SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                   -------------------------------------------
                                    FORM 10-K

    (mark one)
    [ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the fiscal year ended January 3, 1998

    [   ] Transition Report Pursuant to Section 13 or 15(d) of the
          Securities Exchange Act of 1934
                         Commission file number 1-12137

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

    Delaware                                                       04-3311544
    (State or other jurisdiction of                          (I.R.S. Employer
    incorporation or organization)                        Identification No.)

    8 Alfred Circle
    Bedford, Massachusetts                                              01730
    (Address of principal executive offices)                       (Zip Code)
       Registrant's telephone number, including area code: (781) 622-1000
           Securities registered pursuant to Section 12(b) of the Act:

        Title of each class        Name of each exchange on which registered
    ----------------------------   -----------------------------------------
    Common Stock, $.01 par value             American Stock Exchange
    Redemption Rights
    Units

           Securities registered pursuant to Section 12(g) of the Act:
                                      None
    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 the filing requirements for at least the past 90 days. 
    Yes [ X ] No [   ]

    Indicate by check mark if disclosure of delinquent filers pursuant to
    Item 405 of Regulation S-K is not contained herein, and will not be
    contained, to the best of the Registrant's knowledge, in definitive proxy
    or information statements incorporated by reference into Part III of this
    Form 10-K or any amendment to this Form 10-K. [   ]

    The aggregate market value of the voting stock held by nonaffiliates of
    the Registrant as of January 30, 1998, was approximately $37,696,000.

    As of January 30, 1998, the Registrant had 14,715,000 shares of Common
    Stock outstanding.
                       DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the Registrant's Annual Report to Shareholders for the year
    ended January 3, 1998, are incorporated by reference into Parts I and II.

    Portions of the Registrant's definitive Proxy Statement for the Annual
    Meeting of Shareholders to be held on June 1, 1998, are incorporated by
    reference into Part III.
PAGE
<PAGE>
                                     PART I

    Item 1. Business
            --------

    (a) General Development of Business
        -------------------------------

        Thermo Fibergen Inc. (the Company or the Registrant) is developing
    and commercializing equipment and systems to recover materials from
    papermaking sludge generated by plants that produce virgin and recycled
    pulp and paper. The Company intends to finance, build, own, and operate
    fiber-recovery facilities at or near pulp and paper mills, pump the
    sludge directly into its fiber-recovery facilities under long-term
    contracts with mills, and assume responsibility for the processing and
    ultimate recycling of the sludge into new products. The Company intends
    to recover and clean long cellulose fibers, which are used to make paper,
    and extract and clarify water from the sludge for reuse by the mill, and
    convert the remaining components of papermaking sludge -- solid minerals,
    short fibers, and fines -- into products which the Company expects to
    market and sell. The Company expects to receive revenues from the
    services it offers the mill and from the sale of long fiber and
    sludge-based products. In December 1997, the Company entered into its
    first long-term contract to provide fiber-recovery and
    water-clarification services to a paper mill located in the Southeastern
    United States.

        In July 1996, the Company acquired substantially all of the assets,
    subject to certain liabilities, of Granulation Technology, Inc. and
    Biodac, a division of Edward Lowe Industries, Inc., for $12,070,000 in
    cash. This business has been renamed GranTek. GranTek employs patented
    technology to produce absorbing granules from papermaking sludge. These
    granules, marketed under the trade name Biodac(R), are principally used
    as a carrier to deliver chemicals for agricultural, professional turf,
    home lawn and garden, and mosquito-control applications. In 1997*,
    GranTek introduced an agricultural row-crop granule and an oil and grease
    absorption granule, and completed development and market testing of a cat
    box filler product. Prior to its July 1996 acquisition of GranTek, the
    Company was in the development stage.

        The Company was incorporated in Delaware in February 1996 as a wholly
    owned subsidiary of Thermo Fibertek Inc. In September 1996, the Company
    sold 4,715,000 units, each unit consisting of one share of Company common
    stock and one redemption right, in an initial public offering at $12.75
    per unit for net proceeds of $55,781,000. The common stock and redemption
    rights began trading separately on December 13, 1996. Holders of a
    redemption right have the option to require the Company to redeem one
    share of Thermo Fibergen common stock at $12.75 per share in September
    2000 or 2001. A redemption right may only be exercised if the holder owns
    a share of common stock at that time. The redemption rights are
    guaranteed, on a subordinated basis, by Thermo Electron Corporation. As
    of January 3, 1998, Thermo Fibertek owned 10,419,950 shares of the
    Company's common stock, representing 71% of such stock outstanding, which
    includes 419,950 shares purchased during 1997. Purchases of Company

    *References to 1997, 1996, and 1995 herein are for the fiscal years
     ended January 3, 1998, December 28, 1996, and December 30, 1995,
     respectively.

                                        2PAGE
<PAGE>
    common stock by Thermo Fibertek during 1997 consisted of 268,000 shares
    purchased in the open market for $2,328,000 and 151,950 shares purchased
    from Thermo Electron for $1,463,000. During 1997, Thermo Electron had
    purchased 151,950 shares of Company common stock that were subsequently
    sold to Thermo Fibertek. There are currently more redemption rights than
    shares of common stock held by non-affiliates of the Company. Affiliates
    of the Company, including Thermo Fibertek, may acquire additional shares
    of the Company's common stock in the open market, and there can be no
    assurance that the Company will issue additional shares of its common
    stock through the exercise of employee stock options or other
    transactions.

        A publicly traded subsidiary of Thermo Electron, Thermo Fibertek
    develops, manufactures, and markets a range of equipment and products for
    the pulp and paper recycling industries. In addition to Thermo Fibertek's
    products, Thermo Electron provides analytical and monitoring instruments;
    biomedical products including heart-assist devices, respiratory
    equipment, and mammography systems; alternative-energy systems;
    industrial process equipment; and other specialized products. Thermo
    Electron also provides industrial outsourcing, particularly in
    environmental-liability management, laboratory analysis, and
    metallurgical processing; and conducts advanced-technology research and
    development.

    Forward-looking Statements

        Forward-looking statements, within the meaning of Section 21E of the
    Securities Exchange Act of 1934, are made throughout this Annual Report
    on Form 10-K. 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 the Registrant's 1997 Annual Report to Shareholders, which
    statements are incorporated herein by reference.

    (b) Information About Industry Segments
        -----------------------------------

        The Company is engaged in one business segment.

    (c) Description of Business
        -----------------------

        (i) Principal Products and Services
            -------------------------------

        The Company's GranTek subsidiary produces Biodac, organic-based
    granules that are sold principally to chemical formulators for use as
    carriers for chemicals in the agricultural, professional turf, home lawn
    and garden, and mosquito-control markets. Biodac is virtually dust-free,
    uniform in size and absorptivity, and chemically neutral. The Company
    believes that these features give Biodac a competitive advantage over
    clay- and corncob-based granules.

                                        3PAGE
<PAGE>
        In December 1997, the Company entered into a ten-year contract with a
    paper mill to provide fiber-recovery and water-clarification services to
    the mill. The Company will construct a fiber-recovery and water-
    clarification facility adjacent to the mill. Once operational, the
    Company will provide the paper mill with fiber-recovery and
    water-clarification services for established monthly fees. The Company
    has also entered into an engineering, procurement, and construction
    contract with a third party to construct the facility. 

        (ii) and (xi) New Products; Research and Development
                      --------------------------------------

        The Company has developed technology to recover and clean the long
    cellulose fiber and extract and clarify the water from papermaking sludge
    for reuse by paper mills. In 1996, the Company constructed a mobile pilot
    plant, which it is using to demonstrate its fiber-recovery process and
    test the sludge streams of mills in the United States and Canada. The
    Company also tested sludge from several European mills at a pilot lab set
    up at Thermo Fibertek's E. & M. Lamort facility in France.

        Thermo Fibergen continues research and development efforts to develop
    higher-value products from papermaking sludge, including pure minerals,
    commodity and specialty chemicals, controlled-release granules for
    crop-protection chemicals and fertilizers, as well as new, composite
    materials for building, automobile manufacturing, and other applications.

        GranTek operates a manufacturing plant in Green Bay, Wisconsin, at
    which it processes sludge provided by a nearby paper mill into Biodac. A
    pilot plant is located within GranTek's main manufacturing plant. This
    pilot plant processes up to 24 tons of material per day, and has been
    used to develop many of the innovations implemented in GranTek's main
    plant. The Company believes that this pilot plant will give the Company
    the ability to process waste streams from other paper mills under
    operating conditions and in quantities sufficient to determine final
    product and operating characteristics and costs, as well as to develop
    new technologies.

        In 1997, GranTek successfully completed commercial introduction of a
    new row-crop granule in the South African market. The granule was used in
    large-scale applications during the fall planting season. The Company
    intends to introduce the row-crop product to the U.S. market during 1998.
    In addition, GranTek introduced a granule for oil and grease absorption
    on a limited basis. Compared to competing clay granules which tend to be
    dusty, this product is virtually dust free. GranTek also completed
    development of two different formulations of cat box filler product,
    conventional and clumping. The Company performed market testing in five
    regions of the country, including in-home placement and focus-group
    studies, evaluating the product formulations as well as potential product
    names and packaging designs. The Company expects to begin marketing the
    product to distributors during the first half of 1998 under the trade
    name PaPurr(TM) (pronounced paper).

        The Company currently intends to limit the pace and amount of its
    research and development so that its internally funded research and
    development expenditures will not exceed the interest income earned on

                                        4PAGE
<PAGE>
    its cash, cash equivalents, and available-for-sale investments, plus the
    Company's operating earnings before research and development expenses, if
    any.

        Research and development expenses for the Company were $1,877,000,
    $1,300,000, and $601,000 in 1997, 1996, and 1995, respectively.

        (iii) Raw Materials
              -------------

        Papermaking sludge, the raw material used in the manufacture of the
    Company's Biodac product, is obtained from a single paper mill. The mill
    has the exclusive right to supply papermaking sludge to GranTek's
    existing granulation plant in Green Bay, Wisconsin, under a contract
    which expires in December 1999, subject to successive mutual two-year
    extensions. Although the Company believes that its relationship with the
    mill is good, no assurance can be given that the mill will agree to renew
    the contract upon its termination. The inability of the Company to obtain
    papermaking sludge from this paper mill would have a material adverse
    effect upon the Company's operations.

        During 1997, the Company entered into a contract with a supplier to
    purchase all natural gas requirements and natural gas management
    services, which are used by its GranTek subsidiary, from the supplier
    through October 31, 1998. The Company has the option to enter into
    forward contracts with the supplier to purchase specified quantities of
    natural gas at the then-current posted price through specified future
    dates.

        (iv) Patents, Licenses, and Trademarks
             ---------------------------------

        The Company currently holds several U.S. patents, expiring at various
    dates ranging from 2004 to 2012, relating to various aspects of the
    processing of cellulose-based granular materials and the use of such
    materials in the agricultural, general absorption, oil- and
    grease-absorption, and cat box filler markets. The Company also has
    foreign counterparts to its U.S. patents in Canada and in various
    European countries, and has additional patents pending in Canada and two
    European countries.

        The Company has filed four U.S. patent applications for various
    sludge-based products and processes and expects to file additional patent
    applications in the future. In addition, Thermo Fibertek holds two U.S.
    patents relating to the "scalping" technology that is an important
    component of the Company's fiber-recovery system which expire in 2011 and
    2014. Although the Company has licensed the technology covered by Thermo
    Fibertek's patents for use in pulp and paper industry applications, the
    Company does not itself hold any patents or patent applications with
    respect to its pilot fiber-recovery system.

        GranTek has granted a company a nonexclusive license under two of its
    patents to sell cellulose-based granules produced at an existing site for
    sale in the oil- and grease-absorption and cat box filler markets.

                                        5PAGE
<PAGE>

        (v) Seasonal Influences
            -------------------

        The Company's sales are principally in the agricultural-carrier
    market. The Company's primary customers in this market, chemical
    formulators, typically purchase carriers during the winter and spring for
    the cultivation and planting season. As a result, the Company earns a
    disproportionately high share of its revenues for its agricultural-
    carrier products during the first two quarters of the year. The Company
    believes that its planned entrance into the oil- and grease-absorption
    and cat box filler markets, as well as the international agricultural
    row-crop market, if successful, may mitigate the seasonality of the
    Company's sales.

        (vi) Working Capital Requirements
             ----------------------------

        There are no special inventory requirements or credit terms extended
    to customers that would have a material adverse effect on the Company's
    working capital.

        (vii) Dependency on a Single Customer
              -------------------------------

        Revenues from The Solaris Group accounted for 54% and 56% of the
    Company's total revenues in 1997 and 1996, respectively. Revenues from
    Rhone-Poulenc AG Company accounted for 15% and 21% of the Company's total
    revenues in 1997 and 1996, respectively. Revenues from American Cyanamid
    Company accounted for 14% of the Company's total revenues in 1997.

        The Solaris Group has indicated that it will reduce its level of
    purchases from the Company in 1998, relative to 1997. In addition,
    Monsanto Company, its parent, has announced its intent to divest of this
    business. No assurance can be given that the Company's relationship with
    The Solaris Group will continue subsequent to such divestiture.

        (viii) Backlog
               -------

        The Company's backlog of firm orders was $188,000 as of January 3,
    1998, and $106,000 as of December 28, 1996. The Company believes that
    substantially all of the backlog at January 3, 1998, will be shipped or
    completed during the next twelve months. Certain of these orders may be
    canceled by the customer upon payment of a cancellation fee. The Company
    does not believe that the size of its backlog is necessarily indicative
    of intermediate or long-term trends in its business.

        (xi) Government Contracts
             --------------------

        Not applicable.

        (x) Competition
            -----------

        The Company expects that its principal competitors for access to
    papermaking sludge will be landfills, which currently have a collective
    70% market share in North America and approximately 40% market share in
    Europe. The Company believes, however, that landfill costs will tend to
    increase over time and that regulations governing landfills will become

                                        6PAGE
<PAGE>
    more strict, particularly in Europe and Japan. The balance of the
    papermaking sludge produced in the U.S. and Europe is currently
    incinerated or used to manufacture composting materials, egg cartons, and
    other low-value industrial products. The Company competes principally on
    the basis of price and its ability to offer environmentally acceptable
    disposal alternatives.

        Several large waste-management companies have increased their
    marketing activities to provide landfill disposal services to the pulp
    and paper industry. Although the Company does not believe that these
    companies are able to provide sludge processing capability, the Company
    can expect that if its technology is successful, others will seek to
    develop similar technologies and products that may be superior to those
    of the Company. As other companies attempt to provide landfill services
    or sludge processing capabilities, or both, to the pulp and paper
    industry, the Company expects to encounter increasing competition.

        The Company believes that its approach to the management of
    environmental problems associated with papermaking sludge and its ability
    to take advantage of Thermo Fibertek's name recognition, financial
    strength, and experience constitute significant competitive advantages.

        The Company believes that GranTek is currently the only producer of
    cellulose-based agricultural carriers. GranTek's principal competitors in
    the U.S. are producers of clay-based agricultural carriers for row crops
    and professional turf protection, including Oil-Dri Corporation of
    America, Floridin/Engelhard, Aimcor, and American Colloid, and producers
    of corncob-based granules traditionally used in the home lawn and garden
    and professional turf markets, including The Andersons, Mt. Pulaski,
    Green Products, Independence Cob, and Junior Weisner. GranTek's principal
    competitive advantages are that Biodac contains virtually no dust and is
    more uniform in absorptivity and particle-size distribution than are
    clay- and corncob-based granular carriers. Biodac is also chemically
    neutral, requiring little or no chemical deactivation.

        As the Company attempts to develop new markets for the components of
    the papermaking sludge it processes, the Company will encounter
    competition from established companies within those markets. Some of
    these competitors may have substantially greater financial, marketing,
    and other resources than those of the Company, and the Company expects
    that such competition may be intense. The Company believes that the
    absorbing-products industry considers price to be a significant
    competitive factor and therefore, expects that the demand for the
    Company's products in such markets will be significantly influenced by
    the Company's prices for such products.

        (xii) Environmental Protection Regulations
              ------------------------------------

        The Company's operations are subject to significant government
    regulation, including stringent environmental laws and regulations. Among
    other things, these laws and regulations impose requirements to control
    air, soil, and water pollution, and regulate health, safety, zoning, and
    land use, as well as the handling and transportation of industrial
    byproducts and waste materials. Compliance with these regulations may

                                        7PAGE
<PAGE>
    also be required as conditions of operating permits or licenses that are
    subject to renewal, modification, or revocation. This regulatory
    framework imposes significant compliance burdens and costs on the
    Company. Notwithstanding the burdens of this compliance, the Company
    believes that its business prospects are enhanced by the fair and uniform
    enforcement of environmental laws and regulations by government agencies
    against all of the regulated community.

        Among the principal laws governing the Company's operations are the
    Federal Comprehensive Environmental Response, Compensation, and Liability
    Act (CERCLA), the Federal Toxic Substances Control Act (TSCA), the Clean
    Air Act (CAA), and the Resource Conservation and Recovery Act of 1976
    (RCRA), and equivalent state laws. TSCA imposes limitations on the
    presence in commercial products of polychlorinated biphenyls (PCBs), and
    on the generation, handling, storage, and disposal of PCB-containing
    materials, byproducts, and wastes. CERCLA imposes joint and several
    liability for the costs of remediation and natural resource damage on the
    owner or operator of a facility from which there is a release, or a
    threat of a release, of a hazardous substance into the environment, and
    on the generators and transporters of those hazardous substances. RCRA
    provides a comprehensive framework for the regulation of the generation,
    transportation, treatment, storage, and disposal of hazardous waste.
    Under TSCA, RCRA, and equivalent state laws, regulatory authorities may
    require, pursuant to an administrative order or as a condition of an
    operating permit, that the owner or operator of a regulated facility take
    corrective action with respect to contamination resulting from past or
    present operations. The intent of RCRA is to control hazardous wastes
    from the time they are generated until they are properly recycled or
    treated and disposed. Such laws also require that the owner or operator
    of regulated facilities provide assurance that funds will be available
    for the closure and post-closure remediation of its facilities. Because
    Subtitle D of RCRA imposes strict requirements on landfills, such as the
    requirement that new landfills be lined, RCRA creates an incentive for
    pulp mills to use sludge-management technologies such as those offered by
    the Company.

        GranTek uses papermaking sludge from a nearby mill in Green Bay,
    Wisconsin, to make its granules. The papermaking sludge GranTek receives
    from the mill contains trace amounts of PCBs, dioxins, and furans, as
    well as residual amounts of other regulated compounds. During the
    granulation process, GranTek evaporates approximately 95% of the water
    contained in the papermaking sludge. Approximately 1.6 pounds per year of
    PCBs, as well as other compounds such as formaldehyde, benzene, and
    volatile organic compounds (VOCs), are emitted into the atmosphere from
    its Green Bay facility as a result of the evaporation process. Applicable
    Wisconsin regulations limit PCB emissions to de minimis amounts unless
    the generator can demonstrate that it is using the best available control
    technology to limit emissions. GranTek has been issued an air operating
    permit by the Wisconsin Department of Natural Resources (the WDNR).
    GranTek's current operating permit, and its application for a new Title V
    operating permit, each require GranTek to reduce PCB and VOC emissions,
    and to file an annual report on the amounts of PCBs being emitted. In
    August 1995, GranTek submitted materials to the WDNR requesting that
    GranTek be relieved of its obligation to reduce emissions, asserting that

                                        8PAGE
<PAGE>
    there are presently no technologically or economically feasible methods
    to reduce PCB or VOC emissions from its facility that can be implemented.
    GranTek has received no response from the WDNR to date. Although the
    Company believes that the WDNR will accept GranTek's findings, and
    although GranTek's facility is currently fully permitted by Wisconsin
    regulatory authorities, no assurance can be given that the WDNR will not
    require GranTek to reduce or eliminate its emissions, that such
    compliance will not require the Company to make significant expenditures,
    or that such compliance will be technologically or economically feasible.
    Such compliance may have material adverse effects on the Company's
    results of operations, financial condition, and/or competitive position.

        GranTek's agricultural carrier, Biodac, is subject to regulation
    under the Federal Insecticide, Fungicide, and Rodenticide Act, which,
    among other things, empowers the U.S. Environmental Protection Agency
    (EPA) to establish and enforce acceptable tolerance levels for
    agricultural chemicals. In 1989, however, at GranTek's request, the EPA
    granted an exemption from the requirement that a tolerance level be
    established for de-inked paper fiber used as a carrier in pesticide
    formulations applied to growing crops.

        The governmental regulatory process requires the Company to obtain
    and retain numerous approvals, licenses, and permits to conduct its
    operations, any of which may be subject to revocation, modification, or
    denial. Operating permits need to be renewed periodically and may be
    subject to revocation, modification, denial, or nonrenewal for various
    reasons, including failure of the Company to satisfy regulatory concerns.
    Adverse decisions by governmental authorities on permit applications
    submitted by the Company may result in abandonment or delay of projects,
    substantially increased operating costs or capital expenditures, and
    premature closure of facilities or restriction of operations, all of
    which could have a material adverse effect on the Company's results of
    operations, financial condition, and future operations.

        (xiii) Number of Employees
               -------------------

        As of January 3, 1998, the Company employed 41 people. None of the
    Company's employees is represented by a union. The Company believes that
    relations with its employees are good.

    (d) Financial Information About Exports by Domestic Operations and About
        --------------------------------------------------------------------
        Foreign Operations
        ------------------

        Not applicable.


                                        9PAGE
<PAGE>
    (e) Executive Officers of the Registrant
        ------------------------------------

                                        Present Title (Year First Became
        Name                       Age  Executive Officer)
        --------------------------------------------------------------------
        Dr. Yiannis A. Monovoukas   37  President and Chief Executive
                                          Officer (1996)
        John N. Hatsopoulos         63  Chief Financial Officer and
                                          Senior Vice President (1996)
        Paul F. Kelleher            55  Chief Accounting Officer (1996)

        Each executive officer serves until his successor is chosen or
    appointed by the Board of Directors and qualified or until his earlier
    resignation, death, or removal. Dr. Monovoukas has been President and
    Chief Executive Officer of the Company since its incorporation in
    February 1996. Dr. Monovoukas was a Corporate Business Analyst at Thermo
    Electron from July 1995 through February 1996. From 1993 through June
    1995, Dr. Monovoukas was a graduate student at the Harvard Business
    School. From 1990 until 1993, he was a staff scientist and engineer with
    Raychem Corporation, a materials science company, which he joined upon
    completion of a Ph.D. program in chemical engineering at Stanford
    University. Messrs. Hatsopoulos and Kelleher have held comparable
    positions for at least five years with Thermo Fibertek and Thermo
    Electron. Mr. Hatsopoulos and Mr. Kelleher are full-time employees of
    Thermo Electron, but devote such time to the affairs of the Company as
    the Company's needs reasonably require.

    Item 2. Properties
            ----------

        The Company leases a 6,000-square foot, stand-alone building in
    Bedford, Massachusetts, which holds its administrative offices and
    research laboratory. This lease expires in April 2001, subject to the
    Company's option to extend the lease for two three-year terms. The
    Company also has the right to terminate the lease without penalty in
    April 1999.

        GranTek owns approximately 3.3 acres of land in Green Bay, Wisconsin,
    on which its 26,000-square foot processing plant is situated.

        The Company believes that these facilities are adequate for its
    current operations.

    Item 3. Legal Proceedings
            -----------------

        Not applicable.

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

        Not applicable.

                                       10PAGE
<PAGE>
                                     PART II

    Item 5. Market for Registrant's Common Equity and Related Stockholder
            -------------------------------------------------------------
            Matters
            -------

        Information concerning the market and market price for the
    Registrant's common equity securities and redemption rights and dividend
    policy is included under the sections labeled "Common Stock Market
    Information" and "Dividend Policy" in the Registrant's 1997 Annual Report
    to Shareholders and is incorporated herein by reference.

    Item 6. Selected Financial Data
            -----------------------

        The information required under this item is included under the
    sections labeled "Selected Financial Information" and "Dividend Policy"
    in the Registrant's 1997 Annual Report to Shareholders and is
    incorporated herein by reference.

    Item 7. Management's Discussion and Analysis of Financial Condition and
            ---------------------------------------------------------------
            Results of Operations
            ---------------------

        The information required under this item is included under the
    heading "Management's Discussion and Analysis of Financial Condition and
    Results of Operations" in the Registrant's 1997 Annual Report to
    Shareholders and is incorporated herein by reference.

    Item 8. Financial Statements and Supplementary Data
            -------------------------------------------

        The Registrant's Consolidated Financial Statements and Supplementary
    Data are included in the Registrant's 1997 Annual Report to Shareholders
    and are incorporated herein by reference.

    Item 9. Changes in and Disagreements with Accountants on Accounting and
            ---------------------------------------------------------------
            Financial Disclosure
            --------------------

        Not applicable.






                                       11PAGE
<PAGE>
                                    PART III

    Item 10. Directors and Executive Officers of the Registrant
             --------------------------------------------------

        The information concerning directors required under this item is
    incorporated herein by reference from the material contained under the
    caption "Election of Directors" in the Registrant's definitive proxy
    statement to be filed with the Securities and Exchange Commission
    pursuant to Regulation 14A, not later than 120 days after the close of
    the fiscal year. The information concerning delinquent filers pursuant to
    Item 405 of Regulation S-K is incorporated herein by reference from the
    material contained under the heading "Section 16(a) Beneficial Ownership
    Reporting Compliance" under the caption "Stock Ownership" in the
    Registrant's definitive proxy statement to be filed with the Securities
    and Exchange Commission pursuant to Regulation 14A, not later than 120
    days after the close of the fiscal year.

    Item 11. Executive Compensation
             ----------------------

        The information required under this item is incorporated herein by
    reference from the material contained under the caption "Executive
    Compensation" in the Registrant's definitive proxy statement to be filed
    with the Securities and Exchange Commission pursuant to Regulation 14A,
    not later than 120 days after the close of the fiscal year.

    Item 12. Security Ownership of Certain Beneficial Owners and Management
             --------------------------------------------------------------

        The information required under this item is incorporated herein by
    reference from the material contained under the caption "Stock Ownership"
    in the Registrant's definitive proxy statement to be filed with the
    Securities and Exchange Commission pursuant to Regulation 14A, not later
    than 120 days after the close of the fiscal year.

    Item 13. Certain Relationships and Related Transactions
             ----------------------------------------------

        The information required under this item is incorporated herein by
    reference from the material contained under the caption "Relationship
    with Affiliates" in the Registrant's definitive proxy statement to be
    filed with the Securities and Exchange Commission pursuant to Regulation
    14A, not later than 120 days after the close of the fiscal year.




                                       12PAGE
<PAGE>
                                     PART IV

    Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
             ----------------------------------------------------------------

       (a,d) Financial Statements and Schedules
             ----------------------------------

             (1) The consolidated financial statements set forth in the list
                 below are filed as part of this Report.
             (2) The consolidated financial statement schedule set forth in
                 the list below is filed as part of this Report.
             (3) Exhibits filed herewith or incorporated herein by reference
                 are set forth in Item 14(c) below.

             List of Financial Statements and Schedules Referenced in this
             -------------------------------------------------------------
             Item 14
             -------

             Information incorporated by reference from Exhibit 13 filed
             herewith:

                 Consolidated Statement of Operations
                 Consolidated Balance Sheet
                 Consolidated Statement of Cash Flows
                 Consolidated Statement of Shareholders' Investment
                 Notes to Consolidated Financial Statements
                 Report of Independent Public Accountants

             Financial Statement Schedules filed herewith:

                 Schedule II: Valuation and Qualifying Accounts

             All other schedules are omitted because they are not applicable
             or not required, or because the required information is shown
             either in the financial statements or in the notes thereto.

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

             None.

         (c) Exhibits
             --------

             See Exhibit Index on the page immediately preceding exhibits.








                                       13PAGE
<PAGE>
                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) 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.

    Date: March 20, 1998              THERMO FIBERGEN INC.



                                      By: Yiannis A. Monovoukas
                                          -----------------------------------
                                          Yiannis A. Monovoukas
                                          President, Chief Executive Officer,
                                            and Director

        Pursuant to the requirements of the Securities Exchange Act of 1934,
    this report has been signed below by the following persons on behalf of
    the Registrant and in the capacities indicated below, as of March 20,
    1998.

    Signature                           Title
    ---------                           -----


    By: Dr. Yiannis A. Monovoukas        President, Chief Executive Officer,
        --------------------------
        Dr. Yiannis A. Monovoukas          and Director

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

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

    By: William A. Rainville             Chairman of the Board and Director
        --------------------------
        William A. Rainville

    By: Anne T. Barrett                  Director
        --------------------------
        Anne T. Barrett

    By: Francis L. McKone                Director
        --------------------------
        Francis L. McKone

    By: Jonathan W. Painter              Director
        --------------------------
        Jonathan W. Painter

                                       14PAGE
<PAGE>
                    Report of Independent Public Accountants
                    ----------------------------------------


    To the Shareholders and Board of Directors of Thermo Fibergen Inc.:

        We have audited, in accordance with generally accepted auditing
    standards, the consolidated financial statements included in Thermo
    Fibergen Inc.'s Annual Report to Shareholders incorporated by reference
    in this Form 10-K, and have issued our report thereon dated February 9,
    1998. Our audits were made for the purpose of forming an opinion on those
    statements taken as a whole. The schedule listed in Item 14 on page 13 is
    the responsibility of the Company's management and is presented for
    purposes of complying with the Securities and Exchange Commission's rules
    and is not part of the basic consolidated financial statements. This
    schedule has been subjected to the auditing procedures applied in the
    audits of the basic consolidated financial statements and, in our
    opinion, fairly states in all material respects the consolidated
    financial data required to be set forth therein in relation to the basic
    consolidated financial statements taken as a whole.



                                            Arthur Andersen LLP



    Boston, Massachusetts
    February 9, 1998




                                       15PAGE
<PAGE>
    SCHEDULE II

                              THERMO FIBERGEN INC.
                        Valuation and Qualifying Accounts
                                 (In thousands)


                                                 Accounts
                             Balance Provision  Recovered
                                  at   Charged        and            Balance
                           Beginning        to    Written             at End
    Description              of Year   Expense        Off  Other(a)  of Year
    ------------------------------------------------------------------------
    Allowance for Doubtful
      Accounts

    Year Ended
      January 3, 1998        $    30  $      -    $     -  $     -   $    30

    Year Ended
      December 28, 1996      $     -  $      -    $     -  $    30   $    30

    (a)Allowance of business acquired during the year-ended December 28,
       1996, as described in Note 3 to Consolidated Financial Statements in
       the Registrant's 1997 Annual Report to Shareholders.











                                       16PAGE
<PAGE>
                                  EXHIBIT INDEX

    Exhibit
    Number       Description of Exhibit
    ------------------------------------------------------------------------
      3.1        Certificate of Incorporation of the Company, as amended
                 (filed as Exhibit 3.1 to the Registrant's Registration
                 Statement on Form S-1 [Reg. No. 333-07585] and incorporated
                 herein by reference).

      3.2        By-Laws of the Company (filed as Exhibit 3.2 to the
                 Registrant's Registration Statement on Form S-1 [Reg. No.
                 333-07585] and incorporated herein by reference).

      4.1        Form of Guarantee of Thermo Electron (filed as Exhibit 4.1
                 to the Registrant's Registration Statement on Form S-1
                 [Reg. No. 333-07585] and incorporated herein by reference).

      4.2        Guarantee Agreement among the Company, Thermo Electron, and
                 the Representatives of the Underwriters (filed as Exhibit
                 4.2 to the Registrant's Registration Statement on Form S-1
                 [Reg. No. 333-07585] and incorporated herein by reference).

      4.3        Form of Common Stock Certificate (filed as Exhibit 4.3 to
                 the Registrant's Registration Statement on Form S-1 [Reg.
                 No. 333-07585] and incorporated herein by reference).

      4.4        Form of Redemption Right Certificate (filed as Exhibit 4.4
                 to the Registrant's Registration Statement on Form S-1
                 [Reg. No. 333-07585] and incorporated herein by reference).

     10.1        Asset Transfer Agreement dated as of July 2, 1996, between
                 Thermo Fibertek Inc. and the Company (filed as Exhibit 10.1
                 to the Registrant's Registration Statement on Form S-1
                 [Reg. No. 333-07585] and incorporated herein by reference).

     10.2        License and Supply Agreement dated as of July 2, 1996,
                 between Thermo Fibertek and the Company (filed as Exhibit
                 10.2 to the Registrant's Registration Statement on Form S-1
                 [Reg. No. 333-07585] and incorporated herein by reference).

     10.3        Corporate Services Agreement dated July 2, 1996, between
                 Thermo Electron and the Company (filed as Exhibit 10.3 to
                 the Registrant's Registration Statement on Form S-1 [Reg.
                 No. 333-07585] and incorporated herein by reference).

     10.4        Thermo Electron Corporate Charter, as amended and restated
                 effective January 3, 1993 (filed as Exhibit 10.1 to Thermo
                 Electron's Annual Report on Form 10-K for the fiscal year
                 ended January 2, 1993 [File No. 1-8002] and incorporated
                 herein by reference).

     10.5        Tax Allocation Agreement dated as of July 2, 1996, between
                 Thermo Fibertek and the Company (filed as Exhibit 10.5 to
                 the Registrant's Registration Statement on Form S-1 [Reg.
                 No. 333-07585] and incorporated herein by reference).

                                       17PAGE
<PAGE>
                                  EXHIBIT INDEX

    Exhibit
    Number       Description of Exhibit
    ------------------------------------------------------------------------
     10.6        Amended and Restated Master Repurchase Agreement dated as
                 of December 28, 1996, between Thermo Electron and the
                 Company (filed as Exhibit 10.6 to the Registrant's Annual
                 Report on Form 10-K for the year ended December 28, 1996
                 [File No. 1-12137] and incorporated herein by reference).

     10.7        Amended and Restated Master Guarantee Reimbursement and
                 Loan Agreement dated as of December 8, 1997, between Thermo
                 Electron and the Company.

     10.8        Amended and Restated Master Guarantee Reimbursement and
                 Loan Agreement dated as of December 8, 1997, between Thermo
                 Fibertek and the Company.

     10.9        Lease dated as of April 12, 1996, by and between Al and Lee
                 Realty and the Company (filed as Exhibit 10.9 to the
                 Registrant's Registration Statement on Form S-1 [Reg. No.
                 333-07585] and incorporated herein by reference).

     10.10       Equity Incentive Plan of the Company (filed as Exhibit
                 10.11 to the Registrant's Registration Statement on Form
                 S-1 [Reg. No. 333-07585] and incorporated herein by
                 reference).

     10.11       Deferred Compensation Plan for Directors of the Company
                 (filed as Exhibit 10.12 to the Registrant's Registration
                 Statement on Form S-1 [Reg. No. 333-07585] and incorporated
                 herein by reference).

     10.12       Directors Stock Option Plan of the Company (filed as
                 Exhibit 10.13 to the Registrant's Registration Statement on
                 Form S-1 [Reg. No. 333-07585] and incorporated herein by
                 reference).

     10.13       Form of Indemnification Agreement for Officers and
                 Directors of the Company (filed as Exhibit 10.14 to the
                 Registrant's Registration Statement on Form S-1 [Reg. No.
                 333-07585] and incorporated herein by reference).

     10.14       Restated Stock Holding Assistance Plan and Form of
                 Promissory Note.

                 In addition to the stock-based compensation plans of the
                 Registrant, the executive officers of the Registrant may be
                 granted awards under stock-based compensation plans of
                 Thermo Electron and Thermo Fibertek Inc. for services
                 rendered to the Registrant or to such affiliated
                 corporations. The terms of such plans are substantially the
                 same as those of the Registrant's Equity Incentive Plan.

                                       18PAGE
<PAGE>
                                  EXHIBIT INDEX

    Exhibit
    Number       Description of Exhibit
    ------------------------------------------------------------------------
     13          Annual Report to Shareholders for the year ended
                 January 3, 1998 (only those portions incorporated
                 herein by reference).

     21          Subsidiaries of the Registrant.

     23          Consent of Arthur Andersen LLP.

     27          Financial Data Schedule.