SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, DC 20549
               __________________________________________  

                      AMENDMENT NO. 1 ON FORM 10-K/A
                               TO FORM 10-K

 (mark one)   X      Annual Report Pursuant to Section 13 or
            -----
                     15(d) of the Securities Exchange Act of 1934

                     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:
                              (617) 275-3600

       Securities registered pursuant to Section 12(b) of the Act:

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

 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, 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 24, 1997, was approximately
PAGE
<PAGE>





 $42,291,000.

 As of  January 24, 1997, 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
 fiscal year ended December 28, 1996, are incorporated by reference
 into Parts I and II.



      Part III, Item 10.       Directors and Executive Officers of 
                          the Registrant.

      Part III, Item 11.       Executive Compensation.

      Part III, Item 12.       Security Ownership of Certain 
                               Beneficial Owners and 
                                         Management.

      Part III, Item 13.       Certain Relationships and 
                                    Transactions.


      The information required under these items, originally to be
 incorporated by reference from the Registrant's definitive proxy
 statement to be filed with the Commission pursuant to Regulation 14A,
 not later than 120 days after the close of the fiscal year, is
 contained in the following Attachment A, which is included herein and
 made a part of this Annual Report on Form 10-K.

                                SIGNATURES


      Pursuant to the requirements of Section 13 or 15(d) of the
 Securities Exchange Act of 1934, the Registrant has duly caused this
 Amendment No. 1 on Form 10-K/A to be signed by the undersigned, duly
 authorized.


                               THERMO FIBERGEN INC.


                               By: /s/ Sandra L. Lambert
                                   -------------------------------
                                    Sandra L. Lambert
                                    Secretary




                               ATTACHMENT A
  DIRECTORS
PAGE
<PAGE>





      Set forth below are the names of the persons serving as
 directors, their ages, their offices in the Corporation, if any, their
 principal occupation or employment for the past five years, the length
 of their tenure as directors and the names of other public companies
 in which such persons hold directorships. Information regarding their
 beneficial ownership of the Corporation's Common Stock and of the
 common stock of its parent company, Thermo Fibertek Inc. ("Thermo
 Fibertek") , manufacturer of equipment for the paper and paper-recycling
 industries, and Thermo Fibertek's parent company, Thermo Electron
 Corporation ("Thermo Electron"), a diversified high technology company, 
 is reported under the caption "Stock Ownership."  

 Anne T. Barrett      Ms. Barrett, 67, has been a director of the
                      Corporation since July 1996.  Ms. Barrett
                      has been an independent consultant on
                      investor relations and communications
                      matters since her retirement from Thermo
                      Electron in November 1993.  Prior to that
                      time, Ms. Barrett was director of corporate
                      communications for Thermo Electron for more
                      than five years.

 Francis L. McKone    Mr. McKone, 62, has been a director of the
                      Corporation since April 1997.  Mr. McKone
                      has been the chief executive officer of
                      Albany International Corp., a worldwide
                      supplier of paper machine fabrics, since
                      February 1993. For more than five years
                      prior to 1993, Mr. McKone served as the
                      co-chief executive officer of Albany
                      International Corp.  He is also a director
                      of Albank Financial Corporation
 .
 Yiannis A.           Dr. Monovoukas, 36, has been president,
 Monovoukas           chief executive officer and a director of
                      the Corporation since its incorporation in
                      February 1996.  Dr. Monovoukas was a
                      corporate business analyst with Thermo
                      Electron from July 1995 to 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/engineer with Raychem
                      Corporation, a materials science company,
                      which he joined upon completion of a Ph.D.
                      program in chemical engineering at Stanford
                      University.
PAGE
<PAGE>





 Jonathan W. Painter  Mr. Painter, 38, has been treasurer and a
                      director of the Corporation since its
                      incorporation in February 1996.  Mr.
                      Painter has been treasurer of Thermo
                      Electron since August 1994 and treasurer of
                      Thermo Fibertek since October 1994.  Mr.
                      Painter had served as director of strategic
                      planning of Thermo Fibertek from February
                      1993 through August 1994.  For five years
                      prior to that time, Mr. Painter was
                      associate general counsel  of Thermo
                      Electron and its subsidiaries.  Mr. Painter
                      is also a director of Thermo BioAnalysis
                      Corporation.

 William A.           Mr. Rainville, 55, has been chairman of the
 Rainville            board and a director of the Corporation
                      since its incorporation in February 1996.
                      Mr. Rainville has been president and chief
                      executive officer of Thermo Fibertek since
                      its inception in November 1991 and a
                      director of Thermo Fibertek since January
                      1992.  From 1984 until January 1993, Mr.
                      Rainville was president and chief executive
                      officer of Thermo Web Systems Inc., a
                      subsidiary of Thermo Fibertek.  He has been
                      a senior vice president of Thermo Electron
                      since March 1993 and was a vice president
                      from 1986 to 1993.  Mr. Rainville is also a
                      director of Thermo Fibertek, Thermo Ecotek
                      Corporation, Thermo Remediation Inc. and
                      Thermo TerraTech Inc.
  
 Committees of the Board of Directors and Meetings

      The Board of Directors has established an Audit Committee and a
 Human Resources Committee, each consisting solely of outside
 directors. During 1996, the only member of these committees was Ms.
 Barrett.  The present members of the Audit Committee are Mr. McKone
 (Chairman) and Ms. Barrett.  The Audit Committee reviews the scope of
 the audit with the Corporation's independent public accountants and
 meets with them for the purpose of reviewing the results of the audit
 subsequent to its completion. The present members of the Human
 Resources Committee are Ms. Barrett (Chairman) and Mr. McKone. The
 Human Resources Committee reviews the performance of senior members of
 management, recommends executive compensation and administers the
 Corporation's stock option and other stock-based compensation plans.
 The Corporation does not have a nominating committee of the Board of
 Directors. The Board of Directors met one time and the Audit and Human
 Resources Committees did not meet during fiscal 1996. Each director
 attended at least 75% of all meetings of the Board of Directors and
 committees on which he or she served held during fiscal 1996.


                                        2
PAGE
<PAGE>





 Compensation of Directors

 Cash Compensation

      Directors who are not employees of the Corporation, of Thermo
 Electron or of any other companies affiliated with Thermo Electron
 (also referred to as "outside directors") receive an annual retainer
 of $2,000 and a fee of $1,000 per day for attending regular meetings
 of the Board of Directors and $500 per day for participating in
 meetings of the Board of Directors held by means of conference
 telephone and for participating in certain meetings of committees of
 the Board of Directors.  Payment of directors' fees is made quarterly.
 Dr. Monovoukas, Mr. Painter and Mr. Rainville are all employees of
 Thermo Electron companies and do not receive any cash compensation
 from the Corporation for their services as directors.  Directors are
 also reimbursed for out-of-pocket expenses incurred in attending such
 meetings.
  
 Deferred Compensation Plan

      Under the Corporation's deferred compensation plan for directors
 (the "Deferred Compensation Plan"), a director has the right to defer
 receipt of his cash fees until he ceases to serve as a director, dies
 or retires from his principal occupation. In the event of a change in
 control or proposed change in control of the Corporation that is not
 approved by the Board of Directors, deferred amounts become payable
 immediately. Either of the following is deemed to be a change of
 control: (a) the occurrence, without the prior approval of the Board
 of Directors, of the acquisition, directly or indirectly, by any
 person of 50% or more of the outstanding Common Stock or the
 outstanding common stock of Thermo Fibertek or 25% or more of the
 outstanding common stock of Thermo Electron; or (b) the failure of the
 persons serving on the Board of Directors immediately prior to any
 contested election of directors or any exchange offer or tender offer
 for the Common Stock or the common stock of Thermo Fibertek or Thermo
 Electron to constitute a majority of the Board of Directors at any
 time within two years following any such event. Amounts deferred
 pursuant to the Deferred Compensation Plan are valued at the end of
 each quarter as units of the Corporation's Common Stock. When payable,
 amounts deferred may be disbursed solely in shares of Common Stock
 accumulated under the Deferred Compensation Plan.  A total of 25,000
 shares of Common Stock have been reserved for issuance under the
 Deferred Compensation Plan.  As of March 1, 1997, no deferred units
 equal shares of Common Stock were accumulated under the Deferred
 Compensation Plan.   

 Directors Stock Option Plan

      The Corporation's directors stock option plan (the "Directors
 Plan") provides for the grant of stock options to purchase shares of
 common stock of the Corporation to outside directors as additional
 compensation for their service as directors.  The Directors Plan
 provides for the grant of stock options upon a director's initial
 appointment and, beginning in 2000, awards options to purchase 1,000
                                        3
PAGE
<PAGE>





 shares annually to outside directors.  A total of 200,000 shares of
 Common Stock have been reserved for issuance under the Directors Plan.

      Under the Directors Plan, each outside director was granted an
 option to purchase 20,000 shares of Common Stock upon the effective
 date of the Corporation's initial public offering.  The size of awards
 to new directors appointed to the Board of Directors after 1996 is
 reduced by 5,000 shares each year.  Outside directors who join the
 Board of Directors after 1999 would not receive an option grant upon
 their appointment or election to the Board of Directors, but would be
 eligible to participate in the annual option awards described below.
 Options evidencing initial grants to directors are exercisable six
 months after the date of grant.  The shares acquired upon exercise are
 subject to restrictions on transfer and the right of the Corporation
 to repurchase such shares at the exercise price in the event the
 director ceases to serve as a director of the Corporation or any other
 Thermo Electron company.  The restrictions and repurchase rights lapse
 or are deemed to have lapsed in equal annual installments of 5,000
 shares per year, starting with the first anniversary of the grant
 date, provided the director has continuously served as a director of
 the Corporation or any other Thermo Electron company since the grant
 date.  These options expire on the fifth anniversary of the grant
 date, unless the director dies or otherwise ceases to serve as a
 director of the Corporation or any other Thermo Electron company prior
 to that date.

      Outside directors will also receive an annual grant of options to
 purchase 1,000 shares of Common Stock, commencing with the Annual
 meeting of the Stockholders to be held in 2000.  The annual grant will
 be made at the close of business on the date of each Annual meeting of
 the Stockholders of the Corporation to each outside director then
 holding office.  Options evidencing annual grants may be exercised at
 any time from and after the six-month anniversary of the grant date of
 the option and prior to the expiration of the option on the third
 anniversary of the grant date.  Shares acquired upon exercise of the
 options would be subject to repurchase by the Corporation at the
 exercise price if the recipient ceased to serve as a director of the
 Corporation or any other Thermo Electron company prior to the first
 anniversary of the grant date.

      The exercise price for options granted under the Directors Plan
 is the average of the closing prices of the common stock as reported
 on the American Stock Exchange (or other principal market on which the
 common stock is then traded) for the five trading days preceding and
 including the date of grant, or, if the shares are not then traded, at
 the last price per share paid by third parties in an arms-length
 transaction prior to the option grant.  As of March 1, 1997, options
 to purchase 20,000 shares had been granted under the Directors Plan,
 no options had lapsed, and options to purchase 180,000 shares of
 Common Stock were available for grant under the Directors Plan. 

 Stock Ownership Policies for Directors

      During 1997, the Human Resources Committee of the Board of
                                        4
PAGE
<PAGE>





 Directors (the "Committee") established a stock holding policy for
 directors.   The stock holding policy requires each director to hold a
 minimum of 1,000 shares of Common Stock.  Directors are requested to
 achieve this ownership level by the 1998 Annual meeting of
 Stockholders.  Directors who are also executive officers of the
 Corporation are required to comply with a separate stock holding
 policy established by the Committee in 1997.

      In addition, the Committee adopted a policy requiring directors
 to hold shares of the Corporation's Common Stock equal to one-half of
 their net option exercises over a period of five years.  The net
 option exercise is determined by calculating the number of shares
 acquired upon exercise of a stock option, after deducting the number
 of shares that could have been traded to exercise the option and the
 number of shares that could have been surrendered to satisfy tax
 withholding obligations attributable to the exercise of the option.
 This policy is also applicable to executive officers.

                             STOCK OWNERSHIP

      The following table sets forth the beneficial ownership of Common
 Stock, as well as the common stock of Thermo Fibertek, the
 Corporation's parent company, and of Thermo Electron, Thermo
 Fibertek's parent company, as of March 1, 1997, with respect to (i)
 each person who was known by the Corporation to own beneficially more
 than 5% of the outstanding shares of Common Stock, (ii) each director,
 (iii) each executive officer named in the summary compensation table
 under the heading "Executive Compensation" and (iv) all directors and
 current executive officers as a group.

      While certain directors and executive officers of the Corporation
 are also directors and executive officers of Thermo Fibertek or its
 subsidiaries other than the Corporation, all such persons disclaim
 beneficial ownership of the shares of Common Stock owned by Thermo
 Fibertek.







<TABLE>
<CAPTION>

        Name                         Thermo        Thermo       Thermo
                                     Fibergen      Fibertek     Electron
                                     Inc. (2)      Inc. (3)     Corporation
                                                                (4)
        <S>                          <C>           <C>          <C>

        Thermo Fibertek Inc. (5)     10,000,000    N/A          N/A

        Anne T. Barrett              20,000        1,450        8,709

        Francis L. McKone            0             0            0

        Yiannis A. Monovoukas (6)    94,450        31,500       13,550

        Jonathan W. Painter          20,000        103,515      33,271

        William A. Rainville (6)     41,500        517,894      252,294

        All directors and current
        executive
        officers as a group (7       200,950       859,014      979,590
        persons)

</TABLE>


 (1)Except as reflected in the footnotes to this table, shares    
 beneficially owned consist of shares owned by the indicated person or
 by that person for the benefit of minor children and all share
 ownership includes sole voting and investment power. 
  
 (2)Shares of the Common Stock beneficially owned by Ms. Barrett,Dr.
 Monovoukas, Mr. Painter, Mr. Rainville and all directors and executive
 officers as a group include 20,000, 80,000,20,000, 40,000 and 185,000
 shares, respectively, that such person or group has the right to
 acquire within 60 days of March 1, 1997, through the exercise of stock
 options.  No director or executive officer beneficially owned more
 than 1% of the Common Stock outstanding as of March 1, 1997; all
 directors and executive officers as a group beneficially owned 1.4% of
 the Common Stock outstanding as of such date. 
                                        5
PAGE
<PAGE>






 (3)Shares of the common stock of Thermo Fibertek beneficially owned by
 Dr. Monovoukas, Mr. Painter, Mr. Rainville and all directors and
 executive officers as a group include 30,000, 103,500, 495,000 and
 799,950 shares, respectively, that such person or group had the right
 to acquire within 60 days after March 1, 1997, through the exercise of
 stock options.  Shares of the common stock of Thermo Instrument
 beneficially owned by Ms. Barrett includes 1,450 shares held by a
 trust of which Ms. Barrett and her spouse are the trustees.  Shares of
 the common stock of Thermo Fibertek beneficially owned by Mr. Painter
 include 15 shares held by him as custodian for one minor child.  No
 director or executive officer beneficially owned more than 1% of the
 common stock of Thermo Fibertek outstanding as of March 1, 1997, all
 directors and executive officers as a group beneficially owned 1.4% of
 the Thermo Fibertek common stock outstanding as of such date.
  
 (4)  Shares of the common stock of Thermo Electron beneficially owned
 by Dr. Monovoukas, Mr. Painter, Mr. Rainville and all directors and
 executive officers as a group include 11,325, 27,035, 205,648 and
 771,267 shares, respectively, that such person or group has the right
 to acquire within 60 days of March 1, 1997, through the exercise of
 stock options. Shares of the common stock of Thermo Electron
 beneficially owned by Mr. Painter and all directors and executive
 officers as a group include 488 and 3,746 full shares, respectively,
 allocated to accounts maintained pursuant to Thermo Electron's
 employee stock ownership plan, of which the trustees, who have
 investment power over its assets, are executive officers of Thermo
 Electron.  Shares beneficially owned by Ms. Barrett include 6,010
 shares held by a trust of which Ms. Barrett and her spouse are the
 trustees.  The directors and executive officers did not individually
 or as a group beneficially own more than 1% of the Thermo Electron
 common stock outstanding as of March 1, 1997. 
          
 (5)  As of March 1, 1997, Thermo Fibertek beneficially owned
 approximately 68% of the outstanding Common Stock. Thermo Fibertek's
 address is 81 Wyman Street, Waltham, Massachusetts  02254.  As of
 March 1, 1997, Thermo Fibertek had the power to elect all of the
 members of the Corporation's Board of Directors.  Thermo Fibertek is a
 majority-owned subsidiary of Thermo Electron and therefore, Thermo
 Electron may be deemed a beneficial owner of the shares of Common
 Stock beneficially owned by Thermo Fibertek.  Thermo Electron
 disclaims beneficial ownership of these shares.

 (6)  As of March 1, 1997, Mr. Monovoukas and Mr. Rainville also
 beneficially owned 14,450 and 1,500 redemption rights, respectively,
 issued by the Corporation.  Each of these rights, issued in a public
 offering in September 1996, permits the holder to sell one share of
 the Common Stock back to the Corporation at certain periods in the
 future at a price of $12.25 per share.
  
 Section 16(a) Beneficial Ownership Reporting Compliance

      Section 16(a) of the Securities Exchange Act of 1934 requires the
 Corporation's directors and executive officers, and beneficial owners
                                        6
PAGE
<PAGE>





 of more than 10% of the Common Stock, such as Thermo Fibertek and its
 parent company, Thermo Electron, to file with the Securities and
 Exchange Commission initial reports of ownership and periodic reports
 of changes in ownership of the Corporation's securities. Based upon a
 review of such filings, all Section 16(a) filing requirements
 applicable to such persons were complied with during 1996, except in
 the following instances.   Thermo Fibertek filed two Forms 4 late,
 reporting a total of three transactions consisting of the grant to
 employees of options to purchase the Common Stock.  Thermo Electron
 also filed two Forms late, reporting a total of five transactions,
 which included the three transactions described above for Thermo
 Fibertek and an additional two transactions also consisting of the
 grant to employees of options to purchase the Common Stock. 

 EXECUTIVE COMPENSATION

 Summary Compensation Table

      The following table summarizes compensation for services to the
 Corporation in all capacities awarded to, earned by or paid to the
 Corporation's chief executive officer for the last two fiscal years.
 No other executive officer of the Corporation met the definition of
 "highly compensated" within the meaning of the Securities and Exchange
 Commission's executive compensation disclosure rules. 
  
      The Corporation is required to appoint certain executive officers
 and full-time employees of Thermo Electron as executive officers of
 the Corporation, in accordance with the Thermo Electron Corporate
 Charter. The compensation for these executive officers is determined
 and paid entirely by Thermo Electron. The time and effort devoted by
 these individuals to the Corporation's affairs is provided to the
 Corporation under the Corporate Services Agreement between the
 Corporation and Thermo Electron. Accordingly, the compensation for
 these individuals is not reported in the following table. 
                                                     




<TABLE>
<CAPTION>


                                Summary Compensation Table


                                                        Long Term
                                                        Compensation
                                                        Securities
                                                        Underlying
                                                        Options      All Other
    Name and               Fiscal  Annual Compensation  of Shares    Compensation
    Principal Position     Year     Salary   Bonus      and Company 
                                                        (1)         

        <S>                  <C>    <C>     <C>         <C>         

     Yiannis A. Monovoukas   1996   $100,000 $60,500   80,000(TFG)        $0

          President & Chief                                75(TMO)

          Executive Officer                             2,000(TBA)

                                                       30,000(TFT)

                                                        2,000(TLT)

                                                        6,000(TOC)

                                                        4,000(TMQ)

                                                        2,000(TSR)

                                                        2,000(TXM)

                                1995   $ 39,583(2) --  11,250(TMO)         $0   
               
</TABLE>


 (1)  Options granted by the Corporation are designated in the table as
 "TFG."  In addition, the named executive officer has also been granted
 options to purchase the common stock of the following Thermo Electron
 companies from time to time as part of Thermo Electron's stock option
 program:  Thermo BioAnalysis Corporation (designated in the table as
 TBA), Thermo Electron (designated in the table as TMO), Thermo
 Fibertek Inc. (designated in the table as TFT), ThermoLyte Corporation
 (designated in the table as TLT), Thermo Optek Corporation (designated
 in the table as TOC), ThermoQuest Corporation (designated in the table
 as TMQ), Thermo Sentron Inc. (designated in the table as TSR) and  
 Trex Medical Corporation (designated in the table as TXM).

 (2)  Dr. Monovoukas was appointed president and chief executive
 officer of the Corporation in February 1996.  Prior to that time, he
 served as a corporate business analyst for Thermo Electron since
                                        7
PAGE
<PAGE>





 joining Thermo Electron in July 1995.  Reported in the table under
 "Salary" is the salary paid in 1995 to Dr. Monovoukas for his service
 as a corporate business analyst of Thermo Electron, which was paid at
 an annualized rate of $95,000.  None of the bonus paid to Dr.
 Monovoukas with respect to 1995 performance was attributable to his
 service as president and chief executive officer of the Corporation.

 Stock Options Granted During Fiscal 1996

      The following table sets forth information concerning individual
 grants of stock options made during fiscal 1996 to the Corporation's
 chief executive officer.  It has not been the Corporation's policy in
 the past to grant stock appreciation rights, and no such rights were
 granted during fiscal 1996. 
  


<TABLE>

<CAPTION>





                                   Option Grants in Fiscal 1996


                                                                        Potential 
                                                                        Realizable
                                                                        Value at Assumed
                                        Percent of                      Annual Rates of 
                        Number of       Total                           Stock
                        Securities      Options      Exercise           Price Appreciation
                        Underlying      Granted to   Price              for
                        Options         Employees in Per     Expiration Option Term (2)
        Name (1)        Granted (1)     Fiscal Year  Share   Date       5%      10%

        <S>             <C>             <C>          <C>      <C>        <C>     <C>

        Yiannis A.      80,000 (TFG)    39.0%       $10.00  08/14/08   $636,800 $1,710,400
        Monovoukas

                            75 (TMO)   0.005% (3) $42.79  05/22/99       $506    $1,062

                         2,000 (TBA)     0.2% (3) $10.00  03/11/08    $15,920   $42,760

                        30,000 (TFT)    19.6% (3) $14.32  02/16/08   $342,000  $918,600

                         2,000 (TLT)     0.6% (3) $10.00  03/11/08    $15,920   $42,760

                         6,000 (TOC)     0.2% (3) $12.00  04/09/08    $57,300  $153,960

                         4,000 (TMQ)     0.1% (3) $13.00  03/11/08    $41,400  $111,200

                         2,000 (TSR)     0.4% (3) $14.00  03/11/08    $22,280   $59,800

                         2,000 (TXM)     0.1% (3) $11.00  03/11/08    $13,840   $35,060
</TABLE>


 (1)  The options granted during the fiscal year are immediately
 exercisable, except options to purchase the common stock of ThermoLyte
 Corporation, which are not exercisable until the earlier of (i) 90
 days after the effective date of the registration of that company's
 common stock under Section 12 of the Securities Exchange Act of 1934
 (the "Exchange Act") and (ii) nine years after the grant date.  In all
 cases, the shares acquired upon exercise are subject to repurchase by
 the granting corporation at the exercise price if the optionee ceases
 to be employed by such corporation or any other Thermo Electron
 company. The granting corporation may exercise its repurchase rights
 within six months after the termination of the optionee's employment.
 For publicly traded companies, the repurchase rights generally lapse
 ratably over a five- to ten-year period, depending on the option term,
 which may vary from seven to twelve years, provided that the optionee
 continues to be employed by the Corporation or another Thermo Electron
 company.  For companies that are not publicly traded, the repurchase
 rights lapse in their entirety on the ninth anniversary of the grant
 date.  Certain options granted as part of Thermo Electron's stock
 option program have three-year terms, and the repurchase rights lapse
 in their entirety on the second anniversary of the grant date.  The
 granting corporation may permit the holder of options to exercise
 options and to satisfy tax withholding obligations by surrendering
 shares equal in fair market value to the exercise price or withholding
 obligation. 
  
 (2)  The amounts shown on this table represent hypothetical gains that
 could be achieved for the respective options if exercised at the end
 of the option term.  These gains are based on assumed rates of stock
 appreciation of 5% and 10% compounded annually from the date the
 respective options were granted to their expiration date.  The gains
 shown are net of the option exercise price, but do not include
 deductions for taxes or other expenses associated with the exercise.
 Actual gains, if any, on stock option exercises will depend on the
 future performance of the common stock of the granting corporation,
 the optionee's continued employment through the option period and the
                                        8
PAGE
<PAGE>





 date on which the options are exercised.

 (3)  These options were granted under stock option plans maintained by
 Thermo Electron companies other than the Corporation and accordingly
 are reported as a percentage of total options granted to employees of
 Thermo Electron and its subsidiaries. 

 Stock Options Exercised During Fiscal 1996

      The following table reports certain information regarding stock
 option exercises during fiscal 1996 and outstanding stock options held
 at the end of fiscal 1996 by the Corporation's chief executive
 officer.  No stock appreciation rights were exercised or were
 outstanding during fiscal 1996.




<TABLE>

<CAPTION>




        Aggregated Option Exercises In Fiscal 1996 And Fiscal 1996 Year-End Option Values


                                                               Number of
                                                               Unexercised
                                                               Options at 
                                            Shares             Fiscal
                                            Acquired           Year-End        Value of
                                            on        Value    (Exercisable/   Unexercised
        Name                Company         Exercise  Realized  Unexercisable) In-the-Money
                                                                   (1)         Options

        <S>                 <C>                <C>      <C><C>     <C>         <C>

        Yiannis A.        Thermo Fibergen       --       --      80,000/0     $60,000/--  
        Monovoukas

                          Thermo Electron       --       --      11,325/0    $107,101/--

                          Thermo                --       --       2,000/0       $6,250/--
                          BioAnalysis

                          Thermo Fibertek      --       --       30,000/0           $0/--

                          ThermoLyte           --       --        0/2,000        --/$0(2)

                          Thermo Optek         --       --        6,000/0           $0/--

                          ThermoQuest          --       --        4,000/0           $0/--

                          Thermo Sentron       --       --        2,000/0           $0/--

                          Trex Medical         --       --        2,000/0       $3,250/--      

</TABLE>


 (1)  All of the options reported outstanding at the end of the fiscal
 year are immediately exercisable as of the fiscal year-end, except
 options to purchase the common stock of ThermoLyte Corporation, which
 are not exercisable until the earlier of (i) 90 days after the
 effective date of the registration of that company's common stock
 under Section 12 of the Exchange Act and (ii) nine years after the
 grant date.  In all cases, the shares acquired upon exercise of the
 options reported in the table are subject to repurchase by the
 granting corporation at the exercise price if the optionee ceases to
 be employed by such corporation or any other Thermo Electron company.
 The granting corporation may exercise its repurchase rights within six
 months after the termination of the optionee's employment.  For
 publicly traded companies, the repurchase rights generally lapse
 ratably over a five- to ten-year period, depending on the option term,
 which may vary from seven to twelve years, provided that the optionee
 continues to be employed by the Corporation or another Thermo Electron
 company.  For companies that are not publicly traded, the repurchase
 rights lapse in their entirety on the ninth anniversary of the grant
 date.  Certain options granted as a part of Thermo Electron's stock
 option program have three-year terms, and the repurchase rights lapse
 in their entirety on the second anniversary of the grant date.  The
 granting corporation may permit the holder of such options to exercise
 options and to satisfy tax withholding obligations by surrendering
 shares equal in fair market value to the exercise price or withholding
 obligation. 
  
 (2)  No public market for the shares underlying these options existed
 at fiscal year-end.  Accordingly, no value in excess of the exercise
 price has been attributed to these options.

 RELATIONSHIP WITH AFFILIATES

      Thermo Electron has adopted a strategy of selling a minority
 interest in subsidiary companies to outside investors as an important
 tool in its future development. As part of this strategy, Thermo
                                        9
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 Electron and certain of its subsidiaries have created several
 privately and publicly held subsidiaries, and Thermo Fibertek has
 created the Corporation as a publicly held, majority-owned subsidiary.
 From time to time, Thermo Electron and its subsidiaries will create
 other majority-owned subsidiaries as part of its spinout strategy.
 (The Corporation and such other  majority-owned Thermo Electron
 subsidiaries are hereinafter referred to as the "Thermo
 Subsidiaries.") 
  
      Thermo Electron and each of the Thermo Subsidiaries recognize
 that the benefits and support that derive from their affiliation are
 essential elements of their individual performance. Accordingly,
 Thermo Electron and each of the Thermo Subsidiaries have adopted the
 Thermo Electron Corporate Charter (the "Charter") to define the
 relationships and delineate the nature of such cooperation among
 themselves. The purpose of the Charter is to ensure that (1) all of
 the companies and their stockholders are treated consistently and
 fairly, (2) the scope and nature of the cooperation among the
 companies, and each company's responsibilities, are adequately
 defined, (3) each company has access to the combined resources and
 financial, managerial and technological strengths of the others, and
 (4) Thermo Electron and the Thermo Subsidiaries, in the aggregate, are
 able to obtain the most favorable terms from outside parties. 
  
      To achieve these ends, the Charter identifies the general
 principles to be followed by the companies, addresses the role and
 responsibilities of the management of each company, provides for the
 sharing of group resources by the companies and provides for
 centralized administrative, banking and credit services to be
 performed by Thermo Electron. The services provided by Thermo Electron
 include collecting and managing cash generated by members,
 coordinating the access of Thermo Electron and the Thermo Subsidiaries
 (the "Thermo Group") to external financing sources, ensuring
 compliance with external financial covenants and internal financial
 policies, assisting in the formulation of long-range planning and
 providing other banking and credit services. Pursuant to the Charter,
 Thermo Electron may also provide guarantees of debt or other
 obligations of the Thermo Subsidiaries or may obtain external
 financing at the parent level for the benefit of the Thermo
 Subsidiaries. In certain instances, the Thermo Subsidiaries may
 provide credit support to, or on behalf of, the consolidated entity or
 may obtain financing directly from external financing sources. Under
 the Charter, Thermo Electron is responsible for determining that the
 Thermo Group remains in compliance with all covenants imposed by
 external financing sources, including covenants related to borrowings
 of Thermo Electron or other members of the Thermo Group, and for
 apportioning such constraints within the Thermo Group. In addition,
 Thermo Electron establishes certain internal policies and procedures
 applicable to members of the Thermo Group. The cost of the services
 provided by Thermo Electron to the Thermo Subsidiaries is covered
 under existing corporate services agreements between Thermo Electron
 and each of the Thermo Subsidiaries. 
  
      The Charter presently provides that it shall continue in effect
                                       10
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 so long as Thermo Electron and at least one Thermo Subsidiary
 participate. The Charter may be amended at any time by agreement of
 the participants. Any Thermo Subsidiary, including the Corporation,
 can withdraw from participation in the Charter upon 30 days' prior
 notice. In addition, Thermo Electron may terminate a subsidiary's
 participation in the Charter in the event the subsidiary ceases to be
 controlled by Thermo Electron or ceases to comply with the Charter or
 the policies and procedures applicable to the Thermo Group.  A
 withdrawal from the Charter automatically terminates the corporate
 services agreement and tax allocation agreement (if any) in effect
 between the withdrawing company and Thermo Electron. The withdrawal
 from participation does not terminate outstanding commitments to third
 parties made by the withdrawing company, or by Thermo Electron or
 other members of the Thermo Group, prior to the withdrawal. However, a
 withdrawing company is required to continue to comply with all
 policies and procedures applicable to the Thermo Group and to provide
 certain administrative functions mandated by Thermo Electron so long
 as the withdrawing company is controlled by or affiliated with Thermo
 Electron. 
  
      As provided in the Charter, the Corporation and Thermo Electron
 have entered into a Corporate Services Agreement (the "Services
 Agreement") under which Thermo Electron's corporate staff provides
 certain administrative services, including certain legal advice and
 services, risk management, employee benefit administration, tax advice
 and preparation of tax returns, centralized cash management and
 financial and other services to the Corporation. The Corporation was
 assessed an annual fee equal to 1.0% of the Corporation's revenues for
 these services for fiscal 1996.  The fee is reviewed annually and may
 be changed by mutual agreement of the Corporation and Thermo Electron.
 During fiscal 1996, Thermo Electron assessed the Corporation $22,000
 in fees under the Services Agreement. Management believes that the
 charges under the Services Agreement are reasonable and that the terms
 of the Services Agreement are fair to the Corporation.  For items such
 as employee benefit plans, insurance coverage and other identifiable
 costs, Thermo Electron charges the Corporation based on charges
 attributable to the Corporation. The Services Agreement automatically
 renews for successive one-year terms, unless canceled by the
 Corporation upon 30 days' prior notice. In addition, the Services
 Agreement terminates automatically in the event the Corporation ceases
 to be a member of the Thermo Group or ceases to be a participant in
 the Charter. In the event of a termination of the Services Agreement,
 the Corporation will be required to pay a termination fee equal to the
 fee that was paid by the Corporation for services under the Services
 Agreement for the nine-month period prior to termination. Following
 termination, Thermo Electron may provide certain administrative
 services on an as-requested basis by the Corporation or as required in
 order to meet the Corporation's obligations under Thermo Electron's
 policies and procedures. Thermo Electron will charge the Corporation a
 fee equal to the market rate for comparable services if such services
 are provided to the Corporation following termination. 

      From time to time, the Corporation may transact business with other
companies in the Thermo Group.  In fiscal 1996, these transactions included
the following.

      In July 1996, the Corporation entered into a supply and license
 agreement with Thermo Fibertek in which Thermo Fibertek granted to the
                                       11
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 Corporation a worldwide, royalty-free license to use Thermo
 Fibertek's proprietary fiber "scalping" technology in the pulp and
 paper industries.   The agreement has an initial term of eight years
 and is subject to annual renewals thereafter, unless either party elects
 not to renew the agreement.  The Corporation's rights under the agreement
 are exclusive for a period of at least five years and such exclusivity
 will continue thereafter if the Corporation has purchased at least 35
 scalping units from Thermo Fibertek within the first five years of the
 license and at least five such units in each subsequent year.  The
 agreement also provides that Thermo Fibertek will be the exclusive
 manufacturer of products based on the licensed technology.  The purchase
 price to be paid by the Corporation to Thermo Fibertek for these products
 will be based on Thermo Fibertek's  manufacturing cost plus a gross profit
 margin of 55%. Thermo Fibertek has agreed not to sell these components or
 any other technology or products proprietary to Thermo Fibertek for use in
 competition with the Corporation in the pulp and paper industries.

      As of December 28, 1996, $58,366,000 of the Corporation's
 equivalents were invested in a repurchase agreement with Thermo
 Electron.  Under this agreement, the Corporation in effect lends
 excess cash to Thermo Electron, which Thermo Electron collateralizes
 with investments principally consisting of corporate notes, United
 States government agency securities, money market funds, commercial
 paper and other marketable securities, in the amount of at least 103%
 of such obligation.  The Corporation's funds subject to the repurchase
 agreement will be readily convertible into cash by the Corporation and
 have an original maturity of three months or less.  The repurchase
 agreement earns a rate based on the 90-day Commercial Paper Composite
 Rate plus 25 basis points, set at the beginning of each quarter.

 Stock Holding Assistance Plan

      During 1997, the Human Resources Committee of the Corporation's Board
 of Directors (the "Committee") established a stock holding policy for
 executive officers of the Corporation.  The stock holding policy
 specifies an appropriate level of ownership of the Corporation's
 Common Stock as a multiple of the officer's compensation.  For the
 chief executive officer, the multiple is one times his base salary and
 reference bonus for the calendar year.  For all other officers, the
 multiple is one times the officer's base salary.  The Committee deemed
 it appropriate to permit officers to achieve these ownership levels
 over a three-year period.

      In 1997, the Corporation adopted a stock holding policy which
 requires its executive officers to acquire and hold a minimum number
 of shares of Common Stock.  In order to assist the executive officers
 in complying with the policy, the Corporation also adopted a stock
 holding assistance plan under which it may make interest-free loans to
 certain key employees, including its executive officers, to enable
 these individuals to purchase Common Stock in the open market.  Loans
 will be repayable upon the earlier of demand or the fifth anniversary
 of the date of the loan, unless otherwise authorized by the Human
                                       12
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 Resources Committee of the Corporation's Board of Directors.  No such
 loans were outstanding in 1996.

 AA971130049