UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
      Washington, D.C.  20549
            FORM 10-K

(Mark One)
        
[X]    Annual Report Pursuant to Section 13 or 15(d) of the
       Securities  Exchange Act of 1934 

       For the fiscal year ended May 31, 1996.

or

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

       For the transition period from      to             
       

Commission File No. 0-18716

MATRIX SERVICE COMPANY
(Exact name of registrant as specified in its charter)
Delaware (State  or other jurisdiction of incorporation or organization)
10701 East Ute Street
Tulsa, Oklahoma
(Address of Principal Executive Offices)
73-1352174 (I.R.S. Employer Identification No.)
74116 (Zip Code)
Registrant's telephone number, including area code: (918) 838-8822.

Securities Registered Pursuant to Section 12(b) of the Act:  None

Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, 
par value $0.01 per share (Title of class)

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 by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be 
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.  [  ]

The approximate aggregate market value of the registrant's common stock
(based upon the August 26, 1996 closing sale price of the common stock
as reported by the NASDAQ National Market System) held by non-affiliates
as of August 26, 1996 was approximately $50,655,598.

The number of shares of the registrant's common stock outstanding as of
August 26, 1996 was 9,315,972 shares.

Documents Incorporated by Reference  

Certain sections of the registrant's definitive proxy statement relating 
to the registrant's 1996 annual meeting of stockholders, which definitive
proxy statement will be filed within 120 days of the end of the registrant's
fiscal year, are incorporated by reference into Part III of this Form 10-K.

TABLE OF CONTENTS


Part I


Item 1. Business 


Item 2. Properties 


Item 3. Legal Proceedings


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


Part II


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


Item 6. Selected Financial Data


Item 7. Management's Discussion and Analysis of Financial Condition
        and Results of Operations


Item 8. Financial Statements and Supplementary Data


Item 9. Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosure 


Part III


Item 10. Directors and Executive Officers of the Registrant


Item 11. Executive Compensation


Item 12. Security Ownership of Certain Beneficial Owners and
         Management 


Item  13. Certain Relationships and Related Transactions


Part IV


Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K



PART I


Item 1. Business

Background

Matrix Service Company (the "Company") provides specialized on-site maintenance
and construction services for petroleum  refining and storage facilities and
water storage tanks and systems for the municipal and private industry sector.
Owners of these facilities use the Company's services in an effort to improve
operating efficiencies and to comply with stringent environmental and safety
regulations.  Through its subsidiaries Matrix Service, Inc. ("Matrix"), San Luis
Tank Piping Construction Co., Inc., and an affiliated company West Coast
Industrial Coatings, Inc. (collectively "San Luis"), Heath Engineering, Ltd.,
and an affiliated company ("Heath"), Brown Steel Contractors, Inc. and 
affiliated companies (collectively, "Brown") and Mayflower Vapor Seal 
Corporation ("Mayflower"), the Company is a leading provider of maintenance
and construction services and related products for large aboveground storage
tanks ("ASTs") holding petroleum, petrochemical and other products and piping
systems located at petroleum refineries and bulk storage terminals.  Also, the
Company is a leading provider of field-erected, elevated and ground-level water
tanks for the municipal and private industry sector.  Through its subsidiaries,
Midwest Industrial Contractors, Inc. ("Midwest"), and Colt Construction Company
("Colt"), the Company is a leading provider of maintenance and construction
services for refineries. Midwest and Colt specialize in performing "turn-
arounds", which involve complex, time-sensitive maintenance of the critical
operating units of a refinery.  The Company focuses on fluid catalytic cracking
units and process heaters, but has the ability to work on all units within a
refinery.

The Company was incorporated in Delaware in 1989 to become a holding company for
Matrix, which was incorporated in Oklahoma in 1984, and Petrotank Equipment Inc.
("Petrotank"), which wasincorporated in Oklahoma in 1988.  In October 1990, the
Company acquired through a subsidiary substantially all of the assets and 
operations of Midwest.  In June 1991, the Company acquired San Luis (the "San 
Luis Acquisition").  In December 1992, the Company acquired through a subsidiary
ubstantially all of the assets and operations of Colt.  In June 1993, the 
Company acquired substantially all of the assets and assumed certain 
liabilities of Heath.  In July 1993, the Company entered into a joint venture
(Al Shafai-Midwest Constructors) with a Saudi Arabian company to perform 
mechanical contracting services in the Kingdom of Saudi Arabia.  Al Shafai-
Midwest Constructors is 49%  owned by Midwest International, Inc., a wholly-
owned subsidiary of the Company.  Al Shafai-Midwest Constructors was issued a
commercial license to perform services in Saudi Arabia in June 1993.  In May 
1995, the Company discontinued operations in Saudi Arabia, and is in the process
of liquidating the joint venture.  In April 1994, the Company acquired Brown.
In August 1994 the Company acquired certain assets of Mayflower Vapor Seal 
Corporation. Unless the context otherwise requires, all references herein to the
mpany include Matrix Service Company and its subsidiaries.  The Company's 
principal executive offices are located at 10701 East Ute Street, Tulsa, 
Oklahoma 74116, and its telephone number at such address is (918) 838-8822.

Aboveground Storage Tank Operations

The Company's AST operations include the maintenance, repair, inspection, 
design and construction of ASTs, and the equipping of these tanks with devices 
mandated by current and proposed environmental regulations.  These devices 
include a variety of floating roof and seal assemblies, tank bottoms and 
secondary containment systems, each of which is designed to enable tank owners 
and operators to comply with federal and state air and water quality guidelines 
and regulations regarding leaks and spills of petroleum products from storage
facilities.  The Company manufactures and sells certain of these devices, 
including a line of patented floating roof seals.  These seals, which are 
marketed under the Company's Flex-A-Seal (R) and Flex-A-Span (R) trademarks,
reduce losses of stored petroleum products through evaporation and, 
consequently, reduce air pollution.  In addition, the seals reduce the amount
of rainwater that enters the tanks, reduce the hazards of rim fires thereby 
reducing product contamination, lowering waste-water disposal costs, and 
reduce tank owners overall risk. The Company's secondary containment systems
allow tank owners to detect leaks in the tanks at an early stage, before 
groundwater or surface water contamination has occurred.  In addition, the 
systems help to control leakage until the tank can be repaired.

AST Market and Regulatory Background

The American Petroleum Institute has estimated that there are approximately 
700,000 ASTs in the United States that store crude oil, condensate, lube oils,
distillates, gasolines and various other petroleum products.  These tanks range
in capacity from 26 barrels (42 gal/barrels) to in excess of 1,000,000 barrels.
The Company's principal focus is inspecting, maintaining, repairing, designing
and constructing large ASTs, with capacities ranging from approximately 50 to 
1,000,000 barrels.  The Company believes, based on industry statistics, that
there are over 120,000 of these large tanks currently in use, accounting for
more than 70% of the domestic petroleum product storage capacity.  These ASTs
are employed primarily by the refining and storage segments of the petroleum 
industry.  The petrochemical industry also employs a significant number of 
large ASTs.

Historically, many AST owners limited capital expenditures on ASTs to new 
construction and periodic maintenance on an as-needed basis.  Typically, 
these expenditures decreased during periods of depressed conditions in the
petroleum and petrochemical industries, as AST owners sought to defer 
expenditures not immediately required for continued operations.

In the most recent year, there has been some increased demand for AST services; 
however, during fiscal years 1995, 1994 and part of 1993 there was a decrease 
in the overall demand for AST services, generally related to conditions in the 
petroleum industry.  During the last three years, several factors have shifted
new responsibilities to AST service companies.   First, increased safety and 
health requirements have caused owners of the facilities to rely on outside 
sources who have the safety equipment and training to provide repair and 
maintenance services. Second, increasingly stringent federal and state 
regulations regarding air, soil and water contamination from petroleum 
storage facilities, and the related potential liability associated with 
responsibility for environmental damage, have led AST owners to rely on 
service companies to provide more preventive maintenance and equip their ASTs
with various pollution control devices.  Third, many technical personnel left
the petroleum and petrochemical industries resulting in a loss of in-house AST
management expertise.  Fourth, recent changes in the marketing of gasoline and
changes in the supply of refined petroleum products resulting from the closing
of certain refineries have caused an increase in demand for new tankage to 
provide storage facilities at new locations. 

The principal environmental regulations that affect AST owners generally fall 
within two categories - air pollution regulations and soil and water 
contamination regulations.  See "Business - Other Business Matters - 
Regulation." Regulations adopted by the United States Environmental Protection 
Agency ("EPA") and several states provide incentives to owners and operators 
of ASTs to maintain and inspect their tanks on a regular basis and, in some 
cases, to install double tank bottoms and other secondary containment systems
to prevent contamination of soil and water and allow for early detection of
leaks.  The EPA and numerous states have also adopted regulations generally
requiring facilities that hold petroleum products, petrochemicals and other 
volatile liquids be equipped with roof and seal assemblies that substantially
decrease atmospheric emissions from these liquids.  Because many existing ASTs 
were designed with a floating roof assembly that contained only a single roof
seal, these regulations have required many AST owners to retrofit their tanks
with new roof and seal assemblies.  See "Aboveground Storage Tank Operations
- - - AST Services and Products" and "Other Business Matters - Regulation."

On March 29, 1990, the EPA published the Toxicity Characteristic Leachate 
Procedure (the "TCLP") regulation, which provided new guidelines for identifying
certain wastes as "hazardous" under the Resource Conservation Recovery Act of 
1976 ("RCRA").  The TCLP regulation continues to be amended.  The regulation
generally provides that a waste will be considered hazardous if the leachate
from the TCLP leaching procedure test contains any one of several identified
substances at concentrations higher than prescribed levels.  These  substances
include benzene, a common component of petroleum wastes from refineries.
Benzene was not included in the prior EPA leaching procedure test, which has
been replaced by the TCLP.  The Company believes that regulations pursuant to
the TCLP and RCRA have been, and will continue to be, beneficial to its business
by requiring its customers to construct new storage tanks to replace existing
surface impoundments.  See "Other Business Matters - Regulation."

In January 1991, the American Petroleum Institute ("API") adopted industry 
standards for the maintenance, inspection and repair of existing ASTs.  The API
standards provide the industry for the first time with uniform guidelines for
the maintenance and repair of ASTs.  The Company believes that these standards 
have resulted, and will continue to result, in an increased level of AST 
maintenance and repair on the part of many AST owners. 

AST Services and Products

The Company provides its customers with a comprehensive range of AST services
and products.  The Company specializes in maintenance and repair of ASTs and
retro-fitting existing ASTs with a variety of pollution control devices as 
part of its general maintenance services.  In addition, the Company constructs
new ASTs, provides AST inspection and manufactures tank appurtenances. 

New Construction

The Company designs, fabricates and constructs new ASTs to both petroleum and 
water industry standards and customer specifications. These tanks range in 
capacity from approximately 50 barrels to 1,000,000 barrels. Clients require 
new tanks in conjunction with expansion plans, replacement of old or damaged
tanks, storage for additional product lines to meet environmental requirements,
replacement of surface impoundments and changes in population.

Maintenance and Modification
               
The Company derives a significant portion of its revenues from providing AST
maintenance, repair and modification services.  The principal services in this
area involve the design, construction and installation of floating roof and
seal assemblies, the design and construction of secondary containment system
(double bottoms), and the provision of a variety of services for underground
and aboveground piping systems.  The Company also installs, maintains and 
modifies tank appurtenances, including spiral stairways, platforms, water 
drain-off assemblies, roof drains, gauging systems, fire protection systems,
rolling ladders and structural supports.

Floating Roof and Seal Assemblies.  Many ASTs are equipped with a floating 
roof and seal assembly.  A floating roof consists of a circular piece of welded
steel or thin aluminum that floats on the surface of the stored petroleum 
product.  The floating roof is required by environmental regulations to 
minimize vapor emissions and reduce fire hazard.  A floating roof also 
prevents losses of stored petroleum products.  The seal spans the gap between
the rim of the floating roof and the tank wall.  The seal prevents vapor 
emissions from an AST by creating the tightest possible seal around the 
perimeter of the roof while still allowing movement of the roof and seal 
downward and upward with the level of stored product.  In addition, the 
Company's seal system prevents substantially all rain water from entering
the tank.  The type of seal assembly the Company most commonly installs 
consists of a primary mechanical "shoe" seal and a secondary flexible seal
mounted above the shoe seal.  A mechanical shoe seal is a metal sheet 
connected to the outer rim of a floating roof and held vertically against the
wall of the storage vessel by hangers and springs system.  A flexible coated 
"vapor" fabric spans the space between the metal shoe and the floating roof.
The secondary seal is composed of a flexible tip and an additional vapor 
fabric mounted on a metallic compression plate attached to the  rim of the
floating roof.  The Company's seals are manufactured from a variety of 
materials designed for compatibility with specific petroleum products.  All of
the seals installed by the Company may be installed while the tank is in 
service, which reduces tank owners' maintenance, cleaning and disposal costs.
In addition to a mechanical shoe seal coupled with a secondary flexible seal, 
the Company also installs a variety of other types of seal systems designed to
meet customer specifications.  

Secondary Containment Systems.  The Company constructs a variety of secondary
containment systems under or around ASTs according to its own design or the 
design provided by its customers.  Secondary leak detection systems allow tank
owners to detect leaks in the tanks at an early stage before groundwater 
contamination has occurred.  In addition, the systems help to contain leakage
until the tank can be repaired.
               
The most common type of secondary containment system constructed involves 
installing a liner of high-density polyethylene, reinforced polyurethane or a 
layer of impervious clay under the steel tank bottom.  The space between the 
liner and elevation of the new bottom is then filled with a layer of concrete 
or sand.  A cathodic protection system may be installed between the liner and
the new bottom to help control corrosion. Leak detection ports are installed
between the liner and steel bottom to allow for visual inspection while the 
tank is in service. 

The Company believes that during the 1990's a substantial number of AST owners
have installed, and will continue to install, secondary containment systems. 

Elevated Tanks              

In April 1994, as a result of the Company's efforts to expand its product base,
the Company purchased Brown Steel, which designs, fabricates and erects elevated
tanks for water storage for municipalities and industrial customers.  Brown's 
facilities in Georgia include fabrication equipment and buildings containing
184,350 square feet to support the elevated tank operations.  The equipment 
gives Brown the ability to produce two-dimension roll in steel for the 
fabrication of spherical shaped tanks.  This facility is qualified to perform
services on equipment that requires American Society of Mechanical Engineering
Code Stamps ("ASME Codes").  Demand for these types of tanks is expected to 
increase given the current upturn in housing starts resulting in a 
corresponding increase in the demand for water. 

Manufacturing
               
The Company owns and operates a new "state-of-the-art" fabrication facility 
located on 13 acres at the Tulsa Port of Catoosa.  The Company owns the building
and equipment.  This facility has the capacity to fabricate new tanks, new 
tank components and all maintenance, retrofit and repair parts including 
fixed roofs, floating roofs,  seal assemblies, shell plate and tank appur-
tenances.  The Tulsa Port has transportation service via railroad and 
Mississippi River barge facilities in addition to the interstate highway
system, making it economical to transport heavy loads of raw material and
fabricated steel.  This facility is qualified to perform services on equipment
that requires ASME Codes.  Many state agencies and insurance carriers require
that certain equipment be ASME coded.  Many of the Company's competitors are not
ASME code qualified, forcing them to subcontract portions of a project, giving
the Company an advantage on this type of work.  

The Company leases two manufacturing facilities in California and owns a 
manufacturing facility in Georgia.  See "Business - Aboveground Storage Tank 
Operations - Elevated Tanks" for a description of the facility in Georgia. The 
Company rents the real estate and owns the equipment in the two leased 
facilitiesin California which is used for fabricating new tanks and tank 
components. 

Hydrocarbon Process Operations

The Company provides specialized maintenance and construction services to the
domestic petroleum refining industry and, to a lesser extent, to the gas 
processing and petrochemical industries.  The Company specializes in routine
and supplemental plant maintenance, turnarounds and capital construction 
services, which involve complex, time-sensitive maintenance of the critical 
operating units of a refinery.  The Company concentrates on performing these
services for the more structurally complex components in a refinery. See 
"Hydrocarbon Process Operations - Hydrocarbon Process Components".  

Hydrocarbon Process Market Overview

The domestic petroleum refining industry presently consists of approximately
165 operating refineries.  To ensure the operability, environmental compliance,
efficiency and safety of their plants, refiners must maintain, repair or 
replace process equipment, operating machinery and piping systems on a regular
basis.  Major maintenance and capital projects require the shutdown of an 
operating unit, or in some cases, the entire refinery.  In addition to routine
maintenance, numerous repair and capital improvement projects are undertaken 
during a turnaround.  Depending on the type, utilization rate, and operating 
efficiency of a refinery, turnarounds of a refinery unit typically occur at 
scheduled intervals ranging from six months to four years.  

The U.S. refinery industry has undergone significant changes in the last 15 
years.  From 1981 to 1996, crude oil refining capacity dropped from a peak of
approximately 18.6 million barrels per day in 1981, to approximately 15.4 
million barrels per day by the end of 1995, due primarily to the closure of 
many inefficient refineries.  The closings were the result of increased 
international competition, reduced demand for domestic petroleum products,
which resulted in declining product prices during the first part of this 
period, and the inability of some refineries to cost effectively finance capital
improvements required to produce cleaner burning fuels and meet environmental
regulations.

Since 1993, a combination of increased demand for petroleum products and a 
stabilization in refining capacity has led to a substantial increase in 
refinery utilization.  In addition, a substantial improvement in refining
profitability during the last two years has also provided an incentive for
refiners to maintain high levels of utilization at their facilities.  The high
utilization rates have accelerated the physical deterioration of existing 
refineries, intensifying the need for repair and maintenance services. In 
addition, due to the high cost and environmental opposition associated with
the construction of new  refineries, any increase in current refining 
capacity is likely to involve refurbishing old refineries and expanding 
existing facilities, which will require specialized construction services.
Increased utilization rates and increased refining profitability provide an
incentive for refineries to minimize the duration of maintenance turnarounds.
In addition, increased public awareness of environmental issues, potential
liability for exposure to hazardous working conditions, toxic materials, and
environmental contamination, have resulted in increased stringent regulations
which dictate that refineries clean, inspect and maintain process and storage
facilities more frequently.  Further, refineries have been subject to 
increasing regulatory pressure to upgrade their emission control systems.

These factors have encouraged refineries to increase their reliance on outside
contractors who can perform specialized turnaround services within strict time
constraints.  The Company believes, for example, that substantially all fluid 
catalytic cracking unit turnarounds are currently performed by outside 
contractors.  Additional specialized modifications to many existing refineries
may be required to produce cleaner burning, reformulated gasolines and 
desulphurized diesel fuel based on amendments to the Clean Air Act. See "Other
Business Matters - Regulation."  Management believes that projects related to
pollution control are contributing a significant part of the Company's 
refinery-related revenues.  

Hydrocarbon Process Components

The Company's principal refinery services are related to turnaround projects 
at petroleum refineries.  The size and complexity of a turnaround project 
depends on the type of refinery unit being maintained or modified and the 
nature of any necessary modifications.  The following paragraphs describe the 
major units involved in a typical refinery.  The Company performs turnaround
services with respect to each of the units described below, all of which must
be maintained on a regular basis to ensure safe and efficient refinery 
operations.

Crude Distillation Unit.  In the refining process, hydrocarbon raw materials
(primarily crude oil) are heated to approximately 275 degrees F. The crude is
then treated to remove salt and then heated further, resulting in partial vapor-
ization.  The vapors are then routed to a crude distillation unit, where they
are further heated.  The hydrocarbon compounds that comprise crude oil 
separate, or "fractionate", when subjected to high temperatures.  The crude
distillation unit fractionates the hydrocarbons into several intermediate 
products, several of which undergo further processing in various downstream 
units, the most important of which are discussed below.

Fluid Catalytic Cracking Unit.  Catalytic cracking greatly enhances the 
efficiency of a refinery by converting a greater percentage of hydrocarbon 
compounds to gasoline and other light distillates.  The Fluid Catalytic 
Cracking Unit ("FCCU") mixes straight-run heavy gas oil with a fine powdered
catalyst in the presence of extreme heat (650 degrees F to 1,050 degrees F). 
The larger hydrocarbon molecules "crack apart" under such conditions, and can 
then be fractionated into light gases, gasoline and light and heavy cycle oils. 
Spent catalyst is delivered to a regenerator where carbon deposits are burned 
so the catalyst can be used again.
 
Delayed Coker Unit.  Delayed coking is a thermal cracking process in which 
residual substances are heated to high temperatures and allowed time to 
decompose into hydrocarbon vapors and a solid residue coke product.  A full 
range of light hydrocarbon gases, including hydrogen and olefins, are produced
by the coking reaction.  These gases, in addition to gasoline boiling range
material ("naphtha") cracked products, are compressed and cooled at sufficiently
high pressure to condense the volatile light hydrocarbons.  The liquified 
petroleum gases are then routed to an Alkylation Unit, which is described 
below.  Coker gas oil is produced as a side product from the coker fractionator 
with a vaporization temperature of approximately 900 degrees F.  This oil is 
routed to the FCCU.  Petroleum coke from the Delayed Coker Unit is used for fuel
,for electrodes and for special purposes such as manufacturing graphite.

Catalytic Reformer Unit.  The Catalytic Reformer Unit upgrades the octane of 
the naphtha produced in the Delayed Coker Unit.  The octane of the naphtha is 
approximately 52, compared with the average refinery gasoline pool octane of 
87.9.  Straight-run and cracked refinery naphthas boiling between 160 degrees F
and 390 degrees F are catalytically reformed to improve motor fuel properties. 
Prior to entering the Catalytic Reformer Unit, naphtha is fractionated into 
light, medium and heavy naphtha streams.  The two lighter streams are 
selectively blended into gasoline and military jet fuel.  The heavy naphtha 
fraction is routed to a naphtha hydro-treating unit prior to catalytic 
reforming. The principal product of the reformer is reformat, a high octane
gasoline blending stock.

Alkylation Unit.  The Alkylation Unit is used to alkylate or chemically 
combine isobutane with propylene and butylene to form high octane gasoline.
The process utilizes hydrofluoric acid or sulfuric acid as the alkylation 
catalyst.  The feedstock for the Alkylation Unit is produced by the FCCU and
the Delayed Coker Unit and contains saturated propane, isobutane, and normal
butane in addition to propylene and butylene.  The feed stream also contains
significant amounts of hydrogen sulfide, which is extracted and routed to a 
sulfur recovery unit.  The reactor effluent is partially vaporized through a 
heat exchanger to provide refrigeration for the reactor/contractor.  The 
vapors are compressed and then fractionated into propane, isobutane and 
normal butane, and alkylate.  

Butamer Unit.  A Butamer Unit converts normal butane to isobutane. A refinery
needs a source of supplemental isobutane on a year-round basis to balance the
requirements of the Alkylation Unit.  Most of the normal butane produced in a 
refinery is blended into gasoline to increase vapor pressure.  During the summer
months, when gasoline vapor pressure specifications are low, the refinery 
generally has adequate or surplus supplies of normal butane.  During the winter
months, when gasoline vapor pressure specifications are high, a refinery buys
normal butane from outside sources.  

Process Heaters.  A process heater is a large, specialized furnace used to heat
hydrocarbons to varying temperatures within each of the refining units 
described above.  Each of such units includes at least one heater, and 
frequently includes several heaters.

Hydrocarbon Process Services

The Company's principal refinery services include turnarounds for the complete
refinery with integrated process units, the FCC Units within a refinery, and 
complete construction and maintenance services. 

Turnarounds

FCCU Turnarounds.  The Company's principal refinery operations involve 
turnarounds of FCCUs.  FCCUs require a high level of maintenance because 
of the extremely high temperatures inside the unit - in excess of 1000 degrees
F and due to abrasive catalysts flow and their many internal parts, which 
consist generally of stainless steel components and refractory lined systems.
Refractory is a heat and erosion resistant lining that insulates the inner 
shell of the unit vessels.  The main pieces of equipment in an FCCU are the
reactor, the regenerator and the flue gas handling system.  Most of the repair
and revamp work during a turnaround is performed on this equipment.  Major 
revamp work is required to increase efficiencies of the FCCU with changing 
technology and to reduce air pollution from the unit, as required by 
constantly changing laws.  In most cases, the mechanical work - involving the
disassembly and repair of the unit components - and the refractory work - 
involving the installation of the refractory material onto the inside of the
units vessels - is performed by different contractors.  The Company provides
all of these services.

Total Unit Turnarounds.  The Company also performs total unit turnarounds 
involving maintenance of crude distillation units, catalytic reformer units, 
delayed coker units, alkylation units, reformers,  FCCUs and butamer units. 
These services also involve the maintenance and modification of heat 
exchangers, heaters, vessels and piping.

Heat Exchanger Services

The Company provides heat exchanger service to the refining industry, which 
involves the removal, testing, repairing and reinstallation of heat exchangers. 
The Company owns specialized equipment to extract and reinstall heat exchangers 
from both ground levels and aerial installations.  In addition, the Company owns
retubing equipment, hydraulic bolt torquing equipment and specialized transport
carriers for moving these heat exchangers throughout the facilities.  

Process Heaters

The Company constructs new refinery process heaters and repairs and revamps 
existing heaters.  These units require skilled craftsmen and supervisors and
specialized construction techniques.  Through associations with various 
heater manufacturing companies, the Company also offers turnkey fabrication
and erection of process heaters.  The Company has performed field erection 
work for most of the major heater design companies in the U.S.

Other Support Services

Emergency Response Services.  The Company also performs substantial repair and
revamp services in connection with refinery unit failures, fires, explosions 
and other accidents.  The Company believes that it has enhanced its relation-
ships with its customers by responding quickly to these types of emergencies 
and by providing timely repair services, returning the affected plants to 
normal operations without substantial delays.   

Manufacturing.  The Company owns and operates a 40,000 square foot fabrication 
shop in Tulsa, Oklahoma and operates a 9,000 square foot facility in 
Bellingham, Washington and a 12,000 square foot facility in Carson, California
that it uses to support its turnaround projects.  At these facilities, the 
Company constructs piping, heater coils and components, and FCCU equipment 
installed during turnarounds.  The Company also performs emergency fabrication
at these facilities when necessary to assist its customers.  In many instances,
the facilities are operated 24 hours per day to assist a turnaround project.

Refractory.  The Company also owns and operates a 15,000 square foot shop, 
located at the Tulsa, Oklahoma facility used for performing refractory 
installation.  The shop, which supports the Company's mechanical turnaround 
services, contains specialized equipment and is operated by the Company's 
refractory department.

ASME Code Stamp Services.  The Company is qualified to perform services on 
equipment that contains American Society of Mechanical Engineer Code Stamps 
("ASME codes").  Many state agencies and insurance companies require that 
qualified ASME code installers perform services on ASME coded equipment.  
Many of the Company's competitors are not ASME code qualified, which forces 
them to subcontract portions of a project involving work with coded equipment.

Daily and Routine Supplemental Maintenance.  The Company provides supplemental
and routine daily maintenance services for operating refineries.  Daily work
crews at the refineries range in size from 30 to over 135 per refinery.  The 
Company provides a wide range of supplemental services including equipment 
operations and complete daily maintenance services and repairs.  Moreover, 
the pressure to reduce the overall cost of maintaining the refineries has 
initiated a trend of restructuring the daily and routine maintenance forces.
Refineries are seeking outside supplemental maintenance forces with proven 
programs for increasing unit and equipment reliability, and a history of 
performing work safely.  The Company has entered into 3 multi-year maintenance 
agreements.  The Company believes there is a substantial market for a quality
maintenance workforce that places an emphasis on safety and that can forge 
partnerships with refinery personnel to reduce maintenance expenses.  

Other Business Matters

Customers and Marketing

The Company derives most of its revenues from performing services for the 
major integrated oil companies.  The Company also performs services for 
independent petroleum refining and marketing companies, architectural and 
engineering firms and for several major petrochemical companies.  In 
addition, the Company builds water tanks for private and municipal water 
facilities.  The Company is typically engaged by the manager of the facility 
at which the work is being performed, although on occasion the Company 
contracts with one of its customers to perform services at several facilities.


The Company's focus historically has been on maintaining a high level of 
repeat business from existing customers.  During the fiscal year ended May 31,
1996, approximately 69% of the Company's revenues was derived from performing
services for existing customers.

During fiscal 1996 and 1994, ARCO USA and ARCO Pipeline, respectively, accounted
for more than 10% of the Company's revenues for each year.  The Company did not
have any one customer accounting for more than 10% of revenues in 1995.  The 
Company sold its products and services to approximately 320 customers during
fiscal 1996.

The Company markets its services and products primarily through its marketing 
personnel, senior professional staff and its management. The marketing personnel
concentrate on developing new customers and assist management and staff with 
existing customers.  The Company generally is required to bid competitively 
for work on a project-by-project basis.  Projects are typically awarded after
a bidding process spanning two weeks to four months, and are generally awarded
based on price considerations, work quality, safety and efficiency.  The 
Company bids for projects on both a fixed price basis and on a detailed time 
and materials basis.

Competition

The AST and refinery service industries are highly fragmented and competition 
is intense within these industries.  Competition is based on, among other 
factors, work quality and timeliness of performance, safety and efficiency, 
availability of personnel and equipment, and price.  The Company believes that
its expertise and its reputation for providing timely services allow it to
compete effectively.  Although many companies that are substantially larger 
than the Company have entered the market from time to time in competition with
the Company, the Company believes that the level of expertise necessary to 
perform complicated, on-site maintenance and construction operations presents
an entry barrier to these companies and other competitors with less experience
than the Company.

Backlog

At May 31, 1996, the Company had an estimated backlog of work under contracts 
believed to be firm of approximately $71.9 million, as compared with an 
estimated backlog of approximately $68.0 million as of May 31, 1995.  
Virtually all of the projects comprising this backlog are expected to be 
completed within fiscal year 1997.  Because many of the Company's contracts are
performed within short time periods after receipt of an order, the Company does
not believe that the level of its backlog is a meaningful indicator of its 
sales activity. 

Insurance

The Company maintains worker's compensation insurance, general liability
insurance and auto liability insurance in the primary amount of $2.0 million,
and an umbrella policy with coverage limits of $10.0 million in the aggregate.
The Company also maintains policies to cover its equipment and other property 
with coverage limits of $52.8 million and policies for care, custody and 
control with coverage limits of $2.7 million in the aggregate.  Most of the
Company's policies provide for coverage on an occurrence basis, not a "claims 
made" basis.  The Company's liability policies are subject to certain 
deductibles, none of which is higher than $100,000.  The Company maintains a 
performance and payment bonding line of $45.0 million.  The Company also 
maintains key-man insurance policies covering certain of its executive 
officers, and professional liability insurance.

Many of the Company's contracts require it to indemnify its customers for 
injury, damage or loss arising in connection with their projects, and provide 
for warranties of materials andworkmanship.  There can be no assurance that 
the Company's insurance coverage will protect it against the incurrence of 
loss as a result of such contractual obligations.

Employees

At May 31, 1996, the Company had approximately 247 non-field, full-time 
employees.  The Company also employed up to approximately 1,234 additional 
persons on a project-by-project basis during fiscal 1996.  In its refinery 
turnaround operations, the Company employed up to approximately 960 persons at
its job sites during the most active periods of 1996.  Approximately 377 of 
the employees of Matrix Service Mid-Continent, Inc., a subsidiary of the 
Company, are covered by a collective bargaining agreement.  In addition, 
substantially all of the temporary employees of Midwest are employed under 
collective bargaining agreements.  The Company believes that its relations 
with its employees are good, and has not experienced any significant strikes 
or work stoppages.  

Patents and Proprietary Technology

The Company holds two issued U.S. patents, which cover its Flex-A-Seal (R) and
Flex-A-Span (R) roof seal products.  The Company's Flex-A-Seal (R) patent is 
held jointly with an English company, which markets the Flex-A-Seal (R) 
products in the United Kingdom. The Flex-A-Seal (R) patent expires in August
2000 and the Flex-A-Span (R) patent expires in August 2008.  The Company also 
holds the patents for Flex-A-Seal (R) and Flex-A-Span (R) in Holland and in
Canada.  The Company also holds a U.S. patent which covers its ThermoStor (R), 
a diffuser system that receives, stores and dispenses both chilled and warm 
water in and from the same storage tank.  The ThermoStor (R) patent expires 
in March 2010.  The Company acquired a patent for a Floating Deck Support 
Apparatus (R) for aluminum roofs, this patent expires on January 24, 2001.  
The Company has applied for patents for two other products it has developed.
The Company has developed the RS 1000 Tank Mixer (R) which controls sludge 
build-up in crude oil tanks through resuspension.  Also the Company has 
designed the Firesafe (R) which is an environmentally safe alternative to 
underground storage tanks that meets the stringent requirements of UFC 77-203 
(d)(2), NFPA 30, EPA and Underwriter's Laboratories.  While the Company believes
that the protection of its patents is important to its business, it does not 
believe that these patents are essential to the success of the Company.  

Regulation

Various environmental protection laws have been enacted and amended during the 
past 20 years in response to public concern over the environment.  The 
operations of the Company and its customers are subject to these evolving laws
and the related regulations, which are enforced by the EPA and various other 
federal, state and local environmental, safety and health agencies and 
authorities. Although the Company believes that its operations are in material
compliance with such laws and regulations, there can be no assurance that 
significant costs and liabilities will not be incurred due to increasingly 
stringent environmental restrictions and limitations.  Historically, however,
the cost of measures taken to comply with these laws has not had a material 
adverse effect on the financial condition of the Company.  In fact, the 
proliferation of such laws has led to an increase in the demand for some of 
the Company's products and services.  A discussion of the principal 
environmental laws affecting the Company and its customers is set forth below.

Air Emissions Requirements.  The EPA and many state governments have adopted 
legislation and regulations, subjecting many owners and operators of storage 
vessels and tanks to strict emission standards the regulations prohibit the 
storage of certain volatile organic liquids ("VOLs") in open-top tanks and 
require tanks which store VOLs to be equipped with primary and/or secondary 
roof seals mounted under a fixed or floating roof.  Related regulations also
impose continuing seal inspection and agency notification requirements on 
tank owners and prescribe certain seal requirements.  Under recent EPA 
regulations, for example, floating roofs on certain large tanks constructed 
or modified after July 1984 must be equipped with one of three alternative 
continuous seals mounted between the inside wall of the tank and the edge of
the floating roof.  These seals include a foam or liquid-filled seal mounted
in contact with the stored petroleum product; a combination of two seals 
mounted one above the other, the lower of which may be vapor mounted; and a 
mechanical shoe seal, composed of a metal sheet held vertically against the 
inside wall of the tank by springs and connected by braces to the floating 
roof.   

Though Company facilities themselves are generally not subject to such 
requirements, these and other similar regulations have resulted in the 
implementation of ongoing tank maintenance and inspection programs by many 
owners and operators of ASTs.  These programs also generally result in 
additional tank repairs, maintenance and modifications which provide a 
market for the Company's services.

Amendments to the Federal Clean Air Act adopted in 1990 require, among other 
things, that refineries produce cleaner burning gasoline for sale in certain 
large cities where the incidence of volatile organic compounds in the 
atmosphere exceeds prescribed levels leading to ozone depletion.   Refineries 
are undergoing extensive modifications to develop and produce acceptable 
reformulated fuels that satisfy the Clean Air Act Amendments.  Such 
modifications, are  anticipated to cost refineries several billion dollars, 
and require the use of specialized construction services such as those 
provided by the Company.  A significant number of refineries have completed 
changes to produce "reformulated fuels", principally refineries serving 
specific areas of the U.S.; however, there are a substantial number of 
refineries that have not made the change.

Water Protection Regulations.   Protection of groundwater and other water 
resources from spills and leakage of hydrocarbons and hazardous substances 
from storage tanks and pipelines has become a subject of increasing 
legislative and regulatory attention, including releases from ASTs.  Under 
Federal Clean Water Act regulations, owners of most ASTs are required to 
prepare spill prevention, control and countermeasure ("SPCC") plans detailing
steps that have been taken to prevent and respond to spills and to provide 
secondary containment for the AST to prevent contamination of soil and 
groundwater.  These plans are also subject to review by the EPA, which has 
authority to inspect covered ASTs to determine compliance with SPCC 
requirements.

Various states have also enacted groundwater legislation that has materially 
affected owners and operators of petroleum storage tanks.  The adoption of 
such laws has prompted many companies to install double bottoms on their 
storage tanks to lessen the chance that their facilities will discharge or 
release regulated chemicals.  State statutes regarding protection of water 
resources have also induced many petroleum companies to excavate product
pipelines located in or near marketing terminals, to elevate the pipelines 
aboveground and to install leak detection systems under the pipelines.  

In the event hydrocarbons are spilled or leaked into groundwater or surface 
water from an AST that the Company has constructed or repaired, the Company 
could be subject to lawsuits involving such spill or leak.  To date, the 
Company  has not suffered a material loss resulting from such litigation. 

Hazardous Waste Regulations.  The Resource Conservation and Recovery Act of 
1976 ("RCRA") provides a comprehensive framework for the regulation of 
generators and transporters of hazardous waste, as well as persons engaged in
the treatment, storage and disposal of hazardous waste. Under state and federal 
regulations, many generators of hazardous waste are required to comply with a
number of requirements, including the identification of such wastes, strict 
labeling and storage standards, and preparation of a manifest before the 
waste is shipped off site.  Moreover, facilities that treat, store or dispose
of hazardous waste must obtain a RCRA permit from the EPA, or equivalent state
agency, and must comply with certain operating, financial responsibility and 
site closure requirements.

In 1990, the EPA issued its Toxicity Characteristic Leaching Procedure ("TCLP")
regulations, subsequently, these regulations have been amended.  Under the TCLP
regulations, wastes containing prescribed levels of any one of  several 
identified substances,including organic materials found in refinery wastes and
waste-waters (such as benzene), will be characterized as "hazardous" for RCRA 
purposes.   

As a result, some owners and operators of facilities that produce hazardous 
wastes are being required to make modifications to their facilities or 
operations in order to remain outside the regulatory framework or to come 
into compliance with the Subtitle C requirements.   Many petroleum refining, 
production, transportation and marketing facilities are choosing to replace 
existing surface impoundments with storage tanks and to equip certain of the
remaining impoundments with secondary containment systems and double liners.
Accordingly, the Company believes that the promulgation of the TCLP regulations 
are having a positive impact on its tank construction and modification business.

Amendments to RCRA require the EPA to promulgate regulations banning the land
disposal of hazardous wastes, unless the wastes meet certain treatment 
standards or the particular land disposal method meets certain waste containment
criteria.  Regulations governing disposal of wastes identified as hazardous 
under the TCLP, for example, could require water drained from the bottom of
many petroleum storage tanks to be piped from the tanks to a separate facility
for treatment prior to disposal.  Because the TCLP regulations can, therefore, 
provide an incentive for owners of petroleum storage tanks to reduce the amount
of water seepage in the tanks, the Company believes that the regulations  have 
and will continue to positively influence sales of its Flex-A-Seal(R) roof 
seals, which materially reduce the amount of water seepage into tanks.

CERCLA.  The Comprehensive Environmental Response, Compensation and Liability 
Act of 1980 ("CERCLA"), also known as "Superfund", authorizes the EPA to 
identify and clean up sites contaminated with hazardous substances and to 
recover the costs of such activities, as well as damages to natural 
resources, from certain classes of persons specified as liable under the 
statute.  Such persons include the owner or operator of a site and companies 
that disposed or arranged for the disposal of hazardous substances at a site.
Under CERCLA, private parties which incurred remedial costs may also seek 
recovery from statutorily responsible persons. Liabilities imposed by CERCLA
can be joint and several where multiple parties are involved.  Many states 
have adopted their own statutes and regulations to govern investigation and 
cleanup of, and liability for, sites contaminated with hazardous substances 
or petroleum products.  

Although the liabilities imposed by CERCLA (and other environmental 
legislation) are more directly related to the activities of the Company's 
clients, they could under certain circumstances give rise to liability on 
the part of the Company if the Company's efforts in completing client 
assignments were considered arrangements related to the transport or disposal
of hazardous substances belonging to such clients.  In the opinion of 
management, however, it is unlikely that the Company's activities will result
in any liability under either CERCLA or other environmental regulations in an
amount which will have a material adverse effect on the Company's operations 
or financial condition, and management is not aware of any current liability 
of the Company based on such a theory. 

Oil Pollution Act.  The Oil Pollution Act of 1990 ("OPA") established a new 
liability and compensation scheme for oil spills from onshore and offshore 
facilities.  Section 4113 of the OPA directed the President to conduct a study
to determine whether liners or other secondary means of containment should be 
used to prevent leaking or to aid in leak detection at onshore facilities used
for storage of oil.  The Company believes that its business would be positively
affected by any regulations eventually promulgated by EPA that required liners
and/or secondary containment be used to minimize leakage from ASTs.  While the
regulation has not, to date, been enacted, the industry designs secondary 
containment in all new tanks being built and, in general, secondary containment
is installed in existing tanks when they are taken out of service for other 
reasons, in anticipation of this regulation.

Health and Safety Regulations.  The operations of the Company are subject to 
the requirements of the Occupational Safety and Health Act ("OSHA") and 
comparable state laws.  Regulations promulgated under OSHA by the Department 
of Labor require employers of persons in the refining and petrochemical 
industries, including independent contractors, to implement work practices, 
medical surveillance systems, and personnel protection programs in order to 
protect employees from workplace hazards and exposure to hazardous chemicals.
In addition, in response to recent accidents in the refining and petrochemical
industries, new legislation and regulations including OSHA's Process Safety 
Management Standard ("PSM") requiring stricter safety requirements have been 
enacted.  Under PSM, employers and contractors must ensure that their employees
are trained in and follow all facility work practices and safety rules and are
informed of known potential hazards. The Company has established comprehensive
programs for complying with health and safety regulations.  While the Company 
believes that it operates safely and prudently, there can be no assurance that
accidents will not occur or that the Company will not incur substantial 
liability in  connection with the operation of its business.  

The State of California has promulgated particularly stringent laws and 
regulations regarding health and safety and environmental protection.  The 
Company's operations in California are subject to strict oversight under 
these laws and regulations and the failure to comply with these laws and 
regulations could have a negative impact on the Company.

Executive Officers of the Company

The executive officers of the Company and their ages and positions are 
listed below.

      Name             Age                      Position
- - -----------------     -----  ---------------------------------------------

 Doyl D. West         54    Chairman, President & Chief Executive Officer
 C. William Lee       56    Vice President-Finance, Chief Financial Officer
 Bradley S. Vetal     40    President, Matrix Service, Inc.
 Martin L. Rinehart   58    Assistant to President, Matrix Service, Inc.
 Robert B. Wagoner    53    Vice President-Engineering, Matrix Service, Inc.
 James D. Baker       48    President, Midwest Industrial Contractors, Inc.
 Tim S. Selby         48    President, San Luis Tank Piping Construction, Inc.
 Richard C. Gray, II  45    President, Colt Construction Co., Inc.
 Robert A. Heath      49    President, Heath Engineering, Ltd.
 Sample D. Brown      61    Chief Executive Officer, Brown Steel Contractors, 
                                Inc.
 Mark A. Brown        39    President, Brown Steel Contractors,Inc.

Doyl D. West is a founder of the Company and has served as a director since 
the Company's inception in 1984.  Mr. West served as President of the Company 
from 1984 to November 1992.  Mr. West reassumed the duties of President and 
Chief Executive Officer in September 1994.  Prior to founding the Company, 
Mr. West served in various capacities with Tank Service, Inc., most recently 
as President.  Tank Service, Inc. was engaged in repair and maintenance of the
tankage in refineries and marketing and pipeline terminals.

C. William Lee is a founder of the Company and has served as its Vice 
President-Finance and as a director since the Company's inception.  Prior to 
1984, Mr. Lee served as Vice President-Finance and Secretary/Treasurer of 
Tank Service, Inc. 

Bradley S. Vetal has been with the Company since January 1987 and has served 
as President of Matrix Service, Inc. since June 1, 1992.  From June 1991 
through May 1992, he served as Vice President of Eastern Operations of 
Matrix Service Mid-Continent, Inc.  From January 1987 to June 1991, Mr. Vetal
served in various capacities within Matrix.  Effective June 1, 1996 Mr. Vetal
assumed a newly created position of Vice President-Tank Division of Matrix 
Service Company.  This position is responsible for all AST operations.    

Martin L. Rinehart is a founder of the Company and served as the Vice 
President-Operations of the Company from its inception to June 1992.  Since 
June 1992, he has served as Assistant to the President of Matrix Service, Inc. 
From 1980 until 1984, Mr. Rinehart served as Executive Vice President of Tank 
Service, Inc.

Robert B. Wagoner has served as Matrix Service, Inc.'s Vice President-
Engineering since 1985.  From 1979 to 1984, Mr. Wagoner served as Vice 
President-Operations and Manager of Operations Services for Tank Service, Inc.

James D. Baker has served as President of Midwest Industrial Contractors since
June 1, 1995.  From 1993 to June 1995, Mr. Baker has served as Manager of 
Engineering and Estimating for Midwest.  From 1988 to 1993, Mr. Baker served
as Manager of Capital Construction and Maintenance-Turnaround Planning for 
Sun Refining & Marketing Company.  Prior to working for Sun, Mr. Baker worked
for Edecon, Inc. and Refractory Construction, Inc. as an engineer and estimator
involved in maintenance and capital work for the petrochemical industry. Mr. 
Baker holds a BSME degree from Lawrence Institute of Technology. 

Tim Selby is a founder of San Luis Tank Piping Construction, Inc. and has 
served as its President since 1975.  Mr. Selby graduated from Fresno State 
University in 1970 with a degree in Business Administration.

Richard C. Gray is a founder of Colt Construction and has served as President
of Colt since June 1, 1994. From 1989 to 1994, Mr. Gray served as Vice 
President and General Manager in charge of all field operations for Colt. 
Prior to 1989, Mr. Gray worked for ARCO Products Company as contract supervisor
with overall responsibility for contracting all engineering, construction and
maintenance services.  Mr. Gray holds a Bachelor of Science degree in 
Business Administration from Ferris State University. 

Robert A. Heath has served as President of Heath Engineering, Ltd. since 1976.
He graduated in 1971 from Queen's University in Kingston, Ontario Canada with
a degree of Bachelor Science in Electrical Engineering.  Upon graduation, Mr. 
Heath worked with his father, William Heath in management of William R. Heath
Company. When his father retired, Mr. Heath became President and started Heath
Engineering Ltd.  He has been registered with the Association of Professional
Engineers since July 19, 1973.

Sample D. Brown has served as Chief Executive Officer of Brown Steel 
Contractors, Inc. since 1992.  After graduating from Auburn University in 1956,
Mr. Brown joined the company and has served in various management positions, 
including President and Chairman of the Board.  Mr. Brown is a son of Mr. & 
Mrs. E.W. Brown, Sr., the co-founders of Brown Steel.

Mark A. Brown has served as President of Brown Steel Contractors, Inc. since 
1992.  After graduating from Auburn University in 1979, Mr. Brown joined the 
company and has served in various management capacities in all phases of 
company operations.  Mr. Brown is a grandson of the original company founders,
and the son of Sample D. Brown.


I
tem 2.  Properties

The executive offices of the Company are located in a 20,400 square foot 
facility owned by the Company and located in Tulsa, Oklahoma. A 3,000 square 
foot warehouse and engineering testing shop is located on the premises and is
also owned by the Company.  The Company also owns a 13,500 square foot facility
in Tulsa where its Midwest operations are headquartered, a 40,000 square foot
fabrication shop and 25,000 square feet of warehouse and maintenance shop 
space adjacent to Midwest's executive offices. The Company owns a 64,000 square
foot facility located on 13 acres of land leased from the Tulsa Port of Catoosa
which is used for the fabrication of tanks and tank parts.  The Company also 
owns a 22,000 square foot facility in Tulsa, Oklahoma for Tulsa regional 
operations, a 13,300 square foot facility in Temperance, Michigan for the 
Michigan regional operations and a 8,800 square foot facility in Houston, 
Texas for Houston regional operations.  The Company owns 143,300 square foot 
and 41,000 square foot facilities, located on 6.5 acres and 31.8 acres, 
respectively, in Newnan, Georgia which are used for the fabrication of 
elevated tanks. Also, the Company owns a 1,806 square foot facility located in
Sarnia, Quebec, Canada.  The Company leases offices in Anaheim, Bay Point, 
Carson and Paso Robles, California; Rancocas, New Jersey and Bellingham, 
Washington.  The aggregate lease payments for these leases during fiscal 1996
were approximately $646 thousand. The Company has purchased land and plans to
construct a 34,000 square foot facility with an anticipated completion date of
April 1997. The facility in Bellingham, Washington will consolidate all of the
Colt operations in the Bellingham area.  The Company believes its facilities,
after completion of the Bellingham location, are adequate for its present 
needs.


Item 3. Legal Proceedings

The Company and its subsidiaries are named defendants in several lawsuits 
arising in the ordinary course of their business.  While the outcome of 
lawsuits cannot be predicted with certainty, management does not expect these
lawsuits to have a material adverse impact on the Company.


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

No matters were submitted to a vote of security holders of the Company during
the fourth quarter of the Company's fiscal year ended May 31, 1996.


PART II


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

Price Range of Common Stock 

The Common Stock has traded on the National Market System of the National 
Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ") System
since the Company's initial public offering on September 26, 1990.  The 
trading symbol for the Common Stock is "MTRX".  The following table sets forth 
the high and low closing sale prices for the Common Stock on the National 
Market System as reported by NASDAQ for the periods indicated:
                                                                                
 
                                            Fiscal Year
                                      1995              1996
                                   ------------    ------------
                                   High    Low     High    Low
                                   ------------    ------------
           First Quarter.........  $4.63  $3.00    $7.63  $4.88

           Second Quarter........   5.38   3.88     7.25   5.00

           Third Quarter.........   4.88   4.00     7.13   4.88

           Fourth Quarter........   7.13   4.38     5.25   3.00 
            
                  
                                   Fiscal Year
                                      1997
                                  ------------ 
                                  High    Low

      First Quarter.............. $6.75  $5.00


As of August 26, 1996, there were approximately 134 holders of record of the 
Common Stock.  The Company believes that the number of beneficial owners of 
its Common Stock is substantially greater than 134.

Dividend Policy

The Company has never paid cash dividends on its Common Stock. The Company 
currently intends to retain earnings to finance the growth and development of
its business and does not anticipate paying cash dividends in the foreseeable
future.  Any payment of cash dividends in the future will depend upon the 
financial condition, capital requirements and earnings of the Company as well
as other factors the Board of Directors may deem relevant.  Certain of the 
Company's credit agreements restrict the Company's ability to pay dividends.


Item 6. Selected Financial Data

The following table sets forth selected historical financial information for
the Company covering the five years ended May 31, 1996.  See the Notes to the
Company's consolidated financial statements.

[CAPTION]

<TABLE>

   
                                                                  (in thousands, except per share data)
                                                                           Matrix Service Company
                                            ------------------------------------------------------------------------------
Income Statement Data:                        May 31, 1996   May 31, 1995   May 31, 1994     May 31, 1993  May 31, 1992
                                            ------------------------------------------------------------------------------
<S>                                            <C>             <C>           <C>              <C>            <C>
Revenues.....................................  $183,725        $177,516      $133,480        $103,776        $123,108

Gross profit.................................    16,618          13,914        16,488          15,688          22,537

Operating income.............................     4,719           1,456         4,566           6,518          15,025

Income (loss) before income tax expense......     4,398            (455) (1)    4,655           6,886          15,745

Net income (loss) ...........................     2,449            (189)        2,717           4,060           9,186

Earnings (loss) per common and common
equivalent shares............................       .26            (.02)          .29             .42             .92

Weighted average common and                                                                              
common equivalent shares outstanding.........     9,529          9,283          9,467           9,683          10,009
   
                                                                           Matrix Service Company
                                            ------------------------------------------------------------------------------
                                              
                                              May 31, 1996   May 31, 1995   May 31, 1994     May 31, 1993    May 31, 1992
                                              ------------------------------------------------------------------------------  
Balance Sheet Data:

Working capital..............................  $26,370         $26,800       $20,070          $26,549         $29,243

Total assets.................................  105,757         105,729       100,902           83,374          83,012

Long-term obligations........................    4,847           8,467         5,194            4,141           2,393

Deferred tax liability.......................    5,088           4,698         4,145              899             232

Stockholders' equity  .......................   73,034          70,820        69,487           66,400          64,908


(1) Includes a $1.4 million loss from the Company's investment in Al-Shafai-
Midwest Constructors, Ltd., which is being liquidated. See "Item 7-Management's 
Discussion and Analysis of Financial Condition and Results of Operations."  

</TABLE>



Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

General

The Company was organized in October 1989 to become a holding company of Matrix
and Petrotank.  The discussion and analysis presented below is of the 
consolidated financial statements of these companies and the Company's other
subsidiaries since the date of acquisition, including (i) Tank Supply, Inc., 
(ii) after October 3, 1990, Midwest, (iii) after June 1, 1991, San Luis, (iv)
after December 30, 1992, Colt, (v) after June 10, 1993, Heath, (vi) after 
April 1, 1994, Brown, and (vii) after August 26, 1994, Mayflower.  

The Company recognizes revenues from fixed price contracts using the percentage
of completion accounting method which measures progress on an uncompleted 
contract based on the amount of costs incurred for such project compared with 
the total amount of costs expected to be incurred through the completion of 
the project.

Revenues from cost-plus-fee contracts are recognized on the basis of costs 
incurred plus the estimated fee earned. 

The Company has experienced an increase in revenues during the last three 
fiscal years. Fiscal 1994 included a full year for Heath and two months of 
Brown. For fiscal 1995, Mayflower was included for nine months.  All acquired
companies were included for the full year for fiscal 1996. Incremental 
revenues, gross profit and selling, general and administrative expenses 
attributable to the results of operations of acquired companies not included 
in the prior year are as follows:

                                           (in thousands)                     
                                        
                                    Year ended       Year ended
                                   May 31, 1995     May 31, 1994
                                   ------------     ------------
                                  
             Revenues                  $765            $5,836
             Gross Profit                44             1,205
             Selling, general &                       
             Administrative expenses     35               963

The Company expects a continued demand for its services in the foreseeable 
future. Management believes that the percentage growth of its revenues for 
fiscal 1997 will be as strong as fiscal year 1996, but not as strong as 
during the two previous fiscal years. The limitation to growth for the last 
three fiscal years was due to decreased demand for the Company's services. 
Limitations on growth capacity also reflect the seasonal nature of the 
Company's refinery turnaround activities, which creates pressure to expand 
the supervisory staff during the turnaround seasons.  The Company continues to
recruit, hire and train additional project engineers and project managers, 
and the Company's ability to continue to grow will depend, in part, on its 
ability to continue this process, and a stronger demand for the Company's 
services.   

The Company's quarterly results may tend to fluctuate from period to period, 
due primarily to the timing of turnarounds performed by the Company.  
Generally, the Company performs a substantial percentage of its turnaround 
projects in two periods - February through May and September through November.  
Historically, these are the time periods when most refiners temporarily 
shutdown certain operating units for maintenance, repair or modification prior
to changing their product mix in anticipation of a seasonal shift in product
demand.  Consequently, the Company's second quarter ending November 30 and its
fourth quarter ending May 31 will typically include greater revenues from 
turnarounds than its first quarter or its third quarter.

Results of Operations

The following table presents, for the periods indicated, the percentage
relationship which certain items in the Company's statement of operations 
bear to revenues, and the percentage increase or decrease in the dollar 
amount of such items.  The following data should be read in conjunction with 
the financial statements of the Company and the notes thereto contained 
elsewhere in this Form 10-K.  Revenues for fiscal year ending May 31, 1994 
were positively affected by the inclusion of Heath operations for 12 months 
and Brown operations for two months.  Revenues for fiscal year ending May 31,
1995 were positively affected by the inclusion of Mayflower for nine months.

  
  
<TABLE>
                                             Percentage of Revenues        |
                                               Years ended May 31,         |    Period-to-Period Change
                                         ----------------------------------|----------------------------
  <CAPTION>                                                                         |      1996         1995    
                                                                           |       vs.          vs.
                                            1996       1995       1994     |      1995         1994
                                          --------   --------   --------   |   ---------     --------
    <S>                                   <C>        <C>        <C>        |      <C>           <C>   
    Revenues...........................    100.0 %    100.0 %    100.0 %   |       3.5%          33.1%
    Cost of revenues...................     91.0       92.2       87.6     |       2.1           39.8
                                                                           |
    Gross profit.......................      9.0        7.8       12.4     |      19.4          (15.6)
                                                                           |
    Selling, general and administrative                                    |
        expenses.......................      5.9        6.2        7.8     |      (1.3)           4.6
                                                                           |
    Operating income...................      2.6        0.8        3.4     |     224.1          (68.1)
                                                                           |     
    Interest income....................      0.2        0.1        0.2     |     175.8          (53.3)
                                                                           |
    Income before income tax                                               |
        expense........................       2.4       (0.3)       3.5    |    1066.6         (109.8)
                                                                           |
    Net income.........................       1.3%     (0.1)%      2.0%    |    1395.8%        (107.0)%
                                          ========   ========   ========   |  ========       =========

</TABLE>


Fiscal 1996 Compared to Fiscal 1995

Revenues for the year ended May 31, 1996 were $183.7 million as compared to 
revenues of $177.5 million for the year ended May 31, 1995, representing an
increase of approximately $6.2 million or 3.5%.  The increase was primarily 
due to increased revenues for the Company's services in both refinery 
maintenance and aboveground storage tank markets.

Gross profit increased to $16.6 million for the year ended May 31, 1996 from
gross profit of $13.9  million for the year ended May 31, 1995, an increase 
of approximately $2.7 million or 19.4%.  Gross profit as a percentage of 
revenues increased to 9.0% in the 1996 period from 7.8% for the 1995 period.
The Company continues to experience pricing pressure as a result of intense
competition in its established markets; however, the demand for the Company's
services has improved during the year.  Customer inquiry levels and the 
available projects for repairs and maintenance and new construction of AST's 
and refinery maintenance  have been improving during the year. 

Selling, general and administrative expenses decreased to $10.8 million for
the year ended May 31, 1996 from expenses of $10.9 million for the year ended
May 31, 1995, a decrease of $143 thousand or approximately 1.3%.  The decrease
was due to reduction of certain administrative personnel.  Selling, general 
and administrative expenses as a percentage of revenues decreased to 5.9% for
fiscal 1996 from 6.2% for fiscal 1995. 

Operating income increased to $4.7 million for the year ended May 31, 1996 
from $1.5 million for the year ended May 31, 1995, an increase of $3.2 million
or approximately 224.1%.  The increase was due to increased revenue, improved
gross profit margin, and decreases in selling, general and administrative 
expenses.

Due to changes in the economic conditions in Saudi Arabia, there is a shortage
of work available of the nature performed by the foreign joint venture Al 
Shafai-Midwest Constructors, Ltd.  It is management's opinion that those 
conditions will last for several years. The venture partners, Saud Al Shafai 
and Sons Contractors and the Company, are in the process of liquidating the
joint venture.  At May 31, 1995, the Company had reduced its carrying value of
the investment in this joint venture to the estimated recovery amount upon 
completion of the liquidation.  The Company recorded a loss of $1.4 million 
for the year ended May 31, 1995.  The Company had no expenses related to the
joint venture for the year ended May 31, 1996. 

Interest income increased to $411 thousand for the year ended May 31, 1996 
from $149 thousand for the year ended May 31, 1995.  This increase resulted
from interest earned on the refund of certain state and federal income taxes
received during the year.  Interest expense decreased to $815 thousand for the
year ended May 31, 1996 from $897 thousand of interest expense for the year 
ended May 31, 1995.  The decrease resulted primarily from decreased borrowing
under the Company's revolving credit facility and a term loan established 
thereunder.  Under this facility, a $4.9 million term loan was made to the 
Company on October 5, 1994, and $3.5 million remains outstanding at 
May 31, 1996.  

Net income increased to $2.4 million for the 1996 period from a net loss 
income of $189 thousand for the 1995 period.  The increase was due to improved
gross profit margin, decreased selling, general and administrative expenses, 
and no losses from investment in foreign joint venture as compared with the 
prior year. 

Fiscal 1995 Compared to Fiscal 1994

Brown's operations are included in the Company's operations for the full year
ended May 31, 1995.  Only two months of Brown's operations were included in 
the Company's operations in the prior year. 

Revenues for the year ended May 31, 1995 were $177.5 million as compared to 
revenues of $133.5 million for the year ended May 31, 1994, representing an
increase of approximately $44.0 million or 33.1%.  The increase was primarily
due to increased revenues forthe Company's services in its refinery 
maintenance and aboveground storage tank markets, and the Brown acquisition.

Gross profit decreased to $13.9 million for the year ended May 31, 1995 from
gross profit of $16.5  million for the year ended May 31, 1994, a decrease of
approximately $2.6 million or 15.6%.  Gross profit as a percentage of revenues
decreased to 7.8% in the 1995 period from 12.4% for the 1994 period.  The 
Company had continued to experience pricing pressure as a result of intense 
competition in its established markets.  The Company had priced its projects
very competitively and the Company had increased its level of lower-margin 
work.

Selling, general and administrative expenses increased to $10.9 million for 
the year ended May 31, 1995 from expenses of $10.4 million for the year ended
May 31, 1994, an increase of $482 thousand or approximately 4.6%.  The increase
was due to the inclusion of Brown for the full year as compared with only two
months of the prior year partially offset by decreases from the reduction of 
certain administrative personnel.  Selling, general and administrative expenses
as a percentage of revenues decreased to 6.2% for fiscal 1995 from 7.8% for 
fiscal 1994.

Operating income decreased to $1.5 million for the year ended May 31, 1995 
from $4.6 million for the year ended May 31, 1994, a decrease of $3.1 million
or approximately 68.1%.  The decrease was due to reduced gross profit margin, 
and increases in selling, general and administrative expenses.

Due to changes in the economic conditions in Saudi Arabia, there is a shortage
of work available of the nature performed by the foreign joint venture Al 
Shafai-Midwest Constructors, Ltd.  It was management's opinion that these 
conditions would last for several years.  The venture partners, Saud Al 
Shafai and Sons Contractors and the Company, are in the process of liquidating
the joint venture.  The Company had reduced the carrying value of its 
investment in this joint venture to the estimated recovery amount upon 
completion of the liquidation.  The Company recorded a loss of $1.4 million
for the year ended May 31, 1995 and $200 thousand loss for the year ended 
May 31, 1994, in conjunction with the joint venture.

Interest income decreased to $149 thousand for the year ended May 31, 1995 
from $318 thousand for the year ended May 31, 1994.  This decrease resulted
from lower interest rates and a lower amount of funds invested during the 
1995 period as compared with the 1994 period.  Interest expense increased to
$897 thousand for the year ended May 31, 1995 from $546 thousand of interest
expense for the year ended May 31, 1994.  The increase resulted primarily 
from increased borrowing under the Company's revolving credit facility and a 
term loan established thereunder.  Under this facility a $4.9 million term 
loan was made to the Company on October 5, 1994, and $4.6 million remained 
outstanding at May 31, 1995.  Other income for fiscal 1995 was primarily 
from life insurance proceeds offset by the closing of the office in Qatar 
and moving that equipment to another facility of the Company for fiscal 
1995.  The other income for fiscal 1994 was substantially the gain on the 
sale of the subsidiary, TCI, to a group of key employees in December 1993.

Net income decreased to a loss of $189 thousand for the 1995 period from net 
income of $2.7 million for the 1994 period.  The decrease was due to reduced 
gross profit margin, increased selling, general and administrative expenses,
loss from investment in foreign joint venture and increased interest expense.

Liquidity and Capital Resources

The Company's cash and cash equivalents totaled approximately $1.9 million at
May 31, 1996, a decrease of $77 thousand from May 31, 1995.  

The Company has financed its operations recently with cash generated by 
operations and advances under the Company's credit facility.  The Company 
has a credit facility with a commercial bank under which the Company may 
borrow a total of $20.0 million.  The Company may borrow up to $15.0 million 
under a revolving credit agreement based on the level of the Company's 
eligible receivables.  The agreement provides for interest at the Prime Rate
minus one-half of one percent (1/2 of 1%), or a LIBOR based option, and 
matures on October 31, 1997.  At May 31, 1996, the interest rate was 7.75% and
the outstanding advances under the revolver totaled $2.0 million.  The credit
facility also provides for a term loan up to $5.0 million.  On October 5, 1994,
a term loan of $4.9 million was made to the Company.  The term loan is due on 
August 31, 1999 and is to be repaid in 54 equal payments beginning in March 
1995 at an interest rate based upon the Prime Rate.  At May 31, 1996, the 
interest rate on the term loan was 8.25%, and the outstanding balance was 
$3.5 million.                              

Operations of the Company provided $9.6 million of cash for the year ended 
May 31, 1996 as compared with providing $624 thousand of cash for the year 
ended May 31, 1995, representing an increase of approximately $9.0 million.
The increase was due to increased net income of $2.6 million, an increase of
$446 thousand from the collection of accounts and $1.4 million from loss on 
foreign joint venture (in prior year), an increase of $2.4 million from 
prepaid expenses and inventory, a net increase of $443 thousand of costs and
estimated earnings in excess of billings on uncompleted contracts and billings
on uncompleted contracts in excess of costs and estimated earnings and a net 
efund of income taxes of $1.2 million.  These increases are net of decreases 
of $168 thousand from depreciation and amortization, and a $193 thousand 
decrease from accounts payable and accrued liabilities.

Capital expenditures during the year ended May 31, 1996 totaled approximately
$3.4 million.  Of this amount, approximately $401 thousand was used to 
purchase trucks for field operations, and approximately $2.6 million was used
to purchase welding, construction, and fabrication equipment.  The Company has
invested approximately $337 thousand in furniture and fixtures during the year, 
which includes approximately $191 thousand invested in computer equipment for 
operations and automated drafting. The Company has currently budgeted
approximately $4.0 million for capital expenditures for fiscal 1997. The 
Company expects to beable to finance these expenditures with working capital.
The Company believes that its existing funds, amounts available from 
borrowing under its existing credit facility, and cash generated by operations
will be sufficient to meet the Company's working capital needs at least 
through fiscal 1997 and possibly thereafter unless significant expansions of 
operations not now planned are undertaken, in which case the Company would 
arrange additional financing as a part of any such expansion.

Other

In March 1995, the Financial Accounting Standards Board (FASB) issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which required impairment losses to be recorded on 
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are 
less than the assets' carrying amount.  Statement 121 also addresses the 
accounting for long-lived assets that are expected to be disposed of.  The 
Company will adopt Statement 121 in the first quarter of 1997 and, based on 
current circumstances, does not believe the effect of adoption will be 
significant. 

Certain Factors Influencing Results and Accuracy of Forward-Looking
Statements

This Annual Report contains forward-looking statements within the meaning 
of Section 27A of the Securities Act of 1933. Discussions containing such
forward-looking statements may be found in the material set forth under
"Business" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations", as well as within the Annual Report generally.
In addition, when used in this Annual Report, the words "believes" and 
"anticipates", "expects" and similar expressions are intended to identify 
forward-looking statements. In the normal course of its business, the 
Company, in an effort to help keep it shareholders and the public informed
about the Company's operations, may from time to time issue certain 
statements, either in writing or orally, that contain or may contain 
forward-looking information. Generally, these statements relate to business
plans or strategies, projected or anticipated benefits or other consequences
of such plans or strategies, or projections involving anticipated revenues, 
earnings or other aspects of operating results.  Such forward-looking 
statements are subject to a number of risks and uncertainties. As noted 
elsewhere in this Annual Report, all phases of the Company's operations are 
subject to a number of uncertainties, risks and other influences, many of 
which are beyond the control of the Company, and any one of which, or a 
combination of which, could materially affect the results of the Company's 
operations and whether forward-looking statements made by the Company 
ultimately prove to be accurate.

The following discussion outlines certain factors that in the future could 
affect the Company's consolidated results and cause them to differ materially
from those that may be set forth in any forward-looking statement made by or
on behalf of the Company.  The Company cautions the reader, however, that
this list of risk factors may not be exhaustive.

Competition.  The Company competes with numerous large and small companies, 
some of which have greater financial and other resources than the Company.
Competition within both the Aboveground Storage Tank Work and Hydrocarbon 
Process Services is intense and is based on quality of service, price, safety 
considerations and availability of personnel.  See "Business-Other 
Business Matters-Competition."

Market Factors.  The Company is dependent on the petroleum storage and
refining operations of the petroleum industry, and a downturn in that
industry could negatively affect its operations.  The Company's hydrocarbon
processing operations focus primarily on the refining industry.  The refining
industry has undergone significant changes in the past decade with respect to
product composition, costs of petroleum products, and refinery capacity and
utilization.  Although the Company believes that these changes in the industry
have positively affected its business, changes could occur that decrease the 
industry's dependence on the type of services the Company provides.  See 
"Business-Aboveground Storage Tank Operations-Hydrocarbon Process Services."

Availability of Supervisory Personnel.  The Company employs in their operations
project supervisors with substantial experience and training. The growth of 
the businesses will depend on, and may be restricted by, their ability to 
retain these personnel and to recruit and train additional supervisory 
employees.  The competition to recruit qualified supervisor staff is intense.

Labor Markets.  The operations of the Company are labor intensive. The Company
has employed up to 650 workers for a single project, and many of the workers 
employed by the Company are represented by labor unions and are covered by 
collective bargaining agreements.  Although the Company has to date, been able
to employ sufficient labor to complete their projects, changes in labor 
market conditions could restrict the availability of workers or increase the 
cost of such labor, either of which could adversely affect the Company.  In 
addition, the operations of the Company could be adversely affected by a 
strike or work stoppage.  See "Business-Other Business Matters-Employees."

Fluctuations in Quarterly Results.  The operating results of Hydrocarbon 
Process Services and, to a lesser degree, the Aboveground Storage Tank 
Operations, may be subject to significant quarterly fluctuations, affected
primarily by the timing of planned maintenance projects at customers' 
facilities. Generally, the Company's turnaround projects are undertaken in 
two primary periods-February through May and September through November-when
refineries typically shut down certain operating units to make changes to 
adjust to seasonal shifts in product demand.  As a result, the Company's 
quarterly operating results can fluctuate materially.  See "Management's 
Discussion and Analysis of Financial Condition and Results of Operations 
of the Company."

Environmental Regulation.  The operations of the Company have been affected 
positively by the promulgation of stricter environmental laws and more 
stringent enforcement of existing laws.  Although the Company's future 
business success is not dependent on increased environmental regulation, 
decreased regulation and enforcement could adversely affect the demand for
the services provided by the Company.  See "Business-AST Market and Regulatory
Background-Other Business Matters."

Potential Liability and Insurance.  The operations of the Company involve the
use of heavy equipment and exposure to construction hazards, with attendant 
significant risks of liability for personal injury and property damage.  While
the Company believes that it operates safely and prudently, there can be no 
assurance that accidents will not occur or that the Company will not incur
substantial liability in connection with the operation of its business.  In 
addition, recent accidents within the refining and petrochemical industries 
may result in additional regulation of independent contractors serving those 
industries.  See "Business-Other Business Matters-Regulation."  The Company 
maintains workers compensation insurance, general liability insurance and 
auto liability insurance, but such insurance is subject to coverage limits 
of $2.0 million per accident or occurrence.  The Company also maintains an 
umbrella policy with coverage limits of $10.0 million in the aggregate. Such
insurance includes coverage for losses or liabilities relating to environmental
damage orpollution.  Although the Company believes that they conduct their 
operations prudently and that they minimize their exposure to such risks, the 
Company could be materially adversely affected by a claim that was not covered
or only partially covered by insurance. See "Business-Other Business Matters-
Insurance."


I
tem 8. Financial Statements and Supplementary Data

Reference is made to the financial statements, the report thereon, the notes 
thereto and supplementary data commencing at page F-1 of this Annual Report 
on Form 10-K, which financial statements, report, notes and data are 
incorporated herein by reference.  


Item 9. Changes in and Disagreements with Accountants on Accounting and 
        Financial Disclosure

Not Applicable


PART III


Item 10. Directors and Executive Officers of the Registrant

The information relating to the identification, business experience and 
directorships of each director and nominee for director of the Company 
required by Item 401 of Regulation S-K will be presented in the section 
 the section 
entitled "Election of Directors - Nominees" of the Company's definitive 
proxy statement for the annual meeting of stockholders for fiscal 1996, 
and is hereby incorporated by reference; if the definitive proxy statement
for the 1996 annual stockholders' meeting is not filed with the Securities
and Exchange Commission within 120 days of the end of the Company's 1996 
fiscal year, the Company will amend this Annual Report and include such
the amendment.  See Item 1. "Business - Executive Officers 
of the Company" for information relating to the identification and business 
experience of the Company's executive officers.


Item 11.

Executive Compensation

The information relating to the  compensation of directors and officers 
required by Item 402 of Regulation S-K will be presented in the section 
entitled "Election of Directors-Executive Compensation" of the Company's 
definitive proxy statement for the annual meeting of stockholders for fiscal
1996 and is hereby incorporated by reference; if the definitive proxy 
statement for the 1996 annual stockholders' meeting is not filed with the
Securities and Exchange Commission within 120 days of the end of the 
Company's 1996 fiscal year, the Company will amend this Annual Report 
and include such information in the amendment.


Item 12. Security Ownership of Certain Beneficial Owners and Management

The information relating to security ownership required by Item 403 of 
Regulation S-K will be presented in the sections entitled "Voting Securities
and Principal Stockholders" and "Election of Directors Nominees" of the 
Company's definitive proxy statement for the annual meeting of stockholders
for fiscal 1996 and is hereby incorporated by reference; if the definitive 
proxy statement for the 1996 annual stockholders' meeting is not filed with 
the Securities and Exchange Commission within 120 days of the end of the 
Company's 1996 fiscal year, the Company will amend this Annual Report and
include such information in the amendment.


Item 13. Certain Relationships and Related Transactions

The information relating to relationships and transactions required by Item 
404 of Regulation S-K will be presented in the section entitled "Election of 
Directors - Certain Transactions" of the Company's definitive proxy statement
for the annual meeting of stockholders for fiscal 1996, and is hereby 
incorporated by reference; if the definitive proxy statement for the 1996 
annual stockholders' meeting is not filed with the Securities and Exchange 
Commission within 120 days of the end of the Company's 1996 fiscal year, 
the Company will amend this Annual Report and include such information in the
amendment.


PART IV


Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) 1 and 2 Financial Statements of the Company

Report of Independent Auditors. F-2

Consolidated Balance Sheets as of May 31, 1996 and 1995. F-3

Consolidated Statements of Income for the years ended May 31, 1996, 1995 
   and 1994. F-5

Consolidated Statements of Changes in Stockholders' Equity for
the years ended May 31, 1996, 1995 and 1994. F-6


Consolidated Statements of Cash Flows for the years ended May 31,
1996, 1995 and 1994. F-7

Notes to Consolidated Financial Statements F-9
 

Quarterly Financial Data (Unaudited) F-20

All schedules have been omitted since the required information is
not present or is not present in amounts sufficient to require
submission of the schedule.

3.  List of Exhibits  

2.1

Asset Purchase Agreement, dated December 30, 1992, among Matrix
Service Company, Colt Acquisition Company, and Colt Construction
Company, Duncan Electric Company, Edward C. Darling and Richard
C. Gray II. (Exhibit 2.1 to the Company's Annual Report on Form
10-K (File NO. 0-18716), filed August 27, 1993, is hereby
incorporated by reference).

2.2

Stock Purchase Agreement, dated June 10, 1993, among the Company,
Heath Acquisition Corporation and HC Resources, Limited, Heath
Engineering, Limited and Heath Engineering (Tank Maintenance)
Limited. (Exhibit 2.2 to the Company's Annual Report on Form 10-K
(File No. 0-18716), filed August 27, 1993, is hereby incorporated
by reference).

2.3

Stock Purchase Agreement, dated February 22, 1994, by and among
Matrix Service Company and the shareholders of Georgia Steel
Fabricators, Inc. (Exhibit 2.1 to the Company's Current Report on
Form 8-K (File No. 0-18716) filed March 7, 1994, is hereby
incorporated by reference). 

3.1

Restated Certificate of Incorporation (Exhibit 3.1 to the
Company's Registration Statement on Form S-1 (No. 33-36081), as
amended, filed July 26, 1990 is hereby incorporated by
reference).

3.2

Bylaws, as amended (Exhibit 3.2 to the Company's Registration
Statement on Form S-1 (No. 33-36081) as amended, filed July 26,
1990 is hereby incorporated by reference).

4.1

Specimen Common Stock Certificate (Exhibit 4.1 to the Company's
Registration Statement on Form S-1 (File No. 33-36081), as
amended, filed July 26, 1990 is hereby incorporated by
reference).

+ 10.1

Matrix Service Company 1990 Incentive Stock Option Plan (Exhibit
10.14 to the Company's Registration Statement on Form S-1 (File
No. 33-36081), as amended, filed July 26, 1990 is hereby
incorporated by reference.

+ 10.2

Matrix Service Company 1991 Stock Option Plan (Exhibit 10.14 to
the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1991 (File No. 0-18716) is hereby incorporated by
reference).

10.3

Asset Purchase Agreement, dated June 23, 1990, as amended, among
Matrix Environmental Company, Midwest Acquisition Corporation and
Midwest Industrial Contractors, Inc. and certain of its
shareholders (Exhibit 10.15 to the Company's Registration
Statement on Form S-1 (No. 33-36081), as amended, filed July 26,
1990 is hereby incorporated by reference).

10.4

Standard Industrial Lease, dated June 30, 1989, between Matrix
Service, Inc. and the Kinney Family Trust (Exhibit 10.16 to the
Company's Registration Statement on Form S-1 (No. 33-36081), as
amended,  filed July 26, 1990 is hereby incorporated by
reference).

10.5

Agreement and Plan of Reorganization, dated March 22, 1991, by
and among Matrix Service Company, San Luis Acquisition
Corporation, West Coast Acquisition Corporation, San Luis Tank
Piping Construction Co., Inc., West Coast Industrial Coatings,
Inc. and Tim S. Selby (Exhibit 10.19 to the Company's
Registration Statement on Form S-1 (File No. 33-39823), as
amended, filed April 8, 1991 is hereby incorporated by
reference).

10.6

Registration Rights Agreement, dated June 1, 1992, between the
Company and Tim Selby (Exhibit 10.8 to the Company's Registration
Statement on Form S-1 (File No. 33-48373) filed June 4, 1992 is
hereby incorporated by reference).

10.7

Lease Agreement, dated May 30, 1991, between Tim S. Selby and
Stephanie W. Selby as Co-Trustees of the Selby Living Trust dated
October 20, 1983, Tim S. Selby and Stephanie W. Selby, and
Richard Chafin, Trustee of the Selby Children's Trust 1 dated
December 12, 1983 and San Luis Tank Piping Construction Co., Inc.
(Exhibit 10.9 to the Company's Registration Statement on Form S-1
(File No. 33-48373) filed June 4, 1992 is hereby incorporated by
reference).
 
+ 10.8

Employment and Noncompetition Agreement, dated June 1, 1991,
between West Coast Industrial Coatings, Inc. and San Luis Tank
Piping Construction Co., Inc., and Tim S. Selby (Exhibit 10.10 to
the Company's Registration Statement on Form S-1 (File No. 33-
48373) filed June 4, 1992 is hereby incorporated by reference).

10.9

Revolving Credit Agreement, dated August 30, 1994, by and among
the Company and its subsidiaries, and Liberty Bank & Trust
Company of Tulsa, N.A. (Exhibit 10.9 to the Company's Annual
Report on Form 10-K for the fiscal year ended May 31, 1995 (File
No. 0-18716) is hereby incorporated by reference).

10.10

Promissory Note (Revolving Note), dated October 31, 1995, by and
between the Company and its subsidiaries, and Liberty Bank &
Trust Company of Tulsa, N.A. (Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the fiscal year ended May 31, 1995
(File No. 0-18716) is hereby incorporated by reference).

10.11

Promissory Note (Term Note), dated August 30, 1994, by and
between the Company and its subsidiaries, and Liberty Bank &
Trust Company of Tulsa, N.A. (Exhibit 10.11 to the Company's
Annual Report on Form 10-K for the fiscal year ended May 31, 1995
(File No. 0-18716) is hereby incorporated by reference).

10.12

Security Agreement, dated August 30, 1994, by and among the
Company and its subsidiaries, and Liberty Bank & Trust Company of
Tulsa, N.A. (Exhibit 10.12 to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995 (File No. 0-18716) is
hereby incorporated by reference).

10.13

Promissory Note, dated December 30, 1992, by and between the
Company, Colt Acquisition Company and Colt Construction Company
and Duncan Electric Company. (Exhibit 10.17 to the Company's
Annual Report on Form 10-K (File No. 0-18716), filed August 27,
1993, is hereby incorporated by reference).

+ 10.14

Employment and Noncompetition Agreement, dated June 10, 1993,
between Heath Engineering, Limited and Robert Heath. (Exhibit
10.18 to the Company's Annual Report on Form 10-K (File No. 0-
18716), filed August 27, 1993, is hereby incorporated by
reference).

10.15

Share Purchase Agreement, dated June 11, 1993, between Robert
Heath and Heath Acquisition Corporation. (Exhibit 10.19 to the
Company's Annual Report on Form 10-K (File No. 0-18716), filed
August 27, 1993, is hereby incorporated by reference).

+ 10.16

Employment and Noncompetition Agreement dated February 22, 1994,
between Brown Steel Contractors, Inc. and Mark A. Brown (Exhibit
99.2 to the Company's Current Report on Form 8-K, (File No. 0-
18716), filed March 7, 1994, is hereby incorporated by
reference).

+ 10.17

Employment and Noncompetition Agreement dated February 22, 1994,
between Brown Steel Contractors, Inc. and Sample D. Brown
(Exhibit 99.3 to the Company's Current Report on Form 8-K, (File
No. 0-18716), filed March 7, 1994, is hereby incorporated by
reference).

10.18

Lease Agreement, dated January 1, 1994, between Colt Properties,
a Washington partnership, the partners being Wayne N. Berry,
Richard C. Gray and Edward C. Darling, and Colt Construction
Company.  (Exhibit 10.22 to the Company's Annual Report on Form
10-K (File No. 0-18716), filed August 24, 1994, is hereby
incorporated by reference).

10.19  

Asset Purchase Agreement by and among Matrix Service Company,
Mayflower Asset Acquisition Corporation, and Mayflower Vapor Seal
Corp., dated August 26, 1994. (Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the fiscal year ended May 31, 1995
(File No. 0-18716) is hereby incorporated by reference).

+ 10.20

Matrix Service Company 1995 Nonemployee Directors' Stock Option
Plan (Exhibit 4.3 to the Company's Registration Statement on Form
S-8 (File No. 333-2771), filed April 24, 1996 is hereby
incorporated by reference).

*  11.1  Computation of Per Share Earnings.
*  27    Financial Data Schedule.
*  21.1  Subsidiaries of Matrix Service Company.
*  23.1  Consent of Ernst & Young LLP.
*  Filed herewith.
+  Management Contract or Compensatory Plan.
(b)  Reports on Form 8-K:  None





                       Subsidiaries

Matrix Service, Inc., an Oklahoma corporation
Matrix Service Mid-Continent, Inc., an Oklahoma corporation
Midwest Industrial Contractors, Inc., a Delaware corporation
Petrotank Equipment, Inc., an Oklahoma corporation
San Luis Tank Piping Construction Co., Inc., a Delaware corporation
Tank Supply, Inc., an Oklahoma corporation
West Coast Industrial Coatings, Inc., a California corporation
Colt Construction Company, a Delaware corporation
Heath Engineering, Ltd., an Ontario, Canada corporation
Heath (Tank Maintenance) Engineering, Ltd., a U.K. corporation
Midwest International, Ltd., a Delaware corporation
Brown Steel Contractors, Inc., a Georgia corporation
Mayflower Vapor Seal Corporation, an Oklahoma corporation


                           SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Matrix Service Company has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

Matrix Service Company

Date: August 29, 1996

By:    s/Doyl D. West  
       ------------------------
       Doyl D. West, President


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities
 and on the dates indicated:

        Signatures                Title                       Date 
   --------------------  ------------------------------  ---------------

     s/Doyl D. West          President and Director      August 29, 1996
     ----------------    (Principal Executive Officer)
     Doyl D. West


     s/C. William Lee        Chief Financial Officer     August 29, 1996
     ----------------        and Director
     C. William Lee


    s/Hugh E. Bradley        Director                    August 29, 1996
    -----------------
    Hugh E. Bradley


    s/Robert L. Curry        Director                    August 29, 1996
    -----------------
    Robert L. Curry
    

    s/William P. Wood        Director                    August 29, 1996
    -----------------
    William P. Wood

    
    s/John S. Zink           Director                    August 29, 1996
    -----------------
    John S. Zink



                             Matrix Service Company
                              
                 Index to Consolidated Financial Statements
                              
                                Item 14(a) 
                   


                                                           Page
                                                          ------
Covered by Report of Independent Auditors
 
Report of Independent Auditors                              F-2
 
Consolidated Balance Sheets as of May 31, 1996 and 1995     F-3
 
Consolidated Statements of Income for the
years ended May 31, 1996, 1995 and 1994                     F-5
 
Consolidated Statements of Changes in Stockholders' 
Equity for the years ended May 31, 1996, 1995 and 1994      F-6
 
Consolidated Statements of Cash Flows for the years
ended May 31, 1996, 1995 and 1994                           F-7
 
Notes to Consolidated Financial Statements                  F-9
 
Not Covered by Report of Independent Auditors

Quarterly Financial Data (Unaudited)                        F-20
 
All schedules have been omitted since
the required information is not present
or is not present in amounts sufficient
to require submission of the schedule.



               Report of Independent Auditors


The Stockholders and Board of Directors
Matrix Service Company

We have audited the accompanying consolidated balance sheets of Matrix
Service Company and subsidiaries as of May 31, 1996 and 1995, and the 
related consolidated statements of income, changes in stockholders' equity, 
and cash flows for each of the three years in the period ended May 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements 
based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of 
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit 
also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Matrix
Service Company and subsidiaries at May 31, 1996 and 1995, and the consolidated
results of their operations and their cash flows for each of the three years in 
the period ended May 31, 1996, in conformity with generally accepted accounting
principles.


                                           ERNST & YOUNG LLP

Tulsa, Oklahoma
August 20, 1996


<MULTIPLER>         1,000

<TABLE>
[DESCRIPTION]       Consolidated Balance Sheets

                   Matrix Service Company

                 Consolidated Balance Sheets
                              
                       (In thousands)
                              
<CAPTION>


                                                  May 31
                                              1996      1995
                                           ---------------------          
<S>                                        <C>         <C>
Assets                   
Current assets:                                     
Cash and cash equivalents                 $  1,899    $  1,976
Accounts receivable                         29,205      26,948
Costs and estimated earnings in excess of            
   billings on uncompleted contracts        12,122       9,582
Inventories                                  4,149       5,025
Prepaid expenses                               179         426
Deferred taxes                                 995         871
Income tax receivable                          609       3,716
                                          ---------------------
Total current assets                        49,158      48,544
                                                    
Investment in undistributed equity of                
   foreign joint venture                       374         454
                                                    
Property, plant and equipment, at cost:             
   Land and buildings                       14,528      13,356
   Construction equipment                   23,414      20,459
   Transportation equipment                  4,990       4,955
   Furniture and fixtures                    2,806       2,522
   Construction in progress                    189         135
                                          ---------------------
                                            45,927      41,427
Accumulated depreciation                    17,065      12,821
                                          ---------------------
                                            28,862      28,606
                                                    
Goodwill, net of accumulated amortization            
of $4,114 and $3,345 in 1996 and 1995,              
respectively                                27,033      27,437
                                                    
Other assets                                   330         688
                                         ----------------------
Total assets                              $105,757    $105,729
                                          =====================

<FN>
See accompanying notes.
</TABLE>

[MULTIPLIER]       1,000

<TABLE>
[DESCRIPTION]      Consolidated Balance Sheets                   

                   Matrix Service Company

                 Consolidated Balance Sheets
                              
            (In thousands, except share amounts)
                              
<CAPTION>

                                                  May 31
                                             1996        1995
                                           --------    --------
<S>                                         <C>         <C>
Liabilities and stockholders' equity               
Current liabilities:                               
 Accounts payable                          $  9,026   $ 10,772
Billings on uncompleted contracts in                
excess of costs and estimated earnings        4,353      4,313
 Accrued insurance                            3,004      1,792
 Earnout payable                              1,606        233
 Other accrued expenses                       3,170      2,123
 Current portion of long-term debt            1,629      2,511
                                           --------------------
Total current liabilities                    22,788     21,744
                                                   
Long-term debt                                4,847      8,467
                                                   
                                                   
Deferred income taxes                         5,088      4,698
                                                   

Stockholders' equity:                              
 Common stock - $.01 par value; 15,000,000
   shares authorized; 9,491,153                    
   shares issued in 1996 and 1995                95         95
 Additional paid-in capital                  50,927     51,188
 Retained earnings                           23,617     21,464
 Cumulative translation adjustment             (107)      (101)
                                           --------------------
                                             74,532     72,646
Less treasury stock, at cost - 177,467              
   and 213,875 shares in 1996 and 1995,       1,498      1,826
   respectively
                                           --------------------
Total stockholders' equity                   73,034     70,820
                                           --------------------

Total liabilities and stockholders'equity  $105,757   $105,729
                                           ====================
<FN>
See accompanying notes.
</TABLE>

<MULTIPLER>      1,000

<TABLE>
[DESCRIPTION]    Consolidated Statements of Income 
                   
                   Matrix Service Company

              Consolidated Statements of Income

     (In thousands, except share and per share amounts)
                              
<CAPTION>

                                     Year ended May 31
                                 1996     1995      1994
                               -----------------------------                     
<S>                            <C>        <C>       <C>
Revenues                       $183,725   $177,516  $133,480
Cost of revenues                167,107    163,602   116,992
Gross profit                     16,618     13,914    16,488
Selling, general and                                
administrative
   expenses                      10,784     10,927    10,445
Goodwill and noncompete           
   amortization                   1,115      1,531     1,477
                               ------------------------------
Operating income                  4,719      1,456     4,566
                                                         
Other income (expense):                                  
 Loss from investment in                            
   foreign joint venture:                                   
   Equity in losses from     
   operations                      -          (349)     (200)
   Impairment of investment        -        (1,017)     -
 Interest expense                  (815)      (897)     (546)
 Interest income                    411        149       318
 Other                               83        203       517
                               ------------------------------
Income (loss) before income    
   tax expense                    4,398       (455)    4,655

Provision (benefit) for                             
   federal, state and
   foreign income taxes:                              
   Current                        1,683       (327)    1,428
   Deferred                         266         61       510
                               ------------------------------
                                  1,949       (266)    1,938
                               ------------------------------
Net income (loss)              $  2,449   $   (189) $  2,717
                               ==============================   
                                              
Net income (loss) per common                        
and common
 equivalent share:                                  
   Primary                     $   .26    $  ( .02) $   .29
                             
Weighted average common and                         
common
 equivalent shares                                  
outstanding:
   Primary                     9,529,481   9,283,442   9,466,979

<FN>
See accompanying notes.
</TABLE>

[MULTIPLIER]              1,000

<TABLE>
[DESCRIPTION]             Consolidated Statements of Change in 
                          Stockholders' Equity

                     Matrix Service Company

 Consolidated Statements of Changes in Stockholders' Equity

<CAPTION>
                                        Additional                          Cumulative
                               Common   Paid-In    Retained     Treasury    Translation
                               Stock    Capital    Earnings     Stock       Adjustment     Total
                               -------------------------------------------------------------------
                                                        (In thousands)
                                                               
<S>                             <C>     <C>        <C>          <C>              <C>       <C>
Balances, May 31, 1993          $95     $49,364    $19,184      $(2,243)      $    -       $66,400
   Treasury stock issued                                         
    in Brown acquisition 
    (45,452 shares                -           -         91          409            -           500
   Treasury stock purchased
    (10,000 shares)               -           -          -          (85)           -           (85)
   Exercise of stock options      
    (35,074 shares)               -           -       (280)         322            -            42

   Cumulative translation   
    adjustment                    -           -          -            -          (87)          (87)
   Net income                     -           -      2,717            -            -         2,717
                               ---------------------------------------------------------------------
Balances, May 31, 1994           95      49,364     21,712       (1,597)         (87)       69,487
                                            
Treasury stock purchased                         
 (50,000 shares)                  -           -          -         (294)           -          (294)
Exercise of stock options       
(7,235 shares)                    -           -        (59)          65            -             6
Tax effect of exercised  
stock options                     -       1,824          -            -            -         1,824
Cumulative translation 
adjustment                        -           -          -            -          (14)          (14)
Net loss                          -           -       (189)           -            -          (189)
                               ---------------------------------------------------------------------
Balances, May 31, 1995           95       51,188    21,464       (1,826)        (101)       70,820
  Exercise of stock               
  options (36,408 shares)         -            -      (296)         328            -            32
  Tax effect of exercised  
  stock options                   -         (261)        -            -            -          (261)
  Cumulative translation
  adjustment                      -            -         -            -           (6)           (6)
  Net income                      -            -     2,449            -            -         2,449
Balances, May 31, 1996          $95      $50,927   $23,617      $(1,498)       $(107)      $73,034

<FN>
See accompanying notes.
</TABLE>

[MULTIPLIER]            1,000

<TABLE>
[DESCRIPTION]           Consolidated Statements of Cash Flows
                   
                   Matrix Service Company

            Consolidated Statements of Cash Flows

<CAPTION>
                                     Year ended May 31
                                 1996     1995      1994
                                -------------------------
                                      (In thousands)

<S>                            <C>         <C>      <C>                                                
Operating activities                                 
Net income (loss)              $2,449     $  (189)   $2,717
Adjustments to reconcile net                         
income to net cash  provided 
by operating activities:
   Depreciation and          
   amortization                 5,851       6,019     4,949
   Deferred income tax         
   provision                      266          61       510
   (Gain)loss on sale of      
   equipment                      248         (17)     (144)
   Gain on sale of subsidiary       -           -      (344)
   Loss on sale of marketable  
   securities                       -          65         -
   Loss from investment in                           
   foreign joint venture            -       1,366       200
   Changes in operating assets                       
   and liabilities increasing 
   (decreasing) cash, net of
   effects from acquisition                        
   of subsidiaries:
      Accounts receivable      (2,257)     (2,703)   (5,166)
      Costs and estimated                            
      earnings in excess 
      of billings on                    
      uncompleted contracts    (2,540)        353       242
    Inventories                   566      (1,784)   (1,281)
    Prepaid expenses              247         211     1,268
    Accounts payable           (1,746)      3,139      (973)
    Billings on uncompleted                        
      contracts in excess of 
      costs and estimated
      earnings                     40      (3,296)    5,798
    Accrued expenses            3,632      (1,060)    1,907
    Income taxes          
      receivable/payable        2,846      (1,626)      446
    Other assets                   11          85       (13)
                               ------------------------------
Net cash provided by 
   operating activities         9,613         624    10,116

Investing activities                                 
Acquisition of property, 
   plant and equipment         (3,410)     (5,182)   (5,602)
Acquisition of subsidiaries 
   and investment in foreign 
   joint venture, net of  
   cash acquired               (1,931)       (724)   (8,331)
Purchases of marketable 
   securities                       -           -    (2,549)
Proceeds from sale of          
   marketable securities            -         285     6,472
Proceeds from other investing  
   activities                     116         100       583
                               -----------------------------
Net cash used in investing     
   activities                  (5,225)     (5,521)   (9,427)

</TABLE>

[MULTIPLIER]       1,000

<TABLE>
[DESCRIPTION]      Consolidated Statements of Cash Flows


                   Matrix Service Company

      Consolidated Statements of Cash Flows (continued)

<CAPTION>

                                     Year ended May 31
                                 1996     1995      1994
                               -----------------------------
                                      (In thousands)

<S>                            <C>        <C>        <C>                              
Financing activities                                
Issuance of common stock       $   32     $     6   $   542
Purchase of treasury stock          -        (294)      (85)
Advances under bank credit      
   agreement                    7,500      11,000     6,200
Repayments of bank credit  
   agreement                   (9,500)     (4,372)   (4,200)
Repayment of term note         (1,089)          -         -
Repayment of acquisition notes (1,409)     (2,292)   (1,499)
Issuance of equipment lease        50           -         -
Repayments of mortgage and     
   equipment notes                (54)       (109)   (4,067)
                               -----------------------------
Net cash provided by (used in)                       
   financing activities        (4,470)      3,939    (3,109)
Cumulative translation        
   adjustment                       5         (14)      (87)
                               -----------------------------
Net decrease in cash and 
   cash equivalents               (77)       (972)   (2,507)
Cash and cash equivalents,     
   beginning of year            1,976       2,948     5,455
                               -----------------------------
Cash and cash equivalents, 
   end of year                 $1,899     $1,976    $2,948
                               ============================
Supplemental disclosure of 
   cash flow information
   Cash paid during the 
   period for:
   Income taxes                $1,777     $1,355    $   982
   Interest                    $  823     $  962    $   606

<FN>
See accompanying notes.
</TABLE>

[DESCRIPTION]    Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Organization and Basis of Presentation

The consolidated financial statements present the accounts of Matrix Service
Company ("MSC") and its subsidiaries (collectively referred to as "the 
Company"). Subsidiary companies include Matrix Service, Inc., ("Matrix"), 
Midwest Industrial Contractors, Inc. ("Midwest"), Matrix Service Mid-Continent,
Petrotank Equipment, Inc. ("Petrotank"), Tank Supply, Inc., San Luis Tank 
Piping Construction Co., Inc. ("San Luis"), Colt Construction Co. ("Colt"), 
Midwest International, Inc., Heath Engineering Ltd. ("Heath"), Brown Steel 
Contractors, Inc. ("Brown") and Mayflower Vapor Seals Corp. ("Mayflower"). 
Intercompany transactions and balances have been eliminated in consolidation. 
Heath, Brown and Mayflower were acquired on June 10, 1993, April 1, 1994 and 
August 26, 1994, respectively, by MSC (see Note 3).

The Company operates primarily in the United States but has operations in
Canada and Mexico through Heath and San Luis. The Company's one industry 
segment is maintenance, construction services and products for petroleum 
refining and storage facilities and water storage tanks and systems for 
municipalities and private industry.

Cash Equivalents

The Company includes as cash equivalents all investments with original 
maturities of three months or less which are readily convertible into cash. 
The carrying value of cash equivalents approximates fair value.

Inventories

Inventories consist primarily of raw materials and are stated at the lower of
cost or net realizable value. Cost is determined using the first-in, first-out
or average cost method.

Revenue Recognition

Revenues from fixed-price contracts are recognized on the percentage-of-
completion method measured by the percentage of costs incurred to date to 
estimated total costs for each contract. Revenues from cost-plus-fee contracts
are recognized on the basis of costs incurred plus the estimated fee earned. 
Anticipated losses on uncompleted contracts are recognized in full when they
become known. Losses from the investment in the undistributed equity of the 
foreign joint venture were recognized in accordance with the equity method of
accounting in 1995 and 1994.

Depreciation and Amortization

Depreciation is computed using the straight-line method over the estimated 
useful lives of the depreciable assets. Goodwill and noncompete agreements 
are being amortized over 40 and 5 years, respectively, using the straight-
line method.

Income Taxes

The Company accounts for income taxes under Statement of Financial Accounting 
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109,
the deferred tax provision is determined under the liability method whereby
deferred tax assets and liabilities are recognized based on differences between
financial statement and tax bases of assets and liabilities using presently 
enacted tax rates.

Net Income per Common and Common Equivalent Share

Primary net income per common and common equivalent share is computed using the 
weighted average number of shares of common stock and common stock equivalents.
Common stock equivalents consist of stock options (calculated using the treasury
stock method). Fully diluted net income per common and common equivalent share
is computed using the higher of year-end or average market price under the
treasury stock method.

Stock Option Plans

The Company has elected to follow Accounting Principles Board Opinion No. 25, 
"Accounting for Stock Issued to Employees" (APB 25), and related interpretations
in accounting for its employee stock options. Under APB 25, because the exercise
price of the Company's employee stock options equals the market price of the 
underlying stock on the date of grant, no compensation expense is recognized.

Reclassifications

Certain 1994 and 1995 amounts have been reclassified to conform to 1995 and 
1996 presentation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
 
2. Uncompleted Contracts

Contract terms generally provide for progress billings based on completion of 
certain phases of the work. The excess of costs incurred and estimated earnings
recognized for construction contracts over amounts billed on uncompleted 
contracts is reported as a current asset and the excess of amounts billed over
costs incurred and estimated earnings recognized for construction contracts on
uncompleted contracts is reported as a current liability as follows:


<TABLE>
                                            May 31
                                        1996      1995
                                     ------------------
                                        (In thousands)
<CAPTION>                                                
<S>                                  <C>        <C>
 Costs incurred and estimated                   
   earnings recognized on            $97,683    $87,666
   uncompleted contracts
 Billings on uncompleted              89,914     82,397
   contracts                         -------------------
                                     $ 7,769    $ 5,269
                                     ===================           
   Shown on balance sheet as:                   
  Costs and estimated earnings              
    in excess of billings on               
    uncompleted contracts            $12,122    $ 9,582
  Billings on uncompleted 
    contracts in excess of
    costs and estimated  
    earnings                           4,353      4,313
                                     -------------------
                                     $ 7,769    $ 5,269
                                     ===================
</TABLE>


Approximately $880,000 and $2,651,000 of accounts receivable at May 31, 1996
and 1995, respectively, relate to billed retainages under contracts.

3. Acquisitions

Mayflower Vapor Seals

On August 26, 1994, the Company acquired certain assets of Mayflower Vapor 
Seals Corp. for $660,000. The transaction was accounted for as a purchase and
resulted in approximately $442,000 of goodwill, which is being amortized on a
straight-line basis over a 40-year period. The operations of the new 
subsidiary have been included in the accompanying financial statements 
subsequent to August 26, 1994.

A summary of the assets acquired, including acquisition  costs of $20,000 in
the transaction is as follows (in thousands):


<TABLE>
               <S>                       <C>
               Inventory                 $ 18
               Property and equipment     200
               Goodwill                   442
                                         ----- 
                                         $660
                                         =====
</TABLE>


Pro forma results of operations for the year ended May 31, 1995, assuming the
Mayflower transaction occurred on June 1, 1994, were not significantly 
different from the results reported.

Noncash Investing Activities

At May 31, 1996, the Company has an earnout payable of $1,606,000 for 
distributions which will be made pursuant to contingent consideration 
provisions of various business acquisition agreements.

4. Long-Term Debt

Long-term debt consists of the following:


<TABLE>
                                                  1996      1995
                                                 ----------------
                                                  (In thousands)
<CAPTION>                                                    
<S>                                               <C>     <C>
Notes payable to former shareholders of 
  Midwest; requires five equal annual
  installments, including interest at 8% per      $    -   $   880
  annum, commencing June 1, 1991               
Note payable to former shareholders of Colt
  and Duncan; requires quarterly principal       
  payments of $132,315, interest at the prime
  rate, commencing March 31, 1993                    926     1,455
  
Borrowings under bank credit facility:
  Revolving note payable                           2,000     4,000
  Term note payable                                3,539     4,628
Other                                                 11        15
                                                 ------------------ 
                                                   6,476    10,978
Less current portion                               1,629     2,511
                                                 ------------------
                                                  $4,847   $ 8,467
</TABLE>


In August 1994, the Company established a credit facility  with a commercial
bank under which the Company may borrow a total of $20 million. The Company
may borrow up to $15 million under a revolving credit agreement based on the
level of the Company's eligible accounts receivable, which was $25,092,000 at 
May 31, 1996. The agreement provides for interest at the Prime Rate (8.25% 
at May 31, 1996) minus one-half of one percent, or a LIBOR based option, and 
matures on October 31, 1997. The agreement requires maintenance of certain 
financial ratios, limits the amount of additional borrowings and prohibits
the payment of dividends. Advances of $2 million were outstanding under this 
agreement at May 31, 1996. The credit facility also provides for a term loan
up to $5 million. On October 5, 1994, a term loan of $4.9 million was made to
the Company. The term loan is due on August 31, 1999 and is to be repaid in
54 equal payments beginning in March 1995 at an interest rate based upon the
Prime Rate. At May 31, 1996, the balance outstanding on the term loan was 
$3,539,000 at an interest rate of 8.25%. The credit facility is secured by 
all accounts receivable, inventory, intangibles, and proceeds related thereto.

The Company has outstanding letters of credit and letters of guarantee 
totaling $3,586,669 which mature during 1996 and 1999.

Aggregate maturities of long-term debt are as follows (in thousands): 1997 - 
$1,629; 1998 - $3,486; 1999 - $1,089; and 2000 - $272.

The carrying value of debt approximates fair value.

5. Income Taxes

The components of the provision for income taxes are as follows:

<TABLE>

                                 1996      1995      1994
                               ---------------------------   
                                      (In thousands)
<CAPTION>                                                  
<S>                             <C>        <C>      <C>
  Current:                                        
    Federal                     $1,145    $ (83)    $1,036
    State                          373      (10)       229
    Foreign                        165     (234)       163
                               ----------------------------
                                 1,683     (327)     1,428
                                                  
  Deferred:                                       
    Federal                        (21)      48        430
    State                          368       11         80
    Foreign                        (81)       2          -
                               ----------------------------
                                   266       61        510
                               ----------------------------
                                $1,949    $(266)    $1,938
                               ============================

</TABLE>


The difference between the expected tax rate and the effective tax rate is 
indicated below:


<TABLE>
                                 1996      1995      1994
                              -------------------------------
                                      (In thousands)
<CAPTION>                                                  
<S>                             <C>         <C>       <C>
Expected provision (benefit)
  for federal Income taxes at
  the statutory rate            $1,495     $(155)     $1,583
State income taxes, net of                        
  federal benefit                  257        (8)        201
Charges without tax benefit, 
  primarily goodwill             
  amortization                     246       246         226
Life insurance proceeds              -      (255)          -
  Other                            (49)      (94)        (72)
                               -------------------------------
Provision for income taxes      $1,949     $(266)     $1,938

</TABLE>



The Company incurred pretax losses from foreign operations of $1,449,000
in 1996.


<TABLE>
Significant components of the Company's deferred tax liabilities and assets
as of May 31, 1996 and 1995 are as follows:

                                           1996      1995
                                          ----------------
                                           (In thousands)
<CAPTION>                                               
<S>                                       <C>       <C>
     Deferred tax liabilities:                 
       Tax over book depreciation         $5,055    $4,668
       Other - net                           119        44
                                          -----------------
     Total deferred tax liabilities        5,174     4,712

     Deferred tax assets:                      
       Foreign insurance dividend            287       249
       Vacation accrual                      203       164
       Colt noncompete amortization          483       402
       Other - net                           108        70
                                          -----------------
     Total deferred tax assets             1,081       885
                                          -----------------
     Net deferred tax liability           $4,093    $3,827
                                         ==================

</TABLE>


The Company had operating loss carryforwards at May 31, 1995 attributable to
foreign operations totaling $694,000 that were fully utilized during 1996. The
Company has state job tax credit carryforwards of $147,000 at May 31, 1996.

The Company recorded an income tax receivable and additional paid-in capital
of$1,824,000 in 1995 related to stock sold by employees obtained through the
exercise of incentive stock options.

6. Stockholders' Equity

The Company has adopted a 1990 Incentive Stock Option Plan (the "1990 Plan")
and a 1991 Incentive Stock Option Plan (the "1991 Plan") to provide additional
incentives for officers and other key employees of the Company to promote the
success of the business and to enhance the Company's ability to attract and
retain the services of qualified persons. The Company has adopted a 1995
Nonemployee Directors' Stock Option Plan (the "1995 Plan") to promote the 
interests of the Company and its stockholders by helping to attract and
retain highly qualified independent directors and allowing them to develop a
sense of proprietorship and personal involvement in the development and
financial success of the Company. Under the 1990 and 1991 Plans, incentive and
nonqualified stock options may be granted to the Company's key employees and
nonqualified stock options may be granted to nonemployees who are elected for
the first time as directors of the Company after January 1, 1991. Options
generally become exercisable over a five-year period from the date of the
grant. Under the 1995 Plan, qualified stock options are granted annually to
nonemployee directors. Stock options granted under the 1995 Plan generally
become exercisable over a two-year period from the date of the grant. Under 
each plan, options may be granted with durations of no more than ten years.
The option price per share may not be less than the fair market value of the
common stock at the time the option is granted. Shareholders have authorized
an aggregate of 1,250,000, 620,000, and 250,000 options to be granted under
the 1990, 1991, and 1995 Plans, respectively. Options exercisable total 
497,618 and 423,706 at May 31, 1996 and 1995, respectively.

The following summary reflects option transactions for the past three years:


<TABLE>
                                                   Option   Price
                                     Shares          Per    Share
                                   --------------------------------
<CAPTION>
       <S>                         <C>              <C>     <C>
       Shares under option:               
         Balance at May 31, 1993    1,282,453       $ .67 - $11.25
           Granted                    142,000                11.25
           Exercised                  (35,074)        .67  -  8.50
           Canceled                  (145,275)        .80  - 11.25
                                   --------------------------------
         Balance at May 31, 1994    1,244,104         .67  - 11.25
           Granted                  1,392,525        3.63  - 11.25
           Exercised                   (7,235)        .67  -   .80
           Canceled                (1,195,189)        .80  - 11.25
                                   --------------------------------
         Balance at May 31, 1995    1,434,205         .67  -  5.75
           Granted                    391,500        3.63  -  6.25
           Exercised                  (36,408)        .67  -  3.63
           Canceled                  (265,741)        .80  -  5.75
                                   --------------------------------
         Balance at May 31, 1996    1,523,556       $ .67 - $ 6.25
                                   ================================
</TABLE>


7. Commitments

The Company is the lessee under operating leases covering real estate in Tulsa,
Oklahoma; Rancocas, New Jersey; Anaheim, California; Bay Point, California; 
Paso Robles, California; Bellingham, Washington; and Carson, California. The 
Paso Robles lessors are former stockholders of San Luis, now a stockholder of
the Company and parties related to him. In 1995 and 1994, the Bellingham 
lessors were former stockholders of Colt, who became a stockholder of the 
Company and parties related to him. The Company is also the lessee under 
operating leases covering office equipment. Future minimum lease payments are
as follows (in thousands): 1997 - $497; 1998 - $216; 1999 - $150; 
2000 - $49; 2001 - $32 and thereafter $185. Rental expense was $646,000, 
$663,000 and $547,000 for the years ended May 31, 1995, 1994 and 1993, 
respectively. Rental expense related to the Paso Robles lease was $149,190
for the year ended May 31, 1996 and $120,000 for the years ended May 31, 1995
and 1994. Rental expense related to the Bellingham lease was $57,000 for the 
years ended May 31, 1995 and 1994.

8. Discontinued Foreign Operations

During 1993 the Company invested $662,000 to establish a joint venture
(Al Shafai - Midwest Constructors) with a Saudi Arabian company to perform 
mechanical contracting services in the Kingdom of Saudi Arabia. Al Shafai - 
Midwest Constructors is 49% owned by Midwest International, Inc. The Company
invested another $1,404,000 in the joint venture in 1994 and received $46,000
from the joint venture in 1995. The Company's 49% share of the losses was
$349,000 and $200,000 for 1995 and 1994, respectively. Due to changes in
economic conditions in Saudi Arabia, the Company and the Saudi Arabian
company are in the process of liquidating the joint venture. The Company
reduced the carrying value of its investment in this joint venture by $1,017,000
in 1995 to the estimated recovery upon completion of the liquidation.

Effective February 29, 1996, the Company discontinued the operations of its
United Kingdom tank maintenance subsidiary. As a result, assets totaling
$426,000 were sold or written off. Remaining assets of $556,000 were 
transferred to other Company locations for use in operations.

9. Other Financial Information

The Company provides specialized on-site maintenance and construction services
for petrochemical processing and petroleum refining and storage facilities.
The Company grants credit without requiring collateral to customers consisting
of the major integrated oil companies, independent refiners and marketers,
and petrochemical companies. Although this potentially exposes the Company to
the risks of depressed cycles in oil and petrochemical industries, the
Company's receivables at May 31, 1996 have not been adversely affected by
such conditions and historical losses have been minimal.

Sales to one customer accounted for approximately 11%, 9%, and 11% of the 
Company's revenues for the years ended May 31, 1996, 1995, and 1994,
respectively. Sales to another customer accounted for approximately 14% of
the Company's revenues for the year ended May 31, 1994.

10. Employee Benefit Plan

On June 1, 1993, the Company established a defined contribution 401(k) savings
plan (the "Plan"). All employees meeting length of service requirements are
eligible to participate in the Plan. Participants may contribute an amount up
to 15% of pretax annual compensation as defined in the Plan, subject to 
certain other limitations in accordance with Section 401(k) of the Internal
Revenue Code. The Company may match contributions at a percentage determined
by the Company, but not to exceed 100% of the elective deferral contributions
made by participants during the Plan year. The Company has made no matching
contributions to the Plan for the years ended May 31, 1996, 1995, and 1994.

11. New Accounting Standard

In March 1995, the Financial Accounting Standards Board (FASB) issued Statement 
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The 
Company will adopt Statement 121 in the first quarter of 1997 and, based on 
current circumstances, does not believe the effect of adoption will be
significant.

12. Contingent Liabilities

The Company is self-insured for worker's compensation, auto, and general
liability claims with stop loss protection at $250,000, $100,000, and $50,000
per incident, respectively.Management estimates the reserve for such claims
based on knowledge of the circumstances surrounding the claims, the nature of
any injuries involved, historical experience, and estimates of future costs
provided by certain third parties. Accrued insurance at May 31, 1996 represents
management's estimate of the Company's liability at that date. Changes in the
assumptions underlying the accrual could cause actual results to differ from
the amounts reported in the financial statements.


<TABLE>
[MULTIPLIER]     1,000
[DESCRIPTION]    Quarterly Financial Data

                   Matrix Service Company

            Quarterly Financial Data (Unaudited)


Summarized quarterly financial data are as follows:
                              
                               First     Second    Third     Fourth
             1996              Quarter   Quarter   Quarter   Quarter
 ----------------------------------------------------------------------
                               (In thousands except per share amounts)
                                                   
<CAPTION>
<S>                            <C>       <C>       <C>       <C>  
 Revenues                      $43,162   $48,262   $39,951   $52,350
 Gross profit                    4,325     4,321     3,986     3,986
 Net income                        551       670       457       771
 Net income per share -                                  
   primary and fully diluted       .06       .07       .05       .08
                                                     
        1995                                         
 ---------------------------                                                    

  Revenues                     $43,821   $59,239   $34,707   $39,749
  Gross profit                   4,306     5,438     1,634     2,536
  Net income                       721     1,377    (1,810)     (477)
  Net income per share -
    primary and fully diluted      .08       .15      (.19)     (.05)

  </TABLE>






               Consent of Independent Auditors


We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-38809) pertaining to the Matrix Service Company 1990
Incentive Stock Option Plan and the 1991 Stock Option Plan and to the
incorporation by reference in the Registration Statement (Form S-8 No. 33-32771)
pertaining to the Matrix Service Company 1995 Nonemployee Directors' Stock
Option Plan of our report dated August 20,1996, with respect to the
consolidated financial statements of Matrix Service Company included in this
Annual Report (Form 10-K) for the year ended May 31, 1996.

                                           ERNST & YOUNG LLP
Tulsa, Oklahoma
August 29, 1996





[ARTICLE]                   5
[MULTIPLIER]                1,000

<TABLE>
<S>                         <C>
[PERIOD-TYPE]               3-MOS
[FISCAL-YEAR-END]           May-31-1996
[PERIOD-START]              Mar-01-1996
[PERIOD-END]                May-31-1996
[COMMON]                          9,592
[NET-INCOME]                        771
[EPS-PRIMARY]                      0.08
[COMMON]                          9,592
[NET-INCOME]                        771
[EPS-DILUTED]                      0.08
[FISCAL-YEAR-END]           May-31-1995
[PERIOD-START]              Mar-01-1995
[PERIOD-END]                May-31-1995
[COMMON]                          9,402
[NET-INCOME]                       (477)
[EPS-PRIMARY]                     (0.05)
[COMMON]                          9,402
[NET-INCOME]                       (477)
[EPS-DILUTED]                     (0.05)
[PERIOD-TYPE]               12-MOS
[FISCAL-YEAR-END]           May-31-1996
[PERIOD-START]              Jun-01-1995
[PERIOD-END]                May-31-1996
[COMMON]                          9,529
[NET-INCOME]                      2,449
[EPS-PRIMARY]                      0.26
[COMMON]                          9,578
[NET-INCOME]                      2,449
[EPS-DILUTED]                      0.26
[FISCAL-YEAR-END]           May-31-1995
[PERIOD-START]              Jun-01-1994
[PERIOD-END]                May-31-1995
[COMMON]                          9,283
[NET-INCOME]                       (189)
[EPS-PRIMARY]                     (0.02)
[COMMON]                          9,283
[NET-INCOME]                       (189)
[EPS-DILUTED]                     (0.02)
</TABLE>







<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER>                1,000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>               May-31-1996
<PERIOD-END>                    May-31-1996
<CASH>                                1,899
<SECURITIES>                              0
<RECEIVABLES>                        29,205
<ALLOWANCES>                              0
<INVENTORY>                           4,149
<CURRENT-ASSETS>                     49,158
<PP&E>                               45,927
<DEPRECIATION>                       17,065
<TOTAL-ASSETS>                      105,757
<CURRENT-LIABILITIES>                22,788
<BONDS>                                   0
<COMMON>                                 95
<PREFERRED-MANDATORY>                     0
<PREFERRED>                               0
<OTHER-SE>                           72,939
<TOTAL-LIABILITY-AND-EQUITY>        105,757
<SALES>                             183,725
<TOTAL-REVENUES>                    183,725
<CGS>                               167,107
<TOTAL-COSTS>                       167,107
<OTHER-EXPENSES>                     11,899
<LOSS-PROVISION>                          0
<INTEREST-EXPENSE>                      815
<INCOME-PRETAX>                       4,398
<INCOME-TAX>                          1,683 
<INCOME-CONTINUING>                       0
<DISCONTINUED>                            0
<EXTRAORDINARY>                           0
<CHANGES>                                 0
<NET-INCOME>                          2,449
<EPS-PRIMARY>                          0.26
<EPS-DILUTED>                          0.26
        

</TABLE>