FORM 10-Q


                SECURITIES AND EXCHANGE COMMISSION

                      WASHINGTON, DC  20549


            Quarterly Report under Section 13 or 15(d)

             of the Securities Exchange Act of 1934


For Quarter Ended September 30, 1996      Commission File Number 2-36877  


                         IREX CORPORATION


Pennsylvania                                         23-1712949     
   

120 North Lime Street, Lancaster                     17603         

Registrant's Telephone Number, Including Area Code, (717) 397-3633




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       


          Common Shares Outstanding (Single Class) 389,195












                IREX CORPORATION AND SUBSIDIARIES




PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements.

The condensed financial statements included herein have been
prepared by Irex Corporation (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission.  Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations.

The financial information presented herein reflects all adjustments
(consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the
results for the interim periods presented.  Certain prior period
amounts have been reclassified to conform with the current
presentation.  The results for interim periods are not necessarily
indicative of the results to be expected for the full year.


                IREX CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF INCOME
                          (Unaudited)
                
                                                   Nine Months
                              Third Quarter     Ended September 30  

                             1996      1995      1996       1995   
             (Dollars in Thousands Except Per Common Share Amounts) 

Contracting Revenues       $ 31,950  $ 31,546   $ 99,082  $ 98,661

Distribution and 
  Other Revenues             34,886    28,552     97,357    80,723

     Total Revenues          66,836    60,098    196,439   179,384

Cost of Revenues             52,241    47,513    153,181   140,807

     Gross Profit            14,595    12,585     43,258    38,577

Selling, General and 
  Administrative Expenses    12,703    12,301     39,371    37,575

     Operating Income         1,892       284      3,887     1,202

Interest Expense, Net           439       436      1,299     1,355
     Income (Loss)
      Before Income Taxes     1,453      (152)     2,588      (153)

Income Tax Provision 
  (Benefit)                     601       (64)     1,132       (79)

Income Before Cumulative 
  Effect of 
  Accounting Change             852       (88)     1,456       (74)

Cumulative Effect of 
  Accounting Change,
  Net of Income Taxes           -          -          -      1,377

Net Income                 $   852   $    (88)  $  1,456  $  1,303


  Less:  
   Dividend Requirements
    for Preferred Stock       (245)      (245)      (735)     (735)

NET INCOME (LOSS) APPLICABLE
  TO COMMON STOCK          $   607   $   (333)  $    721  $    568

Average Common Shares 
  Outstanding              390,517    396,400    392,241   397,645

Per Common Share Amounts

Income (Loss) Before 
  Cumulative Effect of 
  Accounting Change        $  1.55   $  (0.84)  $   1.84   $ (2.03)

Cumulative Effect of 
  Accounting Change             -          -          -       3.46

Net Income (Loss)          $  1.55   $  (0.84)  $   1.84   $  1.43




                  IREX CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS    
                           (Unaudited)

                              September 30         December 31 
                                 1996                 1995       
                                       (In Thousands)
ASSETS
Cash and Cash Equivalents     $    886               $    411
Receivables, Net                53,107                 51,639
Inventories                     13,896                 12,367
Deferred Income Taxes            8,298                  8,298
Prepaid Income Taxes               695                    303
Other Prepaid Expenses             824                    624
Actual Cost and Estimated 
  Earnings on Contracts in 
  Process in Excess of 
  Billings                       4,320                  4,675

    Total Current Assets        82,026                 78,317

Property and Equipment, Net      3,155                  3,199
Other Assets                        72                    119

  TOTAL ASSETS              $   85,253             $   81,635


LIABILITIES AND 
  SHAREHOLDERS' INVESTMENT
Notes Payable               $    7,582             $    8,756
Current Portion of 
  Long-Term Debt                 3,257                  3,257
Accounts Payable                10,474                  8,164 
Billings in Excess of 
  Actual Cost and 
  Estimated Earnings on 
  Contracts in Process           4,480                  2,546
Accrued Workers' 
  Compensation Insurance         9,926                 10,260
Accrued Liabilities             18,348                 15,535

    Total Current 
     Liabilities                54,067                 48,518

Long-Term Debt 
 (Less Current Portion)          9,985                 12,543

Redeemable Preferred Stock      10,496                 10,496

Capital Stock                    1,028                  1,028 
Paid-in Surplus                    458                    465
Retained Earnings               27,939                 27,217
Cumulative Translation 
  Adjustments                     (156)                  (158)
Treasury Stock at Cost         (18,564)               (18,474)

  Total Shareholders' 
    Investment                  10,705                 10,078 

  TOTAL LIABILITIES AND 
  SHAREHOLDERS' INVESTMENT  $   85,253             $   81,635



               IREX CORPORATION AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Unaudited)

                                 Nine Months Ended September 30
                                      1996           1995
                                         (In Thousands)

Cash Flows from Operating Activities

Net Income                         $ 1 ,456         $ 1,303
Non-cash items included 
  in net income
  Cumulative effect of   
    accounting change                   -            (1,377)
  Deferred income tax benefit           -               971
  Depreciation and amortization         650             905
  Provision for bad debts               122             291

Decrease (increase) in current assets
  Receivables                        (1,590)          1,048 
  Inventories                        (1,529)         (1,616)
  Prepaid income taxes and 
    other prepaid expenses             (592)            438
  Actual cost and estimated earnings
    in excess of billings (net)       2,289            (347)

Increase (decrease) in 
    current liabilities
  Accounts payable                    2,311             726
  Other accrued liabilities           2,479          (2,387)

      Net cash (used for) provided
       by operating activities        5,596             (45)


Cash Flows from Investing Activities

  Net additions to 
    property and equipment             (606)           (648)
  Decrease in other assets               47             223

     Net cash used for 
       investing activities            (559)           (425)


Cash Flows from Financing Activities

  Increase (decrease) in 
    notes payable                    (1,174)          1,022
  Payment on debt                    (2,558)           (720)
  Dividend payments                    (735)           (735)
  Reissuance of common stock            (95)            (33)

     Net cash used for 
       financing activities           (4,562)          (466)

Net increase (decrease) in 
  Cash and Cash Equivalents              475           (936)

Cash and Cash Equivalents at 
  Beginning of Period                    411          1,564

Cash and Cash Equivalents at 
  End of Period                    $     886      $     628 



                 IREX CORPORATION AND SUBSIDIARIES
                    September 30, 1996 and 1995

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (Unaudited)

(1)  The consolidated financial statements include the accounts of
Irex Corporation (the "Company") and its subsidiaries, all of which
are wholly owned.  All significant intercompany accounts and
transactions have been eliminated in consolidation.

The Company is primarily engaged in the business of thermal
insulation contracting throughout the United States and Canada. 
Allied activities include the direct sale of insulation and
acoustical materials, the fabrication of insulation materials, and
interior contracting.

(2)  The Company has authorization for 2,000,000 shares of its
common stock with a par value of $1.00 per share.  At September 30,
1996, 1,028,633 shares were issued, 389,195 shares were outstanding
and 639,438 shares were held, at cost, in Treasury stock.

(3)  All highly liquid investments with a maturity of three months
or less at the time of purchase are considered to be cash
equivalents. The Company's income tax and interest payments for the
first nine months of 1996 and 1995 were:

                                         1996          1995    
            Income Taxes             $1,524,000     $1,205,000
            Interest                 $1,065,000     $  984,000

(4)  The Company is self-insured against a portion of its workers'
compensation and other insurance risks.  The process of determining
reserve requirements for losses within its self-insured retention
limits utilizes historical trends, involves an evaluation of claim
frequency, severity and other factors and also includes the effect
of future inflation.

Effective January 1, 1995, the Company changed its method of
measuring the estimated liability for workers' compensation claims. 
The new method employs actuarial assumptions to discount to present
value the estimated future payments for these claims, using a risk-
free interest rate.  The Company believes this method is preferable
because it more accurately reflects the current impact on its
financial condition of the future cash outflows.  The cumulative
effect of this accounting change was $1,377,000 ($2,276,000 less
the related tax effect of $899,000) and was included in net income
for the nine months ended September 30, 1995.  The impact of this
change, exclusive of the cumulative effect, on operating results in
the first nine months of 1996 and 1995 was not significant nor is
it expected to have a significant impact on future results of
operations.

(5)  The Company's principal contracting subsidiary, ACandS, Inc.,
has moved forward in the process, begun in June of the current
year, of transforming its corporate structure from an operation
based on 38 semi-autonomous branch offices to one based on three
highly integrated regions.  The result will be an increased focus
on customer service and construction management in virtually all of
the present markets served by ACandS.  Economies of scale gained
from regionalized and centralized administration will create a more
competitive contracting organization aimed at being responsive and
flexible in meeting customer needs.

The restructuring plan calls for closing or downsizing twenty-one
of the 38 branch offices throughout the United States.  ACandS will
not exit the geographic markets served by these branches, but
instead will realign its approach to serving the customers within
these markets.  Approximately 37 positions, or 20% of the salaried
workforce, will be eliminated as administrative functions are
regionalized and centralized.  It is anticipated that most of the
restructuring activity will be completed by the end of 1996.  The
expense, which was recorded as a charge against income from
continuing operations in the second quarter of 1996, contains the
following components: severance pay, $200,000 and lease termination
costs, $150,000.  It is expected that this charge will sufficiently
cover the remaining restructuring actions.


                 IREX CORPORATION AND SUBSIDIARIES
                   September 30, 1996 and 1995

             Management's Discussion and Analysis of
           Financial Condition and Results of Operations

Results from Operations

The Company's income from operations for the third quarter of 1996
was $1,892,000, which represents significant improvement over the
$284,000 operating income for the third quarter of 1995.  For the
nine months ended September 30, 1996, operating income of
$3,887,000 represents a $2.7 million increase over the $1,202,000
reported during the first nine months of 1995.  The 1996 third
quarter results continued the momentum begun with a strong second
quarter, and have led to the Company's highest year-to-date income
from operations in the past five years.

After the preferred stock dividend requirements, net income
applicable to common stockholders was $607,000, or $1.55 per share,
for the third quarter of 1996.  The comparable period of 1995
showed a net loss of $(333,000), or $(.84) per share.  For the
nine-month period ended September 30, 1996, net income was
$721,000, or $1.84 per common share.  For the comparable nine
months of 1995, the Company reported a loss of $(809,000), or
$(2.03) per share, before the recognition of an accounting change
(as previously discussed in Note 4).  The cumulative effect of the
accounting change was $1,377,000, net of income taxes, which
resulted in net income for the September 1995 year-to-date period
of $568,000, or $1.43 per common share.

The following table presents for the periods indicated certain
items in the Company's consolidated statements of income as a
percentage of total revenue:

                           Three Months           Nine Months
                         Ended September 30    Ended September 30
                          1996        1995      1996       1995  

Contracting Revenues      47.8%       52.5%     50.4%      55.0% 
Distribution and 
  Other Revenues          52.2%       47.5%     49.6%      45.0%
Total Revenues           100.0%      100.0%    100.0%     100.0%

Gross Profit Margin       21.8%       20.9%     22.0%      21.5%
Income from Operations     2.8%        0.5%      2.0%       0.7%  
Income Before Cumulative
  Effect of Accounting 
  Change                   1.3%       (0.1)%     0.7%       0.0%

Revenues

Contracting revenues are up 1.3% from the third quarter of 1995,
while year-to-date contracting revenues of $99,082,000 have not
substantially changed as compared to $98,661,000 for the same
period last year.  The transition accompanying the restructuring of
the Company's principal contracting subsidiary (as previously
discussed in Note 5) had a somewhat negative impact on revenues for
this year's third quarter.

Continued geographical expansion and market-share penetration of
the distribution business has led to the Company's growth in
overall revenues.  As noted in the table above, distribution
activity accounts for 49.6% of total revenues for the nine months
ended September 30, 1996, versus 45.0% for the comparable period
last year.  For the quarter ended September 30, distribution
revenues were $34,886,000, representing an increase of 22.2% from
the $28,552,000 reported for the third quarter of 1995.  For the
nine-month period ended September 30, 1996, distribution revenues
totaled $97,357,000, and this record level is 20.6% over 1995 year-
to-date revenues of $80,723,000.  Export activity and new branch
locations accounted for approximately $7.5 million and $1.5
million, respectively, of the increase in distribution revenues for
the comparable year-to-date periods.

Gross Profit

For the quarter ended September 30, 1996, gross profit was
$14,595,000, an increase of $2,010,000 over the $12,585,000
reported for the third quarter of 1995.  Gross profit margins were
21.8% and 20.9% for the respective periods.  The increase is
attributable to improved margins in the contracting business, where
lower workers' compensation costs and continued emphasis on
execution have contributed to this gain.  For the nine months ended
September 30, 1996, the gross profit margin was 22.0%, a slight
increase over the 21.5% for the comparable period last year.  Year-
to-date gross profit of $43,258,000 is 12.1% ahead of the
$38,577,000 reported in the prior-year period.  The growth is due
mainly to substantial growth of the distribution business in terms
of volume.

Selling, General, and Administrative Expenses

Operating expenses totaled $12,703,000, or 19.0% of revenues, for
the quarter ended September 30, 1996.  This compares favorably to
prior-year expenses of $12,301,000, or 20.5%, for the similar
period.  For the nine months ended September 30, operating expenses
were $39,371,000 in 1996 and $37,575,000 in 1995.  This represents
a $1.8 million increase in 1996 year-to-date expenses versus last
year's comparable period, of which $1.2 million is directly
attributable to higher personnel and property costs from expansion
of the distribution business.

Financial Condition and Liquidity

At September 30, 1996, the Company has working capital of $28.0
million and stockholders' equity (excluding preferred stock) of
$10.7 million.  Working capital at December 31, 1995, was $29.8
million and stockholders' equity was $10.1 million.  The increase
in both accounts receivable and accounts payable over prior year-
end results is again indicative of the volume growth in the
distribution business.

Total debt outstanding at September 30, 1996, was $20.8 million
compared to $24.6 million at December 31, 1995, as the Company has
begun to pay down long-term debt obligations according to schedule. 
Long-term debt, excluding current portion, is $10.0 million at
September 30, 1996.  Available short-term lines of credit as of
September 30, 1996, were $23.1 million and remain adequate to
provide sufficient liquidity for operations.  Outstanding balances
under these unsecured lined of credit at September 30, 1996, were
$7.6 million, a decrease of $1.2 million from December 31, 1995.

                   PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

The Company's principal subsidiary, ACandS, Inc., is one of a
number of defendants in pending lawsuits filed by approximately
102,000 individual claimants seeking damages for injuries allegedly
caused by exposure to asbestos fibers in insulation products used
at one time by ACandS in its business.  ACandS has defenses to
these actions, including defenses based on the fact it is primarily
a contracting company in the business of installing products
manufactured by others.  During the first three quarters of 1996,
ACandS was served with cases involving approximately 28,213 indi-
vidual plaintiffs.  There were 44,904 new plaintiffs in 1995,
18,122 new plaintiffs in 1994; 20,542 new plaintiffs in 1993;
13,875 new plaintiffs in 1992; and 10,090 new plaintiffs in 1991. 
Of the 1993 filings, over 4,000 were dismissed against ACandS
shortly after filing.  

The large number of filings in 1995 and the first half of 1996
includes 29,263 in Texas, 9,734 from the Maritime Legal Clinic and
10,446 in West Virginia.  The Texas filings are predominantly on
behalf of out-of-state claimants.  A substantial majority of the
Maritime Legal Clinic filings have already been administratively
dismissed.  ACandS has been of the view that this increase in
filings is temporary, the result of factors such as efforts to get
claims on record before proposed tort reform in Texas, or to
participate in a pending consolidated trial in West Virginia. 
However, some recent events suggest that the increase may be
attributable to expanded screening efforts.

It is the pattern in this litigation for suits to be filed as the
result of mass screenings of individuals employed at a particular
facility, through a particular union local, or by a particular
employer.  It is ACandS's experience that such suits are often
filed with little investigation as to whether the claimant ever had
any causative exposure to asbestos-containing products associated
with the various named defendants.  Because of this pattern,
historically, about half of the cases filed against ACandS have
been closed without payment.  As the scope of the mass screening
programs has increased, the degree of illness of the claimants has
appeared to diminish.

The defense of the cases pending against ACandS is now being
handled by the Travelers/Aetna Property Casualty Corp. with the
participation of other insurers that wrote coverage for ACandS. 
Virtually all of ACandS's liability and defense costs for these
cases are being paid by ACandS's insurance carriers.

Since the beginning of 1981, approximately 117,000 individual
claims against ACandS have been settled, dismissed or otherwise
resolved.  Although payments in individual cases have varied
considerably, ACandS's percentage of the aggregate liability
payments for those cases has been small.  As a result, ACandS's
average resolution cost for closed cases is very low.  The
resolution cost per closed case in recent years has been consistent
with long-term averages.  Bankruptcy filings by a number of
companies which had been significant defendants in asbestos cases
have not significantly increased the cost of resolving cases. 
Historically, payments on behalf of ACandS to resolve consolidated
proceedings in jurisdictions which have been difficult for all
defendants have exceeded average costs.  ACandS anticipates that it
will continue to face such proceedings in the future.

On July 29, 1991, the Judicial Panel on Multidistrict Litigation
ordered that all asbestos-related bodily injury cases pending in
the Federal trial courts and not then in trial should be trans-
ferred to Judge Charles R. Weiner in the United States District
Court for the Eastern District of Pennsylvania for coordinated or
consolidated pretrial proceedings.  These proceedings involved less
than one-fourth of the cases then pending against ACandS.  

Subsequently, on January 15, 1993, certain plaintiffs' counsel and
the members of the Center for Claims Resolution (an organization of
20 asbestos litigation defendants) filed a class action complaint,
answer and settlement agreement involving all previously unasserted
claims by individuals who have been occupationally exposed to
asbestos fibers, which was assigned to Judge Weiner as related to
the Multidistrict Litigation proceedings. The District Court
approved the settlement, but the U.S. Court of Appeals in an order
dated May 10, 1996, vacated the District Court's order and directed
decertification of the class.  The U.S. Supreme Court recently
agreed to hear the Center for Claims Resolution case.  On July
25,1996, the U.S. Court of Appeals for the Fifth Circuit approved a
class settlement of future asbestos cases against Fiberboard
Corporation.  A Supreme Court petition is also expected in this
case.  It is uncertain what impact these decisions will have on the
asbestos-related bodily injury litigation. 

Although the large number of pending cases, the continued efforts
of certain courts to clear dockets through consolidated or class
proceedings, the bankruptcy filings by defendants, efforts toward
national solutions, the transfer of federal cases to the United
States District Court for the Eastern District of Pennsylvania, and
the Center for Claims Resolution and Fiberboard class actions
render prediction uncertain, ACandS expects that its percentage of
liability payments will continue to be relatively small.

ACandS has secured the commitment through final settlement
agreements of a large percentage of the very substantial insurance
coverage applicable to its asbestos-related bodily injury claims. 
ACandS believes it will secure significant additional coverage, if
needed, from those insurers which have not to date settled with
ACandS.

Given the number of currently pending cases and the rate of new
filings, it is anticipated that the aggregate amount to be paid by
all defendants  for asbestos-related bodily injury claims will be
very large.  Nevertheless, as noted, ACandS's percentage of
aggregate liability payments is expected to remain small. 
Management, therefore, believes that ACandS's insurance coverage is
adequate to ensure that these actions will not have a material
adverse effect on the long-term business or financial position of
the Company.  

ACandS is also one of a number of defendants in six actions by the
owners of schools and other buildings seeking to recover costs
associated with the replacement or treatment of installed asbestos-
containing products.  These cases involve school buildings, public
buildings, and office buildings.  One of the cases is an alleged
class action.

ACandS has substantial defenses to the actions, including defenses
based upon the character of its operations and the fact that ACandS
did not manufacture the asbestos-containing products involved. 
Moreover, ACandS potentially has indemnification and/or contri-
bution claims against the product manufacturers.  To date, ACandS
has been dismissed from 102 cases, largely on the basis it had no
connection with the products at issue in the claimants' buildings,
and has agreed to settle 15 claims.  The aggregate amount paid has
been very small in the context of this litigation.  ACandS was not
served with any new building-related cases in 1995 and the first
half of 1996.  Since 1990, only three new building related cases
have been served on ACandS.

The Travelers/Aetna Property Casualty Corp is currently providing
ACandS with a defense in these building cases, as well as paying
settlements when necessary.  Coverage based on policies of the
Travelers Insurance Companies is furnished pursuant to a settlement
agreement, but coverage based on Aetna Casualty and Surety Co.
policies is subject to asserted reservations of rights to later
contest both the availability and the amount of coverage.  Required
payments, nevertheless, continue to be made on the Aetna policies.  

Decisions in litigation involving insurance coverage available for
other defendants in asbestos building cases have thus far varied
widely.  The appellate rulings which have fully considered coverage
issues for asbestos building claims to date provide significant
coverage for policyholders.  The decisions are consistent with
ACandS's view that the trend in the courts is to provide broad
coverage for asbestos building cases.

Although the availability of coverage for existing and future suits
is not resolved, and the aggregate potential loss from these suits
may be significant, management believes that ACandS's defenses,
potential indemnification and/or contribution rights and insurance
coverage are adequate to ensure that these actions will not have a
material adverse effect on the long-term business or financial
position of the Company.

From time to time, the Company and its subsidiaries are also
parties as both plaintiff and defendant to various claims and
litigation arising in  the normal course of business, including
claims concerning work performed under various contracts.  In the
opinion of management, the outcome of such claims and litigation
will not materially affect the Company's long-term business,
financial position or results of operations.


                                   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.

                                           IREX CORPORATION



Date         November 13, 1996             (J. E. Pinkerton)
                                            J. E. Pinkerton
                                 Vice President, Finance and Administration

                                           Duly Authorized Signer