UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

                                    FORM 10-K

   [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 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 Number 1-2725

                             HEIN-WERNER CORPORATION         
             (Exact name of registrant as specified in its charter)

                Wisconsin                             39-0340430    
       (State or other jurisdiction of             (I.R.S. Employer
       incorporation or organization)             Identification No.)

             2120 Pewaukee Road                          53188   
             Waukesha, Wisconsin                      (Zip Code)
       (Address of principal executive
                  offices)

   Registrant's telephone number, including area code:  (414) 542-6611

   Securities registered pursuant to Section 12(b) of the Act:

                                              Name of each exchange
               Title of each class             on which registered   

           Common Stock, $1 par value        American Stock Exchange

          Common Share Purchase Rights       American Stock Exchange

   Securities registered pursuant to Section 12(g) of the Act:      None

   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 such shorter period that the
   registrant was required to file such reports), and (2) has been subject to
   such filing requirements for at least 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 [ X ]

   Aggregate market value of the voting stock held by non-affiliates of the
   registrant as of March 6, 1997:  $18,288,240

   The number of shares outstanding of each registrant's classes of common
   stock as of March 6, 1997:  Common Stock, $1 par value -- 2,760,489 shares

   DOCUMENTS INCORPORATED BY REFERENCE:

        Definitive Proxy Statement dated March 13, 1997 relating to the
        annual meeting of shareholders to be held on April 24, 1997
        (Part III of Form 10-K).

   <PAGE>
                                     PART I

   ITEM 1.   BUSINESS

             GENERAL.  Hein-Werner Corporation was incorporated under the
   laws of the State of Wisconsin on April 16, 1921 and is headquartered in
   Waukesha, Wisconsin.  Throughout the remainder of this Form 10-K, Hein-
   Werner Corporation and its subsidiaries will be referred to as the
   "Company" or the "Registrant" except where the context otherwise requires.

             FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.  Industry segment
   information is part of the Notes to Consolidated Financial Statements,
   Segment Information which can be found in FINANCIAL STATEMENTS AND
   SUPPLEMENTARY DATA, Item 8 of this report.

             DESCRIPTION OF THE BUSINESS.  The Company has three functional
   industry segments:  collision repair equipment, engine rebuilding
   equipment and fluid power components.

                           COLLISION REPAIR EQUIPMENT

             The Company serves the collision repair equipment market
   worldwide, with operations centered in North America and in Europe.  This
   business segment represents approximately 60.8%, 56.7% and 54.6% of the
   Company's net sales for 1996, 1995 and 1994, respectively.

             Collision repair equipment is comprised of vehicle correction
   equipment for straightening collision damaged cars, vehicle alignment
   equipment for measuring cars as they are straightened and heavy duty
   collision repair equipment for the truck market.  The collision repair
   market is made up of autobody shops and other collision repair facilities
   owned by automotive dealers, franchisees and independents.  The Company's
   collision repair equipment is designed to straighten collision damaged
   cars and trucks to original manufacturers' specifications.  Using computer
   aided design and patented measuring systems, the Company measures each new
   model of automobile soon after its introduction and provides to its
   customers books or magnetic media that detail measurement data covering
   every model of car over the preceding three model years.  When a damaged
   automobile is to undergo collision repair, an autobody repair technician
   applies controlled pressure to designated points on the body using chains
   and hydraulic pumps to restore the body to its designated size and shape
   utilizing the measurement equipment and specification data published by
   the Company.

             The majority of cars are now made with a unibody shell compared
   to older vehicles built with frames.  Unibody vehicles are designed to
   better absorb the impact of a collision which necessitates more vehicle
   straightening and a higher degree of accuracy in measuring vehicles as
   they are straightened.  The closer tolerances needed in repairing unibody
   vehicles requires the use of sophisticated straightening and measurement
   systems such as those designed, manufactured and marketed by the Company. 
   The insurance industry and automobile manufacturers encourage the use of
   such systems.

             In North America, the Company services the market with its
   Kansas Jack,/R/ Blackhawk,/R/ Hein-Werner Heavy Duty,/R/ and Hein-Werner
   SHARK/R/ brands.  The Company's strategy is to offer the most complete
   line of collision repair equipment available in the marketplace at a range
   of price levels.  The product offering is a full range of frame
   straightening and vehicle alignment equipment for both trucks and
   automobiles including floor-pull correction systems, rack and bench repair
   systems and universal and dedicated vehicle alignment systems employing
   the state of the art technology for laser, mechanical and ultrasonic
   measurement of collision damaged vehicles.  From North America, the
   Company services the markets in North and South America, the Caribbean and
   certain Pacific Rim countries.

             The Company serves the rest of the international market through
   wholly-owned subsidiaries in Europe.  European operating units accounted
   for approximately 56% of the Company's 1996 collision repair sales. 
   International operations are headquartered in Geneva, Switzerland.  The
   Company maintains manufacturing and sales facilities in the United Kingdom
   and Italy; distribution and training facilities in France; and sales
   offices in France, Germany and Switzerland.

             In the international market served from Europe, the Company
   principally sells collision repair equipment under the Blackhawk and Hein-
   Werner trade names.  All collision repair manufacturing facilities provide
   product to markets worldwide.  U.S. manufactured products are modified for
   international markets at the Company's plant in Italy.  European
   manufactured products are modified for the North American market at the
   Company's facilities in the United States.

             The Company markets its collision repair products through sales
   representatives, equipment distributors, automotive jobbers, and a direct
   sales force, depending upon the country and local market.  The Company
   also participates in the equipment programs of all major U.S. and foreign
   automotive manufacturers including Ford, General Motors, Chrysler, Nissan,
   Toyota, Hyundai, Peugeot and Volvo, and national tool marketing programs
   of the companies.  The Company's products have been approved by all major
   European automobile manufacturers.  The Company has also been selected as
   the sole source of collision repair equipment by several manufacturers. 
   Such approvals provide the Company with a significant competitive
   advantage.

                           ENGINE REBUILDING EQUIPMENT

             Engine rebuilding equipment is used by jobber machine shops
   where professional and home mechanics bring engine parts to be rebuilt,
   and by production engine rebuilders.  This industry segment represented
   approximately 9.9%, 15.0% and 17.0% of the Company's net sales in 1996,
   1995 and 1994, respectively.  Growth in this market is influenced by the
   size and age of the vehicle population and overall economic growth.  Sales
   generally lag new car sales by approximately three to five years.

             A full line of engine rebuilding equipment is manufactured and
   sold under the Winona Van Norman and Van Norman trade names.  The products
   manufactured and sold include cleaning, grinding, boring, honing,
   inspection and brake equipment.  The Company is the exclusive distributor
   in North America, Mexico and the Far East for Az di Alvise Zanrosso,
   Rovimpex Novaledo Zona Industriale, and the Carin Equipment Group of
   Italy, all leading manufacturers of complementary equipment.  The
   Company's engine rebuilding equipment is sold through manufacturers'
   representatives.

                             FLUID POWER COMPONENTS

             The Company serves the fluid power component market through its
   Great Bend Industries Division.  The fluid power market represents
   approximately 29.3%, 28.3% and 28.4% of the Company's net sales for 1996,
   1995 and 1994, respectively.  The Company specializes in the production of
   single acting, double acting and telescopic hydraulic cylinders and
   related hydraulic components for the Original Equipment Manufacturer (OEM)
   market.  These products are incorporated into equipment used in road
   repair, construction, transportation, solid waste disposal, utility
   vehicles and oil rigs.  The demand for the Company's fluid power
   components is determined by the demand for the capital goods produced by
   the OEM manufacturers it serves.  The Company's fluid power components are
   sold through manufacturers' representatives, with some in-house accounts. 

             RAW MATERIALS.  The Company's principal raw materials are steel
   products, castings and forgings. The Company customarily procures its
   castings and forgings from unaffiliated foundries.  Steel products are
   purchased by the Company from a number of steel mills and steel service
   centers. The principal materials and supplies used by the Company can
   ordinarily be procured in the general market.  Raw materials, parts and
   components are purchased from many different sources, generally on a
   purchase order basis.

             MANUFACTURING/PRODUCT SOURCING.  The Company has supply
   arrangements with manufacturers in Brazil, Italy, Taiwan and the People's
   Republic of China for engine rebuilding and collision repair equipment
   manufactured exclusively to the Company's standards and specifications. 
   Such equipment is shipped to the Company's facilities in Wisconsin,
   Minnesota and France for packaging and shipment to the Company's
   customers.

             The Company has the ability to switch sources of manufacturing
   to take advantage of wage rates, foreign exchange rates, foreign trade
   developments and other factors.  The Company can manufacture products
   domestically as well.

             PATENTS AND TRADEMARKS.  The Company owns certain patents and
   trademarks which are considered to be important to the success of the
   Company's collision repair equipment business.  The Company also owns
   other patents, none of which are considered to be critical to the success
   of its other business operations.  The remaining term on the Company's
   patents is one to seventeen years.

             SEASONALITY.  The Collision Repair equipment market experiences
   a significant decline in order demand during July and August.  To a lesser
   extent, the same is true for the engine rebuilding equipment market.

             CUSTOMERS.  The Fluid Power segment has two customers whose
   aggregate business represents approximately 14% of the segment's revenues. 
   The other segments and the overall business of the Company are not
   dependent upon a single customer or on a few customers, the loss of which
   would have a material adverse effect on any such segment or on the Company
   taken as a whole.

             BACKLOG.  The estimated amount of backlog at December 31, 1996
   was approximately $8.4 million; the comparable figure for December 31,
   1995 was approximately $18.3 million.  28.9%, 2.5% and 68.7% of the 1996
   year end backlog is attributable to the collision repair, engine
   rebuilding and fluid power segments, respectively.  The Company
   anticipates that all orders on hand as of December 31, 1996 will be filled
   during 1997.  Most collision repair segment orders are filled within three
   months.

             COMPETITION.  The Company experiences intense competition with
   numerous domestic and foreign producers.  Some of the Company's
   competitors in each industry segment are significantly larger than the
   Company and have substantially greater resources.  The Company expects
   that it will continue to encounter highly competitive conditions.  The
   Company believes that its collision repair equipment and engine rebuilding
   equipment compete favorably primarily on the basis of the Company's
   recognized brand names, reputation for product innovation and engineering
   of high quality products and the Company's distribution channels.  The
   Company believes that its fluid power components compete favorably based
   primarily on the ability of the Company to meet customers' quality,
   reliability and service needs.

             RESEARCH AND DEVELOPMENT.  The Company has 26 engineering
   employees who devote all or a portion of their time to the development and
   improvement of its products, and many of the features of the Company's
   products are the result of its own development work.  The Company spent
   approximately $1.6 million, $1.7 million and $1.5 million in the years
   ended December 31, 1996, 1995 and 1994, respectively, on engineering and
   research activities for continuing operations relating to product
   development and improvement, all of which were Company sponsored.

             IMPACT OF ENVIRONMENTAL LEGISLATION.  The Company did not during
   1996, nor does it expect to during 1997, experience any material capital
   expenditures as a result of federal, state or local environmental
   legislation.

             FOREIGN AND EXPORT SALES.  Information concerning foreign and
   export sales is part of the Notes to Consolidated Financial Statements,
   segment information which can be found in FINANCIAL STATEMENTS AND
   SUPPLEMENTARY DATA, Item 8 of this report.

             EMPLOYEES.  The Company had about 507 and 592 employees at the
   end of 1996 and 1995, respectively.  Approximately 72% and 75% of the
   production employees in 1996 and 1995, respectively, were represented by
   labor unions.  The Company's labor agreements with labor unions were
   renewed in 1995 and extend to April, 1998 at its Winona, Minnesota
   location and June, 1998 at its Great Bend, Kansas plant.  The Company
   considers its employee relations to be satisfactory.

             MISCELLANEOUS.  On September 29, 1989, the Company consummated a
   private placement of its $8,500,000 8% Convertible Subordinated Notes due
   September 1, 1999 (the "Notes").  The Note Agreement, dated as of
   September 1, 1989 ("Note Agreement"), was amended by the parties thereto
   effective November 12, 1990, April 26, 1991, February 3, 1992, December
   18, 1992 and February 21, 1994.  The amendments, among other things,
   revised certain financial covenants, reduced the conversion price per
   share, provided for the repurchase of the Notes held by one noteholder and
   provided noteholders with options to purchase shares of the Company's
   Common Stock in the event of prepayments of the Notes.  On January 16,
   1991, the Company repurchased $4,000,000 principal amount of Notes from
   one noteholder.  The remaining $4,500,000 is payable in four equal
   installments of $1,125,000 due on September 1 for the years 1996 through
   1999.  The first installment of $1,125,000 was paid when due in 1996.

             On January 24, 1997, the Company paid a 5% stock dividend to
   shareholders of record on January 3, 1997.

   ITEM 2.   PROPERTIES

             The following table sets forth certain information with respect
   to the principal manufacturing facilities (20,000 square feet or more)
   which the Company uses in its operations:

                                    Owned        Expiration       Square
              Location            or Leased    Date of Lease      Footage

    Baraboo, WI                     Leased         12/05           73,000
    Winona, MN                      Leased         01/98           63,000
    Great Bend, KS                  Leased          (1)           112,000
    Ashford, Kent, England          Leased         09/02           20,000
    Verona, Italy                   Leased         04/98           43,000
    _______________

    (1)  This property is leased under a long-term lease.  The Company has
         an option to purchase the property at a nominal amount upon the
         expiration of the lease.  This lease has been capitalized for
         financial statement purposes.

             Sales, marketing, administrative and distribution and training
   facilities are leased in Wisconsin, France, Germany and Switzerland. 
   Fluid power products are produced at the Great Bend, Kansas plant; engine
   rebuilding equipment is produced at the plant in Winona, Minnesota; and
   collision repair equipment is produced at the facilities in Ashford,
   England, Verona, Italy and Baraboo, Wisconsin.  The properties above are
   considered to be adequate for present and planned future business.

   ITEM 3.   LEGAL PROCEEDINGS

             The Company is involved in various legal proceedings, claims and
   administrative actions arising in the normal course of business.  For
   additional information, see the footnote "Commitments and Contingencies"
   in Notes to Consolidated Audited Financial Statements (Item 8 of this
   report).

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

             The Company did not submit any matters to a vote of its security
   holders during the fourth quarter of 1996.

                        EXECUTIVE OFFICERS OF REGISTRANT

             Set forth below is certain information concerning the executive
   officers of the Registrant as of March 6, 1997:


    Name, Age and Position        Business Experience During Past 5 Years

    Joseph L. Dindorf, 56         President and Chief Executive Officer,
    President and Chief           Hein-Werner Corporation (elected in
    Executive Officer             1976).

    Reinald D. Liegel, 54         Senior Vice President-Technology, Hein-
    Senior Vice President-        Werner Corporation (elected June, 1988).
    Technology

    Jean-Paul Barthelme, 59       Vice President, and President of European
    Vice President, and           Operations, Hein-Werner Corporation
    President-European            (elected September, 1988).
    Operations

    Michael J. Koons, 57          Vice President-Industrial Relations and
    Vice President-Industrial     Personnel, Hein-Werner Corporation
    Relations and Personnel       (elected in 1979).

    James R. Queenan, 54          Elected June, 1990; prior thereto, self-
    Vice President, and           employed as a marketing consultant and
    President-Collision           prior to January, 1988, President of the
    Equipment Group               Kansas Jack Division.

    Maurice J. McSweeney, 58      Elected March, 1983; partner, Foley &
    Secretary                     Lardner, attorneys, Milwaukee, Wisconsin.

             The officers of Registrant are elected annually by the Board of
   Directors following the Annual Meeting of Shareholders and each officer
   holds office until his successor has been duly elected and qualified or
   until his prior death, resignation or removal.  The next Annual Meeting of
   Shareholders is currently scheduled for April 24, 1997.


                                     PART II

   ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND
             RELATED SECURITY HOLDER MATTERS                        

             The Company's Common Stock is listed on the American Stock
   Exchange under the symbol "HNW."  The following table sets forth the range
   of high and low closing sales prices per share as reported on the American
   Stock Exchange for the Company's Common Stock and the cash dividends
   declared per share of Common Stock thereon during the periods indicated. 
   The Company paid a 5% stock dividend on (i) January 26, 1996 to
   shareholders of record on January 5, 1996 and (ii) January 24, 1997 to
   shareholders of record on January 3, 1997.

                                      Closing sale price          Cash
                                                               dividends
                                        High        Low         declared
    1995
         4th quarter  . . . . . .        $5.250     $4.375         --
         3rd quarter  . . . . . .         5.875      4.250         --
         2nd quarter  . . . . . .         5.875      4.750         --
         1st quarter  . . . . . .         5.375      4.500         --

    1996
         4th quarter  . . . . . .        $7.250     $6.250         --
         3rd quarter  . . . . . .         8.000      5.750         --
         2nd quarter  . . . . . .         8.750      5.813         --
         1st quarter  . . . . . .         6.375      4.250         --



   As of March 6, 1997, the closing sales price of the Company's Common
   Stock, as reported on the American Stock Exchange was $6.625 per share. 
   As of that date there were 621 holders of record of the Company's Common
   Stock.  Holders of Common Stock are entitled to receive such dividends, if
   any, as may be declared from time to time by the Board of Directors out of
   funds legally available therefor.

             The Company's ability to pay dividends is restricted by the
   terms of the Note Agreement and the Company's 8% Convertible Subordinated
   Notes due September 1, 1999 issued thereunder and by the Company's credit
   facility with Firstar Bank Milwaukee, N.A. and Continental Bank N.A.
   (succeeded by BankAmerica N.A.'s Security Pacific Business Credit Inc.)
   ("Credit Facility").  Under the terms of the Credit Facility, the Company
   is prohibited from paying dividends.  In addition to the restrictions set
   forth in the Credit Facility, the Note Agreement prohibits the payment of
   any dividends if after giving effect thereto (together with certain other
   payments or distributions in respect of Company capital stock), the
   aggregate amount of all Restricted Payments (as defined in the Note
   Agreement) during the period from and after December 31, 1988 to and
   including the date of making the Restricted Payment (exclusive of the
   dividend paid on January 13, 1989) would exceed 25% of Consolidated Net
   Income (as defined in the Note Agreement) for such period.

   ITEM 6.   SELECTED FINANCIAL DATA

   (Dollars in thousands, except per share data)

   <TABLE>
   <CAPTION>
                                        1996         1995         1994         1993          1992

    <S>                                 <C>        <C>          <C>         <C>            <C>  
    Net sales . . . . . . . . . . .     $68,492    $73,693      $67,100     $60,328        $60,258
    Income (loss) from 
      continuing operations . . . .       2,176      1,013          827      (1,580)        (1,880)
    Income (loss) from 
      continuing operations 
      per common share - primary  .     $  0.78    $  0.37      $  0.30     $ (0.58)       $ (0.69)
    Income (loss) from
      continuing operations
      per common share - 
      fully diluted . . . . . . . .     $  0.72    $    --(1)   $    --(1)  $    --(1)     $    --(1)
    Total assets  . . . . . . . . .      45,598     49,657       46,101      45,345         47,321
    Long-term obligations . . . . .      10,161     10,902       13,256      14,071         12,873
    Cash dividends declared
      per common share  . . . . . .     $  0.00    $  0.00      $  0.00     $  0.00        $  0.00

   Per share data has been restated to give effect to stock
   dividends paid through January 24, 1997.

   (1)  Fully diluted income from continuing operations per common share was
        anti-dilutive for this period.
   </TABLE>

   ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
             RESULTS OF OPERATIONS                                 

        The following discussion includes forward-looking statements that
   reflect management's current assumptions and estimates concerning the
   Company's performance and financial results.  Each forward-looking
   statement contained herein is either preceded by the phrase "management
   expects" or is contained in a paragraph beginning with the phrase
   "management expects."  A variety of factors could cause the Company's
   actual results to differ materially from the anticipated results.  These
   factors include, but are not limited to, increased competition;
   unfavorable fluctuation of currency exchange rates; rising interest rates;
   instability of foreign governments; and the escalation of raw material
   prices, primarily steel.

   Results of Operations

   NET SALES

        Consolidated net sales for 1996 decreased 7.1% from 1995 following an
   increase of 9.8% between 1995 and 1994.

    (Amounts in thousands)      1996           1995           1994

    North America              $45,306        $47,651       $44,657

    Europe                      23,186         26,042        22,443
                                ------         ------        ------
    Total net sales            $68,492        $73,693       $67,100
                                ======         ======        ======


        The Company's North American operations posted a 4.9% decrease in net
   sales in 1996 over 1995, following an increase between 1994 and 1995 of
   6.7%. This decrease reflects weak business conditions in the U.S. engine
   rebuilding market.

        International operations based in Europe experienced an 11.0% decline
   in sales following a 16.0% increase between 1995 and 1994. This decrease
   is a result of a softening of  economic conditions in both the French and
   German markets.

        Management expects sales levels to improve in 1997. One reason is the
   acquisition of distribution and trademark rights to Blackhawk collision
   repair equipment for Central and South America and select Asian markets.
   This will spread our risk of a disruption in any one country's market and
   allow us to sell to areas that were not directly represented. Another
   factor is the development of private labeling of product and contract
   machining at our Engine Rebuilding business. This is expected to smooth
   the revenue stream in this segment.

   Net Sales by Segment*
                              1996           1995           1994

    Collision Repair          60.8%          56.7%         54.6%

    Engine Rebuilding          9.9           15.0          17.0

    Fluid Power               29.3           28.3          28.4
                             ------         ------         ------
    Total net sales          100.0%         100.0%        100.0%
                             ======         ======        =======

   *    Refer to the Segment Information in the Notes to Consolidated
        Financial Statements for more information.

        Net sales for the Collision Repair segment remained steady between
   1996 and 1995 maintaining the 14.2% increase over 1994.  Increased sales
   of Shark/R/ and the introduction of the Workstation 2001/TM/ in the
   Americas offset declines in the French and German markets.

        The Engine Rebuilding segment experienced a decline in sales of 38.6%
   between 1996 and 1995.  This follows a decline in 1995 sales of 3.9% from
   1994.  Contract machining sales were down from the prior year; however,
   sales picked up in the last quarter of 1996.  Management expects sales in
   this area to increase in 1997 due to several new customers and new
   products being added to the mix.  Export sales were also down from the
   prior year reflecting the continued softness in the Mexican market. 
   Management expects exports to revive as business with the Pacific Rim
   increases.  Private labeling, as mentioned above, should also contribute
   to increased sales in 1997.

        The 1996 Fluid Power segment net sales were 4.0% below the record
   pace set in 1995 but were over 1994 levels by 5.3%.  Sales moderated in
   the fourth quarter as customers extended delivery dates.  Early
   indications for 1997 reflect a good order rate and management expects
   another solid performance.

   COSTS AND PROFIT MARGINS

        Gross profit as a percent of sales increased 3.6% between 1996 and
   1995.  Gross profits in dollars declined by 3.7% from $26.8 million in
   1995 to $25.8 million in 1996 mainly due to the reduced sales volume.  The
   1995 gross profit as a percent of sales remained steady from 1994 although
   stated in dollars it rose 10.4% from $24.3 million in 1994.  The increase
   in gross margin dollars between 1994 and 1995 was volume related.

   Gross Profit as a % of Net Sales

                               1996           1995           1994

    Collision Repair           47.6%          48.1%         47.3%
    Engine Rebuilding          23.6           24.2          26.3
    Fluid Power                21.9           19.5          21.2
                             ------         ------        ------
    Consolidated               37.7%          36.4%         36.2%
                             ======         ======        ======

        The leveling off of gross margins in the Collision Repair segment is
   the result of the mix of business between the Americas and the
   International divisions.  Gross margins in the Americas were up 14.0% over
   1995 levels due to several factors.  First, the division was able to
   maintain its fixed costs while increasing production levels to meet
   increased demand, thereby utilizing productive capacity more efficiently. 
   Second, sales of more technologically-advanced equipment continued to
   command higher margins.  In addition, the sale of this advanced equipment
   is directly to the end user, resulting in higher margins for the Company. 
   This benefit is partially offset by commissions paid to distributors. 
   Third, the division was able to continue to benefit from our value
   engineering program.  This program involves re-engineering products to
   reduce their material cost content and to better utilize raw material in
   the production process.

        The gains made in the Americas were offset, however,  by lower
   margins in the International division.  Margins in certain countries were
   lower due to overall economic conditions fostering pricing pressures and
   unfavorable exchange rates.

        The Engine Rebuilding segment's decline in gross margin is due to
   continued competitiveness in the domestic market with the Company not
   being able to pass on increases in material and labor costs for the past
   several years.

        The gross profit margin for the Fluid Power segment is up 12.3% over
   1995 levels.  This is mainly the result of increased control over shop
   expenses and favorable purchase prices due to obtaining alternative
   sources of supply and quantity discounts.

   OPERATING EXPENSES AND PROFIT
    (Amounts in thousands)       1996           1995           1994

    Operating expenses          $21,891        $23,918       $22,414
                                 ------         ------        ------
    Operating profit            $ 3,929        $ 2,908       $ 1,889
                                 ======         ======        ======


        Operating expenses decreased 8.5% from 1995 and even came in below
   1994 levels.  This reduction reflects continued emphasis on cost controls. 
   In addition to general cost controls, insurance premiums were reduced due
   to favorable workers' compensation experience in recent years, a favorable
   settlement of a patent infringement lawsuit that allowed us to recover
   fees incurred in prior years, and the restructuring of our German sales
   office which reduced both marketing and administrative expenses.  The
   Engine Rebuilding segment also reduced operating expenses to reflect the
   overall reduction in business levels.

        Operating profit rose 35.1% to $3.9 million in 1996 from $2.9 million
   in 1995.  The cost containment programs implemented when the weakening in
   certain markets was anticipated helped to offset lower volume levels and
   flat margin performance in those areas.  

   Operating Expenses as a % of Net Sales

                                1996           1995           1994

    Collision Repair            42.9%          46.0%         39.0%
    Engine Rebuilding           33.2           26.2          22.6
    Fluid Power                  8.8            8.6           9.6
                               -----          -----         -----
    Consolidated                32.0%          32.5%         33.4%
                               =====          =====         =====

        Operating expenses as a percent of net sales for the Collision Repair
   segment decreased 6.7% in 1996 due to the restructuring of the German
   sales office and continued emphasis on cost control.  The Engine
   Rebuilding segment reduced operating expenses to a minimum level during
   the year in reaction to the reduced sales volume.

        The dollar value of operating expenses was down slightly at the Fluid
   Power segment, but was up 2.3% as a percent of sales due to the reduction
   in volume.

   NONOPERATING INCOME AND EXPENSE

        Interest expense is the largest component of nonoperating expense. 
   It is interest paid to banks, leasing companies and other lenders for
   borrowed money or for capitalized leases.  The overall borrowing level was
   reduced during 1996.  This reduction, combined with a negotiated reduction
   in interest rates during the last half of the year, provided for a 20.3%
   reduction in our interest expense between 1996 and 1995.  The overall
   borrowing level in 1995 and 1994 remained constant, but higher interest
   rates caused the expense to increase during that time.

    (Amounts in thousands)             1996           1995          1994

    Interest expense                 $(1,465)      $(1,838)     $(1,690)
    Loss on foreign exchange            (207)         (135)         (28)
    Miscellaneous, net                    43            42          339
                                      ------        ------       ------
    Total nonoperating expense,
         net                         $(1,629)      $(1,931)     $(1,379)
                                      ======        ======       ======


        The foreign exchange gains and losses are primarily attributable to
   European operations where a considerable amount of buying and selling is
   done in nonlocal currencies.  Receivables and payables denominated in
   nonlocal currencies give rise to foreign exchange gains and losses on a
   regular basis.  Normally, foreign exchange risk in this category is
   managed by a review of the balance of receivables and payables and, where
   warranted, the purchase of foreign exchange contracts to hedge risk.

   INCOME TAX EXPENSE

        Income tax expense in 1996 is primarily from European operations, as
   North American operations made substantial use of net operating loss
   carryforwards.  The income tax benefit recorded in 1995 and 1994 was the
   result of recoverable income taxes from net operating loss carrybacks and
   the favorable resolution of audits of prior year tax returns.

   Financial Condition

   LIQUIDITY

        Net income adjusted for noncash items for 1996 and 1995 increased
   15.1% and 13.7%, respectively, over previous years' levels.

    (Amounts in thousands)         1996           1995           1994

    Net income (loss)            $ 2,176       $ 1,013        $   827

    Adjustments for noncash
      items                        1,523         2,202          2,001
                                  ------        ------         ------
                                   3,699         3,215          2,828
    Changes in cash from
      certain assets and
      liabilities                   (724)       (2,676)        (1,689)
                                  ------        ------         ------
    Cash provided by
      operating activities       $ 2,975       $   539        $ 1,139
                                  ======        ======         ======


        Management expects that cash provided by operating activities will
   continue to supply the Company with sufficient cash to satisfy debt
   service requirements and investments in capital assets.

        In 1996, the Company was able to hold inventory levels while
   increasing accounts receivable collections.  This additional cash flow
   allowed a significant reduction in accounts payable and notes payable. 
   The Company repaid $1.25 million of subordinated debt on schedule during
   the last half of the year while reducing overall debt levels by 2.8%. 
   Working capital remains strong, being up slightly over 1995 and comparable
   to the 1994 level.

    (Amounts in thousands)       1996            1995            1994

    Current assets              $37,090         $41,525          $37,353
    Current liabilities          16,197          20,749           16,491
                                 ------          ------           ------
    Working capital             $20,893         $20,776          $20,862
                                 ======          ======           ======

    Current ratio              2.3 to 1        2.0 to 1         2.3 to 1   
                               ========        ========         ========   


        Credit arrangements in Europe are short-term in nature and designed
   to satisfy seasonal fluctuations in liquidity requirements.  Those
   arrangements are renewed annually and management expects they will be
   sufficient to support the needs of the Company's European operations.

   FINANCING ACTIVITIES

        The Company extended its current credit agreement with domestic banks
   during the year.  Actual amounts available under the $12 million credit
   line are dependent upon the balances of the underlying collateral.  At
   December 31, 1996, $8.4 million of the line of credit was available and
   $6.4 million was utilized.  Management expects that this line of credit,
   along with cash provided by operating activities, will be adequate to
   satisfy the cash needs of the Company.


   ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                      Index

                              Report of Management

                          Independent Auditors' Report

                      Consolidated Statements of Operations

                           Consolidated Balance Sheets

                      Consolidated Statements of Cash Flows

                   Notes to Consolidated Financial Statements


   <PAGE>
                              REPORT OF MANAGEMENT

        The management of Hein-Werner Corporation is responsible for the
   preparation and presentation of financial statements.  Management believes
   the established policies, internal accounting controls and review
   procedures provide reasonable assurance that the consolidated financial
   statements included herein are prepared in accordance with generally
   accepted accounting principles.  This preparation has been based upon the
   best estimates and judgments and giving due consideration to materiality.

        The Company maintains internal accounting control systems and related
   policies and procedures.  These systems are designed to provide reasonable
   assurance that assets are safeguarded, transactions are executed in
   accordance with management's authorization and properly recorded, and
   accounting records may be relied upon for the preparation of financial
   statements and other financial information.  The design, monitoring and
   revision of internal accounting control systems involve, among other
   things, management's judgment with respect to the relative cost and
   expected benefits of specific control measures.

        The independent auditors are responsible for expressing their opinion
   as to whether the financial statements present fairly the financial
   position, operating results and cash flows of the Company.  In this
   process, they obtain a sufficient understanding of the internal accounting
   systems to establish the audit scope, review selected transactions and
   carry out other audit procedures.  The Audit Committee of the Board of
   Directors is composed of two nonemployee directors who meet periodically
   with the independent auditors and the Company's management.  This
   Committee considers the audit scope, discusses financial and reporting
   subjects and reviews management actions on these matters.  The independent
   auditors have full and free access to the Audit Committee.

                       /s/ Mary L. Kielich      /s/ Joseph L. Dindorf

                       Mary L. Kielich          Joseph L. Dindorf
                       Corporate Controller          President and Chief
   Executive Officer

   Waukesha, Wisconsin
   February 14, 1997


   <PAGE>
                          INDEPENDENT AUDITORS' REPORT

   The Board of Directors and Stockholders of Hein-Werner Corporation:

        We have audited the accompanying consolidated balance sheets of Hein-
   Werner Corporation and subsidiaries as of December 31, 1996 and 1995, and
   the related consolidated statements of operations and cash flows for each
   of the years in the three-year period ended December 31, 1996.  These
   consolidated financial statements are the responsibility of the Company's
   management.  Our responsibility is to express an opinion on these
   consolidated 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 financial position of
   Hein-Werner Corporation and subsidiaries as of December 31, 1996 and 1995,
   and the results of their operations and their cash flows for each of the
   years in the three-year period ended December 31, 1996, in conformity with
   generally accepted accounting principles.


                                      /s/ KPMG Peat Marwick LLP

                                      KPMG Peat Marwick LLP

   Milwaukee, Wisconsin
   February 14, 1997

   <PAGE>
                      CONSOLIDATED STATEMENTS OF OPERATIONS


   Years Ended December 31:
   (Amounts in thousands, except per
     share amounts)                       1996         1995         1994

   Net sales                            $68,492      $73,693       $67,100
   Cost of sales                         42,672       46,867        42,797
                                         ------       ------       -------
   Gross profit                          25,820       26,826        24,303

   Selling, engineering and
     administrative expenses             21,471       22,948        21,711
   Bad debt expense                         420          970           703
                                         ------       ------        ------
                                         21,891       23,918        22,414
                                         ------       ------        ------
   Operating profit                       3,929        2,908         1,889

   Nonoperating income (expense):
     Interest expense                    (1,465)      (1,838)       (1,690)
     Other                                 (164)         (93)          311
                                         ------       ------        ------
                                         (1,629)      (1,931)       (1,379)
                                         ------       ------        ------
   Income before income tax               2,300          977           510

   Income tax expense (benefit)             124          (36)         (317)
                                         ------       ------        ------
   Net income                           $ 2,176      $ 1,013       $   827
                                         ======       ======        ======
   Earnings per share-primary           $  0.78      $  0.37       $  0.30
                                         ======       ======        ======
   Earnings per share-fully diluted     $  0.72      $   ---       $   ---
                                         ======       ======        ======


   See accompanying notes to consolidated financial statements.

   <PAGE>
                           CONSOLIDATED BALANCE SHEETS
   As of December 31:
   (Amounts in thousands, except share amounts)
   Assets                                            1996         1995
   Current Assets:

     Cash                                         $    ---      $   396
     Accounts receivable, net                       18,794       23,277
     Inventories                                    17,415       17,271
     Prepaid expenses and other                        881          581
                                                   -------      -------
     Total current assets                           37,090       41,525
                                                   -------      -------
   Property, plant and equipment, net                5,451        5,354
   Other assets                                      3,057        2,778
                                                   -------      -------
                                                   $45,598      $49,657
                                                   =======      =======
   Liabilities and Stockholders' Equity
   Current Liabilities:
     Notes payable                                 $ 3,281      $ 4,209
     Current installments of long-term debt          1,856        1,470
     Accounts payable                                4,873        9,231

     Other current liabilities                       6,187        5,839
                                                   -------      -------
     Total current liabilities                      16,197       20,749
                                                   -------      -------
   Long-term debt, excluding current
     installments                                   10,161       10,902
   Other long-term liabilities                       1,304        1,861
                                                   -------      -------
   Commitments and contingencies
     Total liabilities                              27,662       33,512
                                                   -------      -------
   Stockholders' Equity:
     Common stock of $1 par value per share
      Authorized: 20,000,000 shares; Issued:
      2,629,320 and 2,504,421 shares at December
      31, 1996 and 1995, respectively                2,629        2,504
     Capital in excess of par value                 11,995       11,558
     Retained earnings                               2,921        1,308

     Cumulative translation adjustments                443          827
                                                   -------      -------
                                                    17,988       16,197
   Less cost of common shares in treasury -
     3,104 and 2,957 shares at December 31, 1996
     and 1995, respectively                             52           52
                                                   -------      -------
     Total stockholders' equity                     17,936       16,145
                                                   -------      -------
                                                   $45,598      $49,657
                                                   =======      =======

   See accompanying notes to consolidated financial statements.

   <PAGE>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

   Years Ended December 31:
   (Amounts in thousands)
   Cash From Operating Activities:           1996       1995        1994

   Net income                              $ 2,176     $ 1,013     $   827

   Adjustments to reconcile net income
     to cash provided by operating
     activities:
     Adjustments to net income for items
      not using or providing cash:
      Depreciation and amortization          1,103       1,234       1,301
      Bad debt expense                         420         970         703
      Gain on sale of property, plant
        and equipment                          ---          (2)         (3)

   Increase (decrease) in cash due to
     changes in:
      Accounts receivable                    4,063      (4,372)     (1,621)
      Inventories                             (144)     (1,117)     (1,530)
      Prepaid expenses and other assets        (75)        806       1,259
      Accounts payable                      (4,358)      1,929        (320)
      Other liabilities                       (210)         78         523
                                           -------     -------      ------
     Cash provided by operating
      activities                             2,975         539       1,139
                                           -------     -------      ------
   Cash From Investing Activities:
   Capital expenditures                     (1,139)     (1,174)       (737)
   Proceeds from sale of property, plant
     and equipment                              14          28          13
                                           -------     -------     -------
     Cash used in investing activities      (1,125)     (1,146)       (724)
                                           -------     -------     -------
   Cash From Financing Activities:
   Increase (decrease) in notes payable       (928)      1,020         235
   Proceeds from long-term debt                551         163       1,461
   Deferred debt issuance costs                ---         ---         (15)
   Repayment of long-term debt              (1,485)     (1,363)     (2,749)
                                           -------     -------     -------

     Cash used in financing activities      (1,862)       (180)     (1,068)
                                           -------     -------     -------
   Cumulative translation adjustments         (384)        717         780
   Total cash provided (used)                 (396)        (70)        127
   Cash - beginning of year                    396         466         339
                                           -------     -------     -------
   Cash - end of year                     $    ---     $   396     $   466
                                           =======     =======     =======

   See accompanying notes to consolidated financial statements.

   <PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   Summary of Significant Accounting Policies

   (A)  NATURE OF OPERATIONS

        The Company is a multinational manufacturer of collision repair,
   engine rebuilding, and fluid power equipment.  The collision repair and
   engine rebuilding equipment are sold to end users and distributors in
   North and South America, Europe and Asia.  The fluid power equipment is
   primarily sold to original equipment manufacturers in North America.

   (B)  FINANCIAL STATEMENT PRESENTATION

        The consolidated financial statements include the accounts of the
   Company and its subsidiaries, all of which are wholly-owned.  All
   significant intercompany balances and transactions have been eliminated in
   consolidation.

        Management of the Company has made a number of estimates and
   assumptions relating to the reporting of assets and liabilities and the
   disclosures of contingent assets and liabilities at the date of these
   consolidated financial statements and the reported amounts of revenues and
   expenses during the reporting periods to prepare these consolidated
   financial statements in conformity with generally accepted accounting
   principles.  Actual results could differ from those estimates.

   (C)  CASH EQUIVALENTS

        For purposes of the statements of cash flows, the Company considers
   all highly liquid investments purchased with a maturity of three months or
   less to be cash equivalents.

   (D)  INVENTORIES

        Inventories are stated at the lower of cost or market.  Cost is
   determined on the first-in, first-out basis.

        Inventory which is repossessed is recorded at the lesser of its
   original fifo cost, the amount receivable from the customer, or its fair
   market value.

   (E)  PROPERTY, PLANT AND EQUIPMENT

        The cost of plant and equipment is depreciated over the estimated
   useful lives of the respective assets using the straight-line method. 
   Major replacements and betterments are capitalized while maintenance and
   repairs are expensed as incurred.

   (F)  INTANGIBLES

        Patents and trademarks are amortized over their estimated useful
   lives but not exceeding seventeen years.  The excess cost over net assets
   of acquired companies is amortized on the straight-line basis over a
   forty-year period.  Deferred debt issuance costs are amortized over the
   term of the underlying debt agreements.  The Company periodically
   evaluates the carrying value and remaining amortization periods of
   intangible assets for impairment. 

   (G)  LONG-LIVED ASSETS

        The Company adopted the provisions of SFAS No. 121, Accounting for
   the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
   Disposed Of, on January 1, 1996.  This Statement requires that long-lived
   assets and certain identifiable intangibles including goodwill be reviewed
   for impairment whenever events or changes in circumstances indicate that
   the carrying amount of an asset may not be recoverable.  Recoverability of
   assets to be held and used is measured by a comparison of the carrying
   amount of an asset to future net cash flows expected to be generated by
   the asset.  If such assets are considered to be impaired, the impairment
   to be recognized is measured by the amount by which the carrying amount of
   the assets exceed the fair value of the assets.  Adoption of this
   Statement did not have a material impact on the Company's financial
   position, results of operations, or liquidity.

   (H)  NONCURRENT RECEIVABLES

        Certain accounts receivable from distributors in the Collision Repair
   segment were renegotiated during 1993 to notes with payment schedules
   which extend beyond one year.  These notes, which bear an interest rate of
   8%, have been collateralized with personal guarantees of the owners,
   partners and principals of the distributors and are presented as
   noncurrent assets.  The allowance for uncollectible notes is management's
   estimate of uncollectible amounts based upon a review of the outstanding
   balances.

   (I)  REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK

        Sales are recognized upon shipment of products to equipment
   distributors, automotive jobbers, warehouse distributors and retail
   dealers for resale; and on shipments directly to original equipment
   manufacturers and end-users.  Estimated losses on accounts receivable and
   guaranteed notes are provided for in allowance for losses.

        The Company extends customary industry credit terms to customers in
   North America and in Europe.  Sales outside these regions are generally
   supported by letters of credit.  Accounts receivable from resellers of
   equipment are generally collateralized by the products sold and the
   Company also obtains guarantees from some owners, partners, or principals.

        When product is repossessed for which the Company has obtained a
   guarantee, the guarantor takes possession of the product and the Company
   records a receivable from the guarantor.  If there is no third party
   guarantor, the Company takes possession of the equipment and reverses any
   previously recognized revenue or charges any recognizable loss to an
   allowance account established for that purpose.

   (J)  INCOME TAXES

        The Company uses the asset and liability method of accounting for
   income taxes.  Under the asset and liability method, deferred tax assets
   and liabilities are recognized for the estimated future tax consequences
   attributable to differences between the financial statement carrying
   amounts of existing assets and liabilities and their respective tax bases. 
   Deferred tax assets and liabilities are measured using enacted tax rates
   in effect for the year in which those temporary differences are expected
   to be recovered or settled.  The effect on deferred tax assets and
   liabilities of a change in tax rates is recognized in income in the period
   that includes the enactment date.

   (K)  TRANSLATION OF FOREIGN FINANCIAL STATEMENTS

        Assets and liabilities of foreign subsidiaries are translated at
   year-end exchange rates and the statements of operations are translated at
   the average exchange rates for the year.  Gains or losses resulting from
   translating foreign currency financial statements are accumulated as a
   separate component of stockholders' equity until the entity is sold or
   substantially liquidated, at which time any gain or loss is included in
   net earnings.

        Gains or losses from foreign currency transactions (transactions
   denominated in a currency other than the entity's functional currency) are
   included in net earnings.

   (L)  RESEARCH AND DEVELOPMENT EXPENSES

        The Company incurred research and development costs  of approximately
   $1,643,000 in 1996, $1,719,000 in 1995, and $1,475,000 in 1994.  Research
   and development costs are expensed as incurred.

   (M)  EARNINGS PER SHARE

        Earnings per share data and weighted average shares outstanding have
   been restated for all years presented to give effect to the 5% stock
   dividend paid January 24, 1997 and all previous stock dividends.

        Primary earnings per share is based on the weighted average number of
   shares outstanding during each year and the assumed exercise of dilutive
   stock options (less the number of treasury shares assumed to be purchased
   from the proceeds).  Fully diluted earnings per share is additionally
   based on the assumed conversion of the 8% convertible subordinated notes
   issued September 29, 1989.

        As adjusted for stock dividends, the number of shares used in
   calculating primary earnings per share was 2,804,000 in 1996, 2,751,000 in
   1995, and 2,737,000 in 1994.  The number of shares used in calculating
   fully diluted earnings per share was 3,495,000 in 1996.  Fully diluted
   earnings per share in all prior years was anti-dilutive.

   (N)  STOCK OPTION PLAN

        Prior to January 1, 1996, the Company accounted for its stock option
   plan in accordance with the provisions of Accounting Principles Board
   ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
   related interpretations.  As such, compensation expense would be recorded
   on the date of grant only if the current market price of the underlying
   stock exceeded the exercise price. On January 1, 1996, the Company adopted
   SFAS No. 123, Accounting for Stock-Based Compensation, which permits
   entities to continue to apply the provisions of APB Opinion No. 25 and
   provide pro forma net income and pro forma earnings per share disclosures
   for employee stock option grants made in 1995 and future years as if the
   fair-value-based method defined in SFAS No. 123 had been applied.  The
   Company has elected to continue to apply the provisions of APB Opinion No.
   25 and provide the pro forma disclosure when required by SFAS No. 123.

   (O)  RECLASSIFICATIONS

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

   (P)  PENDING ACCOUNTING CHANGES

        In June 1996, the Financial Accounting Standards Board issued SFAS
   No. 125, Accounting for Transfers and Servicing of Financial Assets and
   Extinguishments of Liabilities.  SFAS No. 125 is effective for transfers
   and servicing of financial assets and extinguishments of liabilities
   occurring after December 31, 1996, and is to be applied prospectively. 
   This Statement provides accounting and reporting standards for transfers
   and servicing of financial assets and extinguishments of liabilities based
   on consistent application of a financial-components approach that focuses
   on control.  It distinguishes transfers of financial assets that are sales
   from transfers that are secured borrowings.  Management of the Company
   does not expect that adoption of SFAS No. 125 will have a material impact
   on the Company's financial position, results of operations, or liquidity.

    Accounts Receivable

    (Amounts in thousands)            1996            1995

    Accounts receivable               $20,445        $25,019
    Allowance for losses                1,651          1,742
                                      -------        -------
                                      $18,794        $23,277
                                      =======        =======

    Inventories
    (Amounts in thousands)            1996            1995

    Raw material                      $ 5,574        $ 5,837
    Work-in-process                     1,172          1,125
    Finished goods                     10,669         10,309
                                      -------        -------
                                      $17,415        $17,271
                                      =======        =======

    Property, Plant and Equipment, Net
    (Amounts in thousands)             1996           1995

    Land                             $     90      $     90

    Buildings                           3,125         3,023
    Machinery and equipment            14,361        13,404
                                      -------       -------
                                       17,576        16,517
    Less accumulated depreciation      12,125        11,163
                                      -------       -------
                                      $ 5,451       $ 5,354
                                      =======       =======

    Other Assets
    (Amounts in thousands)             1996           1995

    Patents and trademarks             $1,359        $  563
    Goodwill                            2,282         2,282
                                      -------       -------
                                        3,641         2,845
    Accumulated amortization            1,467         1,338
                                      -------       -------
    Net intangibles                     2,174         1,507
    Noncurrent notes receivable         1,159         1,654
    Less allowance for
     uncollectible notes                  500           727
                                      -------       -------
    Net receivables                       659           927
    Other                                 224           344
                                      -------       -------
                                       $3,057        $2,778
                                      =======       =======


        The fair value of noncurrent notes receivable is estimated using
   discounted cash flows on expected payments to be received based on the
   terms of the notes and current interest rates.  The fair value of the
   noncurrent notes receivable is estimated to be approximately $532,000 and
   $595,000 at December 31, 1996 and 1995, respectively.

   Short-term Borrowings and Lines of Credit

        The Company has various unsecured lines of credit with foreign banks
   aggregating $7,942,000. The amount of unused available borrowings under
   these various lines of credit was $4,682,000 at December 31, 1996.  The
   weighted average interest rate on outstanding amounts was 7.5% and 7.4% at
   December 31, 1996 and 1995, respectively.

        In addition, the Company has the ability to borrow funds outside of
   these lines of credit at foreign banks by using local currency receivables
   as collateral.  The Company was not utilizing this facility as of December
   31, 1996.


    Other Current Liabilities
    (Amounts in thousands)             1996           1995

    Accrued payroll and
      related expenses                $ 2,199      $ 1,769
    Accrued commissions                 1,055        1,088
    Other accrued expenses              2,933        2,982
                                      -------      -------
                                      $ 6,187      $ 5,839
                                      =======      =======

    Long Term Debt
    (Amounts in thousands)              1996          1995

    Revolving credit agreement        $ 6,070      $ 5,885
    8% Convertible subordinated
      notes due 1996 to 1999            3,375        4,500
    11.5% Financing due to 2000           791          945
    8.75% Financing due to 2004           272          295
    5.0% Financing due to 2002            188          163
    Capitalized leases due to 2005        670          512
    Other                                 651           72
                                      -------      -------
                                       12,017       12,372
    Less current installments of
      long-term debt                    1,856        1,470
                                      -------      -------
    Total long-term debt,
      excluding current
      installments                    $10,161      $10,902
                                      =======      =======


        Aggregate required annual principal payments, including capital
   leases, for the next five years are:

                    (Amounts in thousands)

                    1997                           $  1,856
                    1998                              1,687
                    1999                              7,686
                    2000                                384
                    2001                                175
                                                    =======


        The revolving credit agreement provides for borrowings not to exceed
   $12 million based on the availability of collateral assets, primarily
   inventory and accounts receivable, and matures June 30, 1999.  At year
   end, the borrowing base approximated $8.4 million.  At December 31, 1996,
   the net book value of such eligible collateral was approximately $15.5
   million.  Unused letters of credit issued on behalf of the Company
   totalled $345,000 at December 31, 1996.  A commitment fee of 1/2 of 1% per
   annum is payable monthly on the average daily amount of the unused
   borrowing availability.  The Company can borrow at the prime rate of
   interest plus .65%.  The prime rate in effect at December 31, 1996 was
   8.25%.

        The 8% convertible subordinated notes are convertible into common
   stock at a price of approximately $5.98 per share after giving effect to
   the 5% stock dividend paid January 24, 1997.  The note agreement, as
   modified in 1994, also calls for the issuance of nondetachable options,
   fixed in price and quantity, to purchase common stock when scheduled
   principal repayments are made.  Under the agreement, 179,000 of
   exercisable options were issued in 1996 at an option price of $5.98.  A
   similar number of options are to be issued when scheduled principal
   repayments are made in 1997 and 1998.  All of the options issued under the
   agreement expire when the final scheduled principal repayment is made in
   1999.

        The 11.5% financing is collateralized by machinery and equipment with
   a net book value of $1.1 million.  The 8.75% financing is collateralized
   by buildings and fixtures with a net book value of $565,000.

        In 1995, the Company entered into a 5% financing arrangement with a
   county in the state of Kansas allowing borrowings up to $195,000.  The
   borrowings are collateralized by a second mortgage on buildings and
   fixtures with a net book value of $933,000.

        Included in Other Long-term Debt is a liability for the present
   value, discounted at the Company's current borrowing rate, of future
   payments expected to be made in connection with the acquisition of
   distribution and trademark rights to Blackhawk collision repair equipment
   for Central and South America and select Asian markets.

        The various underlying agreements contain certain restrictive
   covenants principally relating to additional debt, long-term leases,
   working capital levels, net worth, the ratio of debt to net worth and
   interest charge coverage.  In addition, the Company is restricted from
   paying cash dividends and from purchasing or redeeming its own stock.  The
   convertible subordinated note agreement restricts the Company's cash
   dividend payments, on a cumulative basis, to not more than 25% of the
   cumulative net income from December 31, 1988 to the date of the payment. 
   At December 31, 1996, the Company is in compliance with all covenants.

        The fair value of the Company's long-term debt is estimated using
   discounted cash flow analyses based on the Company's current incremental
   borrowing rates for similar types of borrowing arrangements.  The carrying
   amount of long-term debt approximates fair value at December 31, 1996 and
   1995.

        Interest paid during 1996, 1995, and 1994 was $1,524,000, $1,842,000,
   and $1,649,000, respectively.

   Commitments and Contingencies

   A)   FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

        To meet the financing needs of consumers of its collision repair and
   engine rebuilding products the Company is, in the normal course of
   business, a party to financial instruments with off-balance-sheet risk. 
   The instruments are guarantees of notes payable to financing institutions
   arranged by the Company.  The Company performs credit reviews on all such
   guarantees.  These guarantees extend for periods up to five years and
   expire in decreasing amounts through 2001.  The amount guaranteed to each
   institution is contractually limited to a portion of the amount financed
   in a given year.  The notes are collateralized by the equipment financed. 
   Proceeds from the resale of recovered equipment have generally
   approximated 90% of repurchased notes.

        The maximum credit risk to the Company at December 31, 1996 and 1995
   was approximately $2,199,000 and $3,022,000, respectively.  Proceeds from
   guaranteed notes totalled approximately $728,000 and $1,307,000 in 1996
   and 1995, respectively.

   B)   LITIGATION

        The Company is involved in legal proceedings, claims and
   administrative actions arising in the normal course of business.  In the
   opinion of management, the Company's liability, if any, under any pending
   litigation or administrative proceeding would not materially affect its
   financial condition or operations.

   C)   ENVIRONMENTAL CLAIMS

        From time to time the Company is identified as a potentially
   responsible party in environmental matters, primarily related to waste
   disposal sites which contain residuals from the manufacturing process
   which were previously disposed of by the Company in accordance with
   applicable regulations in effect at the time of disposal.  Materials
   generated by the Company in these sites have been small and claims against
   the Company have been handled on a diminimus basis.  In addition, the
   Company has indemnified purchasers of property previously sold by the
   Company, against any environmental damage which may have existed at the
   time of the sale.  In the opinion of management, the Company's liability,
   if any, under any pending administrative proceeding or claim, would not
   materially affect its financial condition or operations.

   D)   LEASES

        At December 31, 1996, future minimum lease payments under capital
   leases and under noncancelable operating leases with initial terms greater
   than one year are as follows:

                                         Capitalized      Operating
    (Amounts in thousands)                 leases          leases

    1997                                   $  366         $  1,491
    1998                                      154            1,176
    1999                                      135            1,004
    2000                                       62            1,005
    2001-2005                                  70            1,297
                                            -----           ------
    Total minimum lease payments              787         $  5,973
    Less amount representing interest         117
                                            -----
    Present value of minimum
      lease payments                       $  670
                                            =====
    Current portion of capitalized
      lease obligations                    $  293
                                            =====


        Property, plant and equipment includes the following amount relating
   to leases which have been capitalized:


    (Amounts in thousands)               1996            1995

    Machinery and equipment            $ 1,041         $  1,041
    Less accumulated depreciation          513              416
                                        ------          -------
                                       $   528         $    625
                                        ======          =======

        Operating leases are for buildings, warehouses and equipment.  Rental
   expense for operating leases was $1,857,000 in 1996, $1,955,000 in 1995,
   and $1,765,000 in 1994.

   <TABLE>
   <CAPTION>
   Changes in Stockholders' Equity:
                                                           Capital in               Cumulative                  Total
                                                Common     excess of    Retained    translation  Treasury   stockholders'
   (Amounts in thousands)                       stock      par value    earnings    adjustments    stock       equity

   <S>                                          <C>          <C>         <C>            <C>       <C>           <C> 
   Balance at December 31, 1993                 $2,386       $12,023     $1,306         $(670)    $(2,329)      $12,716
     Net income                                    ---           ---        827           ---         ---           827
     Translation adjustments                       ---           ---        ---           780         ---           780
     5% Stock dividend paid January 21,
       1994, 112,271 shares issued                 ---          (646)    (1,305)          ---       1,951           ---
     5% Stock dividend, fractional shares          ---           ---         (1)          ---         ---            (1)
                                               -------       -------    -------       -------     -------       -------
   Balance at December 31, 1994                  2,386        11,377        827           110        (378)       14,322
     Net income                                    ---           ---      1,013           ---         ---         1,013
     Translation adjustments                       ---           ---        ---           717         ---           717
     5% Stock dividend paid January 27,
       1995, 117,944 shares issued                 118           413       (531)          ---         ---           ---
     5% Stock dividend, fractional shares          ---           ---         (1)          ---         ---            (1)
     Shares contributed to employee benefit
       plan                                        ---          (232)       ---           ---         326            94
                                               -------       -------    -------       -------     -------       -------
   Balance at December 31, 1995                  2,504        11,558      1,308           827         (52)       16,145
     Net income                                    ---           ---      2,176           ---         ---         2,176
     Translation adjustments                       ---           ---        ---          (384)        ---          (384)
     5% Stock dividend paid January 26,
       1996, 124,899 shares issued                 125           437       (562)          ---         ---           ---
     5% Stock dividend, fractional shares          ---           ---         (1)          ---         ---            (1)
                                               -------       -------    -------        ------     -------       -------
   Balance at December 31, 1996                 $2,629       $11,995     $2,921         $ 443    $    (52)      $17,936
                                               =======       =======    =======        ======     =======       =======
   </TABLE>

   Stock Plans

        Under the 1987 Stock Option and Incentive Plan, the Company is
   authorized to grant 147,410 stock options.  The options are subject to the
   following conditions and limitations: no option may be exercised until
   three years after the date of grant when 50% of the options granted become
   exercisable; five years after the date of grant 100% of the options
   granted are exercisable.  Options expire ten years after the date of
   grant.  Under provisions defined in the Plan, all options become
   exercisable in the event of a public tender offer or if an exchange offer
   is made for the Company's stock.

        Stock option activity for each of the three years in the period
   ended December 31, 1996 follows:

                                       Option           Price
                                       shares         per share*

    December 31, 1993                  107,679     $ 4.84 - 5.04
      Cancelled                           (579)
      Granted via stock dividend         5,355     $        4.84
                                       -------      ------------

    December 31, 1994                  112,455     $        4.84
      Cancelled                         (5,788)
      Granted via stock dividend         5,623
                                       -------      ------------
    December 31, 1995                  112,290     $        4.84
      Cancelled                         (3,473)
      Granted via stock dividend         5,441
                                       -------
    December 31, 1996                  114,258
                                       =======
    Exercisable at December 31,
      1996:                             57,129              4.84
                                       =======      ============
    Available for future grants         33,152
                                       =======

    *Option shares and price are adjusted to give effect to the
    stock dividend paid January 26, 1996.



        Each outstanding share of common stock is entitled to one common
   share purchase right.  Under certain circumstances, each right entitles
   the holder to purchase one share of common stock at $65, subject to
   adjustment.  The rights are not exercisable until ten days after a public
   announcement that a person or group has acquired at least 20% of the
   outstanding common stock or ten business days (or later date determined by
   the Board of Directors) after a person or group announces an intention to
   make or commences a tender or exchange offer that would result in
   ownership of 20% or more of the Company's common stock.  Subject to
   certain limitations, the Company's Board of Directors may reduce the
   thresholds applicable to the rights to not less than 10%.

        If a person or group acquires 20% or more of the outstanding common
   stock, or certain other events occur, each right not owned by a 20% or
   greater stockholder will become exercisable for that number of shares of
   common stock having a market value of twice the exercise price of the
   right.  If the Company is acquired in a merger or other business
   combination or 50% or more of its consolidated assets or earning power is
   sold at any time after the rights become exercisable, the rights will
   entitle the holder thereof to purchase common stock of the acquiring
   company having a market value equal to two times the exercise price of the
   rights.

        The rights, which do not have voting privileges, may be redeemed by
   the Company at a price of $.03 per right at any time prior to public
   announcement that a person or group has acquired 20% or more of the
   Company's common stock.  In addition, under certain circumstances the
   rights may be redeemed by stockholder action in connection with an
   acquisition proposal.  Further, at any time after a person or group
   acquires 20% or more of the Company's common stock and prior to that
   person or group acquiring 50% or more of the common stock, the Company may
   exchange the rights (other than rights owned by such 20% or greater
   stockholder) in whole or in part for one share of common stock per right. 
   The rights expire on May 23, 1999.

   Employee Benefit Plans

        A profit sharing and retirement plan is in effect for all domestic
   employees of the Company.  The Company can contribute between 5% and 16%
   of its earnings before income taxes in excess of varying levels, ranging
   from $250,000 to $4,500,000.  The Company's expense under the terms of the
   plan was $314,000, $96,600 and $21,250 in 1996, 1995 and 1994,
   respectively.  In 1995, an additional special contribution of $93,750 was
   made in the form of 18,750 shares of the Company's common stock valued at
   the 1994 year end closing price of $5.00 per share.

        The Company does not provide post-retirement benefits under current
   benefit programs.  Obligations under previous programs are not material.

   Income Taxes

        Income before income tax consists of the following:

    (Amounts in thousands)      1996           1995           1994

    Domestic                  $ 1,844        $  (551)      $  (798)
    Foreign                       456          1,528         1,308
                               ------         ------        ------
                              $ 2,300        $   977       $   510
                               ======         ======        ======

        Income tax expense (benefit) consists of the following:

    (Amounts in thousands)      1996           1995           1994

    Current:
    U.S. Federal              $   145        $  (306)      $  (668)
    Foreign                       109            270           351
                               ------         ------        ------
                                  254            (36)         (317)
    Deferred:
    U.S. Federal                 (130)           ---           ---
    Foreign                       ---            ---           ---
                               ------         ------        ------
                                 (130)           ---           ---
                               ------         ------        ------
                               $  124        $   (36)      $  (317)
                               ======         ======        ======


       The significant components of deferred income tax expense (benefit)
   attributable to income before income tax are as follows:

    (Amounts in thousands)             1996         1995         1994

    Deferred income tax expense
      (benefit) (exclusive of the
      effects of other components
      listed below)                 $ 1,040        $  32       $  (159)
    Increase (decrease) in the
      valuation allowance for
      deferred tax assets            (1,170)         (32)          159
                                    -------       ------       -------
                                   $   (130)      $  ---      $    ---
                                    =======       ======       =======


        The tax effects of temporary differences that give rise to
   significant portions of the deferred tax assets and deferred tax
   liabilities are as follows:

    (Amounts in thousands)                      1996         1995

    Inventory valuation                       $  150        $  170
    Accounts receivable valuation                140            58
    Vacation accrual                             166           172
    Self-insurance accrual                       244           311
    Net operating loss carryforwards             792         2,040
    Other, including undistributed
      earnings of foreign subsidiaries           899           721
                                              ------        ------
    Gross deferred tax assets                  2,391         3,472
    Less valuation allowance                  (1,387)       (2,557)
                                              ------        ------
      Deferred tax assets                      1,004           915
                                              ======        ======
    Depreciation                                (874)         (913)

    Other                                        ---            (2)
      Deferred tax liabilities                  (874)         (915)
                                              ======        ======
    Net deferred tax asset                    $  130       $   ---
                                              ======        ======

        The Company received net income tax refunds of $171,000, $306,000 and
   $191,000 during 1996, 1995 and 1994, respectively. 

        A reconciliation of actual income tax expense (benefit) attributable
   to income before income tax to the "expected" income tax expense (benefit)
   computed by applying the U.S. Federal corporate tax rate to income before
   income tax follows:

    (Percent of pretax earnings)           1996         1995         1994

    Statutory rate                          34.0%        34.0%       34.0%
    Amortization of excess cost over
      net assets of acquired
      companies                              2.0          2.0         4.0
    Effect of foreign operations            (2.0)        20.6       (23.4)
    Net operating losses utilized          (30.3)         ---        (9.4)
    Resolution of income tax
      examinations                           ---        (31.4)      (88.6)
    Purchase accounting adjustments
      from tax basis differences at
      acquisition                            ---          ---        (1.6)
    Change in the valuation allowance
      for deferred tax assets
      allocatedto income tax expense         5.7        (30.3)       25.5
    Other items, net                        (4.0)         1.4        (2.7)
                                          ------       ------       ------
                                             5.4%        (3.7)%     (62.2)%
                                          ======       ======       ======


        Deferred income taxes have been provided on that portion of the
   undistributed earnings of foreign subsidiaries which the Company expects
   to recover in a taxable manner, such as through the receipt of dividends. 
   Provision has not been made for U.S. or additional foreign taxes on
   foreign earnings which have been and will continue to be reinvested.  It
   is not practicable to estimate the amount of additional tax that might be
   payable on these foreign earnings.  At December 31, 1996, the
   undistributed earnings of these foreign subsidiaries on which taxes have
   not been provided were approximately $4,700,000.

        Approximate net operating loss carryforwards available at December
   31, 1996, to offset future taxable earnings of the Company are as follows:

    (Amounts in thousands)          Amount     Year of expiration

    State                          $10,000     1998 through 2010
    Foreign                             61     1999 through 2000


   A valuation allowance has been provided for the future benefit of the
   above net operating loss carryforwards.

   Segment Information

        The Company's operations are principally in the Collision Repair,
   Engine Rebuilding and Fluid Power industry segments.  The Collision Repair
   segment includes frame straightening and vehicle measurement equipment, as
   well as various tools and accessories.  Engine Rebuilding products include
   hones, lathes, grinders, and the like, along with various accessories. 
   Products for the Fluid Power segment include single-acting, double-acting
   and telescoping hydraulic cylinders.

        Affiliated inter-segment sales and geographic sales are nominal in
   amount.

    Data by industry segment, with a reconciliation to the consolidated
    financial statements, is presented below:

    <TABLE>
    <CAPTION>
    (Amounts in thousands)
                                                Earnings
                                Net sales        before                                       Capital
    1996:                      unaffiliated   income taxes      Assets     Depreciation     expenditures

    <S>                           <C>            <C>            <C>            <C>             <C> 
    Collision Repair              $41,696        $ 2,689        $35,559        $   550         $   489
    Engine Rebuilding               6,747         (1,359)         5,828            127               8
    Fluid Power                    20,049          1,865          7,742            208             498
                                  -------        -------        -------        -------         -------
    Business segments              68,492          3,195         49,129            885             995
    Corporate and
         eliminations                 ---           (895)        (3,531)           143             144
                                  -------        -------        -------         ------         -------
    Consolidated                  $68,492        $ 2,300        $45,598         $1,028          $1,139
                                  =======        =======        =======         ======         =======
    1995:

    Collision Repair              $41,819        $ 2,520        $37,324        $   518         $   663
    Engine Rebuilding              10,986           (946)         7,748            167              55
    Fluid Power                    20,888          1,548          8,529            178             438
                                  -------        -------        -------         ------         -------
    Business segments              73,693          3,122         53,601            863           1,156
    Corporate and
         eliminations                 ---         (2,145)        (3,944)           195              18
                                  -------        -------        -------         ------         -------
    Consolidated                  $73,693        $   977        $49,657         $1,058          $1,174
                                  =======        =======        =======         ======         =======
    1994:

    Collision Repair              $36,615        $ 1,444        $33,194        $   501         $   438
    Engine Rebuilding              11,436           (458)         7,407            197              75
    Fluid Power                    19,049          1,530          7,815            166             122
                                  -------        -------        -------        -------         -------
    Business segments              67,100          2,516         48,416            864             635
    Corporate and
         eliminations                 ---         (2,006)        (2,315)           256             102
                                  -------        -------        -------        -------         -------
    Consolidated                  $67,100        $   510        $46,101         $1,120         $   737
                                  =======        =======        =======        =======         =======

    <CAPTION>

    Data for geographic regions, excluding Corporate and eliminations, is
    presented below:

    (Amounts in thousands)
                                                Earnings
                                Net sales        before                                       Capital
    1996:                      unaffiliated   income taxes      Assets     Depreciation     expenditures

    <S>                           <C>            <C>            <C>            <C>             <C> 
    North America                 $45,306        $ 2,739        $25,118        $   510         $   647
    Europe                         23,186            456         24,011            375             348
                                  -------        -------        -------        -------         -------
                                  $68,492        $ 3,195        $49,129        $   885         $   995
                                  =======        =======        =======        =======         =======
    1995:

    North America                 $47,651        $ 1,594        $27,666        $   521         $   588
    Europe                         26,042          1,528         25,935            342             568
                                  -------        -------        -------        -------          ------
                                  $73,693        $ 3,122        $53,601        $   863          $1,156
                                  =======        =======        =======        =======          ======
    1994:

    North America                 $44,657        $ 1,208        $27,420        $   575         $   320
    Europe                         22,443          1,308         20,996            289             315
                                  -------        -------        -------        -------          ------
                                  $67,100        $ 2,516        $48,416        $   864         $   635
                                  =======        =======        =======        =======          ======

    Export sales of United States operations made to unaffiliated customers
    located in foreign countries aggregated $2,224,000, $4,438,000, and 
    $3,622,000 in 1996, 1995, and 1994, respectively.

    </TABLE>

                           SUPPLEMENTAL QUARTERLY DATA

        The following table contains selected unaudited quarterly
   consolidated financial data for the last two years including all
   adjustments which the Company considers necessary to a fair presentation
   thereof:

   <TABLE>
   <CAPTION>
    (Amounts in thousands, except per share amounts)

    1996:                    Quarter:       1st            2nd            3rd            4th

    <S>                                    <C>           <C>            <C>            <C> 
    Net sales                              $17,624       $17,870        $14,998        $18,000
    Gross profit                             6,653         6,364          5,571          7,232
    Net income                                 780           482            202            712
                                           =======       =======        =======        =======

    Earnings per share-primary             $  0.28       $  0.17        $  0.07        $  0.26
    Earnings per share-fully diluted       $  0.25       $  0.16        $   ---(1)     $  0.23
                                           =======       =======        =======        =======

    Stock price high                       $ 6.375       $ 8.750        $ 8.000        $ 7.250
    Stock price low                          4.250         5.813          5.750          6.250
                                           =======       =======        =======        =======
   <CAPTION> 
    1995:                    Quarter:       1st            2nd            3rd            4th

    <S>                                    <C>           <C>            <C>            <C>
    Net sales                              $18,512       $17,555        $16,377        $21,249
    Gross profit                             6,726         6,310          5,827          7,963
    Net income (loss)                          422           292           (382)           681
                                           =======       =======        =======        =======

    Earnings (loss) per share-primary     $   0.15      $   0.11       $  (0.14)      $   0.25
    Earnings per share-fully diluted      $    ---(1)   $    ---(1)    $    ---(1)    $   0.22
                                           =======       =======        =======        =======
    Stock price high                       $ 5.375       $ 5.875        $ 5.875        $ 5.250
    Stock price low                          4.500         4.750          4.250          4.375
                                           =======       =======        =======        =======

    Earnings per share data have been adjusted to give effect to the 5% stock dividend paid
     January 24, 1997.

    (1) Fully diluted earnings per share was anti-dilutive for this period.
   </TABLE>


   ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
             ON ACCOUNTING AND FINANCIAL DISCLOSURES              

        The Company did not file a Form 8-K within the 24 months prior to the
   date of its most recent financial statements that reports a change of
   accountants and a disagreement on any matter of accounting principles or
   practices or financial statement disclosure.

                                    PART III

   ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        The information required by this Item with respect to directors and
   Section 16 compliance is included under the headings "ELECTION OF
   DIRECTORS" and "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE"
   in the definitive Proxy Statement, dated March 13, 1997, relating to the
   annual meeting of shareholders scheduled for April 24, 1997 and is
   incorporated herein by reference.  Information about executive officers
   appears at the end of Part I of this Form 10-K under the caption
   "EXECUTIVE OFFICERS OF REGISTRANT."

   ITEM 11.  EXECUTIVE COMPENSATION

        Information concerning executive compensation is included under the
   heading "EXECUTIVE COMPENSATION" in the definitive Proxy Statement, dated
   March 13, 1997, relating to the annual meeting of shareholders scheduled
   for April 24, 1997 and is incorporated herein by reference; provided,
   however, that the subsection entitled "Report on Executive Compensation"
   shall not be deemed to be incorporated herein by reference.

   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
             AND MANAGEMENT               

        Information concerning security ownership is included under the
   heading "STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in
   the definitive Proxy Statement, dated March 13, 1997, relating to the
   annual meeting of shareholders scheduled for April 24, 1997 and is
   incorporated herein by reference.

   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Information concerning relationships and related transactions is
   included under the headings "EXECUTIVE COMPENSATION - Compensation
   Committee Interlocks and Insider Participation" and "CERTAIN RELATIONSHIPS
   AND RELATED TRANSACTIONS" in the definitive Proxy Statement, dated March
   13, 1997, relating to the annual meeting of shareholders scheduled for
   April 24, 1997 and is incorporated herein by reference.

                                     PART IV

   ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
             ON FORM 8-K                      

        (a)  1. and 2. Financial Statements and Financial Statement
                       Schedules.  Reference is made to the separate index to
                       consolidated financial statements and schedules
                       contained hereinafter.

             3.        Exhibits.  Reference is made to the Exhibit Index
                       contained hereinafter.

        (b)  Form 8-K

             There were no reports on Form 8-K filed during the fiscal
             quarter ended December 31, 1996.

   <PAGE>
                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) 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.

        Dated March 6, 1997

                                 HEIN-WERNER CORPORATION


                                 By:  /s/ J. L. Dindorf                   
                                      J. L. Dindorf
                                      President and Chief Executive Officer

        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.

        Dated March 6, 1997        By: /s/ J. L. Dindorf             
                                       J. L. Dindorf
                                       President and Chief Executive
                                       Officer; Director (Principal
                                       Executive Officer, Principal
                                       Financial Officer and Principal
                                       Accounting Officer)


        Dated March 6, 1997        By: /s/ O. A. Friend              
                                       O. A. Friend
                                       Director


        Dated March 6, 1997        By: /s/ J. S. Jones
                                       J. S. Jones
                                       Director


        Dated March 6, 1997        By: /s/ M. J. McSweeney 
                                       M. J. McSweeney
                                       Director


        Dated March 6, 1997        By: /s/ D. J. Schuetz  
                                       D. J. Schuetz
                                       Director

   <PAGE>


                   Index to Consolidated Financial Statements

                           and Schedules for Form 10-K



   The consolidated financial statements of Hein-Werner Corporation and
   Subsidiaries, together with the opinion thereon of KPMG Peat Marwick LLP
   dated February 14, 1997, appear in Item 8 of this report.  The following
   additional financial data should be read in conjunction with the financial
   statements in such 1996 Annual Report to Shareholders.


                            Additional Financial Data



   Independent Auditors' Report on Financial Statement Schedules

   Schedule Submitted:

   II- Valuation and qualifying accounts


   All other schedules are omitted because they are either not applicable or
   the required information is shown in the financial statements or the notes
   thereto.

   <PAGE>
                          INDEPENDENT AUDITORS' REPORT


   The Board of Directors and Stockholders
   Hein-Werner Corporation:

   Under date of February 14, 1997, we reported on the consolidated balance
   sheets of Hein-Werner Corporation and subsidiaries as of December 31, 1996
   and 1995, and the related consolidated statements of operations and cash
   flows for each of the years in the three-year period ended December 31,
   1996, as contained in the Annual Report on Form 10-K for the year 1996.
   In connection with our audits of the aforementioned consolidated financial
   statements, we also audited the related financial statement schedule as
   listed in the accompanying index.  This financial statement schedule is the
   responsibility of the Company's management.  Our responsibility is to
   express an opinion on the financial statement schedule based on our
   audits.

   In our opinion, such financial statement schedule, when considered in
   relation to the basic consolidated financial statements taken as a whole,
   presents fairly, in all material respects, the information set forth
   therein.


                                                    /s/ KPMG Peat Marwick LLP
                                                        KPMG Peat Marwick LLP


   Milwaukee, Wisconsin
   February 14, 1997


   <PAGE>
                                                                  Schedule II


   VALUATION AND QUALIFYING ACCOUNTS
   Years ended December 31, 1996, 1995, and 1994
   (Dollars in thousands)


   <TABLE>
   <CAPTION>

   Allowances for Losses(1)

                   Balance at     Charged to                                       Balance
                    beginning      cost and       Other(2)                          at end
                    of period       expenses     Additions    Deduction(3)       of period

       <S>             <C>            <C>           <C>            <C>              <C> 
       1996            $2,469         $  420        $   --         $  738           $2,151

       1995            $2,625         $  970        $   --         $1,126           $2,469

       1994            $2,933         $  850        $  245         $1,403           $2,625


   <CAPTION>
                                                        __________________

   Inventory Valuation Reserve

                   Balance at     Charged to                                       Balance
                    beginning       cost and         Other                          at end
                    of period       expenses     Additions    Deduction(4)       of period

       <S>             <C>            <C>           <C>            <C>              <C> 
       1996            $  690         $   91       $    --         $  326           $  455

       1995            $  588         $  576       $    --         $  474           $  690

       1994            $  417         $  407       $    --         $  236           $  588

   _____________

   (1)    Includes allowances for losses on accounts receivable and non-
          current notes receivable.
   (2)    Excess fundings from guaranteed consumer notes resulting from an
          interest rate spread to cover losses.
   (3)    Bad debts written off, net of any recoveries.
   (4)    Inventory written off, net of any recoveries.

   </TABLE>

   <PAGE>
                                  EXHIBIT INDEX

        Exhibits

        (3)    Articles of Incorporation and By-Laws:

               (3.1)   By-Laws of the Company, as amended
                       through March 8, 1990
                       (incorporated by reference to
                       Exhibit 3.1 to the Company's Form
                       10-Q for the quarter ended October
                       1, 1994)

               (3.2)   Restated Articles of
                       Incorporation, as amended through
                       February 21, 1991 (incorporated by
                       reference to Exhibit 3.2 to the
                       Company's Form 10-K for the year
                       ended December 31, 1993)

        (4)    Instruments defining the rights of security
               holders, including indentures:

               (4.1)   Revolving Loan and Security
                       Agreement dated October 13, 1993
                       by and between the Company and
                       Firstar Bank Milwaukee, N.A. and
                       Continental Bank N.A.
                       (incorporated by reference to
                       Exhibit 4.1 to the Company's Form
                       10-Q for the quarter ended October
                       2, 1993)

               (4.2)   Letter dated October 27, 1994 by
                       Firstar Bank Milwaukee, N.A., as
                       administrator of the Revolving
                       Loan and Security Agreement dated
                       October 13, 1993 by and between
                       the Registrant and Firstar Bank
                       Milwaukee, N.A. and BankAmerica
                       N.A.'s Pacific Business Credit
                       Inc. (formerly Continental Bank,
                       N.A.), extending the Revolving
                       Loan and Security Agreement to May
                       31, 1996 (incorporated by
                       reference to Exhibit 4.1 to the
                       Company's Form 10-Q for the
                       quarter ended October 1, 1994)

               (4.3)   Letter dated June 25, 1996 by
                       Firstar Bank Milwaukee, N.A., as
                       administrator of the Revolving
                       Loan and Security Agreement dated
                       October 13, 1993 by and between
                       the Company and Firstar Bank
                       Milwaukee, N.A., amending and
                       extending the agreement through
                       June 30, 1999 (incorporated by
                       reference to Exhibit 4 to the
                       Company's Form 10-Q for the
                       quarter ended June 29, 1996)

               (4.4)   Letter dated November 27, 1996 by
                       Firstar Bank Milwaukee, N.A., as
                       administrator of the Revolving
                       Loan and Security Agreement dated
                       October 13, 1993 by and between
                       the Company and Firstar Bank
                       Milwaukee, N.A., amending the
                       agreement

               (4.5)   Form of Note Agreement dated as of
                       September 1, 1989 regarding the
                       Company's $8,500,000 8%
                       Convertible Subordinated Notes due
                       September 1, 1999 (incorporated by
                       reference to Exhibit 4.2 to the
                       Company's Form 10-K for the year
                       ended December 31, 1993)

               (4.6)   Amendment dated November 12, 1990
                       to Note Agreement dated as of
                       September 1, 1989 Re: $8,500,000
                       8% Convertible Subordinated Notes
                       due September 1, 1999
                       (incorporated by reference to
                       Exhibit 4.3 to the Company's Form
                       10-K for the year ended December
                       31, 1993)

               (4.7)   Amendment No. 2 dated April 26,
                       1991 to Note Agreement dated as of
                       September 1, 1989 Re: $8,500,000
                       8% Convertible Subordinated Notes
                       due September 1, 1999
                       (incorporated by reference to
                       Exhibit 4.4 to the Company's Form
                       10-K for the year ended December
                       31, 1993)

               (4.8)   Amendment No. 3 dated February 3,
                       1992 to Note Agreement dated as of
                       September 1, 1989 Re: $8,500,000
                       8% Convertible Subordinated Notes
                       due September 1, 1999
                       (incorporated by reference to
                       Exhibit 4.5 to the Company's Form
                       10-K for the year ended December
                       31, 1993)

               (4.9)   Amendment No. 4 dated December 18,
                       1992 to Note Agreement dated as of
                       September 1, 1989 Re: $8,500,000
                       8% Convertible Subordinated Notes
                       due September 1, 1999
                       (incorporated by reference to
                       Exhibit 4.6 to the Company's Form
                       10-K for the year ended December
                       31, 1993)

               (4.10)  Amendment No. 5 dated February 21,
                       1994 to Note Agreement dated as of
                       September 1, 1989 Re:  $8,500,000
                       8% Convertible Subordinated Notes
                       due September 1, 1999
                       (incorporated by reference to
                       Exhibit 4.7 to the Company's Form
                       10-K for the year ended December
                       31, 1993)

               (4.11)  Rights Agreement by and between
                       the Company and Firstar Trust
                       Company (formerly First Wisconsin
                       Trust Company) (incorporated by
                       reference to Exhibit 4.8 to the
                       Company's Form 10-K for the year
                       ended December 31, 1993)

        (10)   Material contracts:

               (10.1)* Change of Control Agreement
                       between the Company and Joseph L.
                       Dindorf dated January 27, 1984
                       (incorporated by reference to
                       Exhibit 10.1 to the Company's Form
                       10-K for the year ended December
                       31, 1993)

               (10.2)* 1980 Stock Option and Performance
                       Share Plan (incorporated by
                       reference to Exhibit 1 of the
                       Company's Form S-8 Registration
                       Statement (Registration No. 2-
                       68020))

               (10.3)  Lease dated January 25, 1983
                       between the Company and Winvan,
                       Inc. (incorporated by reference to
                       Exhibit 10.3 to the Company's Form
                       10-K for the year ended December
                       31, 1993)

               (10.4)* 1987 Stock Option and Incentive
                       Plan (incorporated by reference to
                       Exhibit 10.4 to the Company's Form
                       10-K for the year ended December
                       31, 1993)

               (10.5)* 1988 Corporate Officer Incentive
                       Bonus Schedule (incorporated by
                       reference to Exhibit 10.5 to the
                       Company's Form 10-K for the year
                       ended December 31, 1993)

        (11)   Computation of Earnings Per Share

        (21)   Subsidiaries

        (23)   Consent of KPMG Peat Marwick LLP

        (27)   Financial Data Schedule

        (99)   Definitive Proxy Statement dated March 13, 1997
               relating to the Annual Meeting of Shareholders to
               be held on April 24, 1997 (filed on March 13, 1997
               pursuant to Rule 14a-6 of the Securities Exchange
               Act of 1934)

               [Except to the extent specifically incorporated by
               reference, the Company's Proxy Statement dated
               March 13, 1997 relating to the Annual Meeting of
               Shareholders to be held on April 24, 1997 is not
               deemed to be filed with the Commission as part of
               this Annual Report on Form 10-K]


   ________________
        * A management contract or compensatory plan or arrangement