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                               UNITED STATES 
                      SECURITIES AND EXCHANGE COMMISSION 
                           WASHINGTON, D.C.  20549
                              _______________ 

                                 FORM 10-Q    

              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                       FOR THE QUARTERLY PERIOD ENDED
                             SEPTEMBER 30, 1996

                              _______________ 

                             UTILX CORPORATION
                       COMMISSION FILE NUMBER 0-16821


             DELAWARE                                     91-1171716          
      (State of Incorporation)                         (I.R.S. Employer       
                                                     Identification Number)   

     22404 - 66TH AVENUE SOUTH
         P. O. BOX 97009
    KENT, WASHINGTON  98064-9709                        (206) 395-0200        
(Address of Principal Executive Offices)       (Registrant's Telephone Number)


Indicate by checkmark whether the Registrant has (1) 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) been subject to such filing requirements for the
past 90 days.  Yes  X   No      
                  -----   ----- 

As of September 30, 1996, 7,188,409 shares of Common Stock were outstanding.



             The total number of pages in this Form 10-Q is 14.

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                               TABLE OF CONTENTS


  ITEM                                                                   PAGE 
  ----                                                                   ---- 
                                    PART I

   1.  Financial Statements

       Consolidated Balance Sheet
       September 30, 1996 and March 31, 1996............................    3 

       Consolidated Statement of Operations
       For the Three Months Ended
       September 30, 1996 and 1995......................................    4 

       Consolidated Statement of Operations
       For the Six Months Ended
       September 30, 1996 and 1995......................................    5 

       Consolidated Statement of Cash Flows
       For the Six Months Ended
       September 30, 1996 and 1995......................................    6 

       Notes to Consolidated Financial Statements.......................    7 

    2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations...........................    9 

                                   PART II

    1. Legal Proceedings................................................   13 

    2. Changes in Securities............................................   13 

    3. Defaults Upon Senior Securities..................................   13 

    4. Submission of Matters to a Vote of Security Holders..............   13 

    5. Other............................................................   13 

    6. Exhibits.........................................................   13 


Signatures..............................................................   14 

                                    -2- 
<PAGE>

PART I - FINANCIAL INFORMATION
     ITEM 1.  FINANCIAL STATEMENTS

                              UTILX CORPORATION

                         CONSOLIDATED BALANCE SHEET   
                      SEPTEMBER 30 AND MARCH 31, 1996 
                        (IN THOUSANDS, EXCEPT SHARES) 
                                (UNAUDITED)

                                  ASSETS

                                           SEPTEMBER 30     MARCH 31 
                                           ------------     -------- 
Current assets:
  Cash and cash equivalents...............    $ 1,129       $   495 
  Accounts receivable, trade, net.........     13,658        10,659 
  Materials, supplies and inventories.....      6,046         8,128 
  Income taxes receivable.................                    1,019 
  Prepaid expenses and other .............        399           216 
                                              -------       ------- 
     Total current assets.................     21,232        20,517 

Equipment and improvements, net...........      9,503         9,113 
Other assets, net.........................        844           994 
                                              -------       ------- 
     Total assets.........................    $31,579       $30,624 
                                              -------       ------- 
                                              -------       ------- 
                LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:
  Note payable to bank ...................    $   750       $ 2,500 
  Accounts payable .......................      1,769         1,912 
  Accrued liabilities.....................      4,323         2,756 
                                              -------       ------- 
     Total current liabilities ...........      6,842         7,168 
                                              -------       ------- 

Commitments and Contingencies
Stockholders' equity:
  Common Stock, $0.01 par value
     (authorized 25,000,000 shares).......         72            72 
  Common Stock Warrants...................        936           936 
  Additional paid-in capital .............     17,399        17,399 
  Retained earnings.......................      7,109         5,940 
  Unearned compensation...................        (51)          (76)
  Cumulative foreign currency translation 
   adjustment.............................       (728)         (815)
                                              -------       ------- 
     Total stockholders' equity...........     24,737        23,456 
                                              -------       ------- 
       Total liabilities and 
        stockholders' equity..............    $31,579       $30,624 
                                              -------       ------- 
                                              -------       ------- 

  Common Stock issued and outstanding.....  7,188,409     7,184,116 


             (See Notes to Consolidated Financial Statements)

                                     -3- 
<PAGE>
                                       
                              UTILX CORPORATION

                     CONSOLIDATED STATEMENT OF OPERATIONS
            FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                 (UNAUDITED)

                                                    1996         1995   
                                                   -------      ------- 
Revenues....................................       $15,549      $11,119 

Cost of revenues............................        13,029        9,866 
                                                   -------      ------- 

  Gross profit...............................        2,520        1,253 
                                                   -------      ------- 

Operating expenses:
  Selling, general and administrative........        1,845        1,846 
  Research and engineering...................          178          161 
                                                   -------      ------- 

     Total operating expenses................        2,023        2,007 
                                                   -------      ------- 

Operating income (loss).....................           497         (754)

Other income (expense), net.................            25           64 
                                                   -------      ------- 

Income (loss) before income taxes............          522         (690)
Income tax provision (benefit)...............            6         (197)
                                                   -------      ------- 

Net income (loss)............................      $   516      $  (493)
                                                   -------      ------- 
                                                   -------      ------- 

Earnings (loss) per share (Note 2):
  Primary....................................      $   .07      $  (.07)
  Fully diluted.............................       $   .07      $  (.07)

Weighted average number of shares (Note 2):
  Primary....................................        7,330        7,185 
  Fully diluted.............................         7,345        7,185 










                (See Notes to Consolidated Financial Statements)

                                      -4- 
<PAGE>

                              UTILX CORPORATION

                     CONSOLIDATED STATEMENT OF OPERATIONS
             FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                 (UNAUDITED)

                                                    1996         1995   
                                                   -------      ------- 
Revenues.....................................      $30,673      $22,873 

Cost of revenues.............................       25,273       20,107 
                                                   -------      ------- 

  Gross profit...............................        5,400        2,766 
                                                   -------      ------- 

Operating expenses:
  Selling, general and administrative........        3,832        3,903 
  Research and engineering...................          371          321 
                                                   -------      ------- 
     Total operating expenses................        4,203        4,224 
                                                   -------      ------- 

Operating income (loss)......................        1,197       (1,458)
Other income (expense), net..................          (16)         132 
                                                   -------      ------- 

Income (loss) before income taxes............        1,181       (1,326)
Income tax provision (benefit)...............           12         (373)
                                                   -------      ------- 

Net income (loss)............................      $ 1,169      $  (953)
                                                   -------      ------- 
                                                   -------      ------- 

Earnings (loss) per share (Note 2):
  Primary....................................      $   .16      $  (.13)
  Fully diluted..............................      $   .16      $  (.13)

Weighted average number of shares (Note 2):
  Primary....................................        7,264        7,185 
  Fully diluted.............................         7,271        7,185 
















                                      -5- 
<PAGE>
                                      
                             UTILX CORPORATION

                   CONSOLIDATED STATEMENT OF CASH FLOWS
          FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                              (IN THOUSANDS)
                               (UNAUDITED)

                                                       1996         1995   
                                                      -------      ------- 
OPERATING ACTIVITIES:
  Net income (loss)..............................     $ 1,169      $  (953)
  Adjustments to reconcile to net cash provided 
   by (used by) operating activities:
    Depreciation and amortization ...............       1,822        1,794 
    Other non-cash (income) expenses, net........          31          (61)
    Changes in assets and liabilities ...........       1,416       (1,168)
                                                      -------      ------- 
    Total adjustments ...........................       3,269         (565)
                                                      -------      ------- 
      Net cash provided by (used by) 
       operating activities......................       4,438         (388)
                                                      -------      ------- 

INVESTING ACTIVITIES:
  Cost of additions to equipment ................      (2,071)        (629)
  Proceeds from sale of equipment................           5           31 
                                                      -------      ------- 
      Net cash used by investing activities......      (2,066)        (598)
                                                      -------      ------- 

FINANCING ACTIVITIES:
  Net borrowings (repayments) on note payable....      (1,750)         900 
  Issuance of Common Stock ......................           1            1 
  Purchase of Common Stock ......................          (1)          (2)
                                                      -------      ------- 
       Net cash provided by (used by) financing 
        activities...............................      (1,750)         899 
                                                      -------      ------- 

CUMULATIVE TRANSLATION ADJUSTMENT OF FOREIGN 
 CURRENCY TRANSACTIONS...........................          12          (17)
                                                      -------      ------- 
  Net increase (decrease) in cash and 
   cash equivalents..............................         634         (104)
                                                      -------      ------- 

CASH AND CASH EQUIVALENTS:
  Beginning of period............................         495          840 
                                                      -------      ------- 
  End of period..................................     $ 1,129      $   736 
                                                      -------      ------- 
                                                      -------      ------- 












             (See Notes to Consolidated Financial Statements)

                                   -6- 
<PAGE>

                           UTILX CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               (UNAUDITED)

1.   FINANCIAL STATEMENT PRESENTATION

In the opinion of management of the Company, the accompanying unaudited 
consolidated financial statements contain all adjustments (consisting of only 
normal recurring accruals) necessary to present fairly the financial position 
and operating results for the three-month and six-month periods ended 
September 30, 1996 and 1995.  The statements should be read in conjunction 
with the March 31, 1996 audited consolidated financial statements included in 
the fiscal 1996 Annual Report on Form 10-K.

2.   EARNINGS PER SHARE

Primary earnings per share is computed by dividing net income (loss) by the 
weighted average number of shares of Common Stock of UTILX Corporation, $0.01 
par value per share (the "Common Stock"), and common stock equivalents 
outstanding during the period.  Common stock equivalents, when dilutive, 
include shares issuable upon exercise of the Company's stock options and 
certain warrants.  Fully diluted earnings per share is computed based on the 
weighted average number of shares of Common Stock and common stock 
equivalents outstanding during the period taking into consideration maximum 
potential dilution.

3.   MATERIALS, SUPPLIES AND INVENTORIES

Materials, supplies and inventories at September 30, 1996 and March 31, 1996 
consists of the following:


                                           SEPTEMBER 30, 1996   MARCH 31, 1996 
                                           ------------------   -------------- 
                                                       (IN THOUSANDS)

    Materials and Supplies                        $4,944            $5,233 
    Work in Process                                  381             1,077 
    Finished Goods                                 1,487             2,753 
    Less allowance for potentially obsolete 
     or overstocked inventory                       (766)             (935)
                                                  ------            ------ 
                                                  $6,046            $8,128 
                                                  ------            ------ 
                                                  ------            ------ 

4.  NOTE PAYABLE TO BANK

The Company has a committed credit facility of $5,000,000 with Seattle-First 
National Bank of Washington ("Seafirst").  The agreement is collateralized by 
the Company's inventory and accounts receivable.  The credit agreement 
requires that the Company maintain certain financial covenants, including 
requirements to maintain certain levels of tangible net worth, current ratio 
and debt ratio. Borrowings bear interest at the Seafirst prime rate, the 
LIBOR rate plus 1.40%, or other specified rates, at the Company's option.  
The Company pays a commitment fee of up to 0.125% on the unused portion of 
the facility.  This line of credit currently expires on November 30, 1996.  
The Company anticipates that it will be able to negotiate an extension of 
this line of credit.



                                     -7-
<PAGE>

5.  COMMITMENTS AND CONTINGENCIES

INTERNAL REVENUE SERVICE AUDIT.  The Company's Federal income tax returns for 
fiscal 1993, 1994 and 1995 are currently under examination by the Internal 
Revenue Service.  Recently, the Internal Revenue Service Agent has indicated 
that no adjustment is advised to the fiscal 1994 income tax return.  The 
ultimate outcome of the examination cannot be predicted with certainty at 
this time.  It is the opinion of management that the ultimate disposition of 
this matter will not have a material adverse effect on the consolidated 
financial position, results of operations or liquidity of the Company.

OTHER MATTERS.  The Company is involved in matters of litigation, both as 
plaintiff and as defendant, all arising in the ordinary course of business.  
In August 1995, the Company was named a defendant in litigation filed in the 
United States District Court for the Southern District of Texas on behalf of 
a person alleging serious personal injury in June 1994, while performing work 
at a Company work site.  In April 1996, an amended complaint was filed adding 
as plaintiffs certain relatives of the injured person.  The plaintiffs have 
alleged negligence, gross negligence and breach of contract by the Company.  
The complaint requests an unspecified amount of damages in excess of $50,000 
and punitive damages plus interest and costs.  Prior to the April 1996 
amendment, the Company received a settlement offer near the limits of the 
Company's insurance policy.  The Company is defending this matter.  A 
co-defendant has tendered its defense in this litigation to the Company's 
insurer, which has accepted the tender under reservation of rights.  
Management expects that these matters will not have a materially adverse 
effect on the consolidated financial position, results of operation or 
liquidity of the Company.






















                                     -8- 

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

                   RESULTS OF OPERATIONS FOR SECOND QUARTER 
                             OF FISCAL YEAR 1997
                          COMPARED TO SECOND QUARTER
                             OF FISCAL YEAR 1996
                   ---------------------------------------- 
REVENUES:

CONSOLIDATED revenues increased 40% in the second quarter of fiscal 1997, 
compared to the same period in fiscal 1996.  Consolidated revenues increased 
34% in the first six months of fiscal 1997, compared to the same period in 
fiscal 1996.

NORTH AMERICAN OPERATIONS.  Revenues from FlowMole drilling operations in 
North America increased 14% to $9.7 million in the second quarter of fiscal 
1997, compared to $8.5 million in the same period of fiscal 1996.  Revenues 
from CableCure services in North America increased to $3.7 million in the 
second quarter of fiscal 1997, compared to $1.4 million in the same period of 
fiscal 1996.

Revenues from FlowMole drilling operations in North America increased 11% in 
the first six months of fiscal 1996 compared to the same period of fiscal 
1996. Revenues from CableCure services in North America increased $7.2 
million  in the first six months of fiscal 1997 compared to $2.2 million in 
the same period of fiscal 1996.

The increased revenues in FlowMole operations were attributed to increased 
demand for FlowMole services and the Company's ability to maintain a higher 
level of drilling crews than in the prior year to meet the demand.  In fiscal 
1996, under a previously commenced program to consolidate crews and improve 
training in order to improve average crew performance, the Company reduced 
its crew levels during the first and second quarters.  When demand for 
services increased in subsequent quarters, revenue growth was partially 
constrained by the need to add and train new crew members.  The time required 
to add and train new FlowMole crews could also constrain revenue growth if 
demand should exceed capacity in future periods.  In addition, the Company 
has expanded its capacity for non-drilling services such as trenching, which 
has also increased demand.  Continued strong demand for CableCure services, 
primarily under "Test, Treat or Replace" contracts, contributed to the 
increased CableCure revenue levels. Customers choosing Test, Treat or Replace 
contracts also contributed to the increased demand for FlowMole services.

INTERNATIONAL OPERATIONS.  Revenues from international operations increased 
to $2.2 million in the second quarter of fiscal 1997, compared to $1.2 
million in the same period of fiscal 1996.  This increase is connected to an 
increase in equipment sales.  Increased revenues from European CableCure 
operation offset decreases in revenues from drilling operations in the United 
Kingdom and decreases in spare parts sales in Asia.  Revenues from 
international operations increased to $4.3 million for the first six months 
of fiscal 1997 compared to $3.5 million in the same period of fiscal 1996.  
This increase was related to an increase in equipment sales and in revenue 
from European CableCure operations.

Equipment sales revenue was $2.1 million during the first six months of 
fiscal 1997.  As discussed under "Review and Outlook", the Company has sold 
substantially all of its inventory of new equipment.  The Company has not yet 
placed an order with an outside manufacturer for additional equipment to be 
held for sale.  Although the Company expects to place such an order in the 
next few months, due to existing inventory levels and manufacturing lead 
times, the Company expects a substantial reduction in revenue from equipment 
sales in the remainder of fiscal 1997, compared to levels of such revenue in 
the first six months of fiscal 1997.

                                    -9- 
<PAGE>

GROSS PROFIT

Gross profit increased 101% in the second quarter of fiscal 1997, compared to 
the same period in fiscal 1996.  Gross profit increased 95% in the first six 
months of fiscal 1997, compared to the same period of fiscal 1996.

NORTH AMERICAN OPERATIONS.  Gross profit from FlowMole and CableCure 
operations increased dramatically due to the higher combined revenue levels 
generated in fiscal 1997, compared to the same period of fiscal 1996.  Fixed 
costs of North American operations, including equipment depreciation, 
facilities costs and field administrative salaries, were spread over higher 
revenue levels, increasing gross profit as a percentage of revenue.

INTERNATIONAL OPERATIONS.  Gross profit from international operations for the 
second quarter of fiscal 1997 increased due to the increased revenues from 
equipment sales.  Gross profit for the first six months of fiscal 1997 
increased as a result  of increased revenues from equipment sales as well as 
European CableCure operations.  In addition, CableCure operations in Europe 
provide a relatively high gross margin, which has served to improve 
international gross margin as a percent of international revenue.

OPERATING EXPENSES AND OTHER INCOME (EXPENSES)

Total operating expenses increased 1% in the second quarter of fiscal 1997, 
compared to the same period of fiscal 1996.  Total operating expenses 
decreased 1% in the first six months of fiscal 1997 compared to the same 
period of fiscal 1996.  Selling, general and administrative expenses remained 
level in both periods.  Provisions for royalty payments under the Company's 
exclusive CableCure license increased to over $200,000 in each of the first 
two quarters of fiscal 1997.  There were no such provisions in the same 
periods of fiscal 1996.  Decreases in selling, general and administrative 
expenses in other areas, primarily due to reduced headcount resulting from 
the Company's restructuring announced on April 2, 1996, offset the higher 
royalty expense.  Research and engineering expenses increased as the Company 
continued prototype testing of its new Series G Drill.

Other income (expense) net, was income of $25,000 and a net expense of 
$16,000 in the second quarter and first six months of fiscal 1997, 
respectively, compared to income of $64,000 and $132,000 in the same periods 
of fiscal 1996. The Company recorded a gain from its share of the start-up 
operations of a joint venture in each of the first two quarters of fiscal 
1996 compared to none in the same period in fiscal 1997.  This joint venture 
ceased operations in the third quarter of fiscal 1996.

INCOME (LOSS) BEFORE INCOME TAXES

As a result of the foregoing, the Company recorded  pretax income of $522,000 
in the second quarter of fiscal 1997 compared to a pretax loss of $690,000 in 
the same period of fiscal 1996.  The Company recorded  pretax income of $1.2 
million in the first six months of fiscal 1997 compared to a pretax loss of 
$1.3 million in the same period of fiscal 1996.

INCOME TAX EXPENSE (BENEFIT)

The Company would normally expect an effective income tax rate of 
approximately 40% on positive pretax income.  This exceeds the federal 
statutory rate of 34% due to the impact of state income taxes and 
nondeductible expenses.  The Company has continued to provide a 100% 
valuation allowance for net deferred tax assets (originally established in 
the fourth quarter of fiscal 1996).  As a result, due to utilization of net 
operating loss carryforwards and other deferred tax benefits in fiscal 1997, 
the Company has eliminated substantially all of the Company's income tax 
provision in the first and second quarters of fiscal 1997. The Company's 
effective income tax rate in the second quarter of fiscal 1996 was 28%.

                                    -10- 
<PAGE>

NET INCOME (LOSS) 

As a result of the foregoing, the Company recorded net income of $516,000 in 
the second quarter of fiscal 1997 compared to a net loss of $493,000 in the 
same period of fiscal 1996.  The Company recorded net income of $1.2 million 
in the first six months of fiscal 1997 compared to a net loss of $953,000 in 
the same period of fiscal 1996.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1996, the Company had unused sources of liquidity consisting 
of $1.1 million in cash and cash equivalents and an unused balance on its 
committed line of credit of $4,250,000.  This compares to $495,000 in cash 
and cash equivalents and unused balance on its committed line of credit of 
$2,500,000 at March 31, 1996.  Capital expenditures of $2.1 million for 
equipment to expand the Company's capabilities to perform additional 
auxiliary services, such as trenching and fusion of gas pipes, represents the 
primary use of cash during the first six months of fiscal 1997.  The net 
increases in cash during the first and second quarters of fiscal 1997 were 
primarily due to the impact of positive cash flow from operations, including 
the collection of Federal Income Tax refunds from the Company's tax return 
for fiscal 1995.  The Company has anticipated the periodic usage of its line 
of credit throughout fiscal 1997.  The Company anticipates that through cash 
generated by operations and the periodic use of its credit facility, it will 
be able to meet its cash requirements through at least fiscal 1997.  The line 
of credit expires on November 30, 1996.  The Company has initiated 
discussions for renewal of the line, and anticipates that it will be able to 
negotiate a renewal of this line of credit.

REVIEW AND OUTLOOK

The Company is experiencing strong demand for its FlowMole and CableCure 
services in North America, and is recruiting personnel to expand its capacity 
for the next fiscal quarter.  The third quarter of the Company's fiscal year 
has historically generated its peak revenue levels due to the normal 
seasonality of work release from utility customers.  However, the Company's 
revenue levels and the weighted average number of FlowMole systems in 
operation on any given day are also affected by factors which include 
weather, pricing, competition, customer work release practices, soil and 
other work difficulty determinants, and permitting.  The Company may choose 
to increase or decrease its capacity; however, management currently plans to 
add crews or equipment when it has a high degree of confidence exists in the 
Company's ability to keep the added crews busy.  In addition, the Company's 
contracts typically allow for cancellation by the customers on relatively 
short notice.  Therefore, sudden changes in demand may have an immediate 
adverse impact on the Company's revenue levels.  A small number of customers 
generate the majority of the Company's North American CableCure revenues, 
increasing the exposure of the Company to such short term fluctuations in 
revenues.  See also the discussion under "Risk Factors", below. 

The Company has announced the termination of its in-house assembly of new 
FlowMole drilling equipment.  No decision has yet been made as to the vendor 
or vendors who will perform such assembly services for the Company in the 
future. The Company has sold substantially all its inventory of new drilling 
equipment. The nature and timing of the decision regarding future equipment 
purchasing  may have an impact on the continuation of revenue from equipment 
sales in the long term and limited inventory levels will adversely impact 
equipment sales revenues in the near future.  Also, although the Company 
expects to maintain or increase its revenues from spare parts sales to 
international customers, such customers may in fact respond to the Company's 
decision by turning to other suppliers for equipment and spare parts.

     This Form 10-Q contains forward looking statements, in addition to those 
under the caption "Review and Outlook".  Such statements are subject to 
substantial risk.  Actual results may vary materially due to risks and 
uncertainties inherent in the Company's business, including those described 
under "Review and Outlook," those described under "Risk Factors" below, and 
additional descriptions included in Item 7 of the Company's fiscal 1996 Form 
10-K filed with the Securities and Exchange Commission.

                                    -11- 
<PAGE>

RISK FACTORS

  COMPETITION. The Company has experienced a long-term trend of declining 
prices for guided boring services, particularly for smaller diameter utility 
installations, due to competitive pressures and changes in utility bidding 
practices.  This trend has also caused the Company to lower its prices for 
CableCure injection services, which are priced at a discount to replacement 
costs, including replacement via guided boring.  In addition, the Company's 
utility customers are increasing their requests for "turnkey" installation, 
replacement and restoration services, requiring their drilling contractors to 
take responsibility for switching circuits, terminating circuits, and other 
non-incidental tasks.  These tasks require additional equipment and labor, 
and the cost increases can offset any price increase the Company is able to 
negotiate for the expansion of its services.  The trend of falling prices for 
guided boring services is expected to continue into the future, as more 
customers award work based on competitive bidding, more customers require 
their drilling contractors to perform additional tasks as part of the 
drilling contract, and more conventional contractors acquire drilling 
capabilities in order to enter into this segment of the construction 
industry.  This trend will continue to put downward pressure on the market 
price for CableCure services. The Company cannot predict the ultimate 
duration or the magnitude of these decreases.

  SEASONAL FACTORS.  Weather and other seasonal factors may decrease the 
Company's revenues and profits in any given period.  Adverse weather may 
preclude the Company from operating its FlowMole drilling systems or 
providing its CableCure services at certain times of the year.  In addition, 
the Company believes that the regular budgetary cycles of certain of its 
North American utility customers tend to concentrate demand for the Company's 
services during the third quarter of its fiscal year (the fourth quarter of 
the calendar year), although other budgetary factors described below may 
override this trend in any given quarter.  As a result of these factors, 
results of operation in any given fiscal quarter are not necessarily 
indicative of results in any other fiscal quarter.

  UTILITIES' BUDGETARY CONSIDERATIONS.  Budgetary considerations arising from 
unfavorable regulatory determinations on matters such as rate-setting, 
capitalization of services performed by the Company, or siting of power 
production facilities, or from reductions in new housing starts, reductions 
in electric utility revenues due to mild weather, and general economic 
downturns, have affected the ability of some of the Company's utility 
customers to sustain their cable replacement or other maintenance programs 
and, accordingly, adversely impact the Company's revenues and profits.  
Although the Company has broadened its customer base, one customer, Virginia 
Electric and Power Company, continues to generate a significant portion of 
the Company's consolidated revenues, and a small number of customers generate 
more than half of its CableCure revenues.  Because cable replacement, 
restoration and other maintenance programs are, to a substantial extent, 
deferrable and the Company's contracts with its utility customers permit 
termination of orders on relatively short notice, postponement or 
cancellation of such programs by customers can interject substantial 
volatility into the Company's revenues and profits.

      DOW CORNING CORPORATION. In May 1995, Dow Corning Corporation ("Dow 
Corning") filed for protection under Chapter 11 of the United States 
Bankruptcy Code and began to operate as a debtor in possession.  To date, Dow 
Corning has not filed any motion to assume or reject the exclusive license 
agreement with the Company, and the Company is unaware of any orders in the 
bankruptcy court to date which pertain to the exclusive license agreement.  
Management of Dow Corning has repeatedly indicated to the Company that it 
intends to continue conducting the business with the Company, and the Company 
is currently unaware of any facts which would lead it to believe that Dow 
Corning intends to discontinue the relationship.  However, there can be no 
guarantee that the CableCure license agreement will not be amended or 
rejected during the course of the bankruptcy proceeding.

                                    -12- 
<PAGE>

PART II - OTHER INFORMATION

     ITEM 1.  LEGAL PROCEEDINGS

     EMERSON, ET AL. V. UTILX CORPORATION, A. B. CHANCE CO., THE CITY OF 
BRYAN AND PAUWELS TRANSFORMERS, INC.  In August 1995, the Company was named a 
defendant in litigation filed in the United States District Court for the 
Southern District of Texas on behalf of a person alleging serious personal 
injury in June 1994 while performing work at a Company work site.  In April 
1996, an amended complaint was filed adding as additional plaintiffs certain 
relatives of the injured person.  The plaintiffs have alleged negligence, 
gross negligence and breach of contract by the Company.  The complaint 
requests an unspecified amount of damages in excess of $50,000 and punitive 
damages, plus interest and costs.  Prior to the April 1996 amendment, the 
Company received a settlement offer near the limits of the Company's 
insurance policy.  The Company is defending this matter.  The City of Bryan, 
a co-defendant, has tendered its defense in this litigation to the Company's 
insurer, which has accepted the tender under reservation of rights.

     OTHER.  The Company is involved in other litigation matters, both as a 
plaintiff and as a defendant, arising in the ordinary course of its business. 
Management expects that these matters will not have a materially adverse 
effect on the consolidated financial position, results of operations or 
liquidity of the Company.

     ITEM 2.  CHANGES IN SECURITIES

     None.

     ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None. 

     ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On July 25, 1996, the Company held its 1996 Annual Meeting of Stockholders
     at which the stockholders took the following action:  (1)  Stanley J.
     Bright was reelected to the Company's Board of Directors for a three year
     term expiring in 1999 by a vote of 6,452,350 "for" and 66,991 "against",
     and William M. Weisfield was reelected to the Company's Board of Directors
     for a three year term expiring in 1999 by a vote of 6,452,850 "for" and
     66,491 "against", and (2) the appointment of the accounting firm of Coopers
     & Lybrand L.L.P. as the Company's auditors for fiscal year 1997 was
     ratified and approved by a vote of  6,446,625 "for", 58,749 "against" and
     13,967 "abstaining".

     ITEM 5.  OTHER

     None. 

     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  11.1  Statement Regarding Computation of Per Share Earnings.

          27.1  Financial Data Schedule.

                                    -13- 
<PAGE>

                             UTILX CORPORATION

                                 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.

                                       UTILX CORPORATION    
                                         (Registrant)


Date: November 4, 1996                 By:        /s/  Craig E. Davies        
                                          ------------------------------------
                                          Craig E. Davies, President and Chief
                                            Executive Officer



Date: November 4, 1996                 By:     /s/ Larry D. Pihl  
                                          ------------------------------------
                                          Larry D. Pihl, Vice President/Chief 
                                            Financial Officer

























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