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         
             September 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 October 25, 1996
         ----------------------------   -------------------------------
         Common Stock, $.10 par value             18,254,067
PAGE
<PAGE>
    PART I - FINANCIAL INFORMATION

    Item 1 - Financial Statements


                              THERMO TERRATECH INC.

                           Consolidated Balance Sheet
                                   (Unaudited)

                                     Assets


                                                   September 28,   March 30,
    (In thousands)                                          1996        1996
    ------------------------------------------------------------------------
    Current Assets:
      Cash and cash equivalents                         $ 68,733    $ 31,182
      Short-term available-for-sale investments,
        at quoted market value (amortized cost
        of $28,369 and $7,007)                            28,426       7,004
      Accounts receivable, less allowances of
        $3,022 and $2,861                                 50,833      44,397
      Unbilled contract costs and fees                    25,053      21,113
      Inventories:
        Raw materials and supplies                         2,630       3,822
        Work in process and finished goods                   795          61
      Prepaid and refundable income taxes                  7,871       9,556
      Prepaid expenses                                     5,249       4,442
                                                        --------    --------
                                                         189,590     121,577
                                                        --------    --------

    Property, Plant and Equipment, at Cost               132,766     126,129

      Less: Accumulated depreciation and amortization     46,767      43,173
                                                        --------    --------
                                                          85,999      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 $25,632 and $24,963)                             25,138      24,251
                                                        --------    --------

    Other Assets                                          19,094      12,931
                                                        --------    --------

    Cost in Excess of Net Assets of Acquired Companies    90,814      89,843
                                                        --------    --------
                                                        $410,635    $333,656
                                                        ========    ========
                                        2PAGE
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                              THERMO TERRATECH INC.

                     Consolidated Balance Sheet (continued)
                                   (Unaudited)

                    Liabilities and Shareholders' Investment

                                                   September 28,  March 30,
    (In thousands except share amounts)                     1996       1996
    -----------------------------------------------------------------------
    Current Liabilities:
      Accounts payable                                  $ 13,597   $ 10,922
      Notes payable and current maturities of
        long-term obligations (includes $38,000 and
        $15,000 due to parent company)                    44,312     19,711
      Billings in excess of revenues earned                1,487      2,076
      Accrued payroll and employee benefits                8,811      9,930
      Accrued income taxes                                   845          -
      Other accrued expenses                              13,193      7,871
      Due to parent company                                3,552      5,059
                                                        --------   --------
                                                          85,797     55,569
                                                        --------   --------
    Deferred Income Taxes                                  3,591      3,558
                                                        --------   --------
    Other Deferred Items                                     950        980
                                                        --------   --------
    Long-term Obligations:
      4 5/8% Subordinated convertible debentures
        (Note 2)                                         113,850          -
      6 1/2% Subordinated convertible debentures          13,382     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)                  26,489     99,252
                                                        --------   --------
                                                         191,671    155,384
                                                        --------   --------
    Minority Interest                                     36,473     32,295
                                                        --------   --------
    Shareholders' Investment:
      Common stock, $.10 par value, 75,000,000
        shares authorized; 18,278,210 and 17,598,013
        shares issued                                      1,828      1,760
      Capital in excess of par value                      63,092     59,419
      Retained earnings                                   27,204     24,474
      Treasury stock at cost, 24,143 and 34,531
        shares                                              (282)      (410)
      Cumulative translation adjustment                      274        635
      Net unrealized gain (loss) on available-for-sale
        investments                                           37         (8)
                                                        --------   --------
                                                          92,153     85,870
                                                        --------   --------
                                                        $410,635   $333,656
                                                        ========   ========

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

                      Consolidated Statement of Operations
                                   (Unaudited)


                                                     Three Months Ended
                                                ----------------------------
                                                September 28,  September 30,
    (In thousands except per share amounts)              1996           1995
    ------------------------------------------------------------------------
    Revenues:
      Service revenues                                $61,121       $49,452
      Product revenues                                  6,148         5,046
                                                      -------       -------
                                                       67,269        54,498
                                                      -------       -------

    Costs and Operating Expenses:
      Cost of service revenues                         50,995        36,686
      Cost of product revenues                          4,902         4,445
      Selling, general and administrative expenses      9,727         8,300
      Product and new business development expenses       275           282
      Write-off of cost in excess of net assets of
        acquired company                                    -         4,995
                                                      -------       -------
                                                       65,899        54,708
                                                      -------       -------

    Operating Income (Loss)                             1,370          (210)

    Interest Income                                     2,017         1,406
    Interest Expense (includes $553 and $1,690
      to parent company)                               (3,462)       (2,959)
    Equity in Earnings of Unconsolidated Subsidiary       280             -
    Gain on Issuance of Stock by Subsidiary (Note 3)    1,475             -
    Gain on Sale of Investments                            19             -
    Loss on Sale of Assets                                  -          (569)
    Other Income                                           47             -
                                                      -------       -------
    Income Before Provision for Income Taxes
      and Minority Interest                             1,746        (2,332)
    Provision for Income Taxes                            207         1,350
    Minority Interest Expense                              89           433
                                                      -------       -------
    Net Income (Loss)                                 $ 1,450       $(4,115)
                                                      =======       =======

    Earnings (Loss) per Share                         $   .08       $  (.24)
                                                      =======       =======

    Weighted Average Shares                            18,848        17,373
                                                      =======       =======


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

                                        4PAGE
<PAGE>
                              THERMO TERRATECH INC.

                      Consolidated Statement of Operations
                                   (Unaudited)


                                                      Six Months Ended
                                                ----------------------------
                                                September 28,  September 30,
    (In thousands except per share amounts)              1996           1995
    ------------------------------------------------------------------------
    Revenues:
      Service revenues                               $122,987       $ 96,618
      Product revenues                                 11,900          8,608
                                                     --------       --------
                                                      134,887        105,226
                                                     --------       --------
    Costs and Operating Expenses:
      Cost of service revenues                        100,803         71,880
      Cost of product revenues                          9,620          7,758
      Selling, general and administrative expenses     18,274         16,649
      Product and new business development expenses       574            558
      Write-off of cost in excess of net assets of
        acquired company                                    -          4,995
                                                     --------       --------
                                                      129,271        101,840
                                                     --------       --------

    Operating Income                                    5,616          3,386

    Interest Income                                     3,647          2,766
    Interest Expense (includes $1,382 and $2,898
      to parent company)                               (6,570)        (5,232)
    Equity in Earnings of Unconsolidated Subsidiary       559              -
    Gain on Issuance of Stock by Subsidiaries
      (Note 3)                                          1,475          2,742
    Gain on Sale of Investments                           166             80
    Loss on Sale of Assets                                  -           (569)
    Other Income                                           47              -
                                                     --------       --------
    Income Before Provision for Income Taxes
      and Minority Interest                             4,940          3,173
    Provision for Income Taxes                          1,721          2,436
    Minority Interest Expense                             311            811
                                                     --------       --------
    Net Income (Loss)                                $  2,908       $    (74)
                                                     ========       ========

    Earnings (Loss) per Share                        $    .15       $      -
                                                     ========       ========

    Weighted Average Shares                            18,839         17,362
                                                     ========       ========

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

                      Consolidated Statement of Cash Flows
                                   (Unaudited)


                                                      Six Months Ended
                                                ----------------------------
                                                September 28,  September 30,
    (In thousands)                                       1996           1995
    ------------------------------------------------------------------------
    Operating Activities:
      Net income (loss)                              $  2,908       $    (74)
      Adjustments to reconcile net income (loss) to
        net cash provided by operating activities:
          Depreciation and amortization                 6,523          5,960
          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                                   (559)             -
          Minority interest expense                       311            811
          Provision for losses on accounts receivable     388            (21)
          Other noncash expenses                            -            194
          Increase (decrease) in deferred income
            taxes                                         (22)            91
          Gain on issuance of stock by subsidiaries    (1,475)        (2,742)
          Gain on sale of investments                    (166)           (80)
          Changes in current accounts, excluding
            the effects of acquisitions:
              Accounts receivable                      (5,850)        (3,018)
              Inventories and unbilled contract
                costs and fees                         (3,423)          (803)
              Other current assets                     (1,153)        (1,026)
              Current liabilities                       5,997          3,473
              Other                                       (87)             -
                                                     --------       --------
                Net cash provided by operating
                  activities                            3,392          8,329
                                                     --------       --------

    Investing Activities:
      Acquisitions, net of cash acquired               (1,681)       (25,404)
      Purchase of minority interest in Thermo Terra
        Tech joint venture                                  -        (34,267)
      Purchases of available-for-sale investments     (39,027)       (23,299)
      Proceeds from sale and maturities of
        available-for-sale investments                 19,915         11,630
      Purchases of property, plant and equipment       (8,262)        (8,609)
      Proceeds from sale of property, plant and
        equipment                                         393            594
      Purchase of other assets                           (413)           (26)
                                                     --------       --------
                Net cash used in investing
                  activities                         $(29,075)      $(79,381)
                                                     --------       --------

                                        6PAGE
<PAGE>
                              THERMO TERRATECH INC.

                Consolidated Statement of Cash Flows (continued)
                                   (Unaudited)

                                                      Six Months Ended
                                                ----------------------------
                                                September 28,  September 30,
    (In thousands)                                       1996           1995
    ------------------------------------------------------------------------
    Financing Activities:
      Net proceeds from issuance of subordinated
        convertible debentures (Note 2)              $112,429       $ 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)                4,720          6,959
      Repurchase of Company common stock               (1,865)             -
      Repurchase of subordinated convertible
        debentures                                     (1,078)             -
      Issuance of short-term obligations                  560          2,178
      Repayment of note payable                          (901)          (618)
      Dividends paid by subsidiary to minority
        shareholders                                     (450)          (551)
      Issuance of note receivable                           -           (401)
      Metal Treating, Inc. transfer to parent
        company                                          (178)          (296)
                                                     --------       --------
                Net cash provided by financing
                  activities                           63,237         75,160
                                                     --------       --------
    Exchange Rate Effect on Cash                           (3)          (372)
                                                     --------       --------

    Increase in Cash and Cash Equivalents              37,551          3,736
    Cash and Cash Equivalents at Beginning of Period   31,182         35,808
                                                     --------       --------
    Cash and Cash Equivalents at End of Period       $ 68,733       $ 39,544
                                                     ========       ========

    Noncash Activities:
      Fair value of assets of acquired companies     $  6,476       $ 28,201
      Cash paid for acquired companies                 (1,705)       (25,836)
      Issuance of subsidiary common stock for
        acquired company                               (2,006)             -
                                                     --------       --------
        Liabilities assumed of acquired companies    $  2,765       $  2,365
                                                     ========       ========

      Conversions of subordinated convertible
        debentures                                   $  4,800       $      -


    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
    September 28, 1996, the results of operations for the three- and
    six-month periods ended September 28, 1996 and September 30, 1995, and
    the cash flows for the six-month periods ended September 28, 1996 and
    September 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 on Form 10-K 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), which was acquired in October 1996 in a
    transaction accounted for under 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 September 1996, the Company repurchased $1,150,000
    principal amount of these debentures, resulting in no material gain or
    loss. In May 1996, the Company repaid its $15.0 million and $35.0 million
    promissory notes to Thermo Electron with proceeds from the 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 $4.4
                                        8PAGE
<PAGE>
                              THERMO TERRATECH INC.

    3.   Transaction in Stock of Subsidiary (continued)

    million, resulting in a gain of $1.5 million. Following the private
    placement, the Company owned 53% of Thermo EuroTech's outstanding common
    stock.


    4.   Subsequent Event

         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 to 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. The
    purchase price of $1.6 million is included in due to parent company in
    the accompanying balance sheet.

         Revenues and net income (loss) as previously reported by the
    separate entities prior to the acquisition and as restated for the
    combined Company are as follows:
                               
                               Three              Three            Six
                            Months Ended       Months Ended    Months Ended
                           -------------      --------------  --------------
    (In thousands)         June 29, 1996      Sept. 30, 1995  Sept. 30, 1995
    ------------------------------------------------------------------------
    Revenues:
      Previously reported       $ 66,888           $ 53,782         $103,638 
      Metal Treating                 739                716            1,588
      Elimination                     (9)                 -                -
                                --------           --------         --------
                                $ 67,618           $ 54,498         $105,226
                                ========           ========         ========
    Net Income (Loss):
      Previously reported       $  1,438           $ (4,159)        $   (210)
      Metal Treating                  20                 44              136
                                --------           --------         --------
                                $  1,458           $ (4,115)        $    (74)
                                ========           ========         ========





                                        9PAGE
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                              THERMO TERRATECH INC.


    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. These statements involve a number of risks and
    uncertainties, including those detailed in Item 5 of this Quarterly
    Report on Form 10-Q.

    Overview

         The Company is a provider of environmental services and
    infrastructure 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 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 nonhazardous soil-remediation facilities
    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. The Company's wholly owned Bettigole Andrews & Clark 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.

                                       10PAGE
<PAGE>
                              THERMO TERRATECH INC.


    Overview (continued)

         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.

    Results of Operations

    Second Quarter Fiscal 1997 Compared With Second Quarter Fiscal 1996

         Total revenues in the second quarter of fiscal 1997 increased 23%
    to $67.3 million from $54.5 million in the second quarter of fiscal 1996.
    Revenues from remediation and recycling services increased to $30.8
    million in fiscal 1997 from $17.1 million in fiscal 1996, primarily due
    to the inclusion of $13.7 million in revenues in fiscal 1997 from ReTec
    and IEM Sealand, which were acquired in December 1995 and September 1996,
    respectively, and, to a lesser extent, higher revenues from health
    physics services. Revenues from soil-remediation services decreased 21%
    resulting from declines in the volume of soil processed due to reduced
    compliance requirements and/or relaxed enforcement activities in several
    states and competitive pricing pressures. Revenues from consulting and
    design services remained relatively unchanged at $18.7 million in fiscal
    1997 and $18.4 million in fiscal 1996. Revenues from laboratory-testing
    services, excluding the radiochemistry laboratory services included in
    remediation and recycling services, decreased to $8.3 million in fiscal
    1997 from $10.2 million in fiscal 1996, largely due to reduced federal
    spending. Metal-treating revenues increased to $10.2 million in fiscal
    1997 from $8.8 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 second quarter of
    fiscal 1997 from 25% in the second quarter of fiscal 1996, primarily due
    to a decrease in gross profit margins for remediation and recycling
    services due to lower volumes of soil processed at the Company's
    traditionally higher-margin soil-remediation centers and, to a lesser
    extent, lower margins on the soil processed due to competitive pricing
    pressures, and the inclusion of lower-margin revenues from ReTec. 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 resulting from an increase in revenues.

                                       11PAGE
<PAGE>
                              THERMO TERRATECH INC.


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

         During the second quarter of fiscal 1996, the Company wrote off
    $4,995,000 of "Cost in excess of net assets of acquired company" related
    to its thermal-processing equipment business. In addition, the Company
    incurred a loss of $569,000 as a result of the sale of an engineering
    office. These noncash expenses are nondeductible for tax purposes.

         Selling, general and administrative expenses as a percentage of
    revenues decreased to 14% in the second quarter of fiscal 1997 from 15%
    in the second quarter of fiscal 1996, primarily due to efficiencies
    associated with an increase in revenues and lower expenses as a
    percentage of revenues at acquired companies.

         Interest income increased to $2.0 million in the second quarter of
    fiscal 1997 from $1.4 million in the second 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 $3.5 million in fiscal
    1997 from $3.0 million in fiscal 1996, primarily due to interest on the
    Company's 4 5/8% issuance of subordinated convertible debentures, offset
    in part by a decrease in interest expense due to the repayment of
    promissory notes to Thermo Electron Corporation (Thermo Electron) with
    proceeds from the Company's 4 5/8% subordinated convertible debentures.

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

         As a result of the sale of stock by Thermo EuroTech, the Company
    recorded a gain of $1.5 million in the second quarter of fiscal 1997
    (Note 3). The gain represents an increase in the Company's proportionate
    share of the subsidiary's equity and is classified as gain on issuance of
    stock by subsidiary in the accompanying statement of operations.

         The effective tax rate in the second quarter of fiscal 1997 was
    lower than the statutory federal income tax rate primarily due to the
    nontaxable gain on issuance of stock by subsidiary, offset in part by
    nondeductible amortization of cost in excess of net assets of acquired
    companies and the impact of state income taxes. The effective tax rate in
    fiscal 1996 was higher than 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.

         Minority interest expense decreased to $0.1 million in the second
    quarter of fiscal 1997 from $0.4 million in the second quarter of fiscal
    1996, due to a reduction in earnings from the Company's majority-owned
    subsidiaries.


                                       12PAGE
<PAGE>
                              THERMO TERRATECH INC.


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

         Total revenues in the first six months of fiscal 1997 increased 28%
    to $134.9 million from $105.2 million in the first six months of fiscal
    1996. Revenues from remediation and recycling services increased to $58.7
    million in fiscal 1997 from $32.5 million in fiscal 1996, primarily due
    to the inclusion of $24.2 million in revenues from ReTec and IEM Sealand,
    which were acquired in December 1995 and September 1996, respectively.
    This increase in revenues is also due to an increase in revenues at
    Thermo EuroTech and, to a lesser extent, higher revenues from health
    physics services and a long-term environmental restoration contract for
    the U.S. Department of Energy's (DOE's) Hanford site (Hanford). These
    increases were offset in part by a decrease in radiochemistry laboratory
    work, reflecting ongoing reductions in spending at the DOE as well as a
    shift in DOE spending from investigative work performed by the Company's
    laboratories to cleanup work. Revenues from soil-remediation services
    decreased 15% primarily due to the reasons discussed in the results of
    operations for the second quarter. Revenues from consulting and design
    services increased to $40.2 million in fiscal 1997 from $38.2 million in
    fiscal 1996, primarily due to increased revenues from two major
    contracts, offset in part by lower revenues from federal government
    contracts, reflecting a reduction in spending and delays in budget
    appropriations. Revenues from laboratory-testing services, excluding the
    radiochemistry laboratory services included in remediation and recycling
    services, remained relatively constant at $17.6 million in fiscal 1997
    and $17.7 million in fiscal 1996. Metal-treating revenues increased to
    $20.1 million in fiscal 1997 from $16.9 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 six months of
    fiscal 1997 from 24% in the first six months of fiscal 1996, primarily
    due to the reasons discussed in the results of operations for the second
    quarter.

         Selling, general and administrative expenses as a percentage of
    revenues decreased to 14% in the first six months of fiscal 1997 from 16%
    in the first six months of fiscal 1996, primarily due to efficiencies
    associated with an increase in revenues, a decline in expenses related to
    the consolidation of administrative functions within the consulting and
    design services business, and lower expenses as a percentage of revenues
    at acquired companies.

         Interest income increased to $3.6 million in the first six months
    of fiscal 1997 from $2.8 million in the first six 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
    May 1996 (Note 2). Interest expense increased to $6.6 million in fiscal
    1997 from $5.2 million in fiscal 1996, primarily due to interest on the
    Company's 4 5/8% subordinated convertible debentures and Thermo
    Remediation's issuance of 4 7/8% subordinated convertible debentures in

                                       13PAGE
<PAGE>
                              THERMO TERRATECH INC.


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

    May 1995, offset in part by a decrease in interest expense due to the
    repayment of promissory notes to Thermo Electron with proceeds from the
    Company's 4 5/8% subordinated convertible debentures.

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

         The effective tax rate in the first six months of fiscal 1997 was
    lower than the statutory federal income tax rate primarily due to the
    nontaxable gain on issuance of stock by subsidiaries offset in part by
    nondeductible amortization of cost in excess of net assets of acquired
    companies and the impact of state income taxes. The effective tax rate in
    fiscal 1996 was higher than 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 $0.3 million in the first
    six months of fiscal 1997 from $0.8 million in the first six months of
    fiscal 1996, due to a reduction in earnings from the Company's
    majority-owned subsidiaries.

    Liquidity and Capital Resources

         Consolidated working capital, including cash, cash equivalents, and
    short-term available-for-sale investments, increased to $103.8 million at
    September 28, 1996 from $66.0 million at March 30, 1996. Cash, cash
    equivalents, and short- and long-term available-for-sale investments were
    $97.2 million at September 28, 1996, compared with $40.3 million at March
    30, 1996. Of the $97.2 million balance at September 28, 1996, $28.7
    million and $4.4 million was held by Thermo Remediation and Thermo
    EuroTech, respectively, and the remainder by the Company and its wholly
    owned subsidiaries. In addition, at September 28, 1996, the Company had
    $25.1 million of long-term held-to-maturity investments, compared with
    $24.3 million at March 30, 1996. During the first six months of fiscal
    1997, $3.4 million of cash was provided by operating activities. In the
    first six months of fiscal 1997, the Company funded increases in accounts
    receivable and unbilled contract costs and fees of $5.8 million and $3.4
    million, respectively. The increase in accounts receivable is primarily
    due to higher revenues at Thermo Remediation's IEM Sealand, Thermo
    NuTech, 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. These uses of cash were largely offset by an increase
    in other current liabilities, including $3.0 million in accrued interest
    related to the 4 5/8% convertible debentures (Note 2).

         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

                                       14PAGE
<PAGE>
                              THERMO TERRATECH INC.


    Liquidity and Capital Resources (continued)

    subordinated basis by Thermo Electron. In September 1996, the Company
    repurchased $1,150,000 principal amount of these debentures. In May 1996,
    the Company repaid its $15.0 million and $35.0 million promissory notes
    to Thermo Electron with proceeds from the 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 September
    28, 1996, the Company and Thermo Remediation had expended $.1 million and
    $1.8 million, respectively, under these authorizations.

         In the first six months of fiscal 1997, the Company expended $1.7
    million for acquisitions and $8.3 million for purchases of property,
    plant and equipment. During the remainder of fiscal 1997, the Company
    expects to expend an additional $3.0 million for purchases of property,
    plant and equipment. In October 1996, the Company signed a definitive
    agreement to acquire the stock of privately held Carlan Consulting Group,
    Inc., a provider of transportation and environmental consulting and
    professional engineering services, located in Pensacola and Tampa,
    Florida, for approximately $3.3 million. The completion of this
    transaction is subject to several conditions, including completion of the
    Company's due diligence investigation. The Company has no other 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 4 - Submission of Matters to a Vote of Security Holders

         On September 25, 1996, at the Annual Meeting of Shareholders, the
    shareholders elected six incumbent directors to one-year terms expiring
    in 1997. The directors reelected at the meeting were: John P. Appleton,
    John N. Hatsopoulos, Donald E. Noble, William A. Rainville, Paul E.
    Tsongas, and Polyvios C. Vintiadis. Dr. Appleton received 16,788,646
    shares voted in favor of election and 263,051 shares voted against; Mr.
    Hatsopoulos, Mr. Rainville, and Mr. Vintiadis each received 16,788,749
    shares voted in favor of election and 262,948 shares voted against; Mr.
    Noble received 16,787,849 shares voted in favor of election and 263,848
    shares voted against; and Mr. Tsongas received 16,788,748 shares voted in
    favor of election and 262,949 shares voted against. No abstentions or
    broker nonvotes were recorded on the election of directors.

         The shareholders also approved a proposal to amend the Company's
    Restated Certificate of Incorporation to increase the Company's
    authorized common stock, $.10 par value per share, from 30 million

                                       15PAGE
<PAGE>
                              THERMO TERRATECH INC.


    Item 4 - Submission of Matters to a Vote of Security Holders (continued)

    shares to 75 million shares as follows: 16,579,935 shares voted in favor,
    440,862 shares voted against, 12,300 shares abstained, and 18,600 broker
    nonvotes were recorded on the proposal.


    Item 5 - Other Information

         In connection with the "safe harbor" provisions of the Private
    Securities Litigation Reform Act of 1995, the Company wishes to caution
    readers that the following important factors, among others, in some cases
    have affected, and in the future could affect, the Company's actual
    results and could cause its actual results in fiscal 1997 and beyond to
    differ materially from those expressed in any forward-looking statements
    made by, or on behalf of, the Company.

         Dependence on Environmental Regulation. Federal, state and local
    environmental laws govern each of the markets in which the Company
    conducts business, as well as many of the Company's operations. The
    markets for many of the Company's services, including industrial
    remediation services, nuclear remediation services, hazardous waste
    remedial construction services, soil-remediation services, waste-fluids
    recycling services, consulting and design services, and laboratory
    services, and the standards governing most aspects of the construction
    and operation of the Company's facilities, were directly or indirectly
    created by, and are dependent on, the existence and enforcement of those
    laws. There can be no assurance that these laws and regulations will not
    change in the future, requiring new technologies or stricter standards
    with which the Company must comply. In addition, there can be no
    assurance that these laws and regulations will not be made more lenient
    in the future, thereby reducing the size of the markets addressed by the
    Company. Any such change in such federal, state and local environmental
    laws and regulations may have a material adverse effect on the Company's
    business.

         Responsibility for establishing and enforcing certain federal
    policies, such as the federal underground storage tank policy, has been
    delegated to the states, which are not only required to establish
    regulatory programs, but also are permitted to mandate more stringent
    requirements than are otherwise required by federal law. Currently, many
    states are considering adopting a "risk-based" approach to prioritizing
    site cleanups and setting cleanup standards, which attempts to balance
    the costs of remediation against the potential harm to human health and
    the environment from leaving sites unremediated. Although the Company
    believes that it will be able to take advantage of this shift toward a
    risk-based approach, there can be no assurance that these policies, if
    implemented, will not reduce the size of the potential market addressed
    by the Company.

         Potential Environmental and Regulatory Liability. The Company's
    operations are subject to comprehensive laws and regulations related to
    the protection of the environment. Among other things, these laws and
    regulations impose requirements to control air, soil, and water
    pollution, and regulate health, safety, zoning, land use, and the
                                       16PAGE
<PAGE>
                              THERMO TERRATECH INC.

    Item 5 - Other Information (continued)

    handling and transportation of hazardous and nonhazardous materials. Such
    laws and regulations also impose liability for remediation and cleanup of
    environmental contamination, both on-site and off-site, resulting from
    past and present operations. These requirements may also be imposed as
    conditions of operating permits or licenses that are subject to renewal,
    modification or revocation. Existing laws and regulations, and new laws
    and regulations, may require the Company to modify, supplement, replace,
    or curtail its operating methods, facilities, or equipment at costs which
    may be substantial without any corresponding increase in revenue. The
    Company is also potentially subject to monetary fines, penalties,
    remediation, cleanup, or stop orders, injunctions, or orders to cease or
    suspend certain of its practices. The outcome of any proceedings and
    associated costs and expenses could have a material adverse impact on the
    Company's business. In addition, the Company's Thermo NuTech and IEM
    Sealand divisions are subject to numerous laws and regulations related to
    the protection of human health and safety. Such laws and regulations may
    pose liability on the Company for exposure of its employees to radiation
    or other hazardous contamination or failure to isolate and remove
    radioactive or other hazardous contaminants from soil.

         The Company endeavors to operate its business to minimize its
    exposure to environmental and other regulatory liabilities. In entering
    into contracts with its customers, the Company seeks to maximize its
    insulation from regulatory liabilities associated with the contaminated
    soil, oil, and other wastes it handles. Although no claims giving rise to
    such liabilities have been asserted by the Company's customers or
    employees to date, there can be no assurance that such claims cannot or
    will not be asserted against the Company.

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

         The Company depends on funding from the federal and state
    governments, and their agencies and instrumentalities, for compensation
    for its services. For example, Thermo NuTech provides a large portion of
    its services directly or indirectly to the U.S. Department of Energy
    (DOE) and the Company's consulting and design businesses perform

                                       17PAGE
<PAGE>
                              THERMO TERRATECH INC.

    Item 5 - Other Information (continued)

    significant amounts of services for state and municipal government.
    Thermo NuTech has experienced a decrease in its radiochemistry laboratory
    work as a result of ongoing reductions in spending at the DOE as well as
    a shift in DOE spending from investigative work to cleanup work.
    Continued declines in spending by DOE and other governmental agencies
    could have a material adverse effect on the Company's business.

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

         Seasonal Influences. A majority of the Company's businesses
    experience seasonal fluctuations. A majority of the Company's
    soil-remediation sites, as well as the Company's fluids-recycling sites,
    experience declines in severe weather conditions. Site remediation work
    and certain environmental testing services, such as the services provided
    by ReTec, Killam Associates, IEM Sealand, and Thermo NuTech, may also
    decline in winter months as a result of severe weather conditions. In
    Europe, Thermo EuroTech may experience a decline in the feedstock
    delivered to its facilities during winter months, due to frozen
    waterways. The Company's operations were adversely affected by severe
    weather in the last quarter of fiscal 1996.

         Possible Obsolescence Due to Technological Change. Technological
    developments are expected to continue at a rapid pace in the
    environmental services industry. The Company's technologies could be
    rendered obsolete or uneconomical by technological advances by one or
    more companies that address the Company's markets or by future entrants
    into the industry. There can be no assurance that the Company would have
    the resources to, or otherwise would be successful in, developing
    responses to technological advances by others.

         Risks Associated with Acquisition Strategy. The Company's strategy
    includes the acquisition of businesses that complement or augment the
    Company's existing services. Promising acquisitions are difficult to
    identify and complete for a number of reasons, including competition
    among prospective buyers and the need for regulatory approvals, including
    antitrust approvals. Any acquisitions completed by the Company may be
    made at substantial premiums over the fair value of the net assets of the
    acquired companies. There can be no assurance that the Company will be
    able to complete future acquisitions or that the Company will be able to
    successfully integrate any acquired businesses. In order to finance such
    acquisitions, it may be necessary for the Company to raise additional
    funds through public or private financings. Any equity or debt financing,

                                       18PAGE
<PAGE>
                              THERMO TERRATECH INC.


    Item 5 - Other Information (continued)

    if available at all, may be on terms which are not favorable to the
    Company and, in the case of equity financing, may result in dilution to
    the Company's stockholders.

         Risks Associated with Spin-Out of Subsidiaries. The Company has
    adopted a strategy of spinning out certain of its businesses into
    separate subsidiaries and having these subsidiaries sell a minority
    interest to outside investors. As a result of the sale of stock by
    subsidiaries, the issuance of stock by subsidiaries upon conversion of
    convertible debentures and similar transactions, the Company records
    gains that represent the increase in the Company's net investment in the
    subsidiaries. These gains have represented a substantial portion of the
    net income reported by the Company in certain periods. The size and
    timing of these transactions are dependent on market and other conditions
    that are beyond the Company's control. Accordingly, there can be no
    assurance that the Company will be able to generate gains from such
    transactions in the future.

         In addition, in October 1995, the Financial Accounting Standards
    Board ("FASB") issued an exposure draft of a Proposed Statement of
    Financial Accounting Standards, "Consolidated Financial Statements:
    Policy and Procedures" (the "Proposed Statement"). The Proposed Statement
    would establish new rules for how consolidated financial statements
    should be prepared. If the Proposed Statement is adopted, there could be
    significant changes in the way the Company records certain transactions
    of its controlled subsidiaries. Among those changes, any sale of the
    stock of a subsidiary that does not result in a loss of control would be
    accounted for as a transaction in equity of the consolidated entity with
    no gain or loss being recorded. The FASB expects to issue a final
    statement or a revised exposure draft in calendar 1997.

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


    Item 6 - Exhibits

         See Exhibit Index on the page immediately preceding exhibits.

                                       19PAGE
<PAGE>
                              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 1st day of November
    1996.

                                            THERMO TERRATECH INC.



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



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



























                                       20PAGE
<PAGE>
                              THERMO TERRATECH INC.

                                  EXHIBIT INDEX


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

      3          Certificate of Amendment to Certificate of
                 Incorporation filed with Secretary of State
                 of Delaware on October 31, 1996.

     10.1        Stock Holdings Assistance Plan and Form of
                 Promissory Note.

     10.2        Stock Purchase Agreement between the Thermo
                 Electron Companies Inc. and Thermo TerraTech
                 Inc. dated October 30, 1996.

     11          Statement re: Computation of earnings per share.

     27          Financial Data Schedule.