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 April 4, 1998.

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

                          Commission File Number 1-9786

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

    Delaware                                                       04-2925809
    (State or other jurisdiction of                          (I.R.S. Employer
    incorporation or organization)                        Identification No.)

    860 West Airport Freeway
    Suite 301
    Hurst, Texas                                                        76054
    (Address of principal executive offices)                       (Zip Code)

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

              Indicate by check mark whether the Registrant (1) has
              filed all reports required to be filed by Section 13
              or 15(d) of the Securities Exchange Act of 1934
              during the preceding 12 months (or for such shorter
              period that the Registrant was required to file such
              reports), and (2) has been subject to such filing
              requirements for the past 90 days. Yes [ X ] No [   ]
                 
              Indicate the number of shares outstanding of each of
              the issuer's classes of Common Stock, as of the
              latest practicable date.

                    Class                    Outstanding at May 1, 1998
         ----------------------------        --------------------------
         Common Stock, $.10 par value               122,161,740
PAGE
<PAGE>
    PART I - FINANCIAL INFORMATION

    Item 1 - Financial Statements
    -----------------------------

                         THERMO INSTRUMENT SYSTEMS INC.

                           Consolidated Balance Sheet
                                   (Unaudited)

                                     Assets


                                                     April 4,     January 3,
    (In thousands)                                       1998           1998
    ------------------------------------------------------------------------
    Current Assets:
      Cash and cash equivalents (includes
        $538,140 and $283,995 under repurchase
        agreement with affiliated company)         $  678,595     $  468,848
      Available-for-sale investments, at quoted
        market value (amortized cost of $8,135
        and $8,287)                                     8,496          8,328
      Accounts receivable, less allowances
        of $22,675 and $22,786                        346,773        364,075
      Unbilled contract costs and fees                 10,012          9,191
      Inventories:
        Raw materials and supplies                    125,573        118,611
        Work in process                                56,303         52,870
        Finished goods                                 92,721         93,238
      Prepaid expenses                                 23,563         19,292
      Prepaid income taxes                             55,444         54,915
                                                   ----------     ----------
                                                    1,397,480      1,189,368
                                                   ----------     ----------
    Property, Plant, and Equipment, at Cost           318,302        317,605
      Less: Accumulated depreciation and
            amortization                              104,923         97,666
                                                   ----------     ----------
                                                      213,379        219,939
                                                   ----------     ----------
    Other Assets                                       51,488         45,477
                                                   ----------     ----------
    Cost in Excess of Net Assets of Acquired
      Companies                                       887,948        896,369
                                                   ----------     ----------
                                                   $2,550,295     $2,351,153
                                                   ==========     ==========

                                        2PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

                     Consolidated Balance Sheet (continued)
                                   (Unaudited)

                    Liabilities and Shareholders' Investment

                                                     April 4,   January 3,
    (In thousands except share amounts)                  1998         1998
    ----------------------------------------------------------------------
    Current Liabilities:
      Notes payable and current maturities of 
        long-term obligations (includes $65,000
        and $55,000 due to parent company)         $  121,775   $  116,226
      Accounts payable                                 97,831       97,516
      Accrued payroll and employee benefits            48,396       59,745
      Accrued income taxes                             71,717       61,409
      Accrued installation and warranty expenses       41,995       42,404
      Accrued acquisition expenses (Note 6)            26,032       33,789
      Deferred revenue                                 47,814       41,759
      Other accrued expenses                           98,746      101,827
      Due to parent company and affiliated
        companies                                      15,290       22,027
                                                   ----------   ----------
                                                      569,596      576,702
                                                   ----------   ----------
    Deferred Income Taxes                              30,483       30,430
                                                   ----------   ----------
    Other Deferred Items                               26,961       27,273
                                                   ----------   ----------
    Long-term Obligations:
      Senior convertible obligations (includes
        $140,000 due to parent company)               327,297      327,824
      Subordinated convertible obligations 
        (Note 2)                                      410,507      160,547
      Other (includes $53,800 and $168,800 due to
        parent company)                                68,586      184,823
                                                   ----------   ----------
                                                      806,390      673,194
                                                   ----------   ----------
    Minority Interest                                 214,808      165,996
                                                   ----------   ----------
    Shareholders' Investment:
      Common stock, $.10 par value, 250,000,000
        shares authorized; 122,771,730 and
        122,645,040 shares issued                      12,277       12,265
      Capital in excess of par value                  323,434      333,580
      Retained earnings                               609,754      571,899
      Treasury stock at cost, 634,209 and
        670,827 shares                                 (7,031)      (6,965)
      Accumulated other comprehensive items 
        (Note 4)                                      (36,377)     (33,221)
                                                   ----------   ----------
                                                      902,057      877,558
                                                   ----------   ----------
                                                   $2,550,295   $2,351,153
                                                   ==========   ==========

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

                                        3PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

                        Consolidated Statement of Income
                                   (Unaudited)


                                                      Three Months Ended
                                                   -----------------------
                                                   April 4,      March 29,
    (In thousands except per share amounts)            1998           1997
    ----------------------------------------------------------------------
    Revenues                                       $407,943       $329,120
                                                   --------       --------
    Costs and Operating Expenses:
      Cost of revenues                              214,209        173,448
      Selling, general, and administrative
        expenses                                    107,727         89,569
      Research and development expenses              28,519         23,407
                                                   --------       --------
                                                    350,455        286,424
                                                   --------       --------
    Operating Income                                 57,488         42,696

    Interest Income                                   8,169          7,224
    Interest Expense (includes $3,431 and $1,559
      to parent company)                            (11,493)        (8,460)
    Gain on Issuance of Stock by Subsidiaries
      (Note 5)                                        9,950         12,035
                                                   --------       --------
    Income Before Provision for Income Taxes
      and Minority Interest Expense                  64,114         53,495
    Provision for Income Taxes                       21,959         17,770
    Minority Interest Expense                         4,300          2,138
                                                   --------       --------
    Net Income                                     $ 37,855       $ 33,587
                                                   ========       ========

    Earnings per Share (Note 3):
      Basic                                        $    .31       $    .28
                                                   ========       ========
      Diluted                                      $    .28       $    .25
                                                   ========       ========
    Weighted Average Shares (Note 3):
      Basic                                         122,065        121,338
                                                   ========       ========
      Diluted                                       146,708        139,302
                                                   ========       ========


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

                                        4PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

                      Consolidated Statement of Cash Flows
                                   (Unaudited)

                                                       Three Months Ended
                                                     ----------------------
                                                     April 4,     March 29,
    (In thousands)                                       1998          1997
    -----------------------------------------------------------------------
    Operating Activities:
      Net income                                   $  37,855      $  33,587
      Adjustments to reconcile net income to net
        cash provided by operating activities:
          Depreciation and amortization               16,117         11,662
          Provision for losses on accounts
            receivable                                   185          1,084
          Gain on issuance of stock by subsidiaries
            (Note 5)                                  (9,950)       (12,035)
          Minority interest expense                    4,300          2,138
          Other noncash expenses                       1,478          1,419
          Changes in current accounts, excluding
            the effects of acquisitions:
              Accounts receivable                     13,700        (12,326)
              Inventories                            (14,028)       (10,436)
              Other current assets                    (5,796)        (7,745)
              Accounts payable                           997          2,942
              Other current liabilities                7,123         (4,785)
          Other                                       (1,074)           (28)
                                                   ---------      ---------
    Net cash provided by operating activities         50,907          5,477
                                                   ---------      ---------
    Investing Activities:
      Acquisitions, net of cash acquired              (1,300)      (336,935)
      Payment to affiliated company for acquired
        business                                     (19,117)             -
      Purchases of property, plant, and equipment     (6,573)        (3,989)
      Proceeds from sale of property, plant, and
        equipment                                      3,768              -
      Other                                              159            601
                                                   ---------      ---------
    Net cash used in investing activities            (23,063)      (340,323)
                                                   ---------      ---------
    Financing Activities:
      Net proceeds from issuance of Company and
        subsidiary common stock (Note 5)              43,701         25,219
      Net proceeds from issuance of subordinated
        convertible debentures (Note 2)              244,150              -
      Proceeds from issuance of long-term
        obligations to parent company                      -        220,000
      Repayment of long-term obligation to
        parent company (Note 2)                     (105,000)             -
      Decrease in short-term borrowings               (2,966)             -
      Repayment of long-term obligations                (894)          (253)
      Other                                               77              -
                                                   ---------      ---------
    Net cash provided by financing activities      $ 179,068      $ 244,966
                                                   ---------      ---------

                                        5PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

                Consolidated Statement of Cash Flows (continued)
                                   (Unaudited)

                                                       Three Months Ended
                                                     ---------------------
                                                     April 4,    March 29,
    (In thousands)                                       1998         1997
    ----------------------------------------------------------------------
    Exchange Rate Effect on Cash                    $   2,835    $    (552)
                                                    ---------    ---------
    Increase (Decrease) in Cash and Cash 
      Equivalents                                     209,747      (90,432)
    Cash and Cash Equivalents at Beginning
      of Period                                       468,848      522,688
                                                    ---------    ---------
    Cash and Cash Equivalents at End of Period      $ 678,595    $ 432,256
                                                    =========    =========

    Noncash Activities:
      Fair value of assets of acquired companies    $   1,300    $ 607,466
      Cash paid for acquired companies                 (1,300)    (383,247)
      Cash to be paid for remaining outstanding
        shares of tender offer                              -      (21,102)
      Issuance of subsidiary stock options
        for acquired company                                -       (2,080)
                                                    ---------    ---------
          Liabilities assumed of acquired
            companies                               $       -    $ 201,037
                                                    =========    =========

      Conversions of Company and 
        subsidiary convertible obligations          $     567    $   3,997
                                                    =========    =========


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

                                        6PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

                   Notes to Consolidated Financial Statements

    1.  General

        The interim consolidated financial statements presented have been
    prepared by Thermo Instrument Systems 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 April 4, 1998, and the results of operations and the cash flows for
    the three-month periods ended April 4, 1998, and March 29, 1997. Interim
    results are not necessarily indicative of results for a full year.

        The consolidated balance sheet presented as of January 3, 1998, 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 January 3, 1998, filed with
    the Securities and Exchange Commission.

    2.  Subordinated Convertible Debentures

        In January 1998, the Company sold at par value $250.0 million
    principal amount of 4% subordinated convertible debentures due 2005 for
    net proceeds of $244.2 million. The debentures are convertible into
    shares of the Company's common stock at a conversion price of $35.65 per
    share and are guaranteed on a subordinated basis by Thermo Electron
    Corporation. The Company used a portion of the proceeds to repay a $105.0
    million promissory note to Thermo Electron. The $105.0 million promissory
    note was classified as long-term in the accompanying 1997 balance sheet,
    as its repayment was made using the proceeds of debt with a maturity
    beyond one year.

                                        7PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

    3.  Earnings per Share

        Basic and diluted earnings per share were calculated as follows:

                                                         Three Months Ended
                                                        --------------------
                                                        April 4,   March 29,
    (In thousands except per share amounts)                 1998        1997
    ------------------------------------------------------------------------
    Basic
    Net income                                          $ 37,855    $ 33,587
                                                        --------    --------
    Weighted average shares                              122,065     121,338
                                                        --------    --------
    Basic earnings per share                            $    .31    $    .28
                                                        ========    ========

    Diluted
    Net income                                          $ 37,855    $ 33,587
    Effect of:
      Convertible obligations                              3,477       2,031
      Majority-owned subsidiaries'
        dilutive securities                                 (907)       (436)
                                                        --------    --------
    Income available to common
      shareholders, as adjusted                         $ 40,425    $ 35,182
                                                        --------    --------
    Weighted average shares                              122,065     121,338
    Effect of:
      Convertible obligations                             23,456      16,828
      Stock options                                        1,187       1,136
                                                        --------    --------
    Weighted average shares, as adjusted                 146,708     139,302
                                                        --------    --------
    Diluted earnings per share                          $    .28    $    .25
                                                        ========    ========

    4.  Comprehensive Income

        During the first quarter of 1998, the Company adopted Statement of
    Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
    Income." This pronouncement sets forth requirements for disclosure of the
    Company's comprehensive income and accumulated other comprehensive items.
    In general, comprehensive income combines net income and "other
    comprehensive items," which represent certain amounts that are reported
    as components of shareholders' investment in the accompanying balance
    sheet, including foreign currency translation adjustments and unrealized
    net of tax gains and losses from available-for-sale investments. During
    the first quarter of 1998 and 1997, the Company's comprehensive income
    totaled $34.7 million and $23.7 million, respectively.

                                        8PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

    5.  Issuance of Stock by Subsidiary

        In March 1998, the Company's ONIX Systems Inc. subsidiary sold
    3,300,000 shares of its common stock in an initial public offering at
    $14.50 per share for net proceeds of $43.2 million, resulting in a gain
    of $10.0 million. Following the initial public offering, the Company
    owned 68% of ONIX Systems' outstanding common stock.

    6.  Accrued Acquisition Expenses

        During 1997, the Company had undertaken a restructuring of Life
    Sciences International PLC, acquired in March 1997. At January 3, 1998,
    the remaining reserve for restructuring activities totaled $10.2 million.
    In March 1998, the Company finalized its plan for restructuring the
    acquired business. During the first quarter of 1998, the Company expended
    $3.0 million for restructuring costs, primarily for severance. At April
    4, 1998, the remaining reserve for restructuring the Life Sciences
    businesses was $8.7 million, as adjusted for the impact of currency
    translation, and primarily represents ongoing severance and
    abandoned-facility payments.

        During 1996, the Company had undertaken a restructuring of a
    substantial portion of the businesses constituting the Scientific
    Instruments Division of Fisons plc. In March 1997, the Company finalized
    its plan for restructuring the acquired businesses. At January 3, 1998,
    the remaining reserve for restructuring activities totaled $11.1 million.
    During the first quarter of 1998, the Company expended $0.6 million for
    restructuring costs, primarily for severance and abandoned-facility
    payments. At April 4, 1998, the remaining reserve for restructuring the
    Fisons businesses was $10.5 million, and primarily represents ongoing
    severance and abandoned-facility payments.

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

        Forward-looking statements, within the meaning of Section 21E of the
    Securities Exchange Act of 1934, are made throughout this Management's
    Discussion and Analysis of Financial Condition and Results of Operations.
    For this purpose, any statements contained herein that are not statements
    of historical fact may be deemed to be forward-looking statements.
    Without limiting the foregoing, the words "believes," "anticipates,"
    "plans," "expects," "seeks," "estimates," and similar expressions are
    intended to identify forward-looking statements. There are a number of
    important factors that could cause the results of the Company to differ
    materially from those indicated by such forward-looking statements,
    including those detailed under the heading "Forward-looking Statements"
    in Exhibit 13 to the Company's Annual Report on Form 10-K for the fiscal
    year ended January 3, 1998, filed with the Securities and Exchange
    Commission.

                                        9PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

    Results of Operations

    First Quarter 1998 Compared With First Quarter 1997
    ---------------------------------------------------

        Revenues increased $78.8 million, or 24%, to $407.9 million in the
    first quarter of 1998 from $329.1 million in the first quarter of 1997,
    due primarily to acquisitions, which included Life Sciences in March
    1997. Acquisitions added revenues of $81.6 million in the first quarter
    of 1998. The increase in revenues was offset in part by a decrease of
    $8.5 million in revenues due to the unfavorable effects of currency
    translation as a result of the strengthening of the U.S. dollar relative
    to foreign currencies in countries in which the Company operates. In
    addition, revenues increased in 1998 due to higher sales at Metrika
    Systems Corporation as a result of higher demand at its
    finished-materials quality control business and, to a lesser extent, at
    its on-line raw materials analysis business. Revenues also increased at
    ONIX Systems Inc. due to increased sales of industry-specific instruments
    to the production segment of the oil and gas industry. At ThermoQuest
    Corporation, an increase in revenues from Europe and North America was
    offset by a decrease in its revenues from Japan of $7.0 million due to
    economic uncertainty in that country. Increased revenues at the majority
    of ThermoSpectra Corporation's existing operations were slightly more
    than offset by a decline for test and measurement systems at its Gould
    Instrument Systems Inc. (GIS) subsidiary and the inclusion in 1997 of a
    large shipment at its Kevex Instruments subsidiary.

        International sales account for a significant portion of the
    Company's total revenues. Although the Company seeks to charge its
    customers in the same currency as its operating costs, the Company's
    financial performance and competitive position can be affected by
    currency exchange rate fluctuations. Where appropriate, the Company uses
    forward exchange contracts to reduce its exposure to currency
    fluctuations.

        The gross profit margin was unchanged at 47% in the first quarter of
    1998 and 1997. The impact of a decline in the gross profit margin in 1998
    due to the inclusion of lower-margin revenues at certain businesses
    acquired in 1997 was offset by the impact in 1997 of an adjustment to
    expense of $2.7 million relating to the sale of inventories revalued at
    the time of the acquisition of Life Sciences International PLC.

        Selling, general, and administrative expenses as a percentage of
    revenues decreased slightly to 26% in the first quarter of 1998 from 27%
    in the first quarter of 1997, primarily due to efforts to reduce selling
    and administrative costs at certain acquired businesses and, to a lesser
    extent, lower selling costs associated with certain of the businesses
    acquired from Life Sciences. Research and development expenses as a
    percentage of revenues were unchanged at 7% in 1998 and 1997.

        Interest income increased to $8.2 million in the first quarter of
    1998 from $7.2 million in the first quarter of 1997, due to interest
    income earned on invested proceeds from the Company's January 1998
    issuance of $250.0 million principal amount of 4% subordinated
    convertible debentures by the Company, offset in part by the use of a 

                                       10PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

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

    portion of the proceeds to repay a $105.0 million promissory note to
    Thermo Electron Corporation (Note 2). To a lesser extent, interest income
    increased due to higher invested cash balances as a result of the sale of
    common stock by the Company's subsidiaries in 1997. Interest expense
    increased to $11.5 million in 1998 from $8.5 million in 1997, primarily
    due to the issuance of an aggregate $428.8 million of promissory notes to
    Thermo Electron in 1997 in connection with acquisitions and the January
    1998 issuance of the 4% subordinated convertible debentures.

        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. The Company believes that this
    strategy provides additional motivation and incentives for the management
    of the subsidiaries through the establishment of subsidiary-level stock
    option programs, as well as capital to support the subsidiaries' growth.
    As a result of the sale of stock by subsidiaries, the Company recorded
    gains of $10.0 million and $12.0 million in the first quarter of 1998 and
    1997, respectively. 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 realize gains from such transactions in the future.

        The effective tax rate was 34% in the first quarter of 1998 and 33%
    in the first quarter of 1997. Excluding the impact of the nontaxable gain
    on issuance of stock by subsidiaries in 1998 and 1997, the effective tax
    rates in both periods exceeded the statutory federal income tax rate due
    to nondeductible amortization of cost in excess of net assets of acquired
    companies, the inability to provide a tax benefit on losses incurred at
    certain foreign subsidiaries, and the impact of state income taxes.
    Excluding the impact of the nontaxable gains, the effective tax rate
    decreased in 1998, primarily due to the lower relative effect of
    nondeductible amortization of cost in excess of net assets of acquired
    companies and, to a lesser extent, a decrease in foreign tax losses not
    benefited.

        Minority interest expense increased to $4.3 million in the first
    quarter of 1998 from $2.1 million in the first quarter of 1997, primarily
    due to the minority interest associated with the Company's newly public
    Metrika Systems, ONIX Systems, and Thermo Vision subsidiaries and higher
    earnings at the Company's other four public subsidiaries.

    Liquidity and Capital Resources

        Consolidated working capital was $827.9 million at April 4, 1998,
    compared with $612.7 million at January 3, 1998. Included in working
    capital are cash, cash equivalents, and available-for-sale investments of
    $687.1 million at April 4, 1998, and $477.2 million at January 3, 1998.
    Of the $687.1 million balance at April 4, 1998, $396.4 million was held
    by the Company's majority-owned subsidiaries and the balance was held by
    the Company and its wholly owned subsidiaries. The Company's operating 

                                       11PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

    Liquidity and Capital Resources (continued)

    activities provided cash of $50.9 million in the first three months of
    1998. The Company used $14.0 million to increase inventories, in part to
    replenish year-end levels at ThermoQuest's European sales offices and
    certain other subsidiaries and to build up inventories at ONIX Systems'
    industry-specific and composition analysis businesses as a result of long
    lead-time orders. Cash flow from operations was improved by a decrease in
    accounts receivable of $13.7 million, primarily due to the timing of cash
    collections at Metrika Systems, management efforts at Thermo Optek to
    reduce its investment in accounts receivable, and the effect of lower
    sales at ThermoSpectra's GIS subsidiary.

        At April 4, 1998, $127.1 million of the Company's cash and cash
    equivalents was held by its foreign subsidiaries. While this cash can be
    used outside of the United States, including for acquisitions,
    repatriation of this cash into the United States would be subject to
    foreign withholding taxes and could also be subject to a United States
    tax.

        The Company's investing activities used $23.0 million of cash in the
    first three months of 1998. ONIX Systems used $19.1 million of cash to
    pay Thermo Power Corporation for the Peek Measurement Business, acquired
    effective November 1997. The Company expended $6.6 million for purchases
    of property, plant, and equipment and received proceeds of $3.8 million
    from the sale of property, plant, and equipment.

        The Company's financing activities provided $179.1 million of cash in
    the first three months of 1998. Net proceeds from the issuance of Company
    and subsidiary common stock totaled $43.7 million and included $43.2
    million of net proceeds from the March 1998 initial public offering of
    ONIX Systems' common stock (Note 5). In January 1998, the Company sold at
    par value $250.0 million principal amount of 4% subordinated convertible
    debentures due 2005 for net proceeds of $244.2 million. The Company used
    a portion of the proceeds to repay a $105.0 million promissory note to
    Thermo Electron.

        In May 1998, Thermo BioAnalysis Corporation filed a registration
    statement under the Securities Act of 1933 with the Securities and
    Exchange Commission for a public offering by Thermo BioAnalysis of
    4,500,000 shares of its common stock. In addition, the underwriters are
    expected to be granted a 30-day over-allotment option to purchase an
    additional 675,000 shares. There can be no assurance that this offering
    will be completed.

        During 1998, the Company plans to make expenditures of approximately
    $30 million for property, plant, and equipment. As of May 18, 1998, the
    Company and its majority-owned subsidiaries had agreements or nonbinding
    letters of intent to acquire new businesses totaling approximately $90
    million. The Company believes that its existing resources are sufficient
    to meet the capital requirements of its existing operations for the
    foreseeable future. The Company has historically complemented internal 

                                       12PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

    Liquidity and Capital Resources (continued)

    development with acquisitions of businesses or technologies that extend
    the Company's presence in current markets or provide opportunities to
    enter and compete effectively in new markets. The Company will consider
    making acquisitions of such businesses or technologies that are
    consistent with its plans for strategic growth. The Company expects that
    it will finance these acquisitions through a combination of internal
    funds, additional debt or equity financing from the capital markets, or
    short-term borrowings from Thermo Electron, although there is no
    agreement with Thermo Electron to ensure that funds will be available on
    acceptable terms or at all.

    Market Risk

        The Company's exposure to market risk from changes in foreign
    currency exchange rates, interest rates, and equity prices has not
    changed materially from its exposure at year-end 1997.

    PART II - OTHER INFORMATION

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

    (a) Exhibits
    ------------

        See Exhibit Index on the page immediately preceding exhibits.

    (b) Reports on Form 8-K
    -----------------------

        On January 16, 1998, the Company filed a Current Report on Form 8-K
    dated January 15, 1998, with respect to the sale of the Company's 4%
    subordinated convertible debentures due 2005 and certain other matters
    (Item 5).

                                       13PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS 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 18th day of May 1998.

                                         THERMO INSTRUMENT SYSTEMS INC.



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



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

                                       14PAGE
<PAGE>
                         THERMO INSTRUMENT SYSTEMS INC.

                                  EXHIBIT INDEX


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

      27          Financial Data Schedule.