<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(MARK ONE)

  /X/           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1995


  / /         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
              THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

          FOR THE TRANSITION PERIOD FROM ____________ TO ____________

                         COMMISSION FILE NUMBER: 0-11647

                              HYCOR BIOMEDICAL INC.
             (Exact name of registrant as specified in its charter)

                 Delaware                          58-1437178
         (State or other jurisdiction of        (I.R.S. Employer
         incorporation or organization)        Identification No.)

             18800 Von Karman Avenue, Irvine, California 92715-1517
              (Address of principal executive offices)    (Zip Code)

Registrant's telephone number, including area code (714) 440-2000

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

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

                          Common Stock, $.01 par value
                                (Title of class)
            Transferable Warrants to Purchase Shares of Common Stock
                                (Title of class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to filesuch reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes /X/    No / /
<PAGE>   2
         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/

         As of March 17, 1996, the aggregate market value of the voting stock
held by non-affiliates of the registrant (based on the closing sale price of
such stock on such date) was approximately $33,115,418.

         The number of shares of common stock of the registrant outstanding at
March 17, 1996 was 7,759,291.

                       DOCUMENTS INCORPORATED BY REFERENCE

         (1) Portions of the registrant's definitive Proxy Statement to be filed
not later than 120 days after December 31, 1995 in connection with the Annual
Meeting of Stockholders to be held in 1996 - Part III.




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PART I

         Item 1.  Business

General
         Hycor Biomedical Inc. ("Hycor" or the "Company") was incorporated as a
Delaware corporation on April 7, 1981. Hycor is engaged in the research,
development, manufacturing marketing of medical diagnostic products throughout
the United States and many foreign countries.

         On January 14, 1994, the Company completed the acquisition of Melja
Diagnostik (Melja) of Kassel, Germany. Melja primarily manufactures and sells
allergy diagnostic products in Europe. The Company's name was subsequently
changed to Hycor Biomedical GmbH ("Hycor GmbH").

         On October 3, 1994, the Company completed the acquisition of Medical
Specialties International, Inc. ("MSI") of South Plainfield, New Jersey. MSI
primarily manufactures and sells hematology controls in the U.S.

         Sales of Hycor GmbH and MSI products have been recorded only since the
date of acquisition. Hycor and its subsidiaries are collectively referred to
herein as the Company.

         During fiscal 1993, the Company closed its manufacturing facility in
Portland, Maine and consolidated such operations into the Company's California
manufacturing facility. The costs included in the accompanying consolidated 1993
statement of income were for the facility closure, severance and out placement
programs and the integration of the Portland, Maine operations into the
California facility.

Restructuring Plan
         During fiscal 1995, the senior management and board of directors of the
Company determined that the business strategies that had successfully brought
the Company from a start-up research organization to a profitable $25 million
sales entity would no longer bring desired results in the changing diagnostic
marketplace of tomorrow. To realize a higher market valuation for its
shareholders, the Company adopted a plan designed to focus on sales growth and
divestitures of certain product lines (the "Restructuring Plan"). To start, the
Company undertook a comprehensive analysis of the worldwide health care
diagnostics

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market. Emerging technologies were investigated, payor trends researched and
competitors and products examined. This intensive scrutiny was followed by a
candid, independent analysis of Hycor's strengths and competitive posture. As a
result, on July 27, 1995 the Company announced the Restructuring Plan as part of
a strategic redirection. The Restructuring Plan focuses Hycor on high potential
clinical immunology sectors of the market, as well as urinalysis and hematology.
Associated with the implementation of the Restructuring Plan were costs of
$1,734,000 recorded in the fourth quarter. These costs arose from the
divestiture and discontinuance of several product lines outside the new
strategic direction. Under current reporting guidelines, $665,000 of these
expenses were allocated to Cost-of Sales or Expense categories. The balance of
these costs are reflected as a restructuring charge of $1,069,000. Consistent
with implementation of the Plan, while some product lines are being sold or
discontinued new product development efforts are being accelerated.
Additionally, marketing resources and sales programs are expanding with the goal
of becoming a major competitive force in the markets the Company intends to
focus on.

On December 1, 1995, the Company sold to ALK Laboratories, Inc. all of the
capital stock of its wholly-owned subsidiary, Meridian Biomedical, Inc., a
Colorado corporation ("Meridian")as part of this Restructuring Plan. The stock
was sold for $3,325,275, net of sales costs. The excess of the net sales price
over net assets sold resulted in a credit that was considered in determining the
full financial impact from this restructuring plan.

Products

         The Company markets a variety of products. The KOVA(TM) Microscopic
Urinalysis System is its most important product line accounting for
approximately 35%, 35% and 37% of its total sales in 1995, 1994 and 1993,
respectively. The KOVA System provides laboratories with the capability to
perform reliable, uniform microscopic analyses of urine specimens. It is
composed of plastic collection containers, tubes and pipettes (suction devices
for transferring urine sediment from the bottom of a tube), patented microscopic
slides, and human urine-based control materials.

         The Company's allergy diagnostic product line, which accounted for
approximately 25%, 27% and 18% of total sales in 1995, 1994 and 1993,
respectively, includes tests for general screening for the diagnosis of allergy
as well as a complete line

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of RIA ("radioimmunoassay") and EIA ("enzymatic immunoassays") procedures to
test for specific allergies to more than 500 different allergens such as
grasses, weeds, trees, epidermals (i.e. animal hair), dust, dust mites, molds
and foods. Unlike the traditional prick puncture and intradermal testing methods
of diagnosing allergies, the Company's products permit a physician to diagnose
allergies by testing a sample of the patient's blood for the presence of the
specific IgE or IgG antibody which reacts with the corresponding allergen. This
method has many advantages over the traditional methods of allergy diagnosis,
not the least of which is patient comfort. Additionally, in November 1993 the
Company, in a joint effort with Switzerland-based Tecan AG, introduced the
HY-TEC automated allergy diagnostic system. The HY-TEC instrument provides
clinical laboratories with significant productivity capabilities. Initial
marketing efforts were focused on Europe, which is the largest market for
in-vitro allergy tests. European shipments began in May 1994 and clearance for
domestic distribution was received from the U.S. Food and Drug Administration in
March 1995.

         In 1991 the Company introduced a new test for the detection of
Helicobacter pylori, a bacterium associated with ulcer disease and stomach
cancer, and was granted a patent in November 1993 for the preparation used in
the Company's test.

         Drug controls are a group of chemistry controls which are part of the
quality control system required to be in place in all clinical laboratories to
insure that the methodology being used is correct and the results are accurate,
precise and reproducible. In August 1993 the Company introduced a new line of
hematology controls and calibrators. These products are usable on all hematology
analyzers and have a shelf life twice as long as competitive products. In March,
1995 the Company received clearance from the Food and Drug Administration to
market the first commercially produced Erythrocyte Sedimentation Rate (ESR)
Control. This ESR Control, developed by MSI, can be used with most manual and
automated ESR methods in the market today.




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         The following products have been divested or discontinued or will be
divested as part of the Restructuring Plan (See "Restructuring Plan" under Item
7, Management's Discussion and Analysis of Financial Condition and Results of
Operations):

-        The Company, through Meridian Bio-Medical, Inc. ("Meridian"), its
         wholly owned subsidiary, manufactured and sold more than 400 different
         allergenic extracts, which accounted for approximately 10%, 11% and 12%
         of total sales in 1995, 1994 and 1993, respectively. The allergenic
         extracts produced and sold by Meridian are, in general, highly
         concentrated. Meridian manufactures and sells sterile glass containers
         and diluting solutions for use in these procedures. Meridian was sold
         on December 1, 1995.

-        Serology kits test for antibodies in serum that indicate the presence
         of certain substances which may indicate disease. The tests identify
         five types of diseases: rheumatoid factors, streptococcal infections,
         certain inflammations characterized by C-reactive protein, infectious
         mononucleosis and lupus erythematosus. This product line was sold in
         February 1996.

-        Radial immunodiffusion (RID) kits provide qualitative and quantitative
         measurements of levels of protein in serum that may indicate the
         presence of disease. Currently the Company has RID tests to measure
         approximately eleven different proteins. This product line was
         discontinued in 1995.

-        The Company markets a number of drug controls as part of a quality
         control system to insure laboratory results are accurate and
         reproducible. This line includes a series of multi-level therapeutic
         drug controls which contain over 30 therapeutic drugs in freeze-dried
         human serum, ranging in concentration from low to toxic levels, and a
         line of drugs of abuse multi-level controls and calibrators which
         contain from one to ten drugs of abuse in liquid urine. Both of these
         product lines are being marketed by the Company for sale and/or
         discontinued as part of the Restructuring Plan.

-        The immunodiagnostic line includes screening assays, bioreagent and
         media products. Screening assays provide a qualitative (yes-no) for
         group A streptococcal antigen and urinary tract infection. Bioreagent
         products are used primarily by immunodiagnostic manufacturers in the
         development

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         of new products and the manufacture of current products and include a
         wide variety of monoclonal and polyclonal antibodies, as well as
         purified proteins and viral antigens. Media products are used for the
         production of cell cultures and are sold primarily to the research
         laboratory and industrial markets. This product line was sold in March
         1996.

Sales and Marketing

         The Company's products, which are used primarily by two markets, the
clinical laboratory and certain specialty physicians, are sold through several
channels. In the United States, the Company's product lines are generally sold
through both independent and clinical laboratory distributors. The majority of
sales in the United States are to two major U.S. distributors, Baxter Scientific
Products and Curtin Matheson Scientific. These efforts are supported by a sales
and telemarketing force of ten employees. The bioreagents and allergy product
lines are sold directly to the end user utilizing a sales and service
organization of eighteen employees. Additional promotion of the Company's
products is accomplished by exhibitions at national and regional allergy and
laboratory products meetings, advertisements in laboratory and medical journals,
direct mail samples to laboratory directors and technologists and programs
designed to reach both clinical laboratory personnel and physician's offices.
During the last fiscal year, approximately $210,000 was expended by the Company
for such promotional activities, compared to $122,000 in 1994.

         In foreign countries the Company's products are sold primarily through
Bayer, the Boehringer Mannheim Group of companies, Sorin and other distributors.
With the acquisition of Melja in early 1994, the Company commenced selling its
allergy products directly to the German market. In addition, the Company
expanded its presence in Europe by establishing an office in the Brussels,
Belgium area to provide technical support for the launch of the HY-TEC system in
Europe. Export sales (all to unaffiliated customers) accounted for $4,231,000 or
17% of product sales in 1995; $4,778,000 or 18% of product sales in 1994 and
$4,671,000 or 19% of product sales in 1993. The primary geographical area was
Europe, which, including sales by the Company and German subsidiary, accounted
for sales of $6,909,000 in 1995, $6,826,000 in 1994 and $3,688,000 in 1993.

         The Company's two largest distributors, Baxter Scientific Products and
Curtin Matheson Scientific, accounted for 18% and 12%

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of net product sales in 1995; 18% and 14% in 1994 and 20% and 15% in 1993. A
loss of one or more of these distributors could significantly affect sales.
However, there are other national, regional and foreign clinical laboratory
products distributors, as well as the Company's sales force, who could market
the Company's products.

         The Company did not have a significant backlog of orders at December
31, 1995 and December 31, 1994. Because of the short time between order receipt
and expected delivery, the Company, consistent with industry practice, carries a
large inventory to meet the expected flow of orders; in addition, backlog is not
a significant factor in the Company's business.

         The Company's business is not considered seasonal in nature but is
slightly affected in the third quarter by the general slowdown in Europe during
the traditional vacation months.

Raw Materials

         Although a substantial amount of the Company's total purchases for raw
materials and finished products were from a limited number of suppliers during
the last fiscal year, a number of alternative sources are available to the
Company should they be required.

Research and Development

         The Company maintains an ongoing research and development effort. The
purpose of this effort is to evaluate new technologies, improve the Company's
current product line, and develop new products. Current projects in progress are
focused on programs to support and enhance the HY-TEC system, develop new
urinalysis and allergy diagnostic products and to develop a line of products to
diagnose autoimmune disease.

         Total research and development expenditures were $2,594,000,
$1,837,000, and $2,143,000 for 1995, 1994 and 1993, respectively.

Government Regulations

         The Company is registered as a manufacturer of medical devices and a
licensed biological manufacturer with the Food and Drug Administration ("FDA").
To comply with FDA requirements, the Company must manufacture its products in
conformance with the FDA's medical device Good Manufacturing Practice
regulations. The

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Company's existing products are also subject to certain premarket notification
requirements of the FDA.

         The receipt, use and disposal of radioactive materials is subject to
licensing requirements of the Nuclear Regulatory Commission ("NRC"). The Company
holds a radioactive materials license from the NRC for its radioactive labeling
activities and its facilities are inspected periodically by the NRC.

         The Company would be adversely affected if it were unable to maintain
its governmental licenses or continue to comply with applicable federal and
state regulations, but the Company does not expect this to occur. The Company
cannot predict whether future changes in government regulations might
substantially increase compliance costs, adversely affect the time required to
develop and introduce products, or limit or preclude the sale of its new
products.

         In September 1992, regulations implementing the Clinical Laboratories
Improvement Amendments of 1988 (CLIA), providing for certification procedures
and requirements for laboratories, became fully effective. The impact of CLIA
has reduced the sales of the Company's allergy diagnostic products to physician
office laboratories, as the testing has shifted toward the larger clinical
laboratory. The new HY-TEC system was designed to meet the needs of these larger
laboratories.

         Compliance with federal, state and local regulations relating to
environmental matters is not expected to have a material effect upon capital
expenditures, earnings or the competitive position of the Company.

Competition

         The Company competes in several segments of the diagnostic market. The
KOVA Microscopic Urinalysis System has significant competition from
approximately six national diagnostic product manufacturing and distribution
companies that market supplies that perform functions similar to the Company's
and from two companies that sell components with designs similar to the
Company's. Management believes that the Company is the leading supplier of
standardized microscopic urinalysis systems. The Hematology line of controls and
calibrators has four primary competitors. A substantial number of the Company's
competitors are larger and have greater resources than the Company.

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         Pharmacia, Inc. and Kallestad Laboratories, Inc., a subsidiary of
Sanofi, whose products compete with the Company's allergy diagnostic products,
have substantially greater resources as well as established positions in the
allergy testing market.

         The Company competes on the basis of price, promotion, quality of
products, design of product, strength of the Company's relationship with dealers
and other methods relevant to the business.

Patents

         The Company has maintained an aggressive patent policy and currently
holds a number of domestic and foreign patents. The earliest patent was issued
in 1973 and the latest in 1994. While these patents offer some protection to its
product lines and related technology, management believes that continued
improvements to the product lines are more important for the protection of its
market position.

Employees

         As of March 17, 1996, the Company had approximately 196 employees. None
of the employees are covered by collective bargaining agreements and management
believes that the Company's relations with its employees are satisfactory.

Item 2.  Properties

         At December 31, 1995, the Company had six separate facilities.
Corporate headquarters is located in a leased 18,000 square foot building at
18800 Von Karman Avenue, Irvine, California. This facility was leased on
November 11, 1992, and became the Company's new administrative headquarters in
June 1993. The initial term of the lease is seven and one-half years; the
initial base rent is $196,800 annually, commencing on October 1, 1993. In
subsequent years the annual rent is adjusted on July 1 of each year in specific
amounts as set in the lease agreement. The Company has the option to renew the
lease for an additional five years at market rental rates.




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         The Company also leases the following facilities:

                1) A two-story freestanding facility at 7272 Chapman Avenue,
Garden Grove, California. The lease has a ten-year term ending December 31,
2002. The initial rent is $455,000 annually. In subsequent years, the annual
rent will be adjusted on January 1 of every other year (the "Adjustment Date")
and will be based on the percentage difference between the Consumer Price Index
("CPI") for the preceding month of December and the CPI for the base year;
however, rent payable as of each Adjustment Date shall be increased by a minimum
of three percent per annum cumulative but may not exceed six percent per annum
cumulative. The Company has the option to extend the lease term for an
additional five-year period. The Company uses this facility, which contains
approximately 76,000 square feet, for laboratory, manufacturing and storage
purposes.

                2) An office suite at "De Vunt" 17, 3220 Holsbeek, Belgium. The
lease has a nine year term commencing on April 1, 1994 and terminates on March
31, 2003. The initial rent is approximately $19,000 annually and is subject to
indexation at each anniversary date based on changes in the Belgium consumer
price index. This facility contains approximately 1,700 square feet and is used
as a marketing, sales and product support location for the European market.

                3) A free standing building located at Otto-Hahn StraBe 16,
34123 Kassel, Germany. The lease has a ten year term ending March 31, 2005. The
initial annual rent is based on a fixed 8.5% of the mutually agreed construction
costs. In subsequent years, the annual rent will be adjusted based on changes to
the cost of living index as published by the Federal Statistics Office in
Wiesbaden, Germany. Adjustments will take place only if the index changes by
more than 10% from the commencement date of the lease. The Company has the
option to extend the term of the lease for an additional five years. The Company
uses this facility for the laboratory, manufacturing, warehousing, distribution
and administrative functions of Hycor GmbH.

                4) A free standing building located at 3610 Kennedy Road, South
Plainfield, New Jersey. This lease was entered into as a result of the
acquisition of MSI. The original lease terminated shortly after the acquisition
was completed and, in order to secure operational continuity pending
finalization of an integration plan, the Company negotiated an extension ending
on December 31, 1995. The annual rent was approximately $54,000. The Company
relocated

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all MSI activity to California at the end of the lease and this facility was
closed as part of the Company's Restructuring Plan.

                5) The Company owns a building located on approximately one acre
of land at 217 Read Street, Portland, Maine. The facility consists of three
connected brick buildings which were built approximately 35 years ago. The
buildings have an aggregate space of approximately 70,000 square feet which can
be used for office, laboratory, manufacturing and storage purposes. As discussed
earlier, this facility was closed in the second half of 1993. On June 30, 1993,
the Company executed a lease leasing the building to a third party commencing
August 1, 1993, and terminating October 31, 1998. The Company intends to sell
the facility when market conditions improve.

         In management's opinion the Company's existing facilities are adequate
for the current level of operations and will support the anticipated growth of
its business without the addition of major facilities for the foreseeable
future.

Item 3.  Legal Proceedings

         To the best of Management's knowledge, there are no material pending
legal proceedings to which the Company is a party or to which the Company's
property is subject.

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

         During the fourth quarter of the fiscal year ended December 31, 1995,
there were no matters submitted to a vote of security holders.




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

         Market Price of Common Stock

         Hycor Biomedical Inc.'s common stock trades on the National Market
System under the symbol HYBD. The following table sets forth the range of high
and low trading prices for the common stock for the periods indicated as
reported. The prices do not include retail markups, markdowns or commissions.

<TABLE>
<CAPTION>
Year Ended                                                    High           Low
--------------------------------------------------------------------------------
<S>                                                        <C>             <C>
December 31, 1994
    1st Quarter                                              6-1/8             4
    2nd Quarter                                              5-1/2         4-1/2
    3rd Quarter                                              5-3/8         4-3/8
    4th Quarter                                              5-1/8         3-3/4

December 31, 1995
    1st Quarter                                            4-25/32             4
    2nd Quarter                                              5-1/8         4-1/2
    3rd Quarter                                              4-3/4         3-1/4
    4th Quarter                                              4-5/8         3-7/8

December 31, 1996
    1st Quarter (Through March 20, 1996)                     5-1/4         4-3/8
</TABLE>

There were 1,210 shareholders of record as of March 20, 1996. No dividends have
been paid to stockholders since the Company was founded and the Company has no
current intentions of paying cash dividends in the foreseeable future.




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ITEM 6. Selected Financial Data

(Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                  1995(a)     1994(b)     1993(c)  1992     1991
--------------------------------------------------------------------------------
<S>                            <C>         <C>         <C>      <C>      <C>    
OPERATING RESULTS

  Net sales                    $25,185     $25,897     $24,213  $27,384  $17,530

  Net income                   $   131     $ 2,833     $ 2,275  $ 3,598  $    97

  Net income per
   common share                $   .02     $   .34     $   .26  $   .41  $   .01



FINANCIAL POSITION

  Working capital              $13,615     $13,322     $15,736  $13,554  $ 8,603

  Net property and
   equipment                   $ 4,727     $ 6,419     $ 6,094  $ 5,268  $ 5,633

  Total assets                 $27,575     $29,000     $27,061  $26,139  $22,439

  Long-term debt               $    --     $    --     $    --  $    --  $   833

  Total
   stockholders' equity        $24,339     $26,169     $24,316  $22,420  $18,064

  Cash dividends
   declared per
   common share                $    --     $    --     $    --  $    --  $    --
</TABLE>

(a)      1995 results include costs of implementing the Company's Restructuring
         Plan amounting to $1,734,000. See note number 13 to the consolidated
         financial statements.

(b)      See note number 3 to the consolidated financial statements regarding 
         certain acquisitions completed in 1994.

(c)      1993 results include charges for plant closure costs amounting to
         $1,113,393.  See note 12 to the consolidated financial statements.



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

        Except for the historical information contained herein, the matters
discussed in this annual report are forward-looking statements which involve
risk and uncertainties, including but not limited to economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices and other factors discussed in the
Company's filings with the Securities and Exchange Commission.

Restructuring Plan

        On July 27, 1995, the Company announced plans for a major restructuring
designed to focus operations on high potential clinical immunology segments
which management believes to have the greatest potential for future growth. The
Restructuring Plan (the "Plan"), which was finalized in the fourth quarter of
1995, includes the discontinuation of several product lines, the closure of the
Company's New Jersey facility, and the disposition or relocation of certain
fixed assets.

        The aggregate costs of the Plan ($3,220,000) included $2,371,000 of
disposal costs and write-offs of inventories, the value of which have been
impaired by the Company's decision to discontinue the related product lines and
liquidate all remaining inventories, $514,000 of costs related to the write down
of fixed assets impaired by downsizing and discontinuance of related product
lines, and $335,000 related to facility closure and other costs. These costs
were offset by estimated gains on the sale of certain product lines amounting to
$1,486,000. The net $1,734,000 cost of implementing the Plan was allocated to
cost of sales ($473,000), selling, general and administrative expenses
($192,000), and restructuring charges ($1,069,000) in the accompanying
consolidated statements of income.

        As part of the Plan, the Company has divested or will divest and has
discontinued the following product lines:

-       On December 1, 1995, the Company sold to ALK Laboratories all of the
        capital stock of Meridian for $3,325,275, net of sales costs. Meridian
        previously accounted for 10%, 11%, and 12% of the Company's total sales
        in 1995, 1994, and 1993, respectively.



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-       On February 5, 1996, the Company sold its serology kit tests for
        antibodies in Serum for $250,000 plus royalties to be earned against
        sales over the next five years at a rate of 5%. Such products accounted
        for approximately 2% of the Company's total sales in 1995.

-       The Company discontinued in 1995 its production of several
        immunodiagnostic and radial immunodiffusion (RID) products. Such
        products accounted for approximately 3% of the Company's total sales in
        1995.

-       The Company discontinued to the extent possible and is currently
        marketing for sale a number of drug controls including a series of
        multi-level therapeutic drug controls. These products accounted for less
        than 4% of the Company's total sales in 1995.

-       On March 8, 1996, the Company sold its media product line for $275,000
        plus royalties to be earned against certain specific products over the
        next 2 years on a sliding scale starting at 50%. Such product lines
        accounted for less than 2% of total sales in 1995.

As of December 31, 1995, the Company discontinued all significant purchases and
production on the remaining discontinued product lines with the exception of
certain contractual supply commitments. Such products accounted for
approximately 9% of the Company's total sales in 1995. The Company anticipates
that the Plan will be primarily completed by the end of the second quarter of
1996 and will not require any significant cash outlays.

The total revenues related to the divested or discontinued product lines account
for approximately 31%, 36% and 45% of the Company's total revenues in 1995, 1994
and 1993 respectively.

Although the Company believes that the sales growth resulting from the focused
efforts in the clinical immunology markets will more than offset the decrease in
revenues resulting from the restructuring, this is not expected to occur until
after 1996. The Company therefore expects that 1996 revenues will show a decline
from 1995.

In addition to the expected decline in total revenues, the increased investment
in marketing and research and development


                                       16
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provided for in the Plan will cause increased expense levels in 1996 over 1995.

The Company expects to remain profitable in 1996 but at reduced levels as
compared to prior years. The Company expects to be able to fund all operating
requirements from existing working capital resources and results from current
operations.

Financial Condition

         In April 1993, January 1994, and September 1995 the Board of Directors
authorized the repurchase of up to an aggregate of 1,620,000 shares of the 
Company's common stock. As of December 31, 1995, 1,273,200 shares had been 
purchased at a cost of $5,461,000.

        The Company increased its working capital $293,000 as of December 31,
1995 compared to December 31, 1994, due primarily to the proceeds from the sale
of Meridian, offset by cash used for the stock repurchase program and the asset
reductions resulting from the Plan. The Company expects to be able to fund
future operations from current working capital and profits generated from
operations.

        Cash and cash equivalents, marketable securities and receivables
fluctuate throughout the year based upon the sales of products through
distributors and the timing of the distributor's related payments to the
Company. As of December 31, 1995, investments increased $3,928,498 compared to
December 31, 1994, primarily because of the proceeds from the sale of Meridian.
The decrease in receivables of $583,916 was also caused by the sale of Meridian.
These fluctuations do not have a significant seasonal component.

        Inventories decreased $2,777,000, or 41%, as of December 31, 1995
compared to December 31, 1994 due primarily to the divestiture and write-off of
inventories related to product lines which are being discontinued as part of the
Plan.

        The deferred income tax benefit primarily reflects adjustments to the
net operating loss carryforwards of acquired businesses. See Note 7 to the
consolidated financial statements.

        The Company's principal capital commitments are for lease payments under
noncancelable operating leases. Working capital and operating profits are
anticipated to be sufficient to satisfy these commitments.


                                       17
<PAGE>   18
        The Company is continuing to evaluate the acquisition of additional
product lines and companies in the medical diagnostics field. The Company
believes that such acquisitions could be financed through issuance of debt or
equity securities as well as its available cash. If such an acquisition were
completed, the Company's operating results and financial condition could change
significantly in future periods.

Results of Operations

1995 COMPARED TO 1994    Product sales decreased 3% compared to 1994. Revenues
were impacted by the fourth quarter sale of Meridian and the effects of the
restructuring announcement on planned discontinued products. This decline can
also be attributed to continued pressures in the health care industry for cost
controls and a decline in domestic allergy product sales as the market continues
to shift from the doctors office to larger laboratories. The Company's new
HY-TEC automated allergy system is designed for the larger testing laboratories
and received clearance from the U.S. Food and Drug Administration in March 1995.

         Gross profit as a percentage of sales declined from 55.8% to 52.6% due
primarily to the allocation of a portion of the restructuring charge to cost of
sales ($473,000) and the lower margins of the German operation and the launch of
the new HY-TEC system in Europe.

         Selling, general and administration expenses, and research and
development costs increased $1,253,000 and $758,000, respectively, primarily due
to the direct cost incurred as a result of the Plan which includes expanding
marketing and R&D programs.

         Interest income declined as the cash balances decreased as described
above.

         The gain on foreign currency transaction of $188,000 for the year ended
December 31, 1995 relates to intercompany balances amounting to approximately
$948,000 between Hycor and its German subsidiary which was acquired in January
1994. The company has hedged this foreign currency exchange rate position.

         The provision for income taxes increased substantially from 39% to 51%
of income due to the higher tax rate for the German operation and the
utilization in prior years of net operating loss carryforwards and tax credits.


                                       18
<PAGE>   19
1994 COMPARED TO 1993    Product sales increased 7% compared to 1993. Net of the
effects of the acquisitions completed in 1994, sales declined approximately
$566,000 or 2%. This decline was caused primarily by pressures in the health
care industry for cost controls and a decline in domestic allergy product sales
as the market continues to shift from the doctors office to larger laboratories.

         Gross profit as a percentage of sales declined from 59.1% to 55.8% due
to the lower margins of the new German operation and the launch of the new
HY-TEC system in Europe.

         Selling, general and administration expenses, and research and
development costs, net of the acquisitions, declined $583,000 and $340,000,
respectively, primarily as a result of the cost savings from the Portland, Maine
plant closure completed in the fourth quarter of 1993.

         Interest income declined as the cash balances decreased as described
above.

         The gain on foreign currency transaction of $209,000 for the year ended
December 31, 1994 relates to intercompany balances amounting to approximately
$1,613,000 between Hycor and its German subsidiary which was acquired in January
1994. The company has hedged this foreign currency exchange rate position.

         The provision for income taxes increased substantially from 29% to 39%
of income due to the higher tax rate for the German operation and the
utilization in prior years of net operating loss carryforwards and tax credits.




                                       19
<PAGE>   20
PART II
Item 8.  Financial Statements and Supplementary Data

The following documents are filed as part of this report:

<TABLE>
<CAPTION>
                                                                     Page Number
                                                                     -----------
<S>                                                                     <C>  
     Independent Auditors' Reports                                      21-22
     Consolidated Balance Sheets as of                                  23-24
         December 31, 1995 and 1994
     Consolidated Statements of Income                                  25
         for the years ended December 31,
         1995, 1994 and 1993
     Consolidated Statements of Stockholders'                           26
         Equity for the years ended December 31,
         1995, 1994 and 1993
     Consolidated Statements of Cash                                    27-28
         Flows for the years ended December 31,
         1995, 1994 and 1993
     Notes to Consolidated Financial Statements                         29-40
</TABLE>




                                       20
<PAGE>   21
                         INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
Hycor Biomedical Inc.
Irvine, California

We have audited the accompanying consolidated balance sheets of Hycor
Biomedical Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the years then ended. Our audit also included the financial statement
schedule listed in the index at Item 14(1). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule 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, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company and subsidiaries as of
December 31, 1995 and 1994, and the results of their operations and their cash
flows for the year then ended, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.




DELOITTE & TOUCHE LLP

Costa Mesa, California
February 29, 1996



                                       21
<PAGE>   22
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Stockholders and Directors of Hycor Biomedical Inc.:

We have audited the accompanying consolidated statements of income,
stockholders' equity and cash flows of Hycor Biomedical Inc. (a Delaware
corporation) and subsidiaries for the year ended December 31, 1993. These
consolidated financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and schedule based on our
audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of income, stockholders'
equity and cash flows are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statements of income, stockholders' equity and cash flows. 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 audit provides a reasonable basis for our
opinion.

In our opinion, the statements of income, stockholders' equity and cash flows
referred to above present fairly, in all material respects, the results of
operations and cash flows of Hycor Biomedical Inc. and subsidiaries for the
year ended December 31, 1993, in conformity with generally accepted accounting
principles.

Our audit was made for the purpose of forming an opinion on the basic
consolidated statements of income, stockholder's equity and cash flows taken as
a whole. The schedule listed in Part IV, Item 14 is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part
of the basic consolidated statements of income, stockholder's equity and cash
flows. This schedule has been subjected to the auditing procedures applied in
our audit of the basic consolidated statements of income, stockholder's equity
and cash flows for the period indicated above and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic consolidated statements of income,
stockholder's equity and cash flows taken as a whole.



                                                ARTHUR ANDERSEN LLP

Orange County, California
February 15, 1994



                                       22
<PAGE>   23
                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
         ASSETS                                               1995          1994
         ------                                               ----          ----
<S>                                                        <C>           <C>        
CURRENT ASSETS:
  Cash and cash equivalents                                $ 1,033,459   $ 1,404,537
  Investments  (Note 4)                                      6,365,995     2,437,497
  Accounts receivable, net of allowance for
    doubtful accounts of $136,604 and
    $170,841 in 1995 and 1994, respectively                  3,679,419     4,263,335
  Inventories (Note 5)                                       3,948,564     6,725,565
  Prepaid expenses and other current assets                    685,399       711,586
  Deferred income tax benefit (Note 7)                       1,138,000       610,000
                                                           -----------   -----------
      Total current assets                                  16,850,836    16,152,520
                                                           -----------   -----------
PROPERTY AND EQUIPMENT, at cost :
  Land and buildings                                         1,428,258     2,304,048
  Leasehold improvements                                     1,619,272     1,684,352
  Machinery and equipment                                    5,115,424     5,796,601
  Furniture, fixtures and office equipment                   2,306,821     2,273,247
                                                           -----------   -----------
                                                            10,469,775    12,058,248

  Accumulated depreciation and amortization                 (5,742,459)   (5,639,674)
                                                           -----------   -----------
  Property and equipment, net                                4,727,316     6,418,574
                                                           -----------   -----------

GOODWILL AND OTHER INTANGIBLE ASSETS, net of
  accumulated amortization of $1,015,082 and
  $741,543 in 1995 and 1994, respectively (Notes 3 and 7)    4,773,904     5,459,039
DEFERRED INCOME TAX BENEFIT (Note 7)                           877,000       620,000
OTHER ASSETS                                                   346,316       350,166
                                                           -----------   -----------
      Total assets                                         $27,575,372   $29,000,299
                                                           ===========   ===========
</TABLE>



                 See notes to consolidated financial statements

                                       23
<PAGE>   24
                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
    LIABILITIES AND STOCKHOLDERS' EQUITY                   1995          1994
    ------------------------------------                   ----          ----
CURRENT LIABILITIES:
<S>                                                     <C>           <C>        
  Accounts payable                                      $   982,646   $ 1,104,520
  Accrued liabilities                                     1,252,718       864,004
  Accrued payroll expenses                                1,000,542       862,457
                                                        -----------   -----------
      Total current liabilities                           3,235,906     2,830,981
                                                        -----------   -----------


COMMITMENTS (Note 9)

STOCKHOLDERS' EQUITY (Notes 6 and 8):
  Preferred stock, $.01 par value;
    authorized - 3,000,000 shares;
    none outstanding                                             --            --
  Common stock, $.01 par value;
    authorized - 20,000,000 shares;
    issued and outstanding: 7,730,291
    shares in 1995 and 8,226,895 shares in 1994              77,303        82,269
  Paid-in capital                                        14,806,686    16,971,456
  Retained earnings                                       9,215,989     9,084,739
  Accumulated foreign currency translation adjustments      254,445       144,138
  Unrealized losses on investments, net of tax benefit      (14,957)     (113,284)
                                                        -----------   -----------
      Total stockholders' equity                         24,339,466    26,169,318
                                                        -----------   -----------
      Total liabilities and stockholders' equity        $27,575,372   $29,000,299
                                                        ===========   ===========
</TABLE>










                 See notes to consolidated financial statements

                                       24
<PAGE>   25
                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
                                              1995         1994         1993
                                              ----         ----         ----
<S>                                       <C>           <C>          <C>        
NET SALES (Note 10)                       $25,184,742   $25,896,591  $24,212,567
COST OF SALES (Note 13)                    11,947,276    11,450,936    9,900,454
                                          -----------   -----------  -----------
      Gross profit                         13,237,466    14,445,655   14,312,113
                                          -----------   -----------  -----------
OPERATING EXPENSES:
  Selling, general and
    administrative (Note 13)                9,812,090     8,558,752    8,350,318
  Research and development                  2,594,468     1,836,830    2,142,789
  Restructure charge (Note 13)              1,069,301            --           --
  Plant closure costs (Note 12)                    --            --    1,113,393
                                          -----------   -----------  -----------
                                           13,475,859    10,395,582   11,606,500
                                          -----------   -----------  -----------
OPERATING INCOME (LOSS)                      (238,393)    4,050,073    2,705,613

INTEREST INCOME, net                          321,765       374,125      498,889
GAIN ON FOREIGN CURRENCY TRANSACTIONS         187,878       208,898           --
                                          -----------   -----------  -----------
INCOME BEFORE PROVISION FOR INCOME TAXES      271,250     4,633,096    3,204,502


PROVISION FOR INCOME TAXES (Note 7)           140,000     1,800,000      930,000
                                          -----------   -----------  -----------
NET INCOME                                $   131,250   $ 2,833,096  $ 2,274,502
                                          ===========   ===========  ===========


NET INCOME PER SHARE (Note 2)             $       .02   $       .34  $       .26
                                          ===========   ===========  ===========
</TABLE>






                 See notes to consolidated financial statements

                                       25
<PAGE>   26
                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
                                                                         Common Stock                                    
                                                                      ------------------                               
                                                                      Number of    Par        Paid-in      Retained  
                                                                       Shares      Value      Capital      Earnings  
                                                                       ------      -----      -------      --------  
<S>                                                                   <C>         <C>       <C>           <C>        
BALANCE AT JANUARY 1, 1993                                            8,242,066   $82,421   $18,360,662   $3,977,141 
                                                                                                                     
ISSUANCE OF COMMON STOCK, including                                                                                  
 related income tax benefits (Note 8)                                   167,909     1,679       495,804           -- 
                                                                                                                     
COMMON STOCK  PURCHASED                                                (202,722)   (2,027)     (873,948)          -- 
                                                                                                                     
NET INCOME                                                                   --        --            --    2,274,502 
                                                                      ---------   -------   -----------   ---------- 
BALANCE AT DECEMBER 31, 1993                                          8,207,253    82,073    17,982,518    6,251,643 
                                                                                                                     
ISSUANCE OF COMMON STOCK, PRINCIPALLY UNDER EMPLOYEE                                                                 
 BENEFIT PLANS, including related income tax benefits (Note 8)          301,342     3,013       311,346           -- 
                                                                                                                     
ISSUANCE OF COMMON STOCK IN CONJUNCTION WITH                                                                         
ACQUISITION OF MSI (Note 3)                                             200,000     2,000       730,000           -- 
                                                                                                                     
COMMON STOCK PURCHASED                                                 (481,700)   (4,817)   (2,052,408)          -- 
                                                                                                                     
NET INCOME                                                                   --        --            --    2,833,096 
                                                                                                                     
FOREIGN CURRENCY TRANSLATION ADJUSTMENT (Note 2)                             --        --            --           -- 
                                                                                                                     
NET UNREALIZED INVESTMENT LOSSES, net of tax (Note 2)                        --        --            --           -- 
                                                                      ---------   -------   -----------   ---------- 
BALANCE AT DECEMBER 31, 1994                                          8,226,895    82,269    16,971,456    9,084,739 
                                                                                                                     
ISSUANCE OF COMMON STOCK, PRINCIPALLY UNDER EMPLOYEE                                                                 
 BENEFIT PLANS, including related income tax benefits (Note 8)           92,174       922       293,836           --             
                                                                                                                     
COMMON STOCK PURCHASED                                                 (588,778)   (5,888)   (2,508,216)          -- 
                                                                                                                     
TAX BENEFITS FROM EXERCISE OF COMMON STOCK OPTIONS                           --        --        49,610           --             
                                                                                                                     
NET INCOME                                                                   --        --            --      131,250 
                                                                                                                     
FOREIGN CURRENCY TRANSLATION ADJUSTMENT (Note 2)                             --        --            --           -- 
                                                                                                                     
NET UNREALIZED INVESTMENT GAINS, net of tax (Note 2)                         --        --            --           -- 
                                                                      ---------   -------   -----------   ---------- 
BALANCE AT DECEMBER 31, 1995                                          7,730,291   $77,303   $14,806,686   $9,215,989 
                                                                      =========   =======   ===========   ========== 
                                                                                                                     
                                                                                                                     
<CAPTION>                                                                                                            
                                                                        Accumulated                                  
                                                                      Foreign Currency    Unrealized                 
                                                                        Translation       Investment                 
                                                                        Adjustments     Gains (Losses)               
                                                                        -----------     --------------               
<S>                                                                   <C>               <C>                          
BALANCE AT JANUARY 1, 1993                                                $     --        $      --                  
                                                                                                                     
ISSUANCE OF COMMON STOCK, including                                                                                  
 related income tax benefits (Note 8)                                           --               --                  
                                                                                                                     
COMMON STOCK  PURCHASED                                                         --               --                  
                                                                                                                     
NET INCOME                                                                      --               --                  
                                                                          --------        ---------                  
BALANCE AT DECEMBER 31, 1993                                                    --               --                  
                                                                                                                     
ISSUANCE OF COMMON STOCK, PRINCIPALLY UNDER EMPLOYEE                                                                 
 BENEFIT PLANS, including related income tax benefits (Note 8)                  --               --                  
                                                                                                                     
ISSUANCE OF COMMON STOCK IN CONJUNCTION WITH                                                                         
ACQUISITION OF MSI (Note 3)                                                     --               --                  
                                                                                                                     
COMMON STOCK PURCHASED                                                          --               --                  
                                                                                                                     
NET INCOME                                                                      --               --                  
                                                                                                                     
FOREIGN CURRENCY TRANSLATION ADJUSTMENT (Note 2)                           144,138               --                  
                                                                                                                     
NET UNREALIZED INVESTMENT LOSSES, net of tax (Note 2)                           --         (113,284)                 
                                                                          --------        ---------                  
BALANCE AT DECEMBER 31, 1994                                               144,138         (113,284)                 
                                                                                                                     
ISSUANCE OF COMMON STOCK, PRINCIPALLY UNDER EMPLOYEE                                                                 
 BENEFIT PLANS, including related income tax benefits (Note 8)                  --               --                  
                                                                                                                     
COMMON STOCK PURCHASED                                                          --               --                  
                                                                                                                     
TAX BENEFITS FROM EXERCISE OF COMMON STOCK OPTIONS                              --               --                  
                                                                                                                     
NET INCOME                                                                      --               --                  
                                                                                                                     
FOREIGN CURRENCY TRANSLATION ADJUSTMENT (Note 2)                           110,307               --                  
                                                                                                                     
NET UNREALIZED INVESTMENT GAINS, net of tax (Note 2)                            --           98,327                  
                                                                          --------        ---------                  
BALANCE AT DECEMBER 31, 1995                                              $254,445        $ (14,957)                 
                                                                          ========        =========                  
</TABLE>



                 See notes to consolidated financial statements

                                         26
<PAGE>   27
                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

<TABLE>
<CAPTION>
                                                                           1995          1994          1993
                                                                           ----          ----          ----
<S>                                                                    <C>           <C>           <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                           $   131,250   $ 2,833,096   $ 2,274,502
  Adjustments to reconcile net income to net cash
      provided by operating activities:
    Depreciation and amortization                                        2,168,151     1,745,123     1,559,424
    Deferred income tax provision                                         (569,000)      419,000       129,000
    Loss on disposition of property, equipment, and other intangibles      522,092            --            --
    Gain on sale of subsidiary                                          (1,286,427)           --            --
    Gain on foreign currency transactions                                 (187,878)     (208,898)           --
    Change in assets and liabilities, net of effects of acquisitions,
       dispositions and foreign currency adjustments 
      Accounts receivable                                                  348,390       893,080        88,779
      Inventories                                                        1,634,932    (1,491,133)     (748,747)
      Prepaid expenses and other current assets                              7,763        47,515      (359,268)
      Other assets                                                           2,125        86,156        45,469
      Accounts payable                                                     (27,676)     (357,903)      (78,393)
      Accrued liabilities                                                  666,740      (265,702)      (58,592)
      Accrued payroll expenses                                             198,279       152,495      (188,897)
                                                                       -----------   -----------   -----------
          Total adjustments                                              3,477,491     1,019,733       388,775
                                                                       -----------   -----------   -----------
    Net cash provided by operating activities                            3,608,741     3,852,829     2,663,277
                                                                       -----------   -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of investments                                              (4,119,291)   (1,893,632)   (1,976,424)
  Proceeds from sales of investments                                       313,279     6,105,132     1,198,946
  Purchases of property, plant and equipment                            (1,496,707)   (1,420,115)   (2,195,295)
  Purchases of intangible assets                                           (71,550)      (23,704)      (60,554)
  Proceeds from sale of property and equipment                                  --        40,544       111,262
  Proceeds from collection of notes receivable                              26,006        24,215       178,450
  Business acquisitions, net of cash acquired                                   --    (4,272,405)           --
  Proceeds from sale of business                                         3,325,275            --            --
                                                                       -----------   -----------   -----------
    Net cash used in investing activities                               (2,022,988)   (1,439,965)   (2,743,615)
                                                                       -----------   -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                                   344,368       314,359       497,483
  Purchases of Hycor common stock                                       (2,514,104)   (2,057,225)     (875,975)
                                                                       -----------   -----------   -----------
    Net cash used in financing  activities                              (2,169,736)   (1,742,866)     (378,492)
                                                                       -----------   -----------   -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                    212,905        50,966            --
                                                                       -----------   -----------   -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          (371,078)      720,964      (458,830)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                             1,404,537       683,573     1,142,403
                                                                       -----------   -----------   -----------
CASH AND CASH EQUIVALENTS, END OF YEAR                                 $ 1,033,459   $ 1,404,537   $   683,573
                                                                       ===========   ===========   ===========
</TABLE>



                                       27
<PAGE>   28
                    HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
             FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


<TABLE>
<CAPTION>
                                                                              1995         1994        1993
                                                                           ----------  -----------   --------
<S>                                                                        <C>         <C>           <C>     
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the year - income taxes                                 $1,811,199  $ 1,306,547   $872,735

SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS
During 1994, the Company acquired certain businesses in noncash
   transactions summarized as follows:
     Fair value of assets acquired                                         $       --  $ 5,797,842   $     --
     Value of common stock issued in transaction                                   --     (732,000)        --
     Cash paid net of cash acquired                                                --   (4,272,405)        --
                                                                           ----------  -----------   --------
        Liabilities assumed, including costs of acquisition                $       --  $   793,437   $     --
                                                                           ==========  ===========   ========

Reduction of goodwill and accrued income taxes payable due to utilization
of Ventrex acquired net operating losses, credit carryforwards and other
timing differences                                                         $  287,385  $        --   $647,653
                                                                           ==========  ===========   ========

Reduction of goodwill and increase in deferred income tax benefit due to
change in valuation allowance                                              $  269,843  $ 1,079,372   $     --
                                                                           ==========  ===========   ========
</TABLE>







                 See notes to consolidated financial statements

                                       28
<PAGE>   29
HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993

NOTE 1:  DESCRIPTION OF BUSINESS

Hycor Biomedical Inc. ("Hycor" or the "Company") is engaged in developing,
manufacturing and marketing medical and diagnostic products. The Company's
products are primarily used in the clinical laboratory and specialty physician
markets in the United States and Europe. The majority of sales are through
independent and clinical laboratory distributors.

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION       The consolidated financial statements include the accounts
of Hycor Biomedical Inc. and its wholly-owned subsidiaries. All material
intercompany amounts and transactions have been eliminated.

FOREIGN CURRENCY ISSUES       The financial position and results of operations
of the Company's foreign subsidiary are measured using the local currency as the
functional currency. Assets and liabilities of this subsidiary are translated at
the exchange rate in effect at each year end. Income statement accounts are
translated at the average rate of exchange prevailing during the year.
Translation adjustments arising from differences in exchange rates from period
to period are included in the accumulated foreign currency translation
adjustments account in stockholders' equity. Realized gains or losses from
foreign currency transactions are included in operations as incurred and relate
to intercompany balances amounting to $948,000 between Hycor and its German
subsidiary. Beginning in May, 1995, the Company began entering into forward
foreign exchange contracts as a hedge against certain effects of fluctuating
currency exchange rates on the intercompany note payable from its German
subsidiary. The Company is exposed to market risk on the forward exchange
contracts as a result of changes in foreign exchange rates; however, the market
risk should be substantially offset by changes in the valuation of the
underlying exposures. Gains and losses on these contracts, which equal the
difference between the forward contract rate and the prevailing market spot rate
at the time of valuation, are recognized in the consolidated statement of
operations. The counterparties to these instruments are major financial
institutions. The Company uses commercial rating agencies to

                                       29
<PAGE>   30
evaluate the credit quality of the counterparties, and the Company does not
anticipate a loss resulting from any credit risk of these institutions.

At December 31, 1995, the Company had forward currency sales contracts open in
the aggregate amount of $952,000, with maturities ranging from 5 months to 20 
months, which represents the expected payment dates against the intercompany 
note. The unrealized gains and losses from these contracts were immaterial at 
December 31, 1995. 

CASH EQUIVALENTS    Cash equivalents are deemed to be highly liquid investments
with an original maturity of three months or less. 

INVESTMENTS    The Company adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities,"
effective January 1, 1994. Financial statements from prior years have not been
restated, and there was no material cumulative effect from the change in
accounting principle in determining net income for the year ended December
31,1994.

At December 31, 1995 and 1994, marketable equity and debt securities
have been categorized as available for sale and, as a result, are stated at fair
value. Marketable equity and debt securities available for current operations
are classified in the balance sheet as current assets. Unrealized holding gains
and losses are included as a component of stockholders' equity, net of tax, 
until realized.

CREDIT RISK    Most of the Company's business activity is with distributors of
medical products which are primarily located in the United States and Europe.
The Company grants normal trade credit to customers without requiring collateral
or other security. The Company maintains reserves for potential credit losses
and those losses have been within management's expectations.

INVENTORIES    Inventories are valued at the lower of cost (first-in,first-out
method) or market. Cost includes material, direct labor and manufacturing
overhead. 

PROPERTY AND EQUIPMENT   Property and equipment are recorded at cost.
Depreciation is computed using the straight-line method over the estimated 
useful lives of the assets which range from three to twenty years. Leasehold
improvements are amortized over the life of the lease. Maintenance, repairs and
minor renewals are charged to expense as incurred. Additions and improvements
are capitalized. 

GOODWILL AND OTHER INTANGIBLE ASSETS    Goodwill represents the excess of
purchase price over the fair market value of tangible assets resulting from
business acquisitions. Other intangible assets include patents, trademarks and
license fees which are recorded at cost. Goodwill is amortized over 15 to 20
years on a

                                       30
<PAGE>   31
straight-line basis. Other intangible assets are amortized on a straight-line
basis over the estimated useful lives of the assets, which range from 10 to 15
years. The Company assesses the recoverability of Goodwill and other intangible
assets at each balance sheet date by determining whether the amortization of the
balance over its remaining useful life can be recovered through projected
undiscounted future operating cash flows. 

OTHER ASSETS   Other assets consist primarily of notes receivable and long-term
deposits.

INCOME TAXES   The Company accounts for income taxes pursuant to Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Accordingly, income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and tax reporting purposes. The deferred tax assets
and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. Deferred taxes also are recognized for
operating losses that are available to offset future taxable income and tax
credits that are available to offset future income taxes.

REVENUE RECOGNITION      Revenue on product sales is recognized when products
are shipped. 

NET INCOME PER SHARE     The number of shares used in computing net income per
share is the weighted average number of shares outstanding during the year plus
common stock equivalents relating to options and warrants. The number of common
stock equivalents relating to options and warrants is determined using the
treasury stock method. Common stock equivalents are not included when their
effect is antidilutive. Fully diluted net income per share approximates primary
net income per share for each year. The numbers of shares used in computing net
income per share are as follows:

<TABLE>
<CAPTION>
                                                1995          1994          1993
--------------------------------------------------------------------------------
<S>                                        <C>           <C>           <C>      
Weighted average number
 of shares outstanding                     8,208,218     8,233,867     8,237,020
Common stock equivalents                      49,805       218,939       453,588
--------------------------------------------------------------------------------
                                           8,258,023     8,452,806     8,690,608
================================================================================
</TABLE>

USE OF ESTIMATES     The preparation of financial statements in conformity 
with generally accepted accounting principles requires management to make 
estimates and assumptions that affect the

                                       31


<PAGE>   32
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

RECLASSIFICATIONS   Certain items in the 1994 and 1993 consolidated financial
statements have been reclassified to conform with the 1995 presentation.

NEW ACCOUNTING PRONOUNCEMENT    The Financial Accounting Standards Board has
recently issued Financial Accounting Standards No. 123, Accounting for
Stock-based Compensation, which requires the determination and disclosure of
compensation costs implicit in stock option grants. The Company is required to
adopt the standard beginning fiscal 1996. The Company does not plan to implement
this standard until that time and has not been able to quantify the effect of
this standard at the present time.

NOTE 3:  ACQUISITIONS

On January 14, 1994, the Company acquired Melja Diagnostik (Melja) for cash of
approximately $2,145,000, net of cash acquired. Melja primarily manufactures and
sells allergy diagnostic products in Europe. The acquisition was accounted for
using the purchase method of accounting, and Melja's operating results have been
included in the Company's consolidated financial statements from the date of
acquisition. Total goodwill and other intangible assets resulting from the
acquisition amounted to approximately $1,879,000. The impact of including
Melja's operation in the Company's financial statements for the year ended
December 31, 1993 would not have been significant.

On October 3, 1994, the Company completed the acquisition of Medical Specialties
International, Inc. (MSI) of So. Plainfield, New Jersey, for a combination of
cash and Hycor common stock of approximately $2,859,000, net of cash acquired.
Under the terms of the acquisition agreement, the Company may be obligated to
issue up to 150,000 additional common shares if MSI achieves specified revenue
levels prior to December 31, 1997. As of December 31, 1995, no additional shares
have been issued under this agreement. MSI primarily manufactures and sells
hematology controls in domestic markets. The acquisition was accounted for using
the purchase method of accounting, and MSI's operating results have been
included in the Company's consolidated financial statements

                                       32
<PAGE>   33
from the date of acquisition. Total goodwill and other intangible assets
resulting from the acquisition amounted to approximately $2,829,000.

The unaudited consolidated results of operations through December 31, 1994 on a
pro forma basis as though the MSI acquisition had been consummated on January 1,
1994 and 1993 are as follows:

<TABLE>
<CAPTION>
                                                         1994               1993
--------------------------------------------------------------------------------
<S>                                               <C>                <C>        
Net sales                                         $26,763,000        $25,019,000
Net income                                          2,072,000          1,503,000
Net income per common share                               .24                .17
--------------------------------------------------------------------------------
</TABLE>

The pro forma financial information presented is not necessarily indicative
either of results of operations that would have occurred had the acquisition
been effected on January 1, 1994 or 1993 or of future results of operations.

NOTE 4: INVESTMENTS

Investments consist principally of corporate debt securities, categorized as
available for sale, with scheduled maturities at December 31, 1995 as follows:

<TABLE>
<CAPTION>
                                                    Fair
                                                   Value                    Cost
--------------------------------------------------------------------------------
<S>                                           <C>                     <C>       
Due after one year through five years         $6,365,995              $6,390,515
--------------------------------------------------------------------------------
</TABLE>

Gross unrealized holding gains and losses at December 31, 1995 were $32,756 and
$57,276, respectively. For the purpose of determining gross realized gains and
losses, the cost of securities sold is based upon specific identification.
During 1995, the Company sold investments with an aggregate book value of
$322,113 for total cash proceeds of $313,279, resulting in a net realized loss
of $8,834.




                                       33
<PAGE>   34
NOTE 5: INVENTORIES

Inventories at December 31, 1995 and 1994 consisted of:

<TABLE>
<CAPTION>
                                                         1995              1994
--------------------------------------------------------------------------------
<S>                                               <C>                <C>       
Raw materials                                     $ 1,325,973        $2,122,387
Work in process                                     1,787,292         2,836,388
Finished goods                                      2,774,801         2,536,877
Allowance for discontinued                                        
product lines and excess, obsolete                                
and short-dated inventories                        (1,939,502)         (770,087)
                                                                  
--------------------------------------------------------------------------------
                                                  $ 3,948,564        $6,725,565
================================================================================
</TABLE>

NOTE 6:  STOCKHOLDERS' EQUITY

At December 31, 1995 the Company had warrants outstanding to purchase 624,232
shares of common stock, all of which are exercisable. Each warrant represents
the right to purchase one share of the Company's common stock at prices ranging
from $5.00 to $9.21 with expiration dates ranging from April 1996 to August
1998. In 1994, warrants for 279 shares of common stock were exercised.

NOTE 7:  INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                         1995               1994            1993
--------------------------------------------------------------------------------
<S>                                 <C>               <C>               <C>     
Current:
  Federal                           $ 307,000         $  817,000        $546,000
  State                               181,000            341,000         255,000
  Foreign                             221,000            223,000              --
--------------------------------------------------------------------------------
    Total                             709,000          1,381,000         801,000
--------------------------------------------------------------------------------
Deferred:                         
  Federal                            (395,000)           396,000         110,000
  State                              (174,000)            23,000          19,000
                                  
--------------------------------------------------------------------------------
    Total                            (569,000)           419,000         129,000
--------------------------------------------------------------------------------
                                    $ 140,000         $1,800,000        $930,000
================================================================================
</TABLE>




                                       34
<PAGE>   35
A reconciliation of the Company's effective tax rate compared to the federal
statutory tax rate is as follows:

<TABLE>
<CAPTION>
                                               1995          1994          1993
--------------------------------------------------------------------------------
<S>                                        <C>         <C>           <C>       
Provision computed at federal
 statutory rate                            $ 93,000    $1,574,000    $1,090,000
Increase (reduction)resulting from:                                 
 State taxes, net                             5,000       237,000       190,000
 Foreign tax rate differential               54,000        82,000            --
 Change in valuation allowance                   --            --       151,000
 Utilization of loss carryforwards               --            --      (205,000)
 Research and development credits           (58,000)     (122,000)     (335,000)
 Foreign sales corporation                  (26,000)      (50,000)      (56,000)
 Amort.of goodwill and trademarks            57,000        27,000            --
 Meals and entertainment                     15,000        17,000            --
 Other                                           --        35,000        95,000
--------------------------------------------------------------------------------
                                           $140,000    $1,800,000    $  930,000
================================================================================
</TABLE>

The components of the provision for deferred income taxes for the years ended
December 31, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                                          1995             1994
--------------------------------------------------------------------------------
<S>                                                  <C>               <C>      
Inventory reserves                                   $(491,000)        $ (6,000)
Operating loss carryforwards                           269,000          269,000
Credit carryforwards                                   (29,000)          57,000
Change in valuation allowance                               --               --
Deferred state taxes                                    59,000           37,000
State tax provision                                     15,000          (84,000)
Allowance for doubtful accounts                         19,000           61,000
Vacation accrual                                        49,000           (9,000)
Restructuring Reserve                                 (484,000)              --
Depreciation                                           (32,000)          77,000
Unrealized foreign exchange gain                        56,000               --
Other                                                       --           17,000
--------------------------------------------------------------------------------
                                                     $(569,000)        $419,000
================================================================================
</TABLE>




                                       35
<PAGE>   36
The components of the Company's deferred income tax benefit as of December 31,
1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                                         1995              1994
--------------------------------------------------------------------------------
<S>                                               <C>               <C>        
Allowance for doubtful accounts                   $    53,000       $    72,000
Inventory reserves                                    815,000           323,000
Depreciation                                         (157,000)         (190,000)
Currently non-deductible accruals                     120,000           168,000
Net operating loss carryforwards                    7,592,000         7,862,000
Valuation allowance                                (6,782,000)       (7,052,000)
Deferred state taxes                                  (96,000)          (37,000)
State tax provision                                    68,000            84,000
Restructuring reserve                                 484,000                --
Capital loss carryforwards                             29,000                --
Unrealized foreign exchange gain                      (57,000)               --
Bond market valuation                                 (54,000)               --
--------------------------------------------------------------------------------
                                                  $ 2,015,000       $ 1,230,000
================================================================================
</TABLE>

     The financial statement benefit from the utilization of acquired net
     operating losses and credit carryforwards is being accounted for as a
     reduction of goodwill in the year utilized until goodwill is reduced to
     zero, at which point any additional benefit will be accounted for as a
     reduction of income tax expense. Effective January 1, 1994, the Company
     reduced the valuation allowance on acquired net operating losses projected
     to be utilized over the next three years, as it is more likely than not
     that such amounts will be utilized. Thus, the corresponding tax benefit of
     $270,000 has been reflected by a reduction of the valuation allowance and a
     corresponding reduction to goodwill. In 1995, the Company utilized $793,000
     of these net operating losses, resulting in a reduction of the goodwill by
     $270,000. In addition, during the current year, the Company utilized
     otherwise expiring net operating losses by offsetting built-in gains upon
     the sale of assets which also resulted in a reduction in goodwill by
     approximately $290,000.

     The components of the Company's deferred income tax benefit as of December
     31, 1995 also reflect $1,925,000 of the net operating loss carryforwards
     and valuation allowance related to the MSI acquisition. Utilization of the
     MSI net operating loss carryforward can only be offset against future MSI
     taxable income.




                                       36
<PAGE>   37
NOTE 8:  EMPLOYEE BENEFIT PLANS

STOCK OPTION PLANS  At December 31, 1995, the Company had reserved 1,712,837
shares of common stock for issuance to employees and directors under five stock
option plans, of which, options to purchase 1,098,816 shares were outstanding
with exercise prices ranging from $0.00 to $6.63 per share. Both incentive and
nonqualified options can be granted under the plans. The following is a summary
of stock option activity for the years ended December 31:

<TABLE>
<CAPTION>
                                1995                      1994                      1993
                       -----------------------   -----------------------   -----------------------
                         Shares       Price       Shares        Price       Shares        Price
                       ---------   -----------   ---------   -----------   ---------   -----------
<S>                    <C>         <C>           <C>         <C>           <C>         <C>        
Outstanding,
   Beginning of year   1,035,373   $0.00-$6.63   1,254,737   $0.00-$6.63   1,148,661   $0.56-$6.63
   Granted               218,500   $0.00-$4.69     111,500   $4.50-$4.75     247,500   $0.00-$6.63
   Exercised             (55,557)  $0.56-$2.47    (254,500)  $0.56-$2.47     (58,000)  $0.59-$1.56
   Canceled              (99,500)  $4.13-$6.50     (76,364)  $4.25-$6.63     (83,424)  $4.88-$6.50
                       ---------                 ---------                 ---------
Outstanding,
   End of year         1,098,816   $0.00-$6.63   1,035,373   $0.00-$6.63   1,254,737   $0.00-$6.63
                       =========                 =========                 =========              
</TABLE>

Options are generally granted at fair market value and become exercisable over
periods of up to ten years. The Company has also granted options to purchase
approximately 100,000 shares at $0.00 which become exercisable based on the
achievement of certain performance criteria. At December 31, 1995, options to
acquire 729,317 shares were exercisable at prices ranging from $1.13 to $6.63
per share, and options to acquire 614,000 shares were available for grant.

STOCK PURCHASE PLAN The Company has reserved 260,488 shares of its common stock
for issuance to employees under an employee stock purchase plan. The plan allows
employees to contribute up to ten percent (to a maximum of $25,000) of their
salary. The employees purchase the Company's common stock at 85 percent of the
lower of the fair market value of the common stock on June 30 or December 31.
The Company issued 20,894, 34,785 and 36,922 shares of its common stock under
this plan in 1995, 1994 and 1993, respectively.

401(k) PLAN    The Company has established a profit sharing plan under Internal
Revenue Code section 401(k). The 401(k) plan allows employees to contribute up
to fifteen percent of their salary to the plan. The Company matches 50 percent
of the first two percent of an employee's contribution and 100 percent of the
next one percent of contribution. A portion of the Company's contribution is
made in the Company's common stock. The Company issued 15,723, 11,778 and 11,169
shares of its common stock under this plan in 1995, 1994 and 1993, respectively.
Compensation expense related to



                                       37
<PAGE>   38
these plans was $249,324, $156,701 and $183,697 in 1995, 1994 and 1993,
respectively.


NOTE 9:  COMMITMENTS

The Company leases office, laboratory and warehouse space and laboratory
equipment under noncancelable operating leases. Rental expense under operating
leases for the years ended December 31, 1995, 1994 and 1993 was approximately
$1,069,000, $723,000 and $521,000, respectively. Future annual minimum lease
payments under the noncancelable operating leases as of December 31, 1995 are:

<TABLE>
<CAPTION>
                          Year                         Amount
--------------------------------------------------------------------------------
<S>                                                  <C>       
                          1996                       $  859,000
                          1997                          859,000
                          1998                          883,000
                          1999                          942,000
                          2000                          960,000
                    Thereafter                        1,626,000
--------------------------------------------------------------------------------
                                                     $6,129,000
================================================================================
</TABLE>


NOTE 10:  MAJOR CUSTOMERS AND INTERNATIONAL SALES

The Company sells its products primarily through distributors. Sales to the
Company's two largest distributors accounted for 18% and 12% of net product
sales in 1995; 18% and 14% in 1994 and 20% and 15% in 1993. A decision by a
significant customer to substantially decrease or delay purchases from the
Company or the Company's inability to collect receivables from these customers
could have a material adverse effect on the Company's financial condition and
results of operations. Export sales accounted for $4,231,000 or 17% of product
sales in 1995; $4,778,000 or 18% in 1994; and $4,671,000 or 19% in 1993. The
primary geographical area was Europe, which, including sales by the Company and
its German subsidiary, accounted for sales of $6,909,000 in 1995, $6,826,000 
in 1994 and $3,688,000 in 1993.




                                       38
<PAGE>   39
NOTE 11:  RESULTS BY QUARTER (UNAUDITED)

The unaudited results by quarter for the years ended December 31, 1995 and 1994
are shown below.

<TABLE>
<CAPTION>
                               First        Second         Third         Fourth
1995                         Quarter       Quarter       Quarter        Quarter
--------------------------------------------------------------------------------
<S>                       <C>           <C>           <C>           <C>        
Revenues                  $6,492,935    $6,764,392    $5,680,775    $ 6,246,640
Gross profit               3,597,922     3,834,401     3,073,237      2,731,906
Net income (loss)            549,523       572,081       148,095     (1,138,449)
Net income (loss)
 per share                $     0.07    $     0.07    $     0.02    $     (0.14)
</TABLE>



<TABLE>
<CAPTION>
                              First         Second          Third         Fourth
1994                        Quarter        Quarter        Quarter        Quarter
--------------------------------------------------------------------------------
<S>                      <C>            <C>            <C>            <C>       
Revenues                 $6,553,111     $7,058,068     $5,708,495     $6,576,917
Gross profit              3,786,994      3,845,897      3,119,718      3,693,046
Net income                  776,547        813,713        559,592        683,244
Net income
 per share               $      .09     $      .10     $      .07     $      .08
</TABLE>


NOTE 12:  PLANT CLOSURE COSTS

During fiscal 1993, the Company closed its manufacturing facility in Portland,
Maine and consolidated such operations into the Company's California
manufacturing facility. The costs included in the accompanying consolidated 1993
statement of income were for the facility closure, severance and outplacement
programs, and the integration of Portland operations into the California
facility.

NOTE 13: RESTRUCTURING CHARGE

On July 27, 1995, the Company announced plans for a major restructuring designed
to focus operations on high potential clinical immunology segments which
management believes to have the greatest potential for future growth. The
Restructuring Plan (the "Plan"), which was finalized in the fourth quarter of
1995, includes the discontinuation of several product lines, the closure of the
Company's New Jersey facility, and the disposition or relocation of certain
fixed assets.

The aggregate costs of the Plan included $2,371,000 of disposal costs and
write-offs of inventories, the value of which have been impaired by the
Company's decision to discontinue the related product lines and liquidate all
remaining inventories, $514,000 of costs related to the write down of fixed
assets impaired by downsizing and discontinuance of related product lines, and
$335,000 related to facility closure and other costs. These costs were offset by
estimated gains on the sale of certain product lines amounting to $1,486,000.
The net $1,734,000 cost of implementing the restructure plan was allocated to
cost of sales ($473,000), selling, general and administrative expenses
($192,000), and

                                       39
<PAGE>   40
restructuring charges ($1,069,000) in the accompanying consolidated statements
of income.

As of December 31, 1995, the Company had sold one product line, produced by its
Meridian Subsidiary, with net assets of $2,039,000 for net cash proceeds of 
$3,325,000, and discontinued all significant purchases and production on 
discontinued product lines with the exception of certain contractual supply 
commitments. 

The Company anticipates that the restructuring plan will be primarily 
completed by the end of the second quarter of 1996 and will not require a 
significant net cash outlay.




                                       40
<PAGE>   41
        Item 9. Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosure

        On September 21, 1994, Hycor Biomedical Inc. ("the Company") informed
Arthur Andersen LLP ("Arthur Andersen") that they had not been selected as the
principal independent public accountants for the audit of the Company's
financial statements for the fiscal year ending December 31, 1994. On September
22, 1994, the Company engaged Deloitte & Touche LLP as principal independent
accountants for the audit of the Company's financial statements for the fiscal
year ending December 31, 1994.

        In connection with the audits of the fiscal year ended December 31, 1993
and the subsequent interim period through September 21, 1994, there were no
disagreements with Arthur Andersen on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to their satisfaction would have caused
them to make reference in connection with their report to the subject matter of
their disagreement.

        The auditor's report of Arthur Andersen on the consolidated financial
statements of the Company for the year ended December 31, 1993, did not contain
an adverse opinion or a disclaimer of opinion, modification or qualification,
and was not qualified or modified as to uncertainty, audit scope or accounting
principles.

        Arthur Andersen has furnished a letter indicating agreement with the
foregoing.

        The decision to change accountants was recommended by Management and
approved by the Audit Committee of the Board of Directors.

PART III

        Item 10.  Directors and Executive Officers of the Registrant

        The information required by this Item is included under the captions
"Election of Directors," "Executive Officers," and "Executive Compensation -
Compliance with Section 16(a) of the Exchange Act" of the Company's Proxy
Statement for the 1996 Annual Meeting of Stockholders and is incorporated herein
by reference.

        Item 11.  Executive Compensation

        The information required by this Item is included under the caption
"Executive Compensation" of the Company's Proxy Statement for the 1996 Annual
Meeting of Stockholders and is incorporated herein by reference; provided,
however, that the Compensation Committee Report on Executive Compensation and
the Performance

                                       41
<PAGE>   42
Graph (I) shall not be deemed incorporated by reference in this Annual Report on
Form 10-K and (ii) shall not otherwise be deemed "filed" as part of this Annual
Report on Form 10-K.

        Item 12. Security Ownership of Certain Beneficial Owners and Management

        The information required by this Item is included under the caption
"Stock Ownership of Management and Certain Beneficial Owners" of the Company's
Proxy Statement for the 1996 Annual Meeting of Stockholders and is incorporated
herein by reference.

        Item 13.  Certain Relationships and Related Transactions

        None

PART IV

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

        1.         Financial Statement Schedules

                   The following financial schedule, together with the
                   Independent Auditors Reports on Schedule, are filed as part
                   of this Report:

<TABLE>
<CAPTION>
                  Schedule                                             Page
                   Number    Description                               Number
                   ------    -----------                               ------
<S>                         <C>                                        <C>
                    II      Valuation and Qualifying                   S-1
                             Accounts

</TABLE>

                  Schedules other than those listed above have been omitted
                  because they are not applicable or the required information is
                  included in the financial statements or notes thereto.




                                       42
<PAGE>   43
2.       Exhibits

<TABLE>
<S>                                         <C>
         3(1).                              Restated Certificate of
                                            Incorporation of Hycor Biomedical
                                            Inc., previously filed with the
                                            Secretary of State of Delaware on
                                            December 29, 1993, previously filed
                                            as Exhibit 3(1). to the Company's
                                            Annual Report on Form 10-K for the
                                            fiscal year ended December 31, 1993,
                                            and incorporated herein by
                                            reference.

         3(2).                              By-Laws of Hycor Biomedical Inc. as
                                            amended, previously filed as Exhibit
                                            3(2). to the Company's Annual Report
                                            on Form 10-K for the fiscal year
                                            ended December 31, 1991, and
                                            incorporated herein by reference.

         4(1)                               Warrant Agreement, previously filed
                                            as Exhibit 4.1 to the Company's
                                            Registration Statement on Form S-4,
                                            File no. 33-40475, and incorporated
                                            herein by reference.

            Material Contracts - Relating to Management Compensation
                              Plans or Arrangements

         10(1).                             Employment Agreement of Richard D.
                                            Hamill, dated December 20, 1990,
                                            previously filed as Exhibit 10(1).
                                            to the Company's Annual Report on
                                            Form 10-K for the fiscal year ended
                                            December 31, 1990, and incorporated
                                            herein by reference.

         10(2).                             Employment Agreement of Reginald P.
                                            Jones, dated December 1, 1991,
                                            previously filed as Exhibit 10(2).
                                            to the Company's Annual Report on
                                            Form 10-K for the fiscal year ended
                                            December 31, 1991, and incorporated
                                            herein by reference.

         10(4).                             Employment Agreement of Nelson F.
                                            Thune, dated December 1, 1991,
                                            previously filed as Exhibit 10(4).
                                            to the Company's Annual Report on
                                            Form 10-K for the fiscal year ended
                                            December 31, 1991, and incorporated
                                            herein by reference.
</TABLE>


                                       43
<PAGE>   44
<TABLE>
<CAPTION>
         Exhibit No.                              Name of Exhibit
         -----------                              ---------------
<S>                                         <C>
         10(6).                             Employment Agreement of W. Barry
                                            McDonald, dated May 4, 1992,
                                            previously filed as Exhibit 10(6).
                                            to the Company's Annual Report on
                                            Form 10-K for the fiscal year ended
                                            December 31, 1992, and incorporated
                                            herein by reference.

         10(10).                            1981 Incentive Stock Option  Plan,
                                            as amended, previously filed as
                                            Exhibit 4(1). to the Company's
                                            Registration Statements on Form S-8
                                            (No. 33-25429 and No. 33-32767), and
                                            incorporated herein by reference.

         10(12).                            1984 Nonqualified Stock Option Plan,
                                            as amended, previously filed as
                                            Exhibit 4(1). to the Company's
                                            Registration Statement on Form S-8
                                            (No. 33-25428), and incorporated
                                            herein by reference.

         10(13).                            1988 Employee Stock Purchase Plan,
                                            previously filed as Exhibit 4(1). to
                                            the Company's Registration Statement
                                            on Form S-8 (No. 33-25427), and
                                            incorporated herein by reference.

         10(14).                            Hycor Biomedical Incentive Profit
                                            Sharing Plan, previously filed as
                                            Exhibit 4(1). to the Company's
                                            Registration Statement on Form S-8
                                            (No. 33-25430), and incorporated
                                            herein by reference.

         10(15).                            Long Term Executive Incentive Plan -
                                            1988, previously filed as Exhibit
                                            4(1). to the Company's Registration
                                            Statement on Form S-8 (No. 33-43280)
                                            and incorporated herein by
                                            reference.

         10(16).                            Annual Executive Incentive Plan,
                                            previously filed as Exhibit 10(16).
                                            to the Company's Annual Report on
                                            10-K for fiscal year ended December
                                            31, 1990, and incorporated herein by
                                            reference.
</TABLE>



                                       44
<PAGE>   45
<TABLE>
<CAPTION>
         Exhibit No.                              Name of Exhibit
         -----------                              ---------------
<S>                                         <C>
         10(17).                            1992 Incentive Stock Plan,
                                            previously filed as Exhibit 10(17).
                                            to the Company's 10-Q for June 30,
                                            1992, and incorporated herein by
                                            reference.

         10(18).                            Nonqualified Stock Option Plan for
                                            Non-Employee Directors, previously
                                            filed as Exhibit 10(18). to the
                                            Company's 10-Q for June 30, 1992,
                                            and incorporated herein by
                                            reference.

         Other Material Contracts

         10(21).                            Lease Agreement for the Company's
                                            Garden Grove, California facility
                                            dated December 1, 1990, previously
                                            filed as Exhibit 10(8). to the
                                            Company's Annual Report on Form 10-K
                                            for the fiscal year ended December
                                            31, 1991, and incorporated herein by
                                            reference.

         10(22).                            Lease Agreement for the Company's
                                            Irvine, California facility, dated
                                            November 11, 1992, previously filed
                                            as Exhibit 10(22). to the Company's
                                            Annual Report on Form 10-K for the
                                            fiscal year ended December 31, 1992,
                                            and incorporated herein by
                                            reference.

         10(23).                            Agreement of Purchase and Sale of
                                            Melja Diagnostik GmbH Shares, dated
                                            December 20, 1993, previously filed
                                            as Exhibit 10(23). to the Company's
                                            Annual Report on Form 10-K for the
                                            fiscal year ended December 31, 1993,
                                            and incorporated herein by
                                            reference.

         10(24)                             Share Purchase Agreement, dated as
                                            of August 19, 1994, as amended
                                            September 27, 1994, by and among
                                            Hycor Biomedical Inc. and Medical
                                            Specialties International, Inc.,
                                            previously filed as Exhibits 2(1).
                                            and 2(2). to the Company's Current
</TABLE>



                                       45
<PAGE>   46
<TABLE>
<CAPTION>
         Exhibit No.                              Name of Exhibit
         -----------                              ---------------
<S>                                         <C>
                                            Report on Form 8-K, dated October 3,
                                            1994, and incorporated herein by
                                            reference.

         10(25)                             Registration Rights Agreement, dated
                                            as of October 3, 1994, by and among
                                            Hycor Biomedical Inc. and Medical
                                            Specialties International, Inc.
                                            shareholders, previously filed as
                                            Exhibit 4(1). to the Company's
                                            Current Report on Form 8-K dated
                                            October 3, 1994, and incorporated
                                            herein by reference.

         10(26)                             Lease agreement for the Company's
                                            Kassel, Germany facility, dated
                                            January 13, 1994, previously filed
                                            as Exhibit 10(26). to the Company's
                                            Annual Report on 10-K for fiscal
                                            year ended December 31, 1994, and
                                            incorporated herein by reference

         10(27)                             Stock Purchase Agreement dated
                                            November 30, 1995, previously filed
                                            as Exhibit 10.01 to the Company's
                                            Current Report on Form 8-K dated
                                            December 1, 1995 and incorporated
                                            herin by reference.

         16.                                Letter from Arthur Andersen LLP
                                            regarding Changes in Registrant's
                                            Certifying Accountants, previously
                                            filed as Exhibit 16. to the
                                            Company's Current Report on Form 8-K
                                            dated September 21, 1994, and
                                            incorporated herein by reference.

         21.                                Subsidiaries of Hycor Biomedical
                                            Inc.

         23(1).                             Consent of Deloitte & Touche LLP,
                                            dated March 29, 1996.

         23(2).                             Consent of Arthur Andersen LLP,
                                            dated March 29, 1996.

         27.                                Financial Data Schedule
</TABLE>


(b)      Reports on Form 8-K

         Acquisition or disposition of assets, Meridian Bio-Medical, Inc.
         divesture, December 1, 1995.




                                       46
<PAGE>   47
                                   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.

                                      Hycor Biomedical Inc.
                                      (Registrant)

Date:  3/29/96                        By: /s/ Richard D. Hamill
      --------------------------          --------------------------------------
                                          Richard D. Hamill
                                          Chairman, 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.

<TABLE>
<S>                                   <C>
Date:  3/29/96                        By: /s/ Richard D. Hamill
      --------------------------          --------------------------------------
                                          Richard D. Hamill
                                          Chairman of the Board, President,
                                          Chief Executive Officer and Director

Date:  3/29/96                        By: /s/ Dick P. Allen
      --------------------------          --------------------------------------
                                          Dick P. Allen
                                          Director

Date:  3/29/96                        By: /s/ Samuel D. Anderson
      --------------------------          --------------------------------------
                                          Samuel D. Anderson
                                          Director

Date:  3/29/96                        By: /s/ David S. Gordon
      --------------------------          --------------------------------------
                                          David S. Gordon
                                          Director

Date:  3/29/96                        By: /s/ Reginald P. Jones
      --------------------------          --------------------------------------
                                          Reginald P. Jones
                                          Senior Vice President, Chief Financial
                                          Officer, Secretary, Treasurer,
                                          Director and Principal Financial
                                          Officer

Date:  3/29/96                        By: /s/ James R. Phelps
      --------------------------          --------------------------------------
                                          James R. Phelps
                                          Director

Date:  3/29/96                        By: /s/ David A. Thompson
      --------------------------          --------------------------------------
                                          David A. Thompson
                                          Director

Date:  3/29/96                        By: /s/ Armando Correa
      --------------------------          --------------------------------------
                                          Armando Correa
                                          Director of Finance and
                                          Principal Accounting Officer
</TABLE>


                                       47
<PAGE>   48
                                                                     Schedule II

                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
                     VALUATION AND QUALIFYING ACCOUNTS (1)
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


<TABLE>
<CAPTION>
                                               (1)
                                             Acquired
                                 Balance at   and or    Charged to  
                                 Beginning   Divested   Costs and                Balance at
                                  of Year    Allowance   Expenses   Deductions  End of Year
                                  -------    ---------   --------   ----------  -----------
<S>                              <C>         <C>        <C>         <C>         <C>      
Allowance for doubtful accounts
  receivable

1993                              287,281         --       14,500    (15,474)      317,255
                                                                                          
1994                              317,255     62,280     (145,000)    63,694       170,841
                                                                                          
1995                              170,841         --       50,512     84,749       136,604
                                  
                                  
Allowance for excess, obsolete,   
  and short-dated inventory       
  balance sheet                   
                                  
1993                              912,635         --      300,443    456,563       756,515
                                                                                          
1994                              756,515     23,993      330,806    341,227       770,087
                                                                                          
1995                              770,087    (76,121)   1,755,001    509,465     1,939,502
</TABLE>





(1)  Medical Specialties International Inc. acquired on October 3, 1994.
     Meridian Biomedical Inc. sold on December 1, 1995.






                                      S-1


                                       48
<PAGE>   49
Exhibit List

<TABLE>
<CAPTION>
Exhibit No.                     Name of Exhibit                    Page Number
-----------                     ---------------                    -----------
<S>                  <C>                                                <C>  
21.                  Subsidiaries of Hycor Biomedical Inc.              50
                                                                    
23(1).               Consent of Deloitte & Touche LLP,              
                        dated March 29, 1996.                           51
                                                                    
23(2).               Consent of Arthur Andersen LLP,                
                        dated March 29, 1996.                           52
                                                                    
27.                  Financial Data Schedule                            53
</TABLE>




                                       49