<PAGE>
 
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 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 period ended October 5, 1997 OR

_  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
   ACT OF 1934
   For the transition period from            to 
                                  ----------    ----------

                        Commission file number 333-29871


                               THERMA-WAVE, INC.
             (Exact name of Registrant as specified in its charter)

                DELAWARE                                        94-3000561
     [State or other jurisdiction of                         [I.R.S. Employer 
      incorporation or organization]                      Identification Number]

            1250 Reliance Way                        
           Fremont, California                                     94539   
[Address of principal executive offices]                         [Zip Code] 

                                 (510) 490-3663
               Registrant's telephone number, including area code

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 and 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               No         X
                            -----------         ------------

Indicate the number of shares of the issuer's class of common stock, as of the
latest practical date:

                 Class                      Outstanding as of November 2, 1997
-------------------------------------------------------------------------------
  Class A Common stock, $.01 par value                 9,073,532
  Class B Common stock, $.01 par value                 1,334,875
  Class L Common stock, $.01 par value                 1,008,170

                                       1
<PAGE>
 
Contents

                               THERMA-WAVE, INC.
                                   FORM 10-Q

                                     INDEX


Part I. Financial Information

Item 1. Unaudited Condensed Consolidated Financial Statements
 
        Condensed Consolidated Balance Sheets
          September 30, 1997 and March 31, 1997                              3
 
        Condensed Consolidated Statements of Operations
          Three and six months ended September 30, 1997 and 1996             4
 
        Condensed Consolidated Statements of Cash Flows
          Six months ended September 30, 1997 and 1996                       5
 
        Notes to Unaudited Condensed Consolidated Financial Statements       6
 
Item 2. Management's Discussion and Analysis of
        Financial Condition and Results of Operations                        9
 
Part II. Other Information
 
Item 1. Legal Proceedings                                                   14
 
Item 2. Changes in Securities and Use of Proceeds                           14
 
Item 3. Defaults upon Senior Securities                                     14
 
Item 4. Submission of Matters to a Vote of Security Holders                 14
 
Item 5. Other Information                                                   14
 
Item 6. Exhibits and Reports on Form 8-K                                    14
 
Signatures                                                                  15

                                       2
<PAGE>
 
Part I. Financial Information
Item 1. Unaudited Consolidated Condensed Financial Statements


                               THERMA-WAVE, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                             September 30,                March 31,
                                                                                 1997                       1997
                                                                             ------------                -----------
<S>                                                                          <C>                         <C>
                              ASSETS
 
Current assets:
 Cash and cash equivalents                                                     $ 17,614                   $ 16,741
 Accounts receivable, net                                                        21,845                     20,107
 Receivable from parent                                                               -                      1,425
 Inventories                                                                     20,739                     17,427
 Other current assets                                                             7,357                      5,939
                                                                             ------------                -----------
 
           Total current assets                                                  67,555                     61,639
 
 Property and equipment, net                                                      6,760                      5,843
 Deferred financing costs, net                                                   10,619                          -
 Other assets                                                                     1,936                      1,138
                                                                             ------------                -----------
           Total assets                                                        $ 86,870                   $ 68,620
                                                                             ============                ===========
 
             LIABILITIES AND STOCKHOLDERS' EQUITY
                   (NET CAPITAL DEFICIENCY)
Current liabilities:
 Short term debt                                                               $      -                   $  3,834
 Accounts payable                                                                 5,472                      4,076
 Other current liabilities                                                       19,606                     15,009
                                                                             ------------                -----------
           Total current liabilities                                             25,078                     22,919
 Long term debt                                                                 115,000                     23,100
 Other liabilities                                                                2,428                      2,456
                                                                             ------------                -----------
           Total liabilities                                                    142,506                     48,475
 
Commitments and contingencies
 
Mandatorily redeemable preferred stock                                           14,101                          -
 
Stockholders' equity (net capital deficiency)
 Common stock                                                                         -                         45
 Common stock  - Class A                                                             91                          -
 Common stock  - Class B                                                             13                          -
 Common stock  - Class L                                                             10                          -
 Additional paid-in capital                                                      21,373                     60,465
 Notes receivable from stockholders                                                (298)                         -
 Accumulated deficit                                                            (89,335)                   (38,927)
 Currency translation adjustment                                                 (1,591)                    (1,438)
                                                                             ------------                -----------
            Total stockholders' equity (net capital deficiency)                 (69,737)                    20,145
                                                                             ------------                -----------
            Total liabilities and stockholders' equity (net
             capital deficiency)                                               $ 86,870                   $ 68,620
                                                                             ============                ===========
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>
 
                               THERMA-WAVE, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                       Three months ended                      Six months ended
                                          September 30,                          September 30,
                               ---------------------------------     ----------------------------------
                                     1997               1996               1997                1996
                               --------------     --------------     --------------      --------------
<S>                            <C>                <C>                <C>                 <C>
Net revenue                           $28,286            $31,034            $56,491             $59,749
Cost of revenue                        13,138             12,876             26,401              25,769
                               --------------     --------------     --------------      --------------
Gross margin                           15,148             18,158             30,090              33,980
 
Operating expenses:
 Research and development               5,086              3,144              9,574               6,168
 Selling, general and
  administrative                        6,749              5,733             11,775              11,627
 Amortization of goodwill and
  purchased intangibles                     -                478                  -                 956
 Non-recurring
  recapitalization and related
  expenses                              1,000                  -              3,888                   -
                               --------------     --------------     --------------      --------------
        Total operating        
         expenses                      12,835              9,355             25,237              18,751
                               --------------     --------------     --------------      --------------
 
Operating income                        2,313              8,803              4,853              15,229
 
Other income (expense):
 Interest expense                      (3,588)              (409)            (5,781)               (841)
 Interest income                          171                 39                340                  84
 Other, net                                 5                (53)                 -                 (80)
                               --------------     --------------     --------------      --------------
                                       (3,412)              (423)            (5,441)               (837)
                               --------------     --------------     --------------      --------------
Income (loss) before income
 taxes                                 (1,099)             8,380               (588)             14,392
Provision (benefit) for income
 taxes                                   (428)             3,457               (229)              5,966
                               --------------     --------------     --------------      --------------
Net income (loss)                        (671)           $ 4,923               (359)            $ 8,426
                                                  ==============                         ==============
 
Accretion of preferred stock
 dividend                                 208                                   324
                               --------------                        --------------
Net loss available to common
 stockholders                         $  (879)                              $  (683)
                               ==============                        ==============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>
 
                               THERMA-WAVE, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                Six months ended
                                                                                  September 30,
                                                                 --------------------------------------------
 
                                                                          1997                     1996
                                                                 -------------------      -------------------
<S>                                                              <C>                      <C>
Operating activities:
  Net income (loss)                                                         $   (359)                 $ 8,426
  Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
    Depreciation and amortization                                              1,663                    2,138
    Amortization of deferred financing costs                                     593                        -
    Non-cash recapitalization and related expenses                             3,888                        -
    Changes in assets and liabilities:
     Accounts receivable                                                      (1,738)                  (2,392)
     Inventories                                                              (3,815)                  (5,913)
     Other assets                                                             (1,418)                    (143)
     Other liabilities                                                         5,034                      878
                                                                 -------------------      -------------------
      Net cash provided by operating activities                                3,848                    2,994

Investing activities:
  Purchases of property and equipment                                         (1,863)                    (677)
  Other                                                                       (1,012)                    (474)
                                                                 -------------------      -------------------
      Net cash used in investing activities                                   (2,875)                  (1,151)

Financing activities:
  Issuance of Senior Notes                                                   115,000                        -
  Repayment of notes payable                                                 (26,934)                    (815)
  Redemption of common stock                                                 (96,900)                       -
  Proceeds from issuance of common stock                                      20,169                      525
  Deferred financing costs                                                   (11,212)                       -
  Other                                                                         (223)                    (143)
                                                                 -------------------      -------------------
      Net cash used in financing activities                                     (100)                    (433)
                                                                 -------------------      -------------------
 Net increase in cash and cash equivalents                                       873                    1,410
 Cash and cash equivalents at beginning of period                             16,741                    7,690
                                                                 -------------------      -------------------
 Cash and cash equivalents at end of period                                 $ 17,614                  $ 9,100
                                                                 ===================      ===================
 
 Supplementary disclosures:
  Cash paid for interest                                                    $    922                  $   714
                                                                 ===================      ===================
  Cash paid for taxes                                                       $  2,800                  $ 6,319
                                                                 ===================      ===================
 
 Noncash financing activity:
  Common stock issued for notes receivable from stockholders                $    298                  $     -
                                                                 ===================      ===================
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>
 
                               THERMA-WAVE, INC.
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.  Basis of Presentation
 
    The accompanying unaudited condensed consolidated financial statements have
    been prepared pursuant to the rules and regulations of the Securities and
    Exchange Commission and include the accounts of Therma-Wave, Inc. and its
    wholly owned subsidiaries (collectively "Therma-Wave" or the "Company").
    Certain information and footnote disclosures, normally included in financial
    statements prepared in accordance with generally accepted accounting
    principles, have been condensed or omitted pursuant to such rules and
    regulations. In the opinion of the Company, the financial statements reflect
    all adjustments, consisting only of normal recurring adjustments, necessary
    for a fair presentation of the financial position at September 30, 1997, and
    the operating results and cash flows for the three and six months ended
    September 30, 1997 and 1996. These financial statements and notes should be
    read in conjunction with the Company's audited financial statements and
    notes thereto for the year ended March 31, 1997, included in the Company's
    Registration Statement on Form S-4 (Registration No. 333-29871) as declared
    effective by the Securities and Exchange Commission on September 10, 1997.
 
    The results of operations for the interim periods are not necessarily
    indicative of the results of operations that may be expected for any other
    period or for the fiscal year, which ends April 5, 1998.
 
    The second fiscal quarters of 1998 and 1997 and the fiscal year 1997 ended
    on October 5, 1997, October 6, 1996 and April 6, 1997, respectively. For
    presentation purposes, the accompanying financial statements have been shown
    as ending on the last day of the calendar month.

2.  Inventories

    Inventories are summarized as follows:
 
<TABLE>
<CAPTION>
                                 September 30, 1997    March 31, 1997
                                 ------------------    --------------
<S>                              <C>                   <C>
    Purchased materials                     $ 9,347           $ 8,937
    Systems in process                        8,259             7,252
    Finished systems                          3,133             1,238
                                 ------------------    --------------
                                            $20,739           $17,427
                                 ==================    ==============
</TABLE> 

                                       6
<PAGE>
 
3.  Recapitalization

    In December 1996, the Board of Directors approved the Recapitalization
    Agreement (the "Recapitalization Agreement"). Pursuant to the
    Recapitalization Agreement, which closed on May 16, 1997, the Company: (i)
    redeemed from Toray Industries, Inc., ("Toray") and Shimadzu Corporation
    ("Shimadzu") approximately 86.6% of its outstanding capital stock for $96.9
    million; (ii) converted its remaining outstanding capital stock of 6.1
    million shares to newly issued shares of preferred stock and common stock;
    (iii) repaid substantially all of its outstanding borrowings of
    approximately $26.9 million; (iv) canceled its receivable from Toray and
    Shimadzu of $1.4 million which was recorded as a reduction of additional
    paid-in capital; and (v) paid the estimated fees and expenses of
    approximately $11.2 million related to the Recapitalization. In order to
    finance the transactions contemplated by the Recapitalization Agreement, the
    Company: (i) issued $115.0 million in aggregate principal amount of senior
    notes in a private debt offering; (ii) received an equity contribution of
    approximately $20.0 million in cash from an investor group, including
    investment funds associated with Bain Capital, Inc. ("Bain"), and members of
    the Company's senior management team; and (iii) converted equity securities
    of Toray and Shimadzu having a value of $15.0 million into newly issued
    shares of preferred stock and common stock.
 
    As a result of the Recapitalization, the outstanding equity securities of
    the Company consist of 9,073,532 shares of Class A Common; 1,334,875 shares
    of Class B Common; 1,008,170 shares of Class L Common; and 748,738 shares of
    Preferred Stock. The shares of Class A Common and Class L Common each
    entitle the holder thereof to one vote per share on all matters to be voted
    upon by the stockholders of the Company and are otherwise identical, except
    that the shares of Class L Common are entitled to a preference over the
    Class A Common with respect to any distribution by the Company to holders of
    its capital stock equal to the original cost of such share ($19.085) plus an
    amount which accrues on a daily basis at a rate of 12% per annum, compounded
    annually. The Class B Common is identical to the Class A common except that
    the Class B Common is nonvoting and is convertible into Class A Common at
    any time following an initial public offering by the Company at the option
    of the holder thereof. The Preferred Stock has a liquidation preference of
    $18.40 per share and is convertible into one share of Class A Common at the
    option of the holder thereof. Dividends on the Preferred Stock accrue at a
    rate of 6.0% per annum. The Preferred Stock has a scheduled redemption on
    May 16, 2007, and is otherwise redeemable by the Company at any time from
    time to time after the earlier of (i) June 30, 1998; or (ii) an initial
    public offering by the Company. The Preferred Stock entitles the holder
    thereof to one vote for each share of Class A Common issuable upon
    conversion of such Preferred Stock.
 
4.  Financing Arrangements

    The $115.0 million of senior notes ("Notes") issued to finance the
    Recapitalization are senior unsecured obligations of the Company and will
    mature on May 15, 2004. 

                                       7
<PAGE>
 
    Interest on the Notes will accrue at the rate of 10 5/8% per annum and is
    payable semiannually in cash on each May 15 and November 15, commencing on
    November 15, 1997, to registered holders at the close of business on May 1
    and November 1, respectively, immediately preceding the applicable interest
    payment date. The Notes are not entitled to the benefit of any mandatory
    sinking fund and are redeemable at the Company's option in whole at any time
    or in part from time to time, on and after May 15, 2001, upon not less than
    30 nor more than 60 days notice, at specified redemption prices. At any
    time, or from time to time, on or prior to May 15, 2000, the Company may, at
    its option, use the net cash proceeds of one or more equity offerings to
    redeem up to 40% of the aggregate principal amount of Notes originally
    issued at a redemption price equal to 110.625% of the principal amount
    thereof plus accrued and unpaid interest.
 
    In connection with the Recapitalization Agreement, the initial purchasers of
    the $115.0 million of Notes were granted certain exchange and registration
    rights. Based upon the terms of such agreement, the Company issued new notes
    with substantially identical terms as the old notes except that the new
    notes are registered under the Securities Act and therefore do not bear
    legends restricting their transfer.
 
    In conjunction with the Recapitalization, the Company entered into a new
    bank credit facility (the "Bank Credit Facility") with Bankers Trust
    Company, which provides for a revolving credit facility of $30.0 million.
    The Company may borrow amounts under the Bank Credit Facility to finance its
    working capital requirements and other general corporate purposes. The Bank
    Credit Facility requires the Company to meet certain financial tests and
    contains covenants customary for this type of financing. At September 30,
    1997, there were $7.6 million of outstanding letters of credit that were
    collateralized by the Bank Credit Facility.
 
5.  Recently Issued Accounting Standard

    In June 1997, the Financial Accounting Standards Board ("FASB") issued
    Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
    Comprehensive Income." The statement established standards for the reporting
    and display of comprehensive income and its components. Comprehensive income
    is defined as the change in equity of a business enterprise during a period
    from transactions and other events and circumstances from non-owner sources.
    It includes all changes in equity during a period except those resulting
    from investments by owners and distributions to owners. This standard will
    require that an enterprise display an amount representing total
    comprehensive income for the period. SFAS No. 130 will be effective for
    fiscal year 1998. The Company does not expect the adoption of SFAS No. 130
    to have a significant impact on the Company's reported results of
    operations.

                                       8
<PAGE>
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

When used in this discussion, the words "expects", "anticipates" and similar
expressions are intended to identify forward-looking statements.  Such forward-
looking statements are subject to a number of risks and uncertainties that could
cause actual results to differ materially from the statements made. The Company
has experienced and expects to continue to experience significant fluctuations
in its quarterly results.  The Company's expense levels are based, in part, on
expectations of future revenues.  If revenue levels in a particular quarter do
not meet expectations, operating results are adversely affected.  A variety of
factors could have an influence on the level of the Company's revenues in a
particular quarter.  These factors include the cyclical nature of the
semiconductor industry, the risk that factors which allowed the Company to
experience relatively good performance in industry downturns may not protect the
Company in future downturns, the timing of the receipt of orders from major
customers, customer cancellations or delay of shipments, specific feature
requests by customers, production delays or manufacturing inefficiencies,
exchange rate fluctuations, management decisions to commence or discontinue
product lines, the Company's ability to design, introduce and manufacture new
products on a cost effective and timely basis, the introduction of new products
by the Company or its competition, the timing of research and development
expenditures, and expenses attendant to acquisitions, strategic alliances and
the future development of marketing and service capabilities.

General

The Company is a worldwide leader in the development, manufacture, marketing and
service of process control metrology systems for use in the manufacture of
semiconductors.  The Company's process control metrology systems are principally
used to measure ion implantation and thin film deposition and removal.  The
Company has developed two major lines of process control metrology systems: (i)
the Therma-Probe system and (ii) the Opti-Probe system.  The Therma-Probe
system, introduced in 1985, utilizes the Company's proprietary thermal wave
technology and is the predominant nondestructive process control metrology
system used to measure the critical ion implantation process on product wafers
in the fabrication of semiconductors.  The Opti-Probe system, introduced in
1992, significantly improves upon existing thin film metrology systems by
successfully integrating different measurement technologies into one system and
utilizing the Company's proprietary optical technologies.

The Company's second quarters of fiscal years 1998 and 1997 ended on October 5,
1997 and October 6, 1996, respectively. For presentation purposes, any reference
herein to such periods refer to the periods ended September 30 of such fiscal
year.

                                       9
<PAGE>
 
Results of Operations

The following table summarizes Therma-Wave's unaudited historical results of
operations as a percentage of net revenues for the periods indicated.  The
historical financial data for the three and six months ended September 30, 1997
and 1996 were derived from the Company's unaudited consolidated financial
statements which, in the opinion of management, reflect all adjustments
(consisting of normal recurring adjustments) necessary for the fair presentation
of the financial condition and results of operations for such periods.

<TABLE>
<CAPTION>
                                              Three months ended                   Six months ended
                                                September 30,                       September 30,
                                      -------------------------------     -------------------------------
Income Statement Data:                     1997              1996              1997              1996
                                      -------------     -------------     -------------     -------------
 
<S>                                   <C>               <C>               <C>               <C>
Net revenue                               100.0%            100.0%            100.0%            100.0%
Cost of revenue                            46.4              41.5              46.7              43.1
                                      -------------     -------------     -------------     -------------
Gross margin                               53.6              58.5              53.3              56.9
Operating expenses:
Research and development expenses          18.0              10.1              17.0              10.3
Selling, general and administrative        23.9              18.5              20.8              19.5
Amortization of goodwill and
 purchased intangibles                        -               1.5                 -               1.6
Non-recurring recapitalization and                                  
 related expenses                           3.5                 -               6.9                 -
                                      -------------     -------------     -------------     -------------
Operating income                            8.2              28.4               8.6              25.5
Interest expense                          (12.7)             (1.3)            (10.2)             (1.4)
Interest income                             0.6               0.1               0.6               0.1
Other, net                                    -              (0.2)                -              (0.1)
                                      -------------     -------------     -------------     -------------
Income (loss) before income taxes          (3.9)             27.0              (1.0)             24.1
Provision (benefit) for income taxes       (1.5)             11.1              (0.4)             10.0
                                      -------------     -------------     -------------     -------------
Net income (loss)                          (2.4)%            15.9%             (0.6)%            14.1%
                                      =============     =============     =============     =============
</TABLE>

    Net revenues for the three and six months ended September 30, 1997 were
    $28.3 million and $56.5 million, respectively. Compared to the corresponding
    periods of fiscal 1997, net revenues decreased $2.7 million or 8.9% and $3.3
    million or 5.5%, respectively. This decrease in the Company's net revenues
    is primarily attributed to lower Therma-Probe sales due to a decrease in new
    semiconductor manufacturing facilities partially offset by increased service
    revenues.

    Gross margin percentages for the three and six months ended September 30,
    1997 were 53.6% and 53.3%, respectively. Compared to the corresponding
    periods of fiscal 1997, the gross margin percentage decreased 4.9 and 3.6
    percentage points for the three and six months, respectively. This decrease
    is attributed to increased investment in the service organization, which was
    partially offset by increased system sales gross margins as a result of
    higher average sales prices.

                                       10
<PAGE>
 
     Research and development expenses were $5.1 million and $9.6 million for
     the three and six months ended September 30, 1997. Compared to the
     corresponding periods of fiscal 1997, research and development expenses
     increased $1.9 million, or 61.8% and $3.4 million, or 55.2% for the three
     and six months, respectively. Research and development expenses as a
     percentage of net revenues for the three and six months ended September 30,
     1997, was 18.0% and 17.0%, respectively. The increase in research and
     development is due to increased headcount and project expense increases
     related to new product development, including the OP-5240, Meta-Probe and
     300 millimeter products. The Company believes that technical leadership is
     essential to its success and expects to continue to commit significant
     resources to research and development projects.

     Selling, general and administrative expenses as a percentage of net
     revenues for the three and six months ended September 30, 1997, were 23.9%
     and 20.8%, respectively. For the three and six months ending September 30,
     1996, selling, general and administrative expenses as a percentage of net
     revenues were 18.5% and 19.5%. The increase for the periods ended September
     30, 1997 is a result of increased spending in marketing and related
     expenses for new products, slightly offset by a decrease in sales
     commissions.

     Non-recurring recapitalization and related expenses for the three and six
     months ended September 30, 1997 was $1.0 million and $3.9 million,
     respectively. These were non-cash charges related to the arrangements for
     the Company's executive officers in connection with the Recapitalization.

     Interest expense for the three and six months ended September 30, 1997 were
     $3.6 million and $5.8 million, respectively. Compared to the corresponding
     periods of fiscal 1997, interest expense increased $3.2 million and $4.9
     million, respectively. This increased interest expense is attributed to the
     additional debt incurred as part of the Recapitalization.

     For the three and six months ended September 30, 1997, the Company recorded
     a benefit for income taxes of $0.4 million and $0.2 million, respectively.
     During the three and six months ended September 30, 1996, the Company
     recorded a provision for income taxes of $3.5 million and $6.0 million,
     respectively. These decreases were caused by reductions in net income of
     the Company for the respective periods.

     Liquidity and Capital Resources
  
     The Company's principal liquidity requirements are for working capital,
     consisting primarily of accounts receivable, inventories, capital
     expenditures and debt service. Historically, the Company has funded its
     operating activities principally from working capital, capital infusions
     from Toray and Shimadzu and working capital lines of credit.

     Cash flow provided by operating activities was $3.8 million and $3.0
     million for the six months ended September 30, 1997 and 1996, respectively.
     The increase in cash flow 

                                       11
<PAGE>
 
     provided by operating activities is a result of the timing between when an
     obligation is incurred and when it was paid and non-cash recapitalization
     expenses, offset by the decrease in net income.

     Purchases of property and equipment were $1.9 million and $0.7 million for
     the six months ended September 30, 1997 and 1996.

     The Company issued $115.0 million in aggregate principal amount of senior
     notes to finance the Recapitalization, including the repayment of notes
     payable and redemption of common stock. The Company also received proceeds
     of approximately $20.2 million from the issuance of common stock.

     In connection with the Recapitalization, the Company entered into the Bank
     Credit Facility. The Bank Credit Facility provides for borrowings of up to
     $30.0 million for working capital and other general corporate purposes, and
     bears interest, at the Company's option, at (i) the Base Rate (as defined
     in the Bank Credit Facility) plus 1.75% or (ii) the Eurodollar Rate (as
     defined in the Bank Credit Facility) plus 3.00%. The Company's borrowings
     under the Bank Credit Facility are secured by substantially all of the
     Company's assets and a pledge of substantially all of the capital stock of
     the Company's domestic subsidiaries and 65% of the capital stock of the
     Company's first-tier foreign subsidiaries. The Bank Credit Facility matures
     on May 16, 2002. Subsequent to the Recapitalization, the Company used $7.6
     million of the available borrowing capacity under the Bank Credit Facility
     to issue letters of credit. At September 30, 1997, the Company had unused
     borrowing capacity under the Bank Credit Facility of $22.4 million.

     The Bank Credit Facility requires the Company to meet certain financial
     tests and contains covenants customary for this type of financing.

     In September 1997, the Board of Directors authorized management of the
     Company to file a Registration Statement with the Securities and Exchange
     Commission permitting the Company to sell shares of its common stock in an
     initial public offering (the "Offering"). On October 2, 1997, the Company
     filed such Registration Statement on Form S-1 with the Securities and
     Exchange Commission.

     Numerous factors, many of which are beyond the control of the Company, may
     cause the Offering not to be completed or, if completed, to be on terms
     different than those described herein. Such factors include, among other
     things, market conditions in the semiconductor capital equipment industry
     and the general status of the securities market (particularly, the
     technology sector, thereof). As a result, no assurance can be given that
     the Offering will be completed or, if completed, will be on the terms
     outlined therein.

     The Company's principal sources of funds are cash flows from operating
     activities and borrowings under the Bank Credit Facility. The Company
     believes that these funds will provide the Company with sufficient
     liquidity and capital resources for the Company to meet its current and
     future financial obligations, as well as to provide funds for the 

                                       12
<PAGE>
 
     Company's working capital, capital expenditures and other needs for at
     least the next twelve months. No assurance can be given, however, that this
     will be the case. Depending upon its rate of growth and profitability, the
     Company may require additional equity or debt financing to meet its working
     capital requirements or to fund its research and development activities.
     There can be no assurance that additional financing will be available when
     required or, if available, will be on terms satisfactory to the Company.
     The Company's future operating performance and ability to service or
     refinance the Notes and to repay, extend or refinance the Bank Credit
     Facility will be subject to future economic conditions and to financial,
     business and other factors, many of which are beyond the Company's control.

     Foreign exchange rate fluctuations have historically not had a significant
     impact on the Company's results of operations. However, future exchange
     rate fluctuations could have a material adverse effect on the Company's
     business, financial condition and results of operations.

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<PAGE>
 
Part II. Other Information

Item 1.  Legal Proceedings

      None.

Item 2.  Changes in Securities and Use of Proceeds

      On July 15, 1997, the Company sold an aggregate of 206,126 shares of
      Class B common to certain employees of the Company for an aggregate of
      $48,440. This sale was deemed exempt from registration under the
      Securities Act of 1933 by virtue of Section 4(2) thereof as a
      transaction not involving a public offering.

Item 3.  Defaults Upon Senior Securities

      None.

Item 4.  Submission of Matters to a Vote of Security Holders

      None.

Item 5.  Other Information

      None.

Item 6.  Exhibits and Reports on Form 8-K

      (a) Exhibits

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

     3.1        Restated Certificate of Incorporation of Therma-Wave, Inc. (1)
     3.2        Amended and Restated By-Laws of Therma-Wave, Inc. (1)
    27.1        Financial Data Schedule
    _______
        (1)  Incorporated by reference to the same numbered exhibit to the
             Company's Registration Statement on Form S-4 (Registration No.
             333-29871)

      (b)  Reports on Form 8-K

      The Company did not file any reports on Form 8-K during the six months
      ended September 30, 1997.

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<PAGE>
 
                                  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.


                                             THERMA-WAVE, INC.
                                               (Registrant)


                                              /s/ ANTHONY LIN
                                              ---------------
                                        
                                                ANTHONY LIN
                                         Executive Vice President,
                                          Chief Financial Officer
                            (as Registrant and as Principal Financial Officer)

                                            November 18, 1997

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