FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                      Quarterly Report Under Section 13 or
                  15(d) of the Securities Exchange Act of 1934
- --------------------------------------------------------------------------------

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

For the quarterly period ended March 31,September 30, 1996
                                                OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
    EXCHANGE ACT OF 1934

For the transition period from __________ to __________
- --------------------------------------------------------------------------

Commission file number 0-2315

                               EMCOR Group, Inc.
                 - ---------------------------------------------------------------
                   (Exact name of registrant as specified in
                                 its charter)

                Delaware                                11-2125338
-------------------------------               ----------------------- -----------------------------------------        -------------------------
    (State or other jurisdiction of                  (I.R.S. Employer
     incorporation or organization)               Identification Number)

    101 Merritt Seven Corporate Park                    06851-1060
                                                 -------------------------
          Norwalk, Connecticut                          ---------- 
    --------------------------------                 (Zip Code)
- -----------------------------------------
(Address of principal executive offices)

             (203) 849-7800
--------------- -----------------------------------------
    (Registrant's telephone number)


                                       N/A
- ---------------------------------------------------------------------------------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

     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  and 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
filing requirements for the past 90 days. Yes X No ---     ---__

     Indicate  by check mark  whether  the  registrant  has filed all  documents
required to be filed by Section 12, 13 or 15(d) of the  Securities  and Exchange
Act of 1934, subsequent to the distribution of securities under a plan confirmed
by a court. Yes X No ---     ---__

     Number of shares of Common Stock outstanding as of the close of business on
April 30,October 29, 1996:
9,424,7069,514,636 shares.







                                EMCOR GROUP, INC.
                                      INDEX


                                                                    Page No.


PART I - Financial Information

Item 1  Financial Statements

        Condensed consolidated balance sheets -
        as of March 31,September 30, 1996 and December 31, 1995                        1

        Condensed consolidated statements of operations -
        three months ended March 31,September 30, 1996 and 1995                        3

        Condensed consolidated statements of cash flowsoperations -
        threenine months ended March 31,September 30, 1996 and 1995                         4

        Condensed consolidated statements of cash flows -
        nine months ended September 30, 1996 and 1995                         5

        Condensed consolidated statement of stockholders'
        equity for the three month period- nine months ended March 31,September 30, 1996                         56

        Notes to condensed consolidated financial statements                  67


Item 2  Management's discussion and analysis of financial condition and
        results of operations                                                 1213

PART II - Other Information

Item 1      Legal Proceedings                                                 1517

Item 6      Exhibits and Reports on Form 8-K                                  1517









PART I - FINANCIAL INFORMATION

ITEM 1  FINANCIAL STATEMENTS

EMCOR Group, Inc. and Subsidiaries


CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
- ------------------------------------------ ------------------ -----------------
                                               March 31,----------------------------------------------------------------------
                                     September 30,    December 31,
                                         1996             1995
                                      (Unaudited)
- ------------------------------------------ ------------------ ---------------------------------------------------------------------------------------

ASSETS

(Unaudited)

Current AssetsAssets:
    Cash and cash equivalents          $54,820$45,494         $53,007
    Accounts receivable, net           410,502432,788         435,974
    Costs and estimated earnings in
     excess of billings on uncompleted  
     contracts                          62,15672,467          65,551
    Inventories                          9,5198,115           8,031
    Prepaid expenses and other           6,9877,682           8,365
    Net assets held for sale                63,819--          61,969
                                    ------------------ ---------------------------------------------------

Total Current Assets                   607,803566,546         632,897
                                    ------------------ ---------------------------------------------------

Investments, Notes and Other Long-Term
    Receivables                          4,6854,291           4,684

Property, Plant and Equipment, net               25,833Net      25,475          27,137

Other AssetsAssets:
    Insurance cash collateral               33,944--          30,812
    Miscellaneous                        14,9143,224          15,415
                                    ------------------ -----------------
                                                 48,858----------------------------------
                                         3,224          46,227
                                    ------------------ ---------------------------------------------------

Total Assets                          $687,179$599,536        $710,945
                                    ================== ===================================================



See notes to condensed consolidated financial statements.







EMCOR Group, Inc. and Subsidiaries


CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share and Per Share Amounts)
- ------------------------------------------ ------------------ -----------------
                                                March 31,----------------------------------------------------------------------
                                          September 30,   December 31,
                                               1996         1995
                                           (Unaudited)
- ------------------------------------------ ------------------ ---------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

(Unaudited)

Current LiabilitiesLiabilities:
    Notes payable                              $14,240$10,955      $14,665
    Borrowings under working capital credit      
         lines                                      25,000--       25,000
    Current maturities of long-term debt         and capital lease obligations                 1,7661,452        1,875
    7% Senior Secured Notes (Series A)              63,819--       61,969
    Accounts payable                           196,583207,348      224,002
    Billings in excess of costs and estimated
        earnings on uncompleted contracts      114,765115,527      113,590
    Accrued payroll and benefits                44,47738,783       38,928
    Other accrued expenses and liabilities      42,388            45,445
                                           ------------------ -----------------43,444       45,287
                                           ---------------------------

Total Current Liabilities                      503,038           525,474
                                           ------------------ -----------------417,509      525,316
                                           ---------------------------

Long-Term Debt                                  70,354            68,24072,796       68,398

Other Long-Term Obligations                     47,13730,216       46,621

Stockholders' EquityEquity:
    Common Stock, $.01 par value, 13,700,000
      shares authorized, 9,424,7069,514,636 and
      9,424,0839,424,706 issued and outstanding,                     
      respectively.                     94respectively                                  95           94
    Warrants                                     2,179        2,179
    Capital surplus                             78,86379,812       78,863
    Cumulative translation adjustment              20297          327
    Accumulated Deficit                         (14,506)(3,368)     (10,853)
                                           ------------------ --------------------------------------------

Total Stockholders' Equity                      66,65079,015       70,610
                                           ------------------ --------------------------------------------

Total Liabilities and Stockholders' Equity    $687,179$599,536     $710,945
                                           ================== ============================================



See notes to condensed consolidated financial statements.






EMCOR Group, Inc. and Subsidiaries


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts) (Unaudited)
- ------------------------------------------ ------------------ ---------------------------------------------------------------------------------------

Three months ended March 31,September 30,              1996          1995
- ------------------------------------------ ------------------ ---------------------------------------------------------------------------------------

Revenues                                   $382,744           $386,015$432,452       $403,941

Costs and ExpensesExpenses:
    Cost of sales                           345,572            354,148390,903        365,232
    Selling, general and administrative      36,643             34,771
                                           ------------------ -----------------
                                                  382,215            388,919
                                           ------------------ -----------------35,566         33,135
                                         -----------------------------
                                            426,469        398,367
                                         -----------------------------
 
Operating Income                              (Loss)                               529             (2,904)5,983          5,574

Interest Expense, Net                         3,7612,425          3,805
------------------ -----------------Net Loss on Businesses Sold                      --            926
                                         -----------------------------

Income Before Income Taxes                    (3,232)            (6,709)3,558            843
Provision For Income Taxes                    4211,627            250
                                         ------------------ ----------------------------------------------
 
Net Loss                                          ($3,653)           ($6,959)
                                           ================== =================

LossIncome                                   $1,931           $593
                                         =============================

Income Per Common Share and Common
  Equivalent Share:                           $0.19           $0.06
                                         =============================


See notes to condensed consolidated financial statements.






EMCOR Group, Inc. and Subsidiaries


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Equivalent:Amounts) (Unaudited)
- ----------------------------------------------------------------------

Nine months ended September 30,               1996          1995
- ----------------------------------------------------------------------

Revenues                                 $1,202,853     $1,171,518

Costs and Expenses:
    Cost of sales                         1,086,318      1,069,008
    Selling, general and administrative     105,999        101,488
                                         -----------------------------
                                          1,192,317      1,170,496
                                         -----------------------------

Operating Income                             10,536          1,022

Other Income, Net                            12,500             --
Interest Expense, Net                         9,915         11,430
Net Loss on Businesses Sold                      --            926
                                         -----------------------------

Income (Loss) Before Income Taxes            13,121        (11,334)
Provision For Income Taxes                    5,636            750
                                         -----------------------------
 
Net Income (Loss)                            $7,485       ($0.37)12,084)
                                         =============================

Income (Loss) Per Common Share and 
  Common Equivalent Share:                    $0.75         ($0.74)
                                           ================== =================1.27)
                                         =============================


See notes to condensed consolidated financial statements.






EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands) (Unaudited)
- ------------------------------------------ ------------------ -----------------
Three-------------------------------------------------------------------------

Nine months ended March 31,September 30,                      1996        1995
- ------------------------------------------ ------------------ ------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATIONS:
    Net lossincome (loss)                               $7,485    ($3,653)           ($6,959)12,084)
    Non-cash expenses                               4,163              4,689
    Change10,129      12,887
    Net loss on businesses sold                         --         926
    Changes in operating assets and liabilities      2,816             (1,813)
                                           ------------------ -----------------7,692      (8,615)
                                                  -----------------------
NET CASH PROVIDED BY (USED IN) OPERATIONS           3,326             (4,083)
                                           ------------------ -----------------25,306      (6,886)
                                                  -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Payments of working capital credit lines       -             (2,500)(45,125)    (11,000)
    Borrowings under working capital credit lines   20,125          --
    Payment of 7% Senior Secured Notes (Series A)  (66,424)         --
    Payments of long-term debt and capital lease      (643)     (1,007)
obligations                           (199)              (315)
    Change in notes payable, net                    (425)             1,232
                                           ------------------ -----------------(3,896)     10,278
    Exercise of stock options                          487          --
                                                  -----------------------
NET CASH USED IN FINANCING
  ACTIVITIES                                       (624)            (1,583)
                                           ------------------ -----------------(95,476)     (1,729)
                                                  -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property, plant 
      and equipment, (1,170)            (1,689)net                            (4,480)     (3,285)
    Proceeds from sale of businesses
      and other assets                                 314         650
    Proceeds from sales of property, plantnet assets
      held for sale                                 66,424           --
    Decrease in investments, notes and
      equipment                                    281                  -
                                           ------------------ -----------------other long-term receivables                      399           --
                                                  -----------------------
NET CASH USED INPROVIDED BY (USED IN) INVESTING
  ACTIVITIES                                        (889)            (1,689)
                                           ------------------ -----------------

INCREASE (DECREASE)62,657      (2,635)
                                                  -----------------------

DECREASE IN CASH AND CASH EQUIVALENTS               1,813             (7,355)(7,513)    (11,250)

CASH AND CASH EQUIVALENTS AT BEGINNING
  OF PERIOD                                         53,007      52,505

                                                  ------------------ ----------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD         $54,820            $45,150
                                           ================== =================$45,494     $41,255
                                                  =======================

SUPPLEMENTAL CASH FLOW INFORMATION
    Cash Paid For:
       Interest                                     $1,449             $1,481$5,311      $5,133
       Income Taxes                                   $62               $104$239        $762



See notes to condensed consolidated financial statements.






EMCOR Group, Inc. and Subsidiaries


CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In Thousands) (Unaudited)
- ------------------- ------- -------- -------- ------------ ------------ --------------------------------------------------------------------------------------
                                                Cumulative
                      Common           Capital  Translation  AccumulatedTranslatioAccumulated
                       Stock  Warrants Surplus  Adjustment  Deficit    Total
- ------------------- ------- -------- -------- ------------ ------------ --------------------------------------------------------------------------------------
Balance, December
31, 1995                 $94  $2,179   $78,863    $327    $(10,853)($10,853)  $70,610

Net Loss                -          -        -        -          (3,653)  (3,653)income                --      --       --       --       7,485     7,485

Common stock issued
  under stock option       
  plans                    1      --      486       --          --       487

NOL Utilization           --      --      463       --          --       463

Translation
  Adjustments           -          -        -     (307)              -     (307)
                    ------- -------- -------- ------------ ------------ --------adjustments             --      --       --      (30)         --       (30)
                      --------------------------------------------------------

Balance, March 31,September
30, 1996                 $94$95  $2,179   $78,863      $20$79,812    $297     ($14,506) $66,650
                    ======= ======== ======== ============ ============ ========3,368)   $79,015
                      ========================================================



See notes to condensed consolidated financial statementsstatements.







================================================================================
EMCOR Group, Inc. and Subsidiaries
================================================================================

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE A  NATURE OF OPERATIONSNature Of Operations

EMCOR Group, Inc. and subsidiaries ("EMCOR" or the "Company") is a multinational
corporation  involved in mechanical and electrical  construction  and facilities
management  services.  EMCOR, which conducts its business through  subsidiaries,
specializes  in  the  design,  integration,   installation,  start-up,  testing,
operation and  maintenance  of (i)  distribution  systems for  electrical  power
(including   power  cables,   conduits,   distribution   panels,   transformers,
generators,  uninterruptible  power supply  systems and related  switch gear and
control),  (ii)  lighting  systems,   including  fixtures  and  controls,  (iii)
low-voltage systems, including fire alarm, security,  communications and process
control systems, (iv) heating, ventilation, air conditioning,  refrigeration and
clean-room  process  ventilation  systems,  and (v)  plumbing,  process and high
purity piping systems. EMCOR provides (i) mechanical and electrical construction
services directly to end-users (including corporations, municipalities and other
governmental  entities,  owners,  developers,  and  tenants of  buildings)  and,
indirectly,  by acting as a  subcontractor,  to construction  managers,  general
contractors and other  subcontractors  and (ii) facilities  management  services
directly  to end users  such as  corporations,  owners,  property  managers  and
tenants of  buildings.  Mechanical  and  electrical  construction  services  are
principally  of three types:  (i) large  installation  projects,  with contracts
generally in the multi-million  dollar range, in connection with construction of
industrial,  institutional  and public work facilities and commercial  buildings
and fit-out of large blocks of space within commercial  buildings;  (ii) smaller
system  installation  projects involving fit-out,  renovation and retrofit work;
and (iii) testing and service of completed facilities.  In addition,  certain of
its subsidiaries  operate and maintain  mechanical and/or electrical systems for
customers  under  contracts  and provide  other  services to  customers,  at the
customer's  facilities,  which  services are commonly  referred to as facilities
management.  Mechanical and electrical  construction  and facilities  management
services  are  provided  to  a  broad  range  of   commercial,   industrial  and
institutional  customers through offices located in major markets throughout the
United States, Canada, the United Kingdom, the Middle East and Hong Kong.


NOTE B  BASIS OF PRESENTATIONBasis of Presentation

In the opinion of the Company, the accompanying unaudited condensed consolidated
financial  statements  contain  all  adjustments  (consisting  only of a  normal
recurring  nature)  necessary to present  fairly the  financial  position of the
Company and the results of its  operations.  The results of  operations  for the
three and nine  month  periodperiods  ended  March 31,September  30,  1996 are not  necessarily
indicative of the results to be expected for the year ending December 31, 1996.

A description of the Company's  significant  accounting  policies is included in
its December 31, 1995 Annual Report on Form 10-K filed with the  Securities  and
Exchange  Commission (the "SEC") on March 13, 1996.  The  accompanying  unaudited  condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements included in the Form 10-K.

Certain  reclassifications  have been made to prior year financial statements to
conform to current year presentation.

NOTE C  NET LOSS PER COMMON SHARE AND COMMON EQUIVALENT SHARE

Net lossIncome (Loss) Per Common Share and Common Equivalent Share

Net income (loss) per common share and common equivalent share for the three and
nine month periods ended March 31,September 30, 1996 and 1995 hashave been calculated  based
on the weighted average number of shares of common stock  outstanding and common
stock  equivalents  relating to warrants and stock options  outstanding when the
effect of such common stock equivalents are dilutive.


NOTE D   CURRENT DEBTNet Assets Held For Sale

In May 1996, the Company  completed the sale of substantially  all of the assets
of its subsidiary  Jamaica Water Supply Company  ("JWS") to The City of New York
and the Water Authority of Western Nassau County for an aggregate purchase price
of   approximately   $179.0  million,   subject  to  post-closing   adjustments;
approximately  $1.2  million  of this  purchase  price is being  held in  escrow
pending determination of post-closing adjustments. In May 1996, the Company also
completed the sale of the stock of its other water supply  subsidiary  Sea Cliff
Water  Company   ("Sea   Cliff")  to  a  subsidiary  of  Aquarion   Company  for
approximately $2.6 million, subject to post-closing  adjustments;  approximately
$0.5  million  of this  purchase  price is being  held in escrow for a period of
approximately one year pending determination of post-closing  adjustments and as
collateral security for certain indemnification  obligations.  JWS and Sea Cliff
are referred to herein collectively as the "Water Companies".  Approximately 96%
of the Common Stock of JWS is owned by the Company.

The sales proceeds from the sale of JWS' assets have been and will be applied to
pay JWS  liabilities and preferred  stock  obligations  and to satisfy  minority
stock  interests in JWS and as a reserve for  litigation  involving  Warrants of
Participation issued by the Company's  predecessor (see Note H). Of the balance,
$15.0  million was used to repay a portion of  indebtedness  under the Company's
then outstanding MES CREDIT  AGREEMENTCredit Agreement referred to below and approximately  $66.5
million  was used to redeem in full its Series A Notes.  The  remainder  was and
will  be  used  to  redeem  notes  issued  by the  Company's  subsidiary  SellCo
Corporation  ("SellCo").  (See Note F for  additional  discussion  of the use of
proceeds from the sale of JWS' assets and the stock of Sea Cliff).

The  operating  results of net assets held for sale have been  excluded from the
condensed consolidated financial statements for the three and nine month periods
ended  September 30, 1996 and 1995 since the operation of these  businesses will
primarily only accrue to the benefit of the holders of notes issued by SellCo.

NOTE E  Current Debt

New Credit  Facility  - On June 19,  1996 the  Company  and its  subsidiary  Dyn
Specialty  Contracting  Inc. ("Dyn") entered into a credit agreement with Harris
Trust and Savings  Bank  ("Harris")  providing  the Company  with up to a $100.0
million  revolving credit facility (the "New Credit  Facility") for a three year
period.  The New Credit  Facility,  which is  guaranteed  by certain  direct and
indirect U.S. subsidiaries of the Company and is secured by substantially all of
the assets of the Company and those  subsidiaries,  currently provides for up to
$50.0  million in  borrowing  capacity and is available in the form of revolving
loans  ("Revolving  Loans") and/or letters of credit ("LCs" or "LC"). As amended
on September 27, 1996, up to the U.S.  Dollar  equivalent of (pound)9.0  million
can be borrowed by the Company's  United Kingdom  subsidiary EMCOR (UK) Limited.
The  remaining  $50.0  million in  borrowing  capacity  is subject to receipt of
additional  commitments from other banks, an earnings test,  consents of bonding
companies  providing  surety bonds to the Company's  Canadian and United Kingdom
subsidiaries   and   these   subsidiaries    guaranteeing   the   facility   and
collateralizing  their  guarantees  with liens upon their assets.  The Revolving
Loans bear interest at a variable rate representing Harris' prime rate (8.25% at
September 30, 1996) plus 1.0% - 2.0% based on certain  financial  covenants,  as
defined.  The interest  rate on the  Revolving  Loans was 9.25% at September 30,
1996.  LC fees ranging  from 1.50% to 3.25% are charged  based on the type of LC
issued.  The New Credit  Facility  expires on June 19, 1999. As of September 30,
1996, the Company had  approximately  $23.8 million of LCs outstanding under the
New Credit Facility.  There were no Revolving Loans  outstanding as of September
30, 1996.

MES Credit  Agreement - On  December  14,  1994,  the Company and certain of its
subsidiaries  entered into a credit agreement (the "MES Credit  Agreement") with
Belmont Capital Partners II,
L.P. ("Belmont") and other lenders  (the(collectively,  the  "Lenders")  providing the Company and MES Holdings
Corporation  ("MES"), a wholly-owned  subsidiary of the Company,  with revolving
credit loans (the "MES Loans") of up to an  aggregate  amount of $35.0  million.
The MES Loans arewere  guaranteed  by certain  direct orand  indirect  United  States
subsidiaries  of MES (the " U.S."U.S.  MES  Subsidiaries")  and arewere secured by, among
other things,  substantially all of the assets of the Company,  MES and the U.S.
MES Subsidiaries, including the proceeds of the sale of all of the assets of the
Company, MES and the U.S. MES Subsidiaries and the proceeds of the sale of stock
or assets of the Company's  two water  supply  companies  (the  "Water
Companies")Water  Companies  to the extent of the first  $15.0  million of
such  proceeds,  subject to the rightsright to such  proceeds of the Lenders under the
Dyn credit  facilityCredit  Agreement  referred  to below.  The MES Loans bearbore  interest  on the
principal  amount thereof at the rate of 15.0% per annum and mature on June 14, 1996.annum.  Borrowings  under the
MES Credit  Agreement  $25.0($25.0  million at March 31, 1996 and December 31, 1995,1995) are  classified  as
current  liabilities under the caption  "Borrowings under working capital credit
lines" in the accompanying condensed consolidated balance sheets.

DYN CREDIT  AGREEMENTBorrowings  outstanding  under the MES Credit Agreement and Dyn Credit Agreement
(hereafter  defined)  were  repaid,  in part,  on June 12,  1996  from  proceeds
received by the Company  from the sale of the Water  Companies  (see Note D) and
the  balance was repaid on June 20,  1996 from  borrowings  under the New Credit
Facility at which time the credit agreements were terminated.

Dyn  Credit  Agreement  - On  December  14,  1994,  the  Company,  Dyn  Specialty
Contracting Inc. ("Dyn"),  a wholly-owned  subsidiary of the Company, and Dyn's
subsidiaries  entered into a credit agreement (the "Dyn Credit  Agreement") with
the  Lenders  providing  revolving  credit  loans (the "Dyn  Loans") of up to an
aggregate  amount of $10.0  million.  The Dyn  Loans  arewere  guaranteed  by the DynDyn's
subsidiaries  and arewere  secured  by  substantially  all of the assets of Dyn and
the
DynDyn's  subsidiaries includingand the proceeds of the sale of stock or assets of the Water
Companies to the extent of the first $15.0 million of such proceeds,  subject to
the rightsright to such  proceeds of the Lenders under the MES Credit  Agreement.  The
Dyn Loans bearbore interest on the principal amount thereof at the rate of 15.0% per
annum  and  mature  on June 14,  1996.annum. No borrowings were outstanding under the Dyn Credit Agreement at March 31, 1996 and December
31, 1995.

The  Company is  actively  seeking to  replace  or extend  its  existing  credit
facilities that will expire in 1996.

SERIESSeries A NOTESNotes - On  December  15,  1994 the  Company  issued  or  reserved  for
issuance approximately $62.2 million principal amount of Series A Notes and $8.8
million  additional  principal  amount  of  Series  A Notes  for  issuance  upon
resolution of disputed and unliquidated  pre-petition  general  unsecured claims
pursuant to the Company's Plan of Reorganization  adopted in connection with its
Chapter 11 proceeding.  A maximum of $7.2 million of Series A Notes are available
as of March 31, 1996 for issuance.  The Series A Notes are guaranteed by MES and
SellCo Corporation  ("SellCo"),  a wholly-owned  subsidiary of EMCOR which holds
the other stock of subsidiaries  of EMCOR  designated for sale. The terms of the
Series A Notes require that the net proceeds realized from the sale of the stock
or assets of the  Company's  subsidiaries  be applied to the  prepayment  of the
Series A Notes  (subject  to the  rights  of the  Lenders  under the MES and Dyn
Credit  Agreements  to receive  proceeds from the sale of the stock or assets of
the Company's mechanical and electrical subsidiaries and the first $15.0 million
of proceeds of the sale of stock or assets of the Water Companies). The recorded
amount  includes  the  estimated  amount  of  Series A Notes to be  issued  upon
resolution  of the  disputed and  unliquidated  pre-petition  general  unsecured
claims.  The Company  recorded the Series A Notes based upon an assumed total of
$100.0 million of  pre-petition  general  unsecured  claims after  settlement of
disputed and unliquidated  pre-petition general unsecured claims.  Approximately  $4.7 million of the issued Series A Notes
were  redeemed  prior to March 31, 1996.
The Series A Notes have been  recorded at a discount to the face amount to yield
an  estimated  effective  interest  rate of 12.0%.  The Series A Notes have been
classified as a current  liability  based on the expected  disposition of assets
held for sale.  Interest  on the Series A Notes is payable  semiannually  by the
issuance of additional Series A Notes until maturity and  substantially  offsets
income generated from net assets held for sale for the three month periods ended
March 31, 1996 and 1995. The outstanding  balancepayment in full of the Series A Notes includedduring the second
quarter of 1996 (approximately  $66.5 million in principal and accrued interest)
with proceeds received by the accompanying condensed consolidated balance sheet as of March 31, 1996 is
approximately  $63.8 million.  The outstanding face amountCompany from the sale of the Series A Notes
at March 31, 1996 is approximately $64.9 million.



Water Companies.

NOTE E  LONG-TERM DEBTF  Long-Term Debt

Long-Term  Debt  in  the  accompanying  condensed  consolidated  balance  sheets
consists of the  following  amounts at March 31,September  30, 1996 and December 31, 1995
(in thousands):
                                                    =========================================
                                              March 31,September 30    December 31,
                                                         1996            1995
                                                    =========================================-------------  -------------

Series C Notes, originaloutstanding face value of
   $62,827approximately $73.8 million at 11.0%,
   discounted to a 14.0% effective rate,  
   due 2001                                            $63,698$65,959        $61,494
Supplemental SellCo Note, originaloutstanding  
   face value of $5,464approximately $5.5
   million at 8.0%, discounted to a          
   14.0% effective rate, due 2004                        4,112                  4,112
Capitalized4,417          4,270
Capital Lease Obligations at weighted average
   interest rates from 7.25% to 11.0%,  
   payable in varying amounts through 2004                 1,133821          1,284
Other, at weighted average interest rates of
   approximately 10.75%, payable in varying 
   amounts through 3,1772012                                   3,051          3,225
                                                       2012
                                          -------------------    ---------------

                                                72,120                 70,115-------------  ----------
                                                         74,248         70,273
Less current maturities                                  (1,766)(1,452)        (1,875)
                                                       -------------------    ---------------

                                               $70,354                $68,240
                                          ===================    ===============

SERIES-------------  ----------

                                                        $72,796        $68,398
                                                       =============  ==========







Series C NOTESNotes - On December  15, 1994 the Company  issued  approximately  $62.8
million  principal amount of Series C Notes.  Interest on the Series C Notes iswas
payable  semiannually through June 15, 1996 by the issuance of additional Series
C Notes and thereafter  is  currently  payable  quarterly  in cash.  The  Series C Notes are
unsecured  indebtedness  of the Company which are  subordinate  to  (i)indebtedness
under the Series A Notes and
(ii) up to $100.0 million of working capital  indebtedness of the Company or MES
and  guaranteed  by MES  subject to  payment in full of the Series A Notes.Company's New Credit  Facility.  The Series C Notes have been recorded
at a discount to their face amount to yield an estimated effective interest rate
of 14.0%. Including  accrued  interest
paid-in-kind, the outstanding face amount ofThe Series C Notes at March 31, 1996 is
approximately $69.0 million.

SUPPLEMENTAL  SELLCO NOTEmature on December 15, 2001.

Supplemental  SellCo Note - On December  15, 1994 EMCOR  issued to SellCo its 8%
promissory  note in the  principal  amount of  approximately  $5.5  million (the
"Supplemental SellCo Note"). The note matures on the earlier of (i) December 15,
2004 or (ii) one day prior to the date on which  theNotes  issued  by  SellCo  Notes(the
"SellCo Notes") (hereafter  described) are deemed canceled. If at any time after
the fifth  anniversary of
the effective  date of the  Company's  plan of  reorganizationDecember 15, 1999 and prior to the maturity date of the SellCo Notes,  the value
of the  consolidated  assets  of  SellCo  and its  subsidiaries  (excluding  the
Supplemental SellCo Note) is determined by independent appraisal to be less than
$250,000,  the  balance of the SellCo  Notes (not  therefore  paid from net salescash
proceeds  from the sale of the stock or assets  of SellCo  subsidiaries  and the
proceeds of the Supplemental SellCo Note which will have become due and payable)
will be deemed  canceled.  Interest on the  Supplemental  SellCo Note is payable
upon maturity.  The Supplemental  SellCo Note has been recorded at a discount to
its face amount to yield an estimated effective interest rate of 14.0%.

The outstanding face amount
of the Supplemental SellCo Note at March 31, 1996 is approximately $5.5 million.

SELLCO NOTESNotes - On December 15, 1994 SellCo  issued  approximately  $48.1 million
principal amount of SellCo Notes. Interest is payable semiannually in additional
SellCo Notes.  Subject  to the prior  payment in full of the Series A Notes and
establishment  of aNet cash reserve for the payment of capital  gains taxes arising
from the sale of  subsidiaries of SellCo and the rights of the Lenders under the
MES and Dyn Credit  Agreements with respect to proceeds (as defined) ofdefined in the sale
of the Water  Companies,Indenture  pursuant to which
the  SellCo  Notes  are  mandatorily  prepayable  to the
extent  of netwere  issued)  from  sales  proceeds  from  the sale  of  stock or  assets  of  SellCo
subsidiaries.  Since thesubsidiaries  are to be used to redeem  SellCo  Notes.  The SellCo Notes will only be satisfied toare not
obligations  of EMCOR and the extent that
assets of SellCo and its subsidiaries generate sufficient cash in excess of that
required  to  redeem  the  Series  A  Notes  and  to  prepay  a  portion  of the
indebtedness under the MES and Dyn Credit Agreements, the SellCo Notes have been
netted in the caption "Net assets held for sale" in the  accompanying  condensed
consolidated  balance  sheets.  The holders of the SellCo Notes may only look to EMCOR
to the extent of EMCOR's  obligation  to pay the  Supplemental  SellCo Note plus
accrued interest.  At this time,interest  thereon.  Approximately  $2.1 and $0.7 million of the Company cannot determine the amount of
net sale proceeds (as defined),  if any,
from  the  sale of SellCo's  subsidiaries
that will be availablethe  stock  of Sea  Cliff  and the  sale  of  assets  of JWS,
respectively,  have been used to redeem, in part, the SellCo Notes. OTHERIn addition,
as the  liabilities  of JWS are  finally  determined,  JWS'  various  contingent
liabilities are resolved,  funds held in escrow under the sales  agreements (the
"Sales Agreements") for the sale of assets of JWS and the stock of Sea Cliff are
released  and post closing  adjustments  under the Sales  Agreements  are agreed
upon,  additional amounts of the sales proceeds may become available,  from time
to time, for additional redemptions of the SellCo Notes.

Other - Other long-term debt consists primarily of loans for real estate, office
equipment, automobiles and building improvements.

NOTE F   NET ASSETS HELD FOR SALE

The  operating  results of net assets held for sale have been  excluded from the
condensed  consolidated  financial  statements for the three month periods ended
March 31, 1996 and 1995 since the operation of these businesses will only accrue
to the benefit of the holders of the SellCo  Notes after  payment in full of the
Series A Notes and certain other  obligations (see Notes D and E). The condensed
consolidated  balance sheet relating to net assets held for sale as of March 31,
1996 is as follows (in thousands):

Cash                              $4,084  Current maturities of
                                            long-term debt and
Accounts receivable, net          19,535    capital lease obligations   $12,173
Costs and estimated earnings              Accounts payable
  in excess of  billings           6,744  Billings in excess of costs    10,926
Inventories                        1,058    and estimated earnings        6,655
Other current assets               1,120  Other accrued expenses         28,679
                               ----------                              ---------
                                  32,541                                 58,433

                                          Long-term debt and capital
                                            lease obligations            42,259
Property, plant and equipment,            Other long-term liabilities    28,704
  net                            153,354
Other assets                       7,320  Net assets held for sale       63,819
                               ----------
                                                                       =========
                                $193,215                               $193,215
                               ==========                              =========

NOTE G  INCOME TAXESIncome Taxes

The Company files a consolidated  federal  income tax return  including all U.S.
subsidiaries.  At  March  31,September  30,  1996,  the Company had a net  operating  loss
carryforward ("NOL") for U.S. income tax purposes expiring in years 2007 through
20102011 which  approximates  $225.0$215.0  million,  subject to Internal  Revenue Service
approval. In  addition,  the  Company  has a U.S.  capital  loss  carryover  of
approximately  $15.0 million  expiring in 1998 and 1999.  However, a subsequent ownership change (as defined in Internal Revenue
Code Section 382) prior to December 15, 1996 would reduce to zero the future NOL
benefits under Internal Revenue Code Section 382(1)(5).

As a result of the adoption of  Fresh-Start  Accounting,  the tax benefit of the
Company's  net  operating  loss  carryforwards  orand  net  deductible   temporary
differences which existed as of the date of itsthe Company's emergence from Chapter
11 will result in a charge to the tax  provision  (provision in lieu of income taxes)
and isare  allocated  to  reorganization  value in excess of amounts  allocable to
identifiable  assets established in connection with the Company's emergence from
bankruptcy and to capital surplus.

The Company has provided a valuation  allowance as of March 31,September 30, 1996 for the
full  amount of the tax benefit of its  remaining  NOLs and other  deferred  tax
assets.  Income tax expense  recorded for the three and nine month periods ended
March 31,September  30, 1996 and 1995  represents  a  provision  primarily  for  federal,
foreign and state and local income  taxes.  For the three and nine month periods
ended September 30, 1996 the Company  allocated  approximately  $1.0 million and
$4.5  million,  respectively,  of its tax provision to  reorganization  value in
excess of amounts allocable to identifiable assets (included in Miscellaneous in
the accompanying  condensed  consolidated  balance sheets) thereby reducing this
balance to zero. The remaining utilization of NOLs and other deferred tax assets
have been applied to capital  surplus for the three and nine month periods ended
September 30, 1996.


NOTE H  LEGAL PROCEEDINGS

In February  1995 as part of an  investigation  by the New York County  District
Attorney's  office into the  business  affairs of Herbert  Construction  Company
("Herbert"),  a  general  contractor  that  does  business  with  the  Company's
subsidiary,  Forest  Electric  Corporation  ("Forest"),  a  search  warrant  was
executed at Forest's executive  offices.  At that time, the Company was informed
that  Forest  and  certain  of  its  officers  are  targets  of  the  continuing
investigation.  Neither the  Company nor Forest has been  advised of the precise
nature of any suspected violation of law by Forest or its officers.  On July 11,
1995,  Ted Kohl,  a principal  of Herbert,  and DPL  Interiors,  Inc., a company
allegedly owned by Kohl, were indicted by a New York County grand jury for grand
larceny, fraud, repeated failure to file New York City Corporate Tax Returns and
related  money  laundering  charges.  Kohl was also  charged  with filing  false
personal income and earnings tax returns, perjury and offering false instruments
for filing  with the New York City  School  Construction  Authority.  In a press
release announcing the indictment, the Manhattan District Attorney said that the
investigation disclosed that Mr. Kohl allegedly received more than $7 million in
kickbacks from  subcontractors  through a scheme in which he allegedly  inflated
subcontracts on Herbert's construction  contracts. At a press conference in July
1995  following  the  indictment,  the  District  Attorney  announced  that  the
investigation  is  continuing,   and  he  expects  further  indictments  in  the
investigation.  Forest performs electrical contracting services primarily in the
New  York  City  commercial   market  and  is  one  of  the  Company's   largest
subsidiaries.Legal Proceedings

The  Dynalectric  Company  ("Dynalectric"),  a subsidiary  of the Company,  is a
defendant in an action entitled  Computran v.  Dynalectric,  et. al., pending in
Superior Court of New Jersey, Bergen County, arising out of its participation in
a joint  venture.  In the action,  which was  instituted in 1988, the plaintiff,
Computran,  a participant in and a subcontractor  to the joint venture,  alleges
that Dynalectric  wrongfully  terminated it from the  subcontract,  fraudulently
diverted  funds  due it,  misappropriated  its  trade  secrets  and  proprietary
information,  fraudulently  induced  it to enter  into  the  joint  venture  and
conspired  with other  defendants to commit certain acts in violation of the New
Jersey Racketeering Influence and Corrupt Organization Act. Dynalectric believes
that  Computran's  claims are  without  merit and  intends to defend this matter
vigorously.  Dynalectric has filed counterclaims against Computran. Discovery is
ongoing,ongoing; no trial date is scheduled.

On September 26, 1994 certain holders of Warrants of Participation  ("Warrants")
that were  issued  pursuant  to a Warrant  Agreement  dated June 15, 1969 by the
Company's predecessor,  Jamaica Water and Utilities,  Inc. ("JWU"),  commenced a
declaratory  judgment  action against a subsidiary of the Company  Jamaica Water
Securities  Corp.  ("JWSC")  by filing a complaint  in the Supreme  Court of the
State  of  New  York,  Westchester  County,  bearing  the  caption,   Harold  F.
Scattergood Jr., et al. v. Jamaica Water Securities Corp.  (Index No. 15992/94).
On  October  17,  1994,  an  amended  complaint  was  served  adding  additional
plaintiffs.

The  plaintiffs  sought a  declaration  that  JWSC  succeeded  to the  Company's
obligations  on the Warrants by reason of its 1977  acquisition of the Company's
96% stock interest in Jamaica Water Supply Company ("JWS").  The plaintiffs also
claimed that certain events constituted a disposition of the assets of JWS which
triggered  the  Warrants,  obligating  JWSC to issue  shares of its own stock to
plaintiffs.  In the alternative,  plaintiffs  claimed that the December 31, 1994
expiration date of the Warrants should be extended for some indefinite period of
time.

By a  Decision  and Order,  entered  on June 22,  1995,  the court  granted  the
Company's  motion to dismiss the  plaintiffs'  action holding that the assets of
JWS had not been  "disposed of" under the express terms of the Warrants prior to
their stated expiration on December 31, 1994. The court also held that it lacked
the power to rewrite  the  "clear and  unambiguous  provisions"  of the  WarrantsWarrant
Agreement to extend the December 31, 1994 deadline. The plaintiffs have appealed
the court's  decision.decision  and oral  arguments  on the appeal were heard  before the
Appellate Division Third Department of the State of New York on October 3, 1996.
To date, no decision has been rendered by the Appellate Division.

In February 1995, as part of an  investigation  by the New York County  District
Attorney's  office into the  business  affairs of Herbert  Construction  Company
("Herbert"),  a  general  contractor  that  does  business  with  the  Company's
subsidiary,  Forest  Electric  Corporation  ("Forest"),  a  search  warrant  was
executed at Forest's executive  offices.  At that time, the Company was informed
that  Forest  and  certain  of  its  officers  are  targets  of  the  continuing
investigation.  Neither the  Company nor Forest has been  advised of the precise
nature of any suspected violation of law by Forest or its officers.  On July 11,
1995,  Ted Kohl,  a principal  of Herbert,  and DPL  Interiors,  Inc., a company
allegedly  owned by Mr. Kohl,  were indicted by a New York County grand jury for
grand  larceny,  fraud,  repeated  failure to file New York City  Corporate  Tax
Returns and related  money  laundering  charges.  Mr. Kohl was also charged with
filing false  personal  income and  earnings  tax returns,  perjury and offering
false  instruments  for  filing  with  the New  York  City  School  Construction
Authority. In a press release announcing the indictment,  the Manhattan District
Attorney said that the investigation  disclosed that Mr. Kohl allegedly received
more than $7.0  million in  kickbacks  from  subcontractors  through a scheme in
which he allegedly inflated subcontracts on Herbert's construction contracts. At
a press conference in July 1995 following the indictment,  the District Attorney
announced  that  the  investigation  is  continuing,   and  he  expects  further
indictments  in  the  investigation.   Forest  performs  electrical  contracting
services  primarily  in the New York City  commercial  market  and is one of the
Company's largest subsidiaries.

In addition to the above, the Company is involved in other legal proceedings and
claims  asserted by and against the  Company,  which have arisen in the ordinary
course of business.

The Company  believes it has a number of valid defenses to these actions and the
Company intends to vigorously defend or assert these claims and does not believe
that a significant  liability will result.  However,  the Company cannot predict
the  outcome  thereof  or the  impact  that an  adverse  result  of the  matters
discussed  above will have upon the Company's  financial  position or results of
operations.

NOTE I  Other

During the second  quarter of 1996,  the Company  entered into an agreement with
one of its insurers to reinsure the Company's obligations to bear certain losses
incurred for  insurance  plan years from October 1, 1992 to September  30, 1995.
Under this agreement,  amounts  previously  deposited by the Company with one of
its insurers as collateral to fund certain losses under the  deductible  portion
of its insurance  program were returned to the Company and used to fund the cost
of the  above  agreement  and to pay down,  in July  1996,  approximately  $10.1
million of indebtedness  under the New Credit Facility.  The net effect upon the
Company of this  transaction,  which is reflected in the accompanying  condensed
consolidated  balance sheets as of September 30, 1996, was to reduce to zero the
funds  deposited by the Company as cash collateral for certain losses and reduce
Other  Long-Term  Obligations by the same amount.  As of September 30, 1996, the
Company is utilizing a $12.2  million  letter of credit  obtained  under the New
Credit  Facility  referred to in Note E as collateral for its current  insurance
obligations,  and  therefore  presently  is not  required  to  deposit  cash  as
collateral for such obligations.






ITEM 2:  MANAGEMENTMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

RESULTS OF OPERATIONSResults of Operations

Revenues for the firstthird  quarter of 1996 were $382.7$432.5  million  compared to $386.0$403.9
million in the firstthird  quarter of 1995.  In the firstthird quarter of 1996 the Company
had agenerated  net lossincome of $3.7$1.9 million or $0.37$0.19 per share  compared to net income
of $0.6 million or $0.06 per share in the third quarter of 1995. The improvement
in net income in the third quarter of 1996 as compared to the same period in the
prior year is primarily due to continued  improvements  in job performance and a
reduction in the Company's cost of borrowing  offset partially by an increase in
selling, general and administrative expenses discussed below.

Revenues  for the nine months ended  September  30, 1996 were  $1,202.9  million
compared to $1,171.5  million in the same period in the prior year. For the nine
months ended September 30, 1996 the Company generated net income of $7.5 million
or $0.75 per share  compared to a net loss of $7.0$12.1 million or $0.74$1.27 per share
for the nine months ended  September  30,  1995.  The  improvement  for the nine
months ended September 30, 1996 as compared to the same period in the first quarterprior year
is due to continued improvements in job performance,  a reduction in the cost of
1995.borrowing and a net after tax gain of $8.1 million  ($12.5  pre-tax) on the sale
of certain assets held for sale including the sale of  substantially  all of the
assets of the Company's  principal water supply subsidiary  Jamaica Water Supply
Company  ("JWS"),  offset  partially  by an  increase  in  selling,  general and
administrative  expenses  discussed  below.  JWS and the  Company's  other water
supply  subsidiary,  Sea Cliff Water  Company  ("Sea  Cliff"),  are  referred to
hereafter as the "Water  Companies".

The Company  generated  operating  income of $0.5$6.0  million for the three  months
ended  March 31,September  30, 1996  compared to a $2.9operating  income of $5.6 million  operating  loss in the
same period of the prior year. The improvement toin operating income for the first
three
months  ofended  September  30, 1996 was  principally  attributable  to  continued
improvements  in gross  profit due to cost  control  efforts  and  favorableimproved  job
closeoutsperformance   offset   partially   by  an  increase  in  selling,   general  and
administrative  expenses due to the increased volume of operating activity.  For
the nine months ended  September 30, 1996,  the Company had operating  income of
$10.5 million compared to operating income of $1.0 million in the same period of
the prior year. The  improvement  in operating  income for the nine months ended
September 30, 1996 was  principally  attributable  to continued  improvements in
gross profit due to cost control  efforts and  improved job  performance  offset
partially by an increase in selling,  general and administrative expenses in the
first quarter of 1996 discussed below.

The increase in revenues  for the third  quarter of 1996 as compared to the same
period in the prior year was primarily attributable to the continued increase in
commercial  construction activity in the Western United States. Revenues remained  substantially  unchangedfor the
nine month period ended September 30, 1996 increased  slightly compared with the
year earlier periods.  While revenues of business units operating in the Western
United States  and Canada increased due to improved  economic  conditions,  these increases
were  substantially  offset by  decreased  revenues in the  EasternNortheastern  United
States  resulting from,  among other things,  adverse weather  conditions in the
first quarter of 1996 and increased  competition,  and in the Midwestern  United
States due to reduced construction activity compared with 1995 and the Company's
previousearlier downsizing of those operations.its Midwestern operations and in the United Kingdom due to
decreased activity in the commercial construction market.

Selling,  general  and  administrative  expenses  ("SG&A"),   excluding  general
corporate  expenses,  for the quarters  ended  March 31,September  30, 1996 and 1995 were
$33.0$32.0 million and $31.0$29.5  million,  respectively,  and for the nine month periods
ended  September  30,  1996 and 1995  were  $95.2  million  and  $90.6  million,
respectively. The increase in SG&A for the third quarter of 1996 compared to the
prior  year's  third  quarter  was  primarily  due to the  increased  volume  of
operating activity. The increase in SG&A for the nine months ended September 30,
1996 was primarily  attributable  to an adverse  arbitration  award in the first
quarter  of 1996  requiring  the  Company  to pay $4.8  million  in  damages  in
connection with a contract dispute involving its subsidiary T.L. Cholette,  Inc.
TheIn October 1996, the Company  is seeking to have the award set  aside.  SG&A  decreased  by $2.8
million,  exclusiveconcluded its settlement of the arbitration  award
in the first quarter of 1996 as
compared to the same period in the prior year.for $4.3 million.

The  Company's  backlog was $1,119.7$1,082.5  million at March 31,September 30, 1996 and $1,060.7
million at December 31, 1995.  TheBetween December 31, 1995 and September 30, 1996,
the  Company's  backlog in the United  States  increased by $68.8$73.9  million, between  December 31, 1995 and March 31, 1996,  while  its
backlog in Canada  decreased  minimally  and its  backlog in the United  Kingdom
decreased by $5.4 million and $4.4
million,  respectively.$41.2 million.  The increase in the Company's  domestic backlog was
primarily  attributable  to improved  economic  conditions in the Midwestern and
Western United States.  The decline in the Canadian backlog is principally  attributable to the
downsizing of its Canadian  operations  while the decline in the United Kingdom  backlog is due to normal operating cycles.

GENERAL  CORPORATE  AND  OTHER EXPENSES  

General  corporate  expensesthe
continued  progress on several large projects and the continued  weakness in the
United Kingdom commercial  construction  market. 

Net Assets Held For Sale 

In May 1996, the Company  completed the sale of substantially  all of the assets
of JWS to The City of New York and the Water  Authority of Western Nassau County
for an aggregate  purchase price of  approximately  $179.0  million,  subject to
post-closing  adjustments;  approximately $1.2 million of this purchase price is
being held in escrow pending determination of the post-closing  adjustments.  In
May 1996,  the Company also  completed the sale of all of the stock of Sea Cliff
to a subsidiary of Aquarion Company for approximately  $2.6 million,  subject to
post-closing  adjustments;  approximately $0.5 million of this purchase price is
being  held  in  escrow  for  a  period  of   approximately   one  year  pending
determination  of the  post-closing  adjustments and as collateral  security for
certain indemnification obligations.

The sales  proceeds  from the sale of JWS'  assets have been and will be applied
first to pay JWS  liabilities  and preferred  stock  obligations  and to satisfy
minority  stock  interests  in JWS and as a  reserve  for  litigation  involving
Warrants of Participation  issued by the Company's  predecessor (See Note H). Of
the balance, $15.0 million was used to repay a portion of indebtedness under the
Company's then outstanding  working capital line and approximately $66.5 million
was used to redeem in full its Series A Notes. Approximately $2.8 million of the
proceeds  from the sale of the stock of Sea Cliff and the sale of assets of JWS,
respectively,  have been used to redeem,  in part,  the notes  ("SellCo  Notes")
issued by the Company's subsidiary SellCo Corporation  ("SellCo").  In addition,
as the  liabilities  of JWS are  finally  determined,  JWS'  various  contingent
liabilities are resolved,  funds held in escrow under the sales  agreements (the
"Sales  Agreements")  for the quarters ended March 31, 1996sale of the JWS  assets and 1995 were
$3.6 millionthe stock of Sea Cliff
are released and $3.8 million,  respectively.  The decrease in general corporate
expenses in 1996 was  attributablepost closing  adjustments under the Sales Agreements are agreed
upon,  additional amounts of the sales proceeds may become available,  from time
to time,  for  additional  redemptions  of the  Company's  continued  cost  reduction
efforts.

NET ASSETS HELD FOR SALESellCo  Notes.  (See  Note F for
additional discussion regarding the proceeds from the sale of JWS' assets.)

The  operating  results  of the  remaining  net  assets  held for sale have been
excluded from the condensed  consolidated financial statements for the three and
nine month  periods  ended  March 31,September  30, 1996 and 1995 since the  operation of
these businesses will primarily only accrue to the benefit of the holders of notes  issued by the
Company's  subsidiary,
SellCo Corporation,  after payment in full of the Company's  Series A NotesNotes.

Liquidity and certain other  obligations  (See Note D in the  accompanying  Notes to Condensed
Consolidated Financial Statements). Net assets held for sale are recorded in the
condensed  consolidated  balance  sheets at the lower of cost or  estimated  net
realizable  value  and are  classified  as  current  based  on  their  estimated
disposition dates. The Company has entered into agreements to sell substantially
all of the  stock  and/or  assets  of its  principal  business  held  for  sale,
collectively known as the "Water Companies".






LIQUIDITY AND CAPITAL RESOURCESCapital Resources

The  Company's  consolidated  cash balance  increaseddecreased by $1.8$7.5 million from $53.0
million at  December  31,  1995 to $54.8$45.5  million at  March 31,September  30,  1996.  The
March 31,September 30, 1996 cash balance included  approximately  $3.5$6.2 million in foreign
subsidiaries'  bank accounts  and reflected  $25.0 million  borrowed under the Company's MES Credit  Agreement
referred to below.  The foreign bankwhich accounts are available only to support the
Company's  foreigntheir
respective  operations.  The Company generated  positive operating cash flow wasfor
the nine months ended  September  30, 1996 due to working  capital  improvements
which has been used primarily to repay  borrowings  under the Company's  working
capital  credit  lines  and  to  fund  capital  expenditures  resulting  in  the
first quarterconsolidated cash balance decrease.

On June 19, 1996 the Company and its subsidiary Dyn Specialty  Contracting  Inc.
("Dyn")  entered  into a credit  agreement  with Harris  Trust and Savings  Bank
("Harris")  providing the Company with up to a $100.0 million  revolving  credit
facility  (the "New Credit  Facility")  for a three year period.  The New Credit
Facility,  which is guaranteed by certain direct and indirect U.S.  subsidiaries
of the Company and is secured by substantially  all of the assets of the Company
and those subsidiaries,  currently provides for up to $50.0 million in borrowing
capacity and is available in the form of  revolving  loans  ("Revolving  Loans")
and/or  letters of credit ("LCs" or "LC").  As amended on September 27, 1996, up
to the U.S Dollar  equivalent  of  (pound)9.0  million  can be  borrowed  by the
Company's  United Kingdom  subsidiary  EMCOR (UK) Limited.  The remaining  $50.0
million in borrowing  capacity is subject to receipt of  additional  commitments
from other banks,  an earnings  test,  consents of bonding  companies  providing
surety bonds to the Company's Canadian and United Kingdom subsidiaries and these
subsidiaries guaranteeing the facility and collateralizing their guarantees with
their assets.  The Revolving Loans bear interest at a variable rate representing
Harris'  prime  rate  (8.25% at  September  30,  1996) plus 1.0% - 2.0% based on
certain  financial  covenants,  as defined.  The interest  rate on the Revolving
Loans was 9.25% at September  30, 1996.  LC fees ranging from 1.50% to 3.25% are
charged based on the type of LC issued.  The New Credit Facility expires on June
19, 1999. As of September 30, 1996, the Company had approximately  $23.8 million
of LCs outstanding under the New Credit Facility.  There were no Revolving Loans
outstanding as of September 30, 1996.

On December 14, 1994, the Company and certain of its subsidiaries entered into a
credit agreement (the "MES Credit  Agreement") with lenders  (collectively,  the
"Lenders')  providing the Company and MES Holdings Corp. ("MES"), a wholly-owned
subsidiary of the Company,  with revolving  credit loans (the "MES Loans") of up
to an  aggregate  amount of $35.0  million.  The MES Loans  arewere  guaranteed  by
certain  direct and indirect  United States  subsidiaries  of MES (the "U.S. MES
Subsidiaries") and arewere secured by, among other things, substantially all of the
assets of the Company, MES and the U.S. MES Subsidiaries, including the proceeds
of the  sale  of all of  the  assets  of the  Company,  MES  and  the  U.S.  MES
Subsidiaries  and the  proceeds  of the  sale of stock or  assets  of the  Company's two water supply companies (the "Water Companies")Water
Companies to the extent of the first $15.0 million of such proceeds,  subject to
the  rightsright to such  proceeds  of the  lendersLenders  under  the Dyn  Credit  Agreement
referred to below.

The MES Loans bear interest on the principal amount thereof at the rate of 15.0%
per  annum,  and  mature  on June 14,  1996.  Borrowings  outstanding  under the MES Credit Agreement $25.0  million  at  March  31,and Dyn Credit Agreement
were repaid in part on June 12, 1996 are  classified  as  current
liabilitiesfrom proceeds  received by the Company from
the sale of the Water Companies and the balance was repaid on June 20, 1996 from
borrowings  under the caption "Borrowings under working capitalNew Credit  Facility  at which time the credit  lines" in
the accompanying condensed consolidated balance sheets.agreements
were  terminated.  

Also on December 14, 1994, the Company,  its subsidiary Dyn Specialty Contracting
Inc.  ("Dyn") and Dyn's subsidiaries entered into
a credit  agreement  (the "Dyn Credit  Agreement")  with lendersthe  Lenders  providing
revolving  credit loans (the "Dyn Loans") of up to an aggregate  amount of $10.0
million. The Dyn Loans arewere guaranteed by the DynDyn's subsidiaries and arewere secured by
substantially  all of the assets of Dyn and the DynDyn's  subsidiaries includingand the proceeds
of the sale of stock or assets of the Water Companies to the extent of the first
$15.0  million of such  proceeds,  subject to the rightsright to such  proceeds of the
lendersLenders under the MES Credit Agreement.  The Dyn Loans bear interest on the principal  amount
thereof  at the rate of 15.0%  per  annum,  and  mature  on June  14,  1996.  No
borrowings were outstanding under the Dyn Credit Agreement at March 31, 1996.

Included  in  the  accompanying  condensed  consolidated  balance  sheet  as  of
March
31,September 30, 1996 are  approximately  $63.8 million of Series A Notes that were issued or
reserved  for  issuance  in  connection   with  the  Company's   emergence  from
bankruptcy.  The Series A Notes  have been  recorded  at a discount  to the face
amount to yield an estimated  effective interest rate of 12.0%.  Interest on the
Series A Notes is payable  semiannually  by the issuance of additional  Series A
Notes until maturity and substantially  offsets income generated from net assets
held for sale for the three month periods ended March 31, 1996 and 1995.

Also included in the  accompanying  condensed  consolidated  balance sheet as of
March 31, 1996 are  approximately  $63.7$66.0  million of the Company's  Series C
Notes that were issued in connection with the Company's emergence from bankruptcy.plan of  reorganization.
The Series C Notes have been  recorded  at a  discount  to their face  amount to
yield an estimated  effective rate of 14.0%.  Interest on the Series C Notes iswas
payable  semiannually through June 15, 1996 by the issuance of additional Series
C Notes and thereafter is currently payable quarterly in cash. The Series C Notes mature on
December 15, 2001.

The accompanying  condensed  consolidated balance sheet as of March 31,September 30, 1996
reflects  approximately $5.5$4.4 million of aindebtedness  evidenced by the Company's
promissory  note (the  "Supplemental  SellCo  Note")  payable to the Company'sits  subsidiary
SellCo Corporation,  which note was issued in connection with the Company's emergence  from  bankruptcy.plan
of reorganization.  The Supplemental SellCo Note has been recorded at a discount
to its face  amount  to yield an  estimated  effective  interest  rate of 14.0%.
Interest  on  the  Supplemental  SellCo  Note  is  payable  upon  maturity.  The
Supplemental SellCo Note matures on the earlier of (i) December 15, 2004 or (ii)
one day prior to the date on which the SellCo Notes are deemed canceled.

In June 1995,September,  1996, the Company's Canadian  subsidiary,  Comstock Canada entered intoLtd.,
renewed a credit agreement with a bank providing for an overdraft facility of up
to CanadianCdn.  $2.0  million.  The  facility is secured by certain  assets of Comstock
Canada Ltd.  and  deposit  instruments  of aanother  Canadian  subsidiary  of the
Company.  The facility  provides for interest at the bank's prime rate (6.75%(5.75% at
March 31,September  30,  1996)  plus 3/4% and  expires  on SeptemberJune 30,  1996.1997.  There were no
borrowings  outstanding  under this credit  agreement at March 31,September 30, 1996. The
Company  is  seeking to include  its  Canadian  operations  under the New Credit
Facility.

In September 1995, a number of the Company's U.K. subsidiaries  renegotiated and
renewed a demand  credit  facility  with a U.K. bank for a credit line of pounds
17.1 million (approximately U.S. $26.1$26.8 million). The credit facility consists of
the following  components  with the  individual  credit limits as indicated:  an
overdraft  line of up to pounds 9.0 million  (approximately  U.S. $13.7$14.1 million)
which   overdraft   line  was   subsequently   reduced  to  (pound)7.0   million
(approximately  U.S. $11.4 million);  a facility for the issuance of guarantees,
bond and  indemnities  of up to pounds 7.3  million  (approximately  U.S.  $11.2$11.4
million); and other credit facilities of up to pounds 0.8 million (approximately
U.S. $1.2$1.3 million).  The facility is secured by substantially  all of the assets
of the Company's  principal U.K.  subsidiaries.  The overdraft facility provides
for  interest at the bank's base rate,  as defined  (6.5%(5.75% as of  March 31,September  30,
1996), plus 3.0% on the first pounds 5.0 million of borrowings and at the bank's
base rate plus 4.0% for  borrowings  over pounds 5.0  million.  This creditDuring the third
quarter of 1996,  the Company  obtained an $11.6 million LC under the New Credit
Facility  for use as  collateral  for  bonds  issued  under  the  U.K.  facility
discussed above thereby  releasing funds previously  deposited as amended, expires June 30, 1996.

As of March 31,collateral for
those bonds.  On October 1, 1996, the Company's U.K.  subsidiaries  had utilized approximately
$22.4 million of the credit facilities as follows:  approximately  $13.1 million
of  borrowings  underreplaced the
overdraft line with Revolving Loans under the New Credit Facility.

During the second  quarter of 1996,  the Company  entered into an agreement with
one of its insurers to reinsure the Company's obligations to bear certain losses
incurred for  insurance  plan years from October 1, 1992 to September  30, 1995.
Under this agreement,  amounts  previously  deposited by the Company with one of
the Company's insurers as collateral to fund certain losses under the deductible
portion of the Company's insurance program were returned to the Company and used
to  fund  the  cost of the  above  agreement  and to pay  down,  in  July  1996,
approximately $8.2$10.1 million forof indebtedness under the issuanceNew Credit Facility. As of
guarantees,  and  approximately  $1.1  million  under other  credit
facilities.

TheSeptember 30, 1996,  the Company is actively  seeking to  replace  or extend  its  existingutilizing a $12.2  million  letter of credit
facilities that will expire in 1996.

On November 4, 1994, the Company's two water supply  subsidiaries  Jamaica Water
Supply  Company  ("JWS") and Sea Cliff Water  Company  ("SCW"),  entered  into a
credit agreement providing for a credit facility to JWS of $17.9 million and for
a credit  facility to SCW of $2.1 million at an interest  rate based upon either
prime  rate,  LIBOR  plus 5/8% or bid rate,  as those  terms are  defined in the
credit agreement.  These borrowings are reflected as current  liabilities in the
condensed  consolidated  balance  sheet of "Net  assets  held for sale" which is
presented in Note F to the condensed  consolidated  financial  statements.  This
credit  agreement  has been  extended  from  November 4, 1995 to August 1, 1996.
During  the  period  from  November  4, 1995 to August 1,  1996,  the  Company's
borrowings  are limited to $12.0  million for JWS.  JWS'  obligationsobtained under the credit  agreement become dueNew Credit  Facility as collateral for its current  insurance
obligations,  and  payable on the earlier of (a) August 1, 1996 or
(b) the tenth business day following any disposition by JWS outside the ordinary
course of business of assets with an  aggregate  value in excess of  $5,000,000.
Sea Cliff's obligations under the credit agreement become due and payable on the
earlier  of (a)  August 1,  1996 or (b) the tenth  business  day  following  any
disposition  by JWS  outside the  ordinary  course of business of assets with an
aggregate fair market value in excess of $5,000,000,  (c) a distribution  by JWStherefore  presently is not required to its stockholders of the proceeds ofdeposit cash for such
disposition, or (d) a disposition by
Sea Cliff  outside the  ordinary  course of business of assets with an aggregate
fair market value in excess of $50,000.obligations.

At March 31,September 30, 1996, the Company had a net operating loss carryforward ("NOL")
for  U.S.  income  tax  purposes  expiring  in years  2007  through  20102011  which
approximates  $225.0$215.0  million,  subject to Internal  Revenue  Service  approval.
In addition,  the
Company  has a U.S.  capital  loss  carryover  of  approximately  $15.0  million
expiring in 1998 and 1999.  However,  a  subsequent  ownership  change (as defined in Internal  Revenue Code
Section  382) prior to  December  15,  1996 would  reduce to zero the future NOL
benefits under Internal Revenue Code Section 382(1)(5). The Company has provided
a valuation  allowance as of  March  31,September  30, 1996 for the full amount of the tax
benefit of its remaining NOLs and other deferred tax assets.





PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

The information in Note H to the Company's March 31,September 30, 1996 Notes to Condensed
Consolidated  Financial  Statements  (unaudited)  regarding legal proceedings is
hereby incorporated herein by reference thereto.


In addition,  in  connection  with a contract  dispute  involving  the Company's
subsidiary T.L. Cholette, Inc. ("Cholette") and Gallagher Kaiser, Inc. ("GK"), a
general contractor with whom Cholette contracted,  an arbitration panel in April
1996  awarded  damages  against  Cholette  and in favor of GK in the  amount  of
$4,835,702.  Also in April 1996,  Cholette commenced an action against GK in the
Circuit Court for the County of Wayne, State of Michigan to have the arbitration
award vacated  alleging the arbitrators  exceeded their powers and/or  committed
material and/or  substantive  errors of law and fact,  ignored the  controlling,
material,  and/or  essential  provisions of law and the  contract,  and acted in
manifest  disregard  of the law.  GK has  commenced  an action in the same court
seeking to have judgment entered upon the arbitration award in GK's favor.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits
         Exhibit No. 27.  Financial Data Schedule.  Page.11.  Computation of Earnings Per Common Share and Common  Equivalent
                 Share for the three and nine month periods ended 
                 September 30, 1996.

(b) DuringNo reports on Form 8-K were filed  during the quarter  ended  March 31, 1996, the Company filed Reports on
           Form 8-K dated February 5, 1996, February 29, 1996 and March 29, 1996
           reporting information with respect to Item 5.September  30,
    1996.







                                   SIGNATURES

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


                                                  EMCOR GROUP, INC.
                                        --------------------------------------------------------------------
                                                     (Registrant)


Date:  May 10,October 30, 1996            By:           /s/FRANK T. MacINNIS
                                        --------------------------------------------------------------------
                                                  Frank T. MacInnis
                                               Chairman of the Board of
                                               Directors, President and
                                               Chief Executive Officer


Date:  May 10,October 30, 1996            By:           /s/LEICLE E. CHESSER
                                        --------------------------------------------------------------------
                                                  Leicle E. Chesser
                                               Executive Vice President
                                              and Chief Financial Officer



Exhibit 11

EMCOR Group, Inc. and Subsidiaries

Computation  of Earning  Per Common  Share and Common  Equivalent  Share for the
three and nine month periods ending September 30, 1996.

                                           Three Months        Nine Months
                                         Ended September          Ended
PRIMARY                                      30, 1996         September 30,
                                                                   1996
- ---------------------------------------  -----------------    ---------------

Net Income                                $1,931,000          $7,485,000
                                         =================    ===============

Weighted average number of common
shares outstanding                         9,513,788           9,468,083

Add - common equivalent shares using
the treasury stock method                    562,470             453,338
                                          -----------------    ---------------

Weighted average number of shares
 used in calculation of primary
 income per common and equivalent      
 share                                    10,076,258           9,921,421
                                         =================    ===============

Primary net income per common and
common equivalent share                        $0.19               $0.75
                                         =================    ===============


                                           Three Months         Nine Months
                                         Ended September      Ended September
FULLY DILUTED                                30, 1996             30, 1996
- ---------------------------------------  -----------------    ---------------

Net Income                                $1,931,000           $7,485,000
                                         =================    ===============

Weighted average number of shares
   used in calculating primary income         
   per share                              10,076,258            9,921,421

Shares issuable upon exercise of
   stock options included in primary         
   calculation above                        (562,470)            (453,338)

Shares issuable upon exercise of
   stock options at period end                            
   market price                              551,431              551,431
                                         -----------------    ---------------

Weighted average number of shares
   used in calculation of fully 
   diluted income per common and     
   common equivalent share                10,065,219           10,019,514
                                         =================    ===============

Fully diluted net income per common
   and common equivalent share                 $0.19                $0.75
                                          =================    ===============