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 2, 1999

[   ] 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              (I.R.S. Employer Identification No.)
of incorporation or organization)       

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

          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 29, 1999, was approximately $35,587,000.

As of January 29, 1999, 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 2, 1999, 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 May 27, 1999, are incorporated by reference into
Part III.

<PAGE>


                                     PART I
                                        
Item 1.  Business

(a)   General Development of Business

      Thermo Fibergen Inc. (the Company or the Registrant) designs, builds,
owns, and operates fiber-recovery and water-clarification plants which allow
pulp and paper mill customers to "close the loop" in their water and solids
systems on a long-term contract basis. The Company will clean and recycle water
and long fiber to be reused in papermaking and convert the remaining solids -
short fiber and fines - into commercial products.

      In July 1998, the Company completed construction and began operating its
first fiber-recovery and water-clarification facility and began operating the
facility, providing clean water and long fiber to a mill located in Cowpens,
South Carolina, under a ten-year contract.

      The Cellulose-based Products segment, which consists of the Company's
GranTek subsidiary, employs patented technology to produce absorbing granules
from papermaking byproducts. These granules are used as agricultural carriers,
oil- and grease-absorbents, and cat box fillers. The agricultural carriers are
marketed under the trade name Biodac(R), and are used to deliver agricultural
chemicals for professional turf, home lawn and garden, agricultural row crop,
and mosquito-control applications.

      The Company was incorporated in Delaware in February 1996 as a wholly
owned subsidiary of Thermo Fibertek Inc. Thermo Fibertek is a 91%-owned
subsidiary of Thermo Electron Corporation. 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 September 2001 for a total redemption
value of $60,116,000. A redemption right may only be exercised if the holder
owns a share of Company common stock at that time. As of January 2, 1999, there
were 4,715,000 redemption rights outstanding and only 4,028,250 shares of
Company common stock held by persons other than Thermo Electron or Thermo
Fibertek. In addition, Thermo Electron and/or 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. To
the extent that the number of redemption rights exceeds the number of shares of
common stock held by persons other than Thermo Electron or Thermo Fibertek, the
Company will not be required to redeem the total redemption value. The
redemption rights are guaranteed, on a subordinated basis, by Thermo Electron.
As of January 2, 1999, Thermo Fibertek owned 10,419,950 shares of the Company's
common stock, representing 71% of such outstanding common stock. As of January
2, 1999, Thermo Electron owned 266,800 shares of Company common stock,
representing 2% of such outstanding common stock. During 1998*, Thermo Electron
purchased these shares of Company common stock in the open market for
$2,103,000.

      Thermo Fibertek develops, manufactures, and markets a range of equipment
and products for the pulp and paper recycling industries. Thermo Electron is a
world leader in monitoring, analytical, and biomedical instrumentation;
biomedical products including heart-assist devices, respiratory-care equipment,
and mammography systems; and paper recycling and papermaking equipment. Thermo
Electron also develops alternative-energy systems and clean fuels, provides a
range of services including industrial outsourcing and environmental-liability
management, and conducts research and development in advanced imaging, laser
communications, and electronic information-management technologies.


--------------------
*  References to 1998, 1997, and 1996 herein are for the fiscal years ended
   January 2, 1999, January 3, 1998, and December 28,1996, respectively.


                                       2
<PAGE>


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 1998 Annual Report to
Shareholders, which statements are incorporated herein by reference.

(b)   Financial Information About Segments

      Financial information concerning the Company's segments is summarized in
Note 9 to Consolidated Financial Statements in the Registrant's 1998 Annual
Report to Shareholders, which information is incorporated herein by reference.

(c)   Description of Business

      (i)  Principal Products and Services

Fiber-recovery and Water-clarification Services

      The Fiber-recovery and Water-clarification Services segment designs,
builds, owns, and operates plants which allow pulp and paper mills to "close the
loop" in their water and solid systems. The plants recover and return to the
mill long cellulose fiber and clarified water to be reused in papermaking. In
July 1998, the Company completed construction and began operating its first
fiber-recovery and water-clarification facility, providing clean water and long
fiber to a mill under a ten-year contract. The fiber-recovery and
water-clarification facility is located in a building adjacent to the South
Carolina mill. The Company's facility generally operates 24 hours a day, seven
days a week. The paper mill pumps its used process water directly into the
Company's system. The facility recovers and returns long fiber to the mill and
clarifies water which is recycled for reuse in the papermaking process. The
paper mill pays the Company a monthly fee for these services.

Cellulose-based Products

      The Company's GranTek subsidiary uses a proprietary process to produce
absorbing granules from papermaking byproducts. These granules are used as
agricultural carriers, oil- and-grease absorbents, and cat box fillers. The
agricultural carriers are marketed under the trade name Biodac(R), and are
currently used to deliver agricultural chemicals for professional turf, home
lawn and garden, agricultural row-crop, and mosquito-control applications.

      The Company's oil- and grease-absorbent, GranSorb(TM), was introduced in
August 1998 and is currently being sold throughout the Midwest. In addition,
during 1998, the Company also introduced a cat box filler product called PaPurr
(pronounced paper) in conventional and clumping formulations as an alternative
to clay. PaPurr is now available in more than 750 stores, which primarily
represent grocery chains in the Midwest. The Company is working to expand
distribution through mass merchandisers and specialty pet stores.

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

      The Company continues research and development efforts to develop
high-value products using materials recovered from papermaking byproducts,
including controlled-release granules for crop-protection chemicals and
fertilizers, as well as new, natural-fiber-reinforced composite thermoplastics
for plastic lumber and other applications. Development of a nontoxic,
noncorrosive, biodegradable de-icer was completed in 1998.

                                       3
<PAGE>


      The Company's mobile pilot plant is used to demonstrate its fiber-recovery
and water-clarification process, and to test the effluent streams of mills in
the United States and Canada. In addition, the GranTek subsidiary operates a
manufacturing plant in Green Bay, Wisconsin, at which it processes papermaking
byproducts provided by a nearby paper mill into cellulose-based granules. A
pilot plant is located within GranTek's main manufacturing plant. This pilot
plant processes up to 24 tons of material per day, and is used to develop many
of the innovations implemented in GranTek's main plant. The Company believes
that this pilot plant will provide the ability to process materials 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
products.

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

      Research and development expenses for the Company were $1,454,000,
$1,877,000, and $1,300,000 in 1998, 1997, and 1996, respectively.

      (iii)
Raw Materials

      Papermaking byproducts, the raw material used in the manufacture of the
Company's cellulose-based products, are obtained from a single paper mill. The
mill has the exclusive right to supply papermaking byproducts to the Company'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 byproducts from
this paper mill would have a material adverse effect upon the Company's
operations.

      During 1998, the Company entered into a five-year contract with a supplier
to purchase all necessary chemicals used in conjunction with certain equipment
for the processing of papermaking byproducts at its fiber-recovery and
water-clarification facility located in South Carolina. The contract expires in
July 2003.

      During 1998, 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 2000. 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 2016, relating to various aspects of the processing
of cellulose-based granular materials and the use of such materials in the
agricultural, professional turf, home lawn and garden, 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 certain European countries.

      The Company has filed several U.S. patent applications for various
products and processes relating to papermaking byproducts 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
fiber-recovery and water-clarification system.

      The Company 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.

                                       4
<PAGE>


      (v)  Seasonal Influences

Fiber-recovery and Water-clarification Services

      Not applicable.

Granular-products Segment

      Revenues from the Cellulose-based Products segment are principally from
sales 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 from its
agricultural-carrier products during the first two quarters of the year. The
Company believes that its entrance into the oil- and grease-absorption, cat box
filler, and international agricultural row-crop markets, 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 34%, 54%, and 56% of the
Company's total revenues in 1998, 1997, and 1996, respectively. Revenues from
Rhone-Poulenc AG Company accounted for 14%, 15%, and 21% of the Company's total
revenues in 1998, 1997, and 1996, respectively. Revenues from American Cyanamid
Company accounted for 16% and 14% of the Company's total revenues in 1998 and
1997, respectively. Revenues from Somerset Paper, the customer for which the
Company is providing fiber-recovery and water-clarification services, accounted
for 11% of revenues in 1998.

      The Solaris Group was sold by Monsanto Company, its parent, in January
1999. No assurance can be given that the Company's relationship with The Solaris
Group will continue.

      (viii) Backlog

      The backlog of firm orders at the Company's Cellulose-based Products
segment was $419,000 as of January 2, 1999, and $188,000 as of January 3, 1998.
The Company believes that substantially all of the backlog at January 2, 1999,
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. In
addition, the Fiber-recovery and Water-clarification Services segment has a
ten-year contract to provide clean water and long fiber to a mill. The contract
may be canceled by either party within six months after the end of the fourth
year of the contract, or by the paper mill with one year's notice thereafter, if
certain benefits or profitability levels are not achieved. See Note 8 to
Consolidated Financial Statements in the Registrant's 1998 Annual Report to
Shareholders for other terms and conditions of the contract. 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.


                                       5
<PAGE>


      (x)  Competition

Fiber-recovery and Water-clarification Services

      The Company expects that its principal competitors for access to
papermaking byproducts will be landfills, which currently have a large market
share in both North America and Europe. The Company believes, however, that
landfill costs will tend to increase over time and that regulations governing
landfills will become more strict, particularly in Europe. The balance of the
papermaking byproducts produced in the U.S. and Europe is currently incinerated
or used to manufacture composting materials and other low-value industrial
products. The Company competes principally on its ability to offer long-term
environmentally acceptable byproducts management alternatives.

      Certain companies are seeking to develop technologies and services to
treat and process papermaking byproducts that are similar to those of the
Company. No assurance can be given that such technologies and services will not
be superior to those of the Company. As other companies attempt to provide
landfill services or byproducts 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 byproducts and its ability to take
advantage of Thermo Fibertek's name recognition, financial strength, and
experience constitute significant competitive advantages.

Cellulose-based Products

      The Company believes that the Company is currently the only producer of
paper-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. The Company's principal competitive advantages are that Biodac
is virtually dust-free 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 byproducts 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 in the absorbing-products industry price is 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 believes that compliance by the Company with federal, state,
and local environmental protection laws may materially affect the Company's
capital expenditures, earnings, and competitive position. Federal, state, and
local environmental laws govern air emissions and discharges into water, as well
as the generation, transportation, storage, treatment, and disposal of solid
waste. These laws establish standards governing most aspects of the construction
and operation of the Company's facilities. Additional information required under
this heading is included in the section labeled "Environmental and Regulatory
Risks" under "Forward-looking Statements" in the Registrant's 1998 Annual Report
to Shareholders and is incorporated herein by reference.


                                       6
<PAGE>


(d)   Financial Information About Geographic Areas

      Not applicable.

(e)   Executive Officers of the Registrant
<TABLE>
<CAPTION>
<S>     <C>                          <C>    <C> 
        Name                          Age   Present Title (Fiscal Year First Became Executive
                                            Officer)
        ---------------------------- ------ -----------------------------------------------------

        Dr. Yiannis A. Monovoukas     38    President and Chief Executive Officer (1996)
        Theo Melas-Kyriazi            39    Chief Financial Officer (1998)
        Paul F. Kelleher              56    Chief Accounting Officer (1996)
</TABLE>

     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.
Mr. Melas-Kyriazi was appointed Chief Financial Officer of the Company and
Thermo Electron on January 1, 1999. He joined Thermo Electron in 1986 as
Assistant Treasurer, and became Treasurer in 1988. He was named President and
Chief Executive Officer of ThermoSpectra Corporation, a public subsidiary of
Thermo Instrument Systems Inc. in 1994, a position he held until becoming Vice
President of Corporate Strategy for Thermo Electron in 1998. Mr. Melas-Kyriazi
remains a Vice President of Thermo Electron. Mr. Kelleher has held a comparable
position for at least five years with Thermo Electron. Mr. Melas-Kyriazi 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 believes that its facilities are in good condition and are
suitable and adequate for its present operations and that suitable space is
readily available if any leases are not extended. The location and general
character of the Company's principal properties by segment as of January 2,
1999, are:

Fiber-recovery and Water-clarification Services

      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. The Company leases the property on which
its fiber-recovery and water-clarification facility is located. The lease is for
the life of the related service contract.

Cellulose-based Products

      The Company owns approximately 3.3 acres of land in Green Bay, Wisconsin,
on which its 26,000-square foot processing plant is situated. In addition, the
Company leases a 21,000-square foot packaging plant under a lease which expires
in January 2000.

Item 3.  Legal Proceedings

      Not applicable.

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

      Not applicable.


                                       7
<PAGE>

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

(a) 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 1998 Annual Report to Shareholders and is
incorporated herein by reference.

      (b)The Company sold 4,715,000 Units (each Unit consisting of one share of
the Company's common stock and one redemption right which enables the holder to
sell one share of the Company's common stock to the Company during the month of
September 2000 or the month of September 2001 for $12.75 in cash), pursuant to a
Registration Statement on Form S-1 (File No. 333-07585), which was declared
effective by the Securities and Exchange Commission on September 13, 1996. The
managing underwriters of the offering were NatWest Securities Limited, Lehman
Brothers, and Oppenheimer & Co., Inc. The aggregate gross proceeds of the
offering were $60,116,250. The Company's total expenses in connection with the
offering were $4,335,250, of which $3,913,450 was for underwriting discounts and
commissions, $401,800 was for other expenses paid to persons other than
directors or officers of the Company, persons owning more than 10% of any class
of equity securities of the Company, or affiliates of the Company (collectively,
Affiliates), and $20,000 was paid to Thermo Electron for certain corporate
services rendered in connection with the offering. The Company's net proceeds
from the offering were $55,781,000. As of January 2, 1999, the Company had
expended $3,182,000 of such net proceeds for the construction of a
water-clarification and fiber-recovery facility. The Company has invested, from
time to time, the balance of such net proceeds primarily in investment grade
interest- or dividend-bearing instruments. As of January 2, 1999, remaining net
proceeds of $45,892,000 were invested directly with persons other than
Affiliates and $6,707,000 were invested pursuant to a repurchase agreement with
Thermo Electron.

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 1998 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 1998 Annual Report to Shareholders and is
incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

      The information required under this item is included under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Registrant's 1998 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 1998 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.

                                       8
<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.


                                       9
<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 Comprehensive Income and 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.


                                       10
<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 10, 1999                 THERMO FIBERGEN INC.


                                  By: /s/ 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 10, 1999.

Signature                             Title


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


By:  /s/ Theo Melas-Kyriazi           Chief Financial Officer
     Theo Melas-Kyriazi


By:  /s/ Paul F. Kelleher             Chief Accounting Officer
     Paul F. Kelleher


By:  /s/ Anne T. Barrett              Director
     Anne T. Barrett


By:  /s/ Francis L. McKone            Director
     Francis L. McKone


By:  /s/ Jonathan W. Painter          Director
     Jonathan W. Painter


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


By:  /s/ Roger D. Wellington          Director
     Roger D. Wellington


                                       11
<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 10, 1999. 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 11 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 10, 1999


                                       12
<PAGE>

SCHEDULE II

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

<TABLE>
<CAPTION>

<S>                                   <C>           <C>           <C>          <C>           <C> 
Description                             Balance at     Provision  Accounts        Other (a)       Balance
                                         Beginning    Charged to  Recovered                        at End
                                           of Year       Expense         and                      of Year
                                                                     Written
                                                                         Off
------------------------------------- ------------- ------------- ------------ ------------- -------------

Allowance for Doubtful Accounts

Year Ended January 2, 1999                     $30           $ -           $-           $ -           $30

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
    1998 Annual Report to Shareholders.
</TABLE>

                                       13
<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).

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 (filed as Exhibit 10.7 to the Registrant's Annual Report
           on Form 10-K for the year ended January 3, 1998 [File No. 1-12137]
           and incorporated herein by reference).


<PAGE>


Exhibit
Number     Description of Exhibit

10.8       Amended and Restated Master Guarantee Reimbursement and Loan
           Agreement dated as of December 8, 1997, between Thermo Fibertek and
           the Company (filed as Exhibit 10.8 to the Registrant's Annual Report
           on Form 10-K for the year ended January 3, 1998 [File No. 1-12137]
           and incorporated herein by reference).

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).

           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
           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.

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
           (filed as Exhibit 10.14 to the Registrant's Annual Report on Form
           10-K for the year ended January 3, 1998 [File No. 1-12137] and
           incorporated herein by reference).

13         Annual Report to Shareholders for the year ended January 2, 1999
           (only those portions incorporated herein by reference).

21         Subsidiaries of the Registrant.

23         Consent of Arthur Andersen LLP.

27         Financial Data Schedule.