    Gain on Issuance of Stock by Subsidiaries
      (Note 3)                                          1,475          2,742
    Gain on Sale of Investments                           197            180
    Loss on Sale of Assets                                  -           (569)
    Other Income                                          206              -
                                                     --------       --------
    Income Before Provision for Income Taxes
      and Minority Interest                             7,271          6,465
    Provision for Income Taxes                          3,042          3,835
    Minority Interest Expense                             419          1,106
                                                     --------       --------
    Net Income                                       $  3,810       $  1,524
                                                     ========       ========
    Earnings per Share                               $    .20       $    .08
                                                     ========       ========
    Weighted Average Shares                            18,798         18,163
                                                     ========       ========


    The accompanying notes are an integral part of these consolidated
    financial statements.
                                        5PAGE
<PAGE>
                              THERMO TERRATECH INC.

                      Consolidated Statement of Cash Flows
                                   (Unaudited)


                                                      Nine Months Ended
                                                 ---------------------------
                                                 December 28,   December 30,
    (In thousands)                                       1996           1995
    ------------------------------------------------------------------------
    Operating Activities:
      Net income                                     $  3,810       $  1,524
      Adjustments to reconcile net income to
        net cash provided by operating activities:
          Depreciation and amortization                 9,749          9,283
          Write-off of cost in excess of net asset
            of acquired company                             -          4,995
          Loss on sale of assets                            -            569
          Equity in earnings of unconsolidated
            subsidiary                                   (677)             -
          Minority interest expense                       419          1,106
          Provision for losses on accounts receivable     490            (47)
          Increase (decrease) in deferred income
            taxes                                         (32)            91
          Gain on issuance of stock by subsidiaries    (1,475)        (2,742)
          Gain on sale of investments                    (197)          (180)
          Other noncash expenses                          330             54
          Changes in current accounts, excluding
            the effects of acquisitions:
              Accounts receivable                      (8,361)        (2,013)
              Inventories and unbilled contract
                costs and fees                         (5,475)        (1,716)
              Other current assets                        (91)          (187)
              Current liabilities                       4,080         (2,411)
                                                     --------       --------
    Net cash provided by operating activities           2,570          8,326
                                                     --------       --------
    Investing Activities:
      Acquisitions, net of cash acquired               (4,191)       (43,117)
      Purchase of minority interest in Thermo Terra
        Tech joint venture                                  -        (34,267)
      Purchases of available-for-sale investments     (38,799)       (31,000)
      Proceeds from sale and maturities of
        available-for-sale investments                 24,821         29,295
      Purchases of property, plant and equipment      (12,323)       (12,279)
      Proceeds from sale of property, plant and
        equipment                                         426            683
      Purchase of other assets                           (456)          (383)
                                                     --------       --------
    Net cash used in investing activities            $(30,522)      $(91,068)
                                                     --------       --------


                                        6PAGE
<PAGE>
                              THERMO TERRATECH INC.

                Consolidated Statement of Cash Flows (continued)
                                   (Unaudited)

                                                      Nine Months Ended
                                                 ---------------------------
                                                 December 28,   December 30,
    (In thousands)                                       1996           1995
    ------------------------------------------------------------------------
    Financing Activities:
      Net proceeds from issuance of subordinated
        convertible debentures (Note 2)              $112,398       $ 36,889
      Issuance of note payable to parent company            -         35,000
      Repayment of notes payable to parent
        company (Note 2)                              (50,000)        (4,000)
      Proceeds from issuance of Company and
        subsidiary common stock (Note 3)                5,095          7,405
      Repurchase of Company and subsidiary
        common stock                                   (6,606)             -
      Repurchase of subordinated convertible
        debentures                                     (2,878)             -
      Issuance of short-term obligations                  803          2,178
      Repayment of note payable                          (909)          (660)
      Dividends paid by subsidiary to minority
        shareholders                                     (450)          (393)
      Issuance of note receivable                           -           (401)
      Metal Treating, Inc. transfer to parent
        company                                          (266)          (373)
                                                     --------       --------
    Net cash provided by financing activities          57,187         75,645
                                                     --------       --------
    Exchange Rate Effect on Cash                          (67)          (402)
                                                     --------       --------
    Increase (Decrease) in Cash and Cash Equivalents   29,168         (7,499)
    Cash and Cash Equivalents at Beginning of Period   31,182         35,808
                                                     --------       --------
    Cash and Cash Equivalents at End of Period       $ 60,350       $ 28,309
                                                     ========       ========
    Noncash Activities:
      Fair value of assets of acquired companies     $ 13,000       $ 68,533
      Cash paid for acquired companies                 (4,500)       (45,005)
      Issuance of subsidiary common stock, stock 
        options, and warrants for acquired companies   (2,006)       (11,210)
      Issuance of short- and long-term obligations
        for acquired company                           (2,265)             -
                                                     --------       --------
        Liabilities assumed of acquired companies    $  4,229       $ 12,318
                                                     ========       ========

      Conversions of subordinated convertible
        debentures                                   $  4,812       $      -


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

                                        7PAGE
<PAGE>
                              THERMO TERRATECH INC.

                   Notes to Consolidated Financial Statements

    1.  General

        The interim consolidated financial statements presented have been
    prepared by Thermo TerraTech Inc. (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
    December 28, 1996, the results of operations for the three- and
    nine-month periods ended December 28, 1996 and December 30, 1995, and the
    cash flows for the nine-month periods ended December 28, 1996 and
    December 30, 1995. Interim results are not necessarily indicative of
    results for a full year.

        The consolidated balance sheet presented as of March 30, 1996, 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, as amended, on Form 10-K/A for the fiscal year ended March 30,
    1996, filed with the Securities and Exchange Commission.

        Certain amounts in fiscal 1996 have been reclassified to conform to
    the fiscal 1997 financial statement presentation. Certain of these
    reclassifications are required to present consistent classification of
    expenses within the Company's consulting and design services business.
    Historical financial results have been restated to include Metal
    Treating, Inc. (Metal Treating), acquired in October 1996 in a
    transaction accounted for in a manner similar to the pooling-of-interests
    method (Note 4).

    2.  Subordinated Convertible Debentures

        In May 1996, the Company issued and sold $115.0 million principal
    amount of 4 5/8% subordinated convertible debentures due 2003 for net
    proceeds of $112.4 million. The debentures are convertible into shares of
    the Company's common stock at a price of $15.90 per share and are
    guaranteed on a subordinated basis by Thermo Electron Corporation (Thermo
    Electron). In May 1996, the Company repaid its $15.0 million and $35.0
    million promissory notes to Thermo Electron with proceeds from the
    debenture offering.

    3.  Transaction in Stock of Subsidiary

        In September 1996, the Company's majority-owned Thermo EuroTech N.V.
    (Thermo EuroTech) subsidiary sold 1,105,000 shares of its common stock in
    a private placement at $4.25 per share, for net proceeds of $4.3 million,
    resulting in a gain of $1.5 million. Following the private placement, the
    Company owned 53% of Thermo EuroTech's outstanding common stock.

                                        8PAGE
<PAGE>
                              THERMO TERRATECH INC.

    4.  Acquisitions

        During the first nine months of fiscal 1997, the Company and a
    majority-owned subsidiary acquired two companies for $2.9 million in
    cash, 311,040 shares of Thermo Remediation's common stock, valued at $2.0
    million, and the issuance of $2.3 million of short- and long-term
    obligations.

        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 the dates of acquisition. The cost
    of these acquisitions exceeded the estimated fair value of the net assets
    acquired by $8.4 million, which is being amortized over 40 years.
    Allocation of the purchase price for these acquisitions was based on an
    estimate of the fair values of the net assets acquired and is subject to
    adjustment upon finalization of the purchase price allocation. Pro forma
    data is not presented since these acquisitions were not material to the
    Company's results of operations and financial position.

        In October 1996, the Company acquired Metal Treating from Thermo
    Electron in exchange for $1.6 million in cash. Metal Treating provides
    heat treating services, including carburizing, vacuum hardening, silver
    and copper brazing, and aluminum heat treating, primarily in the
    Milwaukee and southeastern Wisconsin areas. Because the Company and Metal
    Treating were deemed for accounting purposes to be under control of their
    common majority owner, Thermo Electron, the transaction has been
    accounted for at historical cost in a manner similar to the
    pooling-of-interests method. Accordingly, all historical information
    presented has been restated to include the results of Metal Treating.

    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 caption "Item 5 - Other Information"
    in the Company's Quarterly Report on Form 10-Q for the quarter ended
    September 28, 1996, filed with the Securities and Exchange Commission.

    Overview

        The Company is a provider of environmental services and infra-
    structure planning and design, encompassing a range of specializations
    within the remediation and recycling, consulting and design, and
    laboratory-testing industries. The Company also provides metal-treating
    services and thermal-processing systems used to treat primary metals and

                                        9PAGE
<PAGE>
                              THERMO TERRATECH INC.

    Overview (continued)

    metal parts. The Company's environmental services businesses are affected
    by several factors, particularly extreme weather variations, government
    spending, and regulation of remediation activities.

        Remediation and Recycling - In December 1995, the Company's
    majority-owned Thermo Remediation Inc. (Thermo Remediation) subsidiary
    acquired Remediation Technologies, Inc. (ReTec), a provider of integrated
    environmental services such as remediation of industrial sites
    contaminated with organic wastes and residues. In September 1996, Thermo
    Remediation acquired IEM Sealand Corporation (IEM Sealand), a provider of
    construction services for the remediation of hazardous wastes under
    contracts with federal and state governments and other public- and
    private-sector clients. Through its Thermo Nutech subsidiary, Thermo
    Remediation provides services to remove radioactive contaminants from
    sand, gravel, and soil, as well as health physics, radiochemistry
    laboratory, and radiation dosimetry services. Through its TPS
    Technologies Inc. division, Thermo Remediation is also a national leader
    in the design and operation of facilities for the remediation of
    nonhazardous soil and operates a network of such facilities serving
    customers in more than a dozen states along the East and West coasts. In
    addition, Thermo Remediation's Thermo Fluids subsidiary collects, tests,
    processes, and recycles used motor oil and other industrial oils. The
    Company's majority-owned Thermo EuroTech N.V. (Thermo EuroTech)
    subsidiary, located in the Netherlands, provides wastewater treatment
    services as well as services to test, remove, and install underground
    storage tanks. Through its North Refinery subsidiary, Thermo EuroTech
    specializes in converting "off-spec" and contaminated petroleum fluids
    into usable oil products.

        Consulting and Design - The Company's wholly owned Killam Associates
    subsidiary provides environmental consulting and engineering services and
    specializes in wastewater treatment and water resources management. In
    November 1996, the Company acquired Carlan Consulting Group, Inc.
    (Carlan), a provider of transportation and environmental consulting and
    professional engineering and architectural services. The Company's wholly
    owned Bettigole Andrews Clark & Killam and Normandeau Associates
    subsidiaries provide both private- and public-sector clients with a range
    of consulting services that address transportation planning and design,
    and natural resource management issues, respectively.

        Laboratory Testing - The Company's wholly owned Thermo Analytical
    subsidiary operates a network of analytical laboratories that provide
    environmental testing services to commercial and government clients
    throughout the U.S. The May 1995 acquisition of Lancaster Laboratories,
    Inc. (Lancaster Laboratories) expanded the Company's range of contract
    services beyond environmental testing to the pharmaceutical- and
    food-testing industries.

        Metal Treating - The Company performs metallurgical processing
    services using thermal-treatment equipment at locations in California,
    Minnesota, and Wisconsin. The Company also designs, manufactures, and
    installs advanced custom-engineered, thermal-processing systems through
    its equipment division located in Michigan.

                                       10PAGE
<PAGE>
                              THERMO TERRATECH INC.

    Results of Operations

    Third Quarter Fiscal 1997 Compared With Third Quarter Fiscal 1996

        Total revenues in the third quarter of fiscal 1997 increased 36% to
    $75.7 million from $55.6 million in the third quarter of fiscal 1996.
    Revenues from remediation and recycling services increased to $38.0
    million in fiscal 1997 from $19.7 million in fiscal 1996, primarily due
    to the inclusion of $10.1 million of revenues from IEM Sealand, acquired
    in September 1996, and an additional $8.5 million of revenues from ReTec,
    acquired in December 1995. Revenues from soil-remediation services
    decreased 33% resulting from declines in the volume of soil processed due
    to over capacity 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
    consulting and design services remained relatively unchanged at $18.1
    million in fiscal 1997 and $17.9 million in fiscal 1996. Revenues from
    laboratory-testing services, excluding radiochemistry laboratory services
    included in remediation and recycling services, decreased slightly to
    $9.4 million in fiscal 1997 from $9.9 million in fiscal 1996.
    Metal-treating revenues increased to $11.6 million in fiscal 1997 from
    $8.4 million in fiscal 1996, primarily due to an increase in demand for
    thermal-processing equipment at existing businesses.

        The gross profit margin decreased to 17% in the third quarter of
    fiscal 1997 from 23% in the third quarter of fiscal 1996, primarily due
    to a decrease in gross profit margins from remediation and recycling
    services due to lower margins on soil processed resulting from
    competitive pricing pressures and, to a lesser extent, lower volumes of
    soil processed at the Company's traditionally higher-margin soil-
    remediation centers. The decrease also resulted from the inclusion of
    lower-margin revenues from ReTec and IEM Sealand.

        Selling, general and administrative expenses as a percentage of
    revenues decreased to 12% in the third quarter of fiscal 1997 from 14% in
    the third quarter of fiscal 1996, primarily due to lower expenses as a
    percentage of revenues at acquired companies.

        Interest income increased to $1.8 million in the third quarter of
    fiscal 1997 from $1.2 million in the third quarter of fiscal 1996,
    primarily as a result of interest income earned on invested proceeds from
    the Company's issuance of 4 5/8% subordinated convertible debentures in
    May 1996 (Note 2). Interest expense increased to $3.1 million in fiscal
    1997 from $2.8 million in fiscal 1996, primarily due to an increase in
    average long-term borrowings as a result of the Company's issuance of    
    4 5/8% subordinated convertible debentures, offset in part by the
    repayment of promissory notes to Thermo Electron Corporation (Thermo
    Electron) with proceeds from the Company's 4 5/8% subordinated
    convertible debentures.

        The effective tax rate was 57% in the third quarter of fiscal 1997
    and 42% in the third quarter of fiscal 1996. The effective tax rate
    exceeded the statutory federal income tax rate, primarily due to the
    nondeductible amortization of cost in excess of net assets of acquired

                                       11PAGE
<PAGE>
                              THERMO TERRATECH INC.

    Third Quarter Fiscal 1997 Compared With Third Quarter Fiscal 1996
    (continued)

    companies and the impact of state income taxes. The increase in the
    effective tax rate in fiscal 1997 results from the larger relative effect
    of nondeductible amortization.

        Minority interest expense decreased to $0.1 million in the third
    quarter of fiscal 1997 from $0.3 million in the third quarter of fiscal
    1996, due to lower earnings from the Company's majority-owned
    subsidiaries.

    First Nine Months of Fiscal 1997 Compared With First Nine Months of
    Fiscal 1996

        Total revenues in the first nine months of fiscal 1997 increased 31%
    to $210.6 million from $160.8 million in the first nine months of fiscal
    1996. Revenues from remediation and recycling services increased to $96.6
    million in fiscal 1997 from $52.2 million in fiscal 1996, primarily due
    to an additional $30.2 million of revenues from ReTec, acquired in
    December 1995, and the inclusion of $12.6 million of revenues from IEM
    Sealand, acquired in September 1996. Revenues from soil-remediation
    services decreased 21%, primarily due to the reasons discussed in the
    results of operations for the third quarter. Revenues from consulting and
    design services increased to $58.2 million in fiscal 1997 from $56.1
    million in fiscal 1996, primarily due to increased revenues from a major
    contract, offset in part by lower revenues from federal government
    contracts. Revenues from laboratory-testing services, excluding
    radiochemistry laboratory services included in remediation and recycling
    services, decreased slightly to $26.9 million in fiscal 1997 from $27.6
    million in fiscal 1996. Metal-treating revenues increased to $31.7
    million in fiscal 1997 from $25.3 million in fiscal 1996, primarily due
    to an increase in demand for thermal-processing equipment at existing
    businesses.

        The gross profit margin decreased to 18% in the first nine months of
    fiscal 1997 from 24% in the first nine months of fiscal 1996, primarily
    due to the reasons discussed in the results of operations for the third
    quarter. This decline is also due to a decrease in gross profit margins
    for laboratory-testing services due to costs incurred related to efforts
    to eliminate redundant capabilities at regional laboratories. These
    decreases were offset in part by higher gross profit margins from metal-
    treating services as a result of an increase in revenues.

        Selling, general and administrative expenses as a percentage of
    revenues decreased to 13% in the first nine months of fiscal 1997 from
    15% in the first nine months of fiscal 1996, primarily due to lower
    expenses as a percentage of revenues at acquired companies and a decline
    in expenses related to the consolidation of administrative functions
    within the consulting and design services business.

        Interest income increased to $5.4 million in the first nine months of
    fiscal 1997 from $4.0 million in the first nine months of fiscal 1996,
    primarily as a result of interest income earned on invested proceeds from
    the Company's issuance of 4 5/8% subordinated convertible debentures in

                                       12PAGE
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                              THERMO TERRATECH INC.

    First Nine Months of Fiscal 1997 Compared With First Nine Months of
    Fiscal 1996 (continued)

    May 1996 (Note 2). Interest expense increased to $9.7 million in fiscal
    1997 from $8.0 million in fiscal 1996, primarily due to the reasons
    discussed in the results of operations for the third quarter and Thermo
    Remediation's issuance of 4 7/8% subordinated convertible debentures in
    May 1995.

        Equity in earnings of unconsolidated subsidiary in the first nine
    months of fiscal 1997 represents ReTec's proportionate share of income
    from a joint venture.

        During the first nine months of fiscal 1997 and 1996, the Company
    recorded gains of $1.5 million and $2.7 million, respectively, from the
    issuance of stock by subsidiaries (Note 3).

        The effective tax rate in the first nine months of fiscal 1997
    exceeded the statutory federal income tax rate primarily due to the
    nondeductible amortization of cost in excess of net assets of acquired
    companies and the impact of state income taxes, offset in part by the
    nontaxable gain on issuance of stock by subsidiaries. The effective tax
    rate in fiscal 1996 exceeded the federal statutory rate, primarily due to
    the nondeductible write-off of cost in excess of net assets of acquired
    company and the loss on sale of assets, offset in part by the nontaxable
    gains on issuance of stock by subsidiaries.

        Minority interest expense decreased to $0.4 million in the first nine
    months of fiscal 1997 from $1.1 million in the first nine months of
    fiscal 1996, due to lower earnings from the Company's majority-owned
    subsidiaries.

    Liquidity and Capital Resources

         Consolidated working capital increased to $97.3 million at December
    28, 1996 from $66.0 million at March 30, 1996. Cash, cash equivalents,
    and short- and long-term available-for-sale investments were $83.7
    million at December 28, 1996, compared with $40.3 million at March 30,
    1996. Of the $83.7 million balance at December 28, 1996, $25.9 million
    was held by Thermo Remediation and the remainder by the Company and its
    wholly owned subsidiaries. In addition, at December 28, 1996, the Company
    had $25.6 million of long-term held-to-maturity investments, compared
    with $24.3 million at March 30, 1996. During the first nine months of
    fiscal 1997, $2.6 million of cash was provided by operating activities.
    In the first nine months of fiscal 1997, the Company funded increases in
    accounts receivable and unbilled contract costs and fees of $8.4 million
    and $5.5 million, respectively. The increase in accounts receivable is
    primarily due to higher revenues at Thermo Remediation's IEM Sealand,
    ReTec, and Thermo Fluids divisions. The increase in unbilled contract
    costs and fees was due to an increase in thermal-processing equipment
    contracts, remediation contracts at ReTec, and consulting and design
    services contracts. This use of cash was offset in part by an increase in
    current liabilities, primarily due to a $5.1 million increase in accounts

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                              THERMO TERRATECH INC.

    Liquidity and Capital Resources (continued)

    payable resulting from an increase in the volume of business at Thermo
    Remediation's IEM Sealand and ReTec divisions.

        In May 1996, the Company issued and sold $115.0 million principal
    amount of 4 5/8% subordinated convertible debentures due 2003 for net
    proceeds of $112.4 million (Note 2). The debentures are guaranteed on a
    subordinated basis by Thermo Electron. In May 1996, the Company repaid
    its $15.0 million and $35.0 million promissory notes to Thermo Electron
    with proceeds from the debenture offering.

        The Boards of Directors of the Company and Thermo Remediation each
    authorized the repurchase, through August 23, 1997 and September 10,
    1997, respectively, of up to $10.0 million of their own securities. Any
    such purchases would be funded from working capital. Through December 28,
    1996, the Company and Thermo Remediation had expended $4.1 million and
    $5.4 million, respectively, under these authorizations.

        In the first nine months of fiscal 1997, $4.5 million was expended
    for acquisitions by the Company and a majority-owned subsidiary (Note 4).
    The Company also expended $12.3 million for purchases of property, plant
    and equipment. The Company has no material commitments for the
    acquisition of businesses or for capital expenditures. Such expenditures
    will largely be affected by the number and size of the complementary
    businesses that can be acquired or developed during the year. The Company
    believes that it has adequate resources to meet the financial needs of
    its current operations for the foreseeable future.


    PART II - OTHER INFORMATION

    Item 6 - Exhibits

        See Exhibit Index on the page immediately preceding exhibits.









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                              THERMO TERRATECH INC.

                                   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
    1997.

                                            THERMO TERRATECH INC.



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



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











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<PAGE>
                              THERMO TERRATECH INC.

                                  EXHIBIT INDEX


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

      11         Statement re: Computation of earnings per share.

      27         Financial Data Schedule.