SECURITIES AND EXCHANGE COMMISSION


                              Washington, DC 20549

                   -------------------------------------------

                                    FORM 10-Q

    (mark one)

    [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the Quarter Ended September 27, 1997.

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

                         Commission File Number 1-11406


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

    Delaware                                                       52-1762325
    (State or other jurisdiction of                          (I.R.S. Employer
    incorporation or organization)                        Identification No.)

    81 Wyman Street, P.O. Box 9046
    Waltham, Massachusetts                                         02254-9046
    (Address of principal executive offices)                       (Zip Code)

       Registrant's telephone number, including area code: (617) 622-1000

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

                   Class                  Outstanding at September 27, 1997
        ----------------------------      ---------------------------------
        Common Stock, $.01 par value                  61,766,094
PAGE

    PART I - FINANCIAL INFORMATION

    Item 1 - Financial Statements


                              THERMO FIBERTEK INC.

                           Consolidated Balance Sheet
                                   (Unaudited)

                                     Assets


                                                September 27,   December 28,
    (In thousands)                                       1997           1996
    ------------------------------------------------------------------------
    Current Assets:
      Cash and cash equivalents                      $109,646       $109,805
      Available-for-sale investments, at quoted
        market value (amortized cost of $29,433)       29,492              -
      Accounts receivable, less allowances of
        $2,345 and $1,948                              49,194         38,115
      Unbilled contract costs and fees                  7,932          1,236
      Inventories:
        Raw materials and supplies                     12,667         13,778
        Work in process                                 7,075          4,180
        Finished goods                                 11,256          6,509
      Prepaid income taxes and other current
        assets                                          8,162          8,802
                                                     --------       --------
                                                      235,424        182,425
                                                     --------       --------
    Property, Plant, and Equipment, at Cost            58,848         57,869
      Less: Accumulated depreciation and
            amortization                               31,196         31,329
                                                     --------       --------
                                                       27,652         26,540
                                                     --------       --------

    Other Assets (Note 3)                              14,824          8,720
                                                     --------       --------

    Cost in Excess of Net Assets of Acquired 
      Companies (Note 2)                              132,480         39,547
                                                     --------       --------
                                                     $410,380       $257,232
                                                     ========       ========










                                        2PAGE

                              THERMO FIBERTEK INC.

                     Consolidated Balance Sheet (continued)
                                   (Unaudited)

                    Liabilities and Shareholders' Investment


                                              September 27,   December 28,
    (In thousands except share amounts)                1997           1996
    ----------------------------------------------------------------------
    Current Liabilities:
      Accounts payable                             $ 21,806       $ 16,805
      Accrued payroll and employee benefits           9,765         10,989
      Accrued income taxes (includes $2,000 and
        $1,340 due to related party)                  3,379          2,414
      Billings in excess of contract costs
        and fees                                      7,514          2,540
      Accrued warranty costs                          7,655          7,752
      Other accrued expenses                         15,715          8,707
      Due to parent company                           1,766         17,609
                                                   --------       --------
                                                     67,600         66,816
                                                   --------       --------
    Deferred Income Taxes and Other Deferred
      Items                                           2,715          3,202
                                                   --------       --------
    Subordinated Convertible Debentures (Note 4)    153,000              -
                                                   --------       --------
    Minority Interest                                   366            277
                                                   --------       --------
    Common Stock of Subsidiary Subject to
      Redemption ($54,762 and $60,116 redemption
      value)                                         52,564         56,087
                                                   --------       --------
    Shareholders' Investment:
      Common stock, $.01 par value, 150,000,000
        shares authorized; 63,331,887 and
        61,154,930 shares issued                        633            612
      Capital in excess of par value                 81,920         65,951
      Retained earnings                              76,994         66,181
      Treasury stock at cost, 1,565,793 and
        23,550 shares                               (16,465)          (360)
      Cumulative translation adjustment              (8,985)        (1,534)
      Net unrealized gain on available-for-sale
        investments                                      38              -
                                                   --------       --------
                                                    134,135        130,850
                                                   --------       --------
                                                   $410,380       $257,232
                                                   ========       ========


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


                                        3PAGE

                              THERMO FIBERTEK INC.

                        Consolidated Statement of Income
                                   (Unaudited)


                                                     Three Months Ended
                                                ----------------------------
                                               September 27,   September 28,
    (In thousands except per share amounts)             1997            1996
    ------------------------------------------------------------------------
    Revenues                                         $67,606         $46,124
                                                     -------         -------
    Costs and Operating Expenses:
      Cost of revenues                                42,336          26,173
      Selling, general, and administrative
        expenses                                      16,189          12,239
      Research and development expenses                1,789           1,328
      Restructuring costs (Note 5)                     1,063               -
                                                     -------        --------
                                                      61,377          39,740
                                                     -------         -------

    Operating Income                                   6,229           6,384
    Interest Income                                    2,060             733
    Interest Expense (includes $510 and $131
      to related party in 1997 and 1996)              (2,020)           (153)
                                                     -------         -------
    Income Before Provision for Income Taxes
      and Minority Interest                            6,269           6,964
    Provision for Income Taxes                         2,495           2,724
    Minority Interest Expense                            180              27
                                                     -------         -------
    Net Income                                       $ 3,594         $ 4,213
                                                     =======         =======
    Earnings per Share:
      Primary                                        $   .06         $   .07
                                                     =======         =======
      Fully diluted                                  $   .06         $   .07
                                                     =======         =======
    Weighted Average Shares:
      Primary                                         61,504          61,089
                                                     =======         =======
      Fully diluted                                   63,367          64,381
                                                     =======         =======


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








                                        4PAGE

                              THERMO FIBERTEK INC.

                        Consolidated Statement of Income
                                   (Unaudited)


                                                    Nine Months Ended
                                              -----------------------------
                                             September 27,   September 28,
    (In thousands except per share amounts)           1997            1996
    -----------------------------------------------------------------------
    Revenues                                      $166,784        $143,699
                                                  --------        --------
    Costs and Operating Expenses:
      Cost of revenues                             100,522          82,469
      Selling, general, and administrative
        expenses                                    43,670          35,105
      Research and development expenses              4,652           4,153
      Restructuring costs (Note 5)                   1,063               -
                                                  --------        --------
                                                   149,907         121,727
                                                  --------        --------

    Operating Income                                16,877          21,972
    Interest Income                                  5,162           2,105
    Interest Expense (includes $1,412 and $393
      to related party in 1997 and 1996)            (2,961)           (483)
                                                  --------         -------
    Income Before Provision for Income Taxes
      and Minority Interest                         19,078          23,594
    Provision for Income Taxes                       7,425           9,243
    Minority Interest Expense                          840              56
                                                  --------         -------
    Net Income                                    $ 10,813         $14,295
                                                  ========         =======
    Earnings per Share:
      Primary                                     $    .18         $   .23
                                                  ========         =======
      Fully diluted                               $    .17         $   .23
                                                  ========         =======
    Weighted Average Shares:
      Primary                                       61,296          61,015
                                                  ========         =======
      Fully diluted                                 63,934          64,398
                                                  ========         =======


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



                                        5PAGE

                              THERMO FIBERTEK INC.

                      Consolidated Statement of Cash Flows
                                  (Unaudited) 


                                                    Nine Months Ended
                                              -----------------------------
                                              September 27,  September 28,
    (In thousands)                                     1997           1996
    -----------------------------------------------------------------------
    Operating Activities:
      Net income                                  $  10,813      $  14,295
        Adjustments to reconcile net income
          to net cash provided by operating
          activities:
            Depreciation and amortization             5,368          3,652
            Provision for losses on accounts
              receivable                                147           (221)
            Minority interest expense                   840             56
            Restructuring costs (Note 5)              1,063              -
            Deferred income tax expense (benefit)       (93)           211
            Other noncash items                        (383)          (307)
            Changes in current accounts, excluding
              the effects of acquisition:
                Accounts receivable                   2,490          9,977
                Inventories and unbilled contract
                  costs and fees                     (3,683)          (216)
                Prepaid income taxes and other
                  current assets                        415            772
                Accounts payable                     (6,827)        (3,748)
                Other current liabilities             2,297         (7,257)
                                                  ---------      ---------
    Net cash provided by operating activities        12,447         17,214
                                                  ---------      ---------
    Investing Activities:
      Acquisition, net of cash acquired (Note 2)   (107,738)       (12,028)
      Issuance of note receivable                    (3,000)             -
      Repayment of note receivable                    3,000              -
      Purchases of available-for-sale investments   (29,050)             -
      Proceeds from sale and maturities of
        available-for-sale investments                    -          2,750
      Purchases of property, plant, and equipment    (2,102)        (3,232)
      Other                                            (189)        (5,326)
                                                  ---------      ---------
    Net cash used in investing activities          (139,079)       (17,836)
                                                  ---------      ---------
    Financing Activities:
      Net proceeds from issuance of subordinated
        convertible debentures (Note 4)             149,771              -
      Issuance of obligation to parent company 
        (Note 2)                                    110,000              -
      Repayment of obligation to parent company 
        (Note 2)                                   (110,000)       (10,400)
      Purchases of Company common stock             (16,320)             -
      Purchases of subsidiary common stock           (3,791)             -
      Net proceeds from issuance of Company and
        subsidiary common stock                         680         56,642
      Other                                             (34)             -
                                                  ---------      ---------
    Net cash provided by financing activities     $ 130,306      $  46,242
                                                  ---------      ---------

                                        6PAGE

                              THERMO FIBERTEK INC.

                Consolidated Statement of Cash Flows (continued)
                                   (Unaudited)


                                                    Nine Months Ended
                                               -----------------------------
                                               September 27,  September 28,
    (In thousands)                                      1997           1996
    ------------------------------------------------------------------------
    Exchange Rate Effect on Cash                   $  (3,833)     $    (484)
                                                   ---------      ---------
    Increase (Decrease) in Cash and Cash 
      Equivalents                                       (159)        45,136
    Cash and Cash Equivalents at Beginning of
      Period                                         109,805         57,028
                                                   ---------      ---------
    Cash and Cash Equivalents at End of Period     $ 109,646      $ 102,164
                                                   =========      =========
    Noncash Activities:
      Fair value of assets of acquired company     $ 129,271      $  12,606
      Cash paid for acquired company                 107,750        (12,099)
                                                   ---------      ---------
      Liabilities assumed of acquired company      $  21,521      $     507
                                                   =========      =========


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














                                        7PAGE

                              THERMO FIBERTEK INC.

                   Notes to Consolidated Financial Statements

    1.  General

        The interim consolidated financial statements presented have been
    prepared by Thermo Fibertek Inc. (the Company) without audit and, in the
    opinion of management, reflect all adjustments of a normal recurring
    nature necessary for a fair statement of the financial position at
    September 27, 1997, the results of operations for the three- and
    nine-month periods ended September 27, 1997, and September 28, 1996, and
    the cash flows for the nine-month periods ended September 27, 1997, and
    September 28, 1996. Interim results are not necessarily indicative of
    results for a full year.

        The consolidated balance sheet presented as of December 28, 1996, has
    been derived from the consolidated financial statements that have been
    audited by the Company's independent public accountants. The consolidated
    financial statements and notes are presented as permitted by Form 10-Q
    and do not contain certain information included in the annual financial
    statements and notes of the Company. The consolidated financial
    statements and notes included herein should be read in conjunction with
    the financial statements and notes included in the Company's Annual
    Report on Form 10-K for the fiscal year ended December 28, 1996, filed
    with the Securities and Exchange Commission.

    2.  Acquisition

        In May 1997, the Company acquired a majority of the assets, subject
    to certain liabilities, of the stock-preparation business of Black
    Clawson Company and its affiliates (Black Clawson). In August 1997, the
    Company acquired the remaining assets of the stock-preparation business
    of Black Clawson. The aggregate purchase price was approximately $107.7
    million in cash, net of cash acquired, and is subject to a post-closing
    adjustment.

        Pursuant to a promissory note, the Company borrowed $110 million from
    Thermo Electron Corporation to finance the acquisition. The promissory
    note bore interest at the 90-day Commercial Paper Composite Rate plus 25
    basis points, set at the beginning of each quarter. The note was repaid
    in July 1997 with the net proceeds from the sale of long-term
    subordinated convertible debentures (Note 4). 

        Black Clawson is a leading supplier of recycling equipment used in
    processing fiber for the manufacture of "brown paper," such as that used
    in the manufacture of corrugated boxes.

        The acquisition has been accounted for using the purchase method of
    accounting and its results have been included in the accompanying
    financial statements from the date of acquisition. The cost of the
    acquisition exceeded the estimated fair value of the acquired net assets
    by $95.1 million, which is being amortized over 40 years. Allocation of
    the purchase price was based on estimates of the fair value of the net
    assets acquired and is subject to adjustment upon finalization of the
    purchase price allocation.
                                        8PAGE

                              THERMO FIBERTEK INC.

    2.  Acquisition (continued)

        Based on unaudited data, the following table presents selected
    financial information for the Company and Black Clawson on a pro forma
    basis, assuming the companies had been combined since the beginning of
    1996.

                            Three Months Ended        Nine Months Ended
                           ---------------------    --------------------
    (In thousands except   Sept. 27,   Sept. 28,    Sept. 27, Sept. 28,
    per share amounts)          1997        1996         1997      1996
    --------------------------------------------------------------------
    Revenues                 $71,269     $70,829     $209,518  $214,382
    Net income                 4,351       3,181       10,599    10,923
    Earnings per share:
      Primary                    .07         .05          .17       .18
      Fully diluted              .07         .05          .17       .17

        The pro forma results are not necessarily indicative of future
    operations or the actual results that would have occurred had the
    acquisition of Black Clawson been made at the beginning of 1996.

    3.  Note Receivable

        During 1996, the Company loaned $6.0 million to Tree-Free Fiber
    Company, LLC (Tree-Free) in connection with a proposed engineering,
    procurement, and construction project. This project has been indefinitely
    delayed due to the current weakness in pulp prices and, therefore, the
    Company expects the project will not proceed in the near future.
    Tree-Free was unable to repay the note upon its original maturity and the
    Company consented to several payment extensions. On July 28, 1997, the
    Company restructured the note from Tree-Free into two promissory notes
    aggregating $6.5 million, which represent the original principal amount
    due to the Company plus interest accrued through the date of the
    restructuring. One such promissory note, for $3.0 million, is secured by
    a first priority security interest, pari passu with a security interest
    held by another lender, on certain real estate and equipment, and a
    second priority security interest, pari passu with a security interest
    held by another lender, on inventories and accounts receivable. The
    second promissory note, for $3.5 million, is secured by a first priority
    security interest in the membership (equity) interests of the equity
    owners of Tree-Free and certain other assets and is subordinate to other
    borrowings. In the event of default, the Company intends to exercise its
    rights under its security agreement to cause all of such membership
    interests to be transferred to the Company. In such event, the Company
    expects that it will operate the existing tissue mill owned by Tree-Free,
    with the intent of selling either the mill or membership interests at one
    or more public or private sales as soon as practicable thereafter.
    Although no assurance can be given as to either the timing of any such
    sale or the amount of the proceeds that may be received therefrom, the
    Company believes that the fair value of its security exceeds the sum of
    the carrying amount of the notes from Tree-Free and Tree-Free's
    indebtedness to its third-party lenders.

                                        9PAGE

                              THERMO FIBERTEK INC.

    4.  Subordinated Convertible Debentures

        In July 1997, the Company issued and sold $153 million principal
    amount of 4 1/2% subordinated convertible debentures due 2004 for net
    proceeds of approximately $149.8 million. The debentures are convertible
    into shares of the Company's common stock at a conversion price of $12.10
    per share and are guaranteed on a subordinated basis by Thermo Electron.
    In July 1997, the Company repaid a $110 million promissory note due to
    Thermo Electron with a portion of the net proceeds from this offering
    (Note 2).

    5.  Restructuring Costs

        During the third quarter of 1997, the Company recorded restructuring
    costs of approximately $1.1 million relating to the consolidation of
    operations at its Fiberprep, Inc. subsidiary and Lamort Paper Services
    Ltd. subsidiary (a subsidiary of E&M Lamort, S.A.), located in the United
    Kingdom, into the operations of Black Clawson. The restructuring charges
    related primarily to severance for 34 employees whose employment was
    terminated during the third quarter, and abandoned-facility payments.
    Other accrued expenses in the accompanying September 27, 1997, balance
    sheet includes a remaining reserve of $0.4 million associated with the
    consolidation of these operations.

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

        Forward-looking statements, within the meaning of Section 21E of the
    Securities Exchange Act of 1934, are made throughout this Management's
    Discussion and Analysis of Financial Condition and Results of Operations.
    For this purpose, any statements contained herein that are not statements
    of historical fact may be deemed to be forward-looking statements.
    Without limiting the foregoing, the words "believes," "anticipates,"
    "plans," "expects," "seeks," "estimates," and similar expressions are
    intended to identify forward-looking statements. There are a number of
    important factors that could cause the results of the Company to differ
    materially from those indicated by such forward-looking statements,
    including those detailed under the caption "Forward-looking Statements"
    in Exhibit 13 to the Company's Annual Report on Form 10-K for the fiscal
    year ended December 28, 1996, filed with the Securities and Exchange
    Commission.

    Overview

        The Company designs and manufactures processing machinery,
    accessories, and water-management systems for the paper and paper-
    recycling industries. The Company's principal products include
    custom-engineered systems and equipment for the preparation of wastepaper
    for conversion into recycled paper; accessory equipment and related
    consumables important to the efficient operation of papermaking machines;
    and water-management systems essential for draining, purifying, and
    recycling process water. The Company's Thermo Black Clawson subsidiary,
    acquired May 1997, is a leading supplier of recycling equipment used in
    processing fiber for the manufacture of "brown paper," such as that used

                                       10PAGE

                              THERMO FIBERTEK INC.

    Overview (continued)

    in the manufacture of corrugated boxes. The Company's Thermo Fibergen
    Inc. subsidiary is developing and commercializing equipment and systems
    to recover valuable materials from papermaking sludge generated by plants
    that produce virgin and recycled pulp and paper. Through its GranTek Inc.
    subsidiary, acquired July 1996, Thermo Fibergen employs patented
    technology to produce absorbing granules from papermaking sludge.
        The Company's manufacturing facilities are principally in the U.S.
    and France. The manufacturing facility in France is located at the
    Company's E&M Lamort, S.A. subsidiary, which primarily manufactures
    recycling equipment and accessories.

        The Company's products are primarily sold to the paper industry.
    Generally, the financial condition of the paper industry corresponds both
    to changes in the general economy and to a number of other factors,
    including paper and pulp production capacity. The paper industry entered
    a severe downcycle in early 1996 and has not recovered. This cyclical
    downturn adversely affected the Company's business during the second half
    of 1996 and the first nine months of 1997. The timing of the recovery of
    the financial condition of the paper industry cannot be predicted.

        The Company has significant foreign operations, particularly in
    Europe. Although the Company seeks to charge its customers in the same
    currency as its operating costs, the Company's financial performance and
    competitive position can be affected by currency exchange rate
    fluctuations affecting the relationship between the U.S. dollar and
    foreign currencies. The Company reduces its exposure to currency
    fluctuations through the use of forward contracts. The Company enters
    into forward contracts to hedge certain firm purchase and sale
    commitments denominated in currencies other than its subsidiaries' local
    currencies, principally U.S. dollars, British pounds sterling, French
    francs, and Japanese yen. The purpose of the Company's foreign currency
    hedging activities is to protect the Company's local currency cash flows
    related to these commitments from fluctuations in foreign exchange rates.
    Because the Company's forward contracts are entered into as hedges
    against existing foreign currency exposures, there generally is no effect
    on the income statement since gains or losses on the customer contract
    offset gains or losses on the forward contract.

    Results of Operations
    Third Quarter 1997 Compared With Third Quarter 1996

        Revenues increased to $67.6 million in the third quarter of 1997 from
    $46.1 million in the third quarter of 1996. Revenues increased $20.2
    million due to the acquisition of Black Clawson in May 1997. Revenues
    from the Company's water-management business increased $2.2 million,
    primarily due to an increase in demand. These improvements were offset in
    part by a decrease in revenues from the Company's recycling business,
    primarily due to a decrease in demand resulting from the severe drop in
    de-inked pulp prices in the summer of 1996. Revenue improvement at the
    Company's accessories business in the U.S. was largely offset by a
    decrease in revenues at Lamort's accessories business. The unfavorable
    effects of currency translation due to a stronger U.S. dollar decreased
    revenues by $2.0 million.
                                       11PAGE

                              THERMO FIBERTEK INC.

    Third Quarter 1997 Compared With Third Quarter 1996 (continued)

        The gross profit margin decreased to 37% in the third quarter of 1997
    from 43% in the third quarter of 1996, primarily due to lower-margin
    revenues at Black Clawson, as well as a decrease in gross profit margin
    at the Company's Lamort subsidiary due to a decrease in revenues and
    lower margins from Lamort's recycling business due to competitive pricing
    pressures.

        Selling, general, and administrative expenses as a percentage of
    revenues decreased to 24% in the third quarter of 1997 from 27% in the
    third quarter of 1996, primarily due to lower expenses as a percentage of
    revenues at Black Clawson, offset in part by an increase at Thermo
    Fibergen, primarily due to the hiring of additional sales, marketing, and
    administrative staff.

        Research and development expenses increased to $1.8 million in the
    third quarter of 1997 from $1.3 million in the third quarter of 1996,
    primarily due to the inclusion of $0.4 million in expenses at Black
    Clawson.

        During the third quarter of 1997, the Company recorded restructuring
    costs of $1.1 million relating to the consolidation of operations at its
    Fiberprep, Inc. subsidiary and Lamort Paper Services Ltd. subsidiary (a
    subsidiary of Lamort), located in the United Kingdom, into the operations
    of Black Clawson. The restructuring charges related primarily to
    severance for 34 employees whose employment was terminated during the
    third quarter, and abandoned-facility payments.

        Interest income increased to $2.1 million in the third quarter of
    1997 from $0.7 million in the third quarter of 1996, primarily due to an
    increase in average invested balances resulting from the net proceeds
    from Thermo Fibergen's initial public offering in September 1996 and the
    sale of $153 million principal amount of subordinated convertible
    debentures in July 1997 (Note 4).

        Interest expense increased to $2.0 million in the third quarter of
    1997 from $0.2 million in the third quarter of 1996 as a result of
    borrowings from Thermo Electron Corporation to finance the May 1997
    acquisition of Black Clawson and the July 1997 issuance of $153 million
    principal amount of subordinated convertible debentures. The borrowings
    from Thermo Electron were repaid with a portion of the net proceeds from
    the sale of the subordinated convertible debentures (Note 4).

        The effective tax rate was 40% in the third quarter of 1997 and 39%
    in the third quarter of 1996. The effective tax rates exceed the
    statutory federal income tax rate primarily due to the impact of state
    income taxes, offset in part by the effect of lower foreign tax rates.

        Minority interest expense primarily represents accretion of common
    stock of subsidiary subject to redemption.

                                       12PAGE

                              THERMO FIBERTEK INC.

    First Nine Months 1997 Compared With First Nine Months 1996

        Revenues increased to $166.8 million in the first nine months of 1997
    from $143.7 million in the first nine months of 1996. Revenues increased
    $30.0 million due to the acquisitions of Black Clawson in May 1997 and
    GranTek in July 1996. In addition, revenues from the Company's
    accessories and water-management businesses increased primarily due to an
    increase in demand. These improvements were offset in part by a $9.7
    million decrease in revenues from the Company's recycling business,
    principally at the Company's Fiberprep subsidiary, due to a decrease in
    demand resulting from a severe drop in de-inked pulp prices in the summer
    of 1996. The unfavorable effects of currency translation due to a
    stronger U.S. dollar decreased revenues by $4.1 million.

        The gross profit margin decreased to 40% in the first nine months of
    1997 from 43% in the first nine months of 1996, primarily for the reasons
    discussed in the results of operations for the third quarter.

        Selling, general, and administrative expenses as a percentage of
    revenues increased to 26% in the first nine months of 1997 from 24% in
    the first nine months of 1996, primarily due to a decrease in revenues at
    the Company's Fiberprep subsidiary and an increase in selling, general,
    and administrative expenses at Thermo Fibergen for the reasons discussed
    in the results of operations for the third quarter. The increase in
    selling, general, and administrative expenses as a percentage of revenues
    was offset in part by lower selling, general, and administrative expenses
    as a percentage of revenues at Black Clawson.

        Research and development expenses increased to $4.7 million in the
    first nine months of 1997 from $4.2 million in the first nine months of
    1996, primarily due to the inclusion of $0.6 million in expenses at Black
    Clawson.

        The Company recorded restructuring costs of $1.1 million in the first
    nine months of 1997 for the reasons discussed in the results of
    operations for the third quarter.

        Interest income increased to $5.2 million in the first nine months of
    1997 from $2.1 million in the first nine months of 1996, primarily due to
    the reasons discussed in the results of operations for the third quarter.

        Interest expense increased to $3.0 million in the first nine months
    of 1997 from $0.5 million in the first nine months of 1996, primarily due
    to the reasons discussed in the results of operations for the third
    quarter.

        The effective tax rate was 39% in the first nine months of 1997 and
    1996. The effective tax rate exceeds the statutory federal income tax
    rate primarily due to the impact of state income taxes, offset in part by
    the effect of lower foreign tax rates.

        Minority interest expense primarily represents accretion of common
    stock of subsidiary subject to redemption.

                                       13PAGE

                              THERMO FIBERTEK INC.

    Liquidity and Capital Resources

        Consolidated working capital was $167.8 million at September 27,
    1997, compared with $115.6 million at December 28, 1996. Included in
    working capital are cash, cash equivalents, and available-for-sale
    investments of $139.1 million at September 27, 1997, compared with $109.8
    million at December 28, 1996. Of the $139.1 million balance at September
    27, 1997, $58.1 million was held by Thermo Fibergen and $3.5 million was
    held by Fiberprep, with the remainder being held by the Company and its
    wholly owned subsidiaries. At September 27, 1997, $13.4 million of the
    Company's cash and cash equivalents was held by its Lamort subsidiary.
    Repatriation of this cash into the U.S. is subject to a 5% withholding
    tax in France and could also be subject to a United States tax.

        During the first nine months of 1997, $12.4 million of cash was
    provided by operating activities. Cash provided by the Company's
    operating results was reduced by a decrease in accounts payable of $6.8
    million and an increase in unbilled contract costs and fees of $4.3
    million, offset in part by an increase in other current liabilities of
    $2.3 million and a decrease in accounts receivable of $2.5 million. The
    reduction in accounts payable was primarily due to the payment of a
    substantial portion of acquired accounts payable at Black Clawson. The
    increase in other current liabilities reflects an increase in billings in
    excess of contract costs and fees, accrued income taxes, and accrued
    interest payable. The reduction in accounts receivable was primarily due
    to the timing of billings on percentage-of-completion contracts,
    reflected in the increase in unbilled contract costs and fees.

        During the first nine months of 1997, the Company's primary investing
    activities, excluding purchases of available-for-sale investments,
    included an acquisition and capital expenditures. The Company acquired
    the assets, subject to certain liabilities, of the stock-preparation
    business of Black Clawson for $107.7 million in cash, net of cash
    acquired (Note 2). The purchase price is subject to a post-closing
    adjustment. The Company expended $2.1 million for purchases of property,
    plant, and equipment during the first nine months of 1997.

        During the first nine months of 1997, the Company's financing
    activities provided $130.3 million in cash. The Company borrowed $110
    million from Thermo Electron to finance the acquisition of Black Clawson
    (Note 2). In July 1997, the Company issued and sold $153 million
    principal amount of 4 1/2% subordinated convertible debentures due 2004
    for net proceeds of approximately $149.8 million. A portion of the
    proceeds was used to repay the $110 million note due to Thermo Electron
    (Note 4). The Company repurchased $3.8 million of Thermo Fibergen common
    stock and $16.3 million of Company common stock during the first nine
    months of 1997.

        The Company's Board of Directors has authorized the repurchase,
    through March 19, 1998, of up to $5 million of Thermo Fibergen's common
    stock in open market or negotiated transactions. Any such purchases would
    be funded from working capital. Through September 27, 1997, the Company
    had expended $3.8 million under this authorization.
                                       14PAGE

                              THERMO FIBERTEK INC.

    Liquidity and Capital Resources (continued)

        The Company's Board of Directors has authorized the repurchase,
    through July 18, 1998, of up to $20 million of Company common stock in
    open market or negotiated transactions. Any such purchases would be
    funded from working capital. Through September 27, 1997, the Company had
    expended $16.3 million under this authorization.

        At September 27, 1997, the Company had $54.8 million of undistributed
    foreign earnings. The Company does not intend to repatriate undistributed
    foreign earnings into the U.S., and does not expect that this will have a
    material adverse effect on the Company's current liquidity.

        In the remainder of 1997, the Company plans to make expenditures for
    property, plant, and equipment of approximately $1.5 million. In
    addition, Thermo Fibergen may make additional capital expenditures for
    the construction of one or more fiber-recovery plants. Construction of
    fiber-recovery plants is dependent upon Thermo Fibergen entering into
    long-term contracts with paper mills, under which Thermo Fibergen will
    charge fees to accept the mills' papermaking sludge. Thermo Fibergen does
    not currently have such agreements in place nor is there any assurance
    that Thermo Fibergen will be able to obtain such contracts. The Company
    believes that its existing resources are sufficient to meet the capital
    requirements of its existing operations for the foreseeable future.


    PART II - OTHER INFORMATION
    Item 2 - Changes in Securities and Use of Proceeds

    (c) Recent Sales of Unregistered Securities

        On July 10, 1997, the Company entered into an agreement to sell at
    par $150 million principal amount of 4 1/2% convertible subordinated
    debentures due 2004 (the Debentures).

        Debentures having an aggregate principal amount of $153 million
    (including $3 million principal amount to cover over-allotments) were
    sold on July 16, 1997 to the underwriters of the offering in reliance on
    Section 4(2) of the Securities Act of 1933, as amended (the Securities
    Act). Debentures having an aggregate principal amount of $116.9 million
    were then resold by the underwriters to qualified institutional buyers in
    reliance on the exemption from registration provided by Rule 144A under
    the Securities Act. (The balance of the Debentures were resold and
    delivered by the underwriters to non-United States persons outside of the
    United States, its territories and possessions in reliance on the
    exemption from registration provided by Regulation S under the Securities
    Act.)

        The managers of the offering were Lehman Brothers International
    (Europe), Salomon Brothers Inc., and Smith Barney Inc. The total
    underwriting discounts and commissions applicable to the 144A Debentures
    were approximately $2.3 million, or 2.0% of the principal amount thereof.

        The Debentures are convertible into shares of the Company's common
    stock at a price of $12.10 per share.

                                       15PAGE

                              THERMO FIBERTEK INC.

    Item 6 - Exhibits and Reports on Form 8-K

    (a) Exhibits

        See Exhibit Index on the page immediately preceding exhibits.

    (b) Reports on Form 8-K

        On July 16, 1997, the Company filed a Current Report on Form 8-K,
    with respect to the sale of $153 million principal amount of 4 1/2%
    convertible subordinated debentures due 2004.

        On August 5, 1997, the Company filed an amendment on Form 8-K/A,
    pertaining to the acquisition by the Company of the Stock-preparation
    Business of the Black Clawson Company and its affiliates, the purpose of
    which was to file the financial information required by Form 8-K
    concerning this acquisition.


















                                       16PAGE

                              THERMO FIBERTEK INC.

                                   SIGNATURES


        Pursuant to the requirements of the Securities Exchange Act of 1934,
    the Registrant has duly caused this report to be signed on its behalf by
    the undersigned thereunto duly authorized as of the 30th day of October
    1997.

                                             THERMO FIBERTEK INC.



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



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












                                       17PAGE

                              THERMO FIBERTEK INC.

                                  EXHIBIT INDEX


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

       11        Statement re: Computation of Earnings per Share.

       27        Financial Data Schedule.













                                                                      Exhibit 11
                              THERMO FIBERTEK INC.

                        Computation of Earnings per Share


                               Three Months Ended         Nine Months Ended
                            ------------------------  -------------------------
                             Sept. 27,    Sept. 28,    Sept. 27,     Sept. 28,
                                  1997         1996         1997          1996
- ------------------------------------------------------------------------------
 Computation of Fully
   Diluted Earnings
   per Share:

 Income:
   Net income              $ 3,594,000  $ 4,213,000  $10,813,000   $14,295,000

   Add: Convertible debt
        interest, net
        of tax                  30,000       79,000      188,000       237,000
                           -----------  -----------  -----------   -----------
   Income applicable to
     common stock assuming
     full dilution (a)     $ 3,624,000  $ 4,292,000  $11,001,000   $14,532,000
                           -----------  -----------  -----------   -----------
 Shares:
   Weighted average shares
     outstanding            61,503,678   61,088,657   61,296,040    61,015,230

   Add: Shares issuable
        from assumed
        conversion of
        subordinated
        convertible
        obligation             726,192    1,888,113    1,500,806     1,888,113

        Shares issuable
        from assumed
        exercise of
        options (as
        determined by
        the application
        of the treasury
        stock method)        1,136,837    1,404,451    1,136,837     1,494,662
                           -----------  -----------  -----------   -----------
   Weighted average
     shares outstanding,
     as adjusted (b)        63,366,707   64,381,221   63,933,683    64,398,005
                           -----------  -----------  -----------   -----------
 Fully Diluted Earnings
   per Share (a) / (b)     $       .06  $       .07  $       .17   $       .23
                           ===========  ===========  ===========   ===========

 

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO FIBERTEK INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 27, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS JAN-03-1998 SEP-27-1997 109,646 29,492 51,539 2,345 30,998 235,424 58,848 31,196 410,380 67,600 153,000 0 0 633 133,502 410,380 166,784 166,784 100,522 100,522 4,652 147 2,961 19,078 7,425 10,813 0 0 0 10,813 .18 .17