<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)
  [X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

         FOR THE FISCAL YEAR ENDED:  DECEMBER 31, 1996


  [ ]    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 92612
                -------------------------------------------------
               (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 file such 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 13, 1997, the aggregate market value of the voting stock
held by non-affiliates of the registrant (based on the closing sale price of
such stock as quoted by The Nasdaq National Market System on such date) was
approximately $18,962,000.

         The number of shares of common stock of the registrant outstanding at
March 13, 1997 was 7,076,663.

                       DOCUMENTS INCORPORATED BY REFERENCE

         (1) Portions of the registrant's definitive Proxy Statement to be filed
not later than 120 days after December 31, 1996 in connection with the Annual
Meeting of Stockholders to be held in 1997 - Part III.





                                       2
<PAGE>   3



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 and 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.

         On September 30, 1996, the Company formed Hycor Biomedical SAS ("Hycor
SAS") as a wholly owned subsidiary. Located in Paris, France, Hycor SAS will
market allergy diagnostic products in France. Business activity is expected to
commence during the second quarter of 1997.

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 address these changes in the market place, the
Company adopted a plan designed to focus on sales growth and divestitures of
certain product lines (the "Restructuring Plan"). On July 27, 1995 the Company
announced the Restructuring Plan as part of a strategic redirection in which the
Company focuses 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 of
1995. These costs arose from the divestiture and discontinuance of several
product lines, which were outside the new strategic direction (see note 12 to
the consolidated financial statements). Consistent with implementation of the
Restructuring Plan, while some product lines have been sold or discontinued, new
product development efforts have been accelerated. Additionally, 


                                       3
<PAGE>   4

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.

         As of December 31, 1996, the Restructuring Plan was essentially
complete, actual aggregate costs incurred were materially consistent with those
anticipated, and no further significant net cash outlays are expected.

         The total revenues related to the divested or discontinued product
lines accounted for approximately 14%, 31% and 36% of the Company's total
revenues in 1996, 1995 and 1994, respectively.

PRODUCTS

         The Company markets a variety of products. The KOVA(TM) Microscopic
Urinalysis System is its largest product line accounting for approximately 46%,
35% and 35% of its total sales in 1996, 1995 and 1994, 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, patented microscopic slides, and human
urine-based control materials.

         The Company's allergy diagnostic product line, which accounted for
approximately 29%, 25% and 27% of total sales in 1996, 1995 and 1994,
respectively, includes tests for general screening for the diagnosis of allergy
as well as a complete line 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, the Company, in a joint effort with Switzerland-based Tecan AG,
introduced the HY-TEC automated 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.

         Hematology controls are a group of reagents 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. These products are usable on all hematology analyzers
and have a shelf life twice as long as competitive products. The product line
also includes the 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.



                                       4
<PAGE>   5

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 three major U.S. distributors, Allegiance
Healthcare Corporation, Fisher Scientific and Polymedco Inc.. The allergy
product line is sold directly to the end user through a direct sales force.

         In foreign countries the Company's products are sold primarily through
a network of independent distributors. With the acquisition of Melja in early
1994, the Company commenced selling its allergy products directly to the German
market. With the formation of Hycor SAS in 1996, the Company will commence
direct sales in France during 1997. Export sales (all to unaffiliated customers)
accounted for $3,319,000 or 17% of product sales in 1996; $4,231,000 or 17% of
product sales in 1995 and $4,778,000 or 18% of product sales in 1994. The
primary geographical area was Europe, which, including sales by the Company and
its German subsidiary, accounted for sales of $5,660,000 in 1996, $6,909,000 in
1995 and $6,826,000 in 1994.

         The Company's two largest distributors, Allegiance Healthcare
Corporation and Fisher Scientific, accounted for 19% and 15% of net product
sales in 1996; 18% and 12% in 1995 and 18% and 14% in 1994 respectively. 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, 1996 and December 31, 1995. 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.



                                       5
<PAGE>   6




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 $2,729,000,  
$2,594,000, and $1,837,000 for 1996, 1995 and 1994, 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 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.


                                       6
<PAGE>   7




COMPETITION

         The Company competes in several segments of the diagnostic market. The
KOVA Microscopic Urinalysis System has significant competition from
approximately two national diagnostic product manufacturing and distribution
companies that market supplies that perform functions similar to the Company's
products. 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.

         Pharmacia,  Inc.  and Sanofi  Pastuer,  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 1993. 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 February 28, 1997, the Company had approximately 180 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, 1996, the Company had four separate facilities.

1) Corporate headquarters, the Company's principal administrative and marketing
facility, is located in a leased 18,000 square foot building at 18800 Von Karman
Avenue, Irvine, California. The lease has a seven and one half year term ending
on December 31, 2000. The Company has the option to renew the lease for an
additional five year period.


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<PAGE>   8



2) A two-story freestanding facility at 7272 Chapman Avenue, Garden Grove,
California. The lease has a ten-year term ending December 31, 2002. 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.

3) A free standing building located at Otto-Hahn Stra(beta)e 16, 34123 Kassel,
Germany. The lease has a ten year term ending March 31, 2005. 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) 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 36 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. The Company is currently
leasing the building to a third party. The lease has a five year term ending on
October 31, 1998. The Company intends to sell the facility when market
conditions improve.

         In management's opinion, in general, its plant and equipment are
adequately maintained, in good operating condition and adequate for the
Company's present needs. The Company regularly upgrades and modernizes its
facilities and equipment and expands its facilities as necessary to meet
customer requirements.


         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, 1996,
there were no matters submitted to a vote of security holders.




                                       8
<PAGE>   9
PART II
         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 Nasdaq National
Market System under the symbol "HYBD." The following table sets forth the range
of high and low trading prices as reported on The Nasdaq National Market System
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
-------------------------------------------------------------------------
December 31, 1995
<S>                                           <C>              <C>
    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                               5-1/4             4-3/8
    2nd Quarter                               5-3/8             4-1/4
    3rd Quarter                               4-3/4             3-3/4
    4th Quarter                               4                 2-1/2
                                              
December 31, 1997                             
    1st Quarter (Through March 13, 1997)      3                 3
</TABLE>                   

         There were 1,179 shareholders of record as of March 13, 1997. 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.


                                       9
<PAGE>   10




         ITEM 6. SELECTED FINANCIAL DATA


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

                                   1996       1995(a)    1994(b)      1993        1992
----------------------------------------------------------------------------------------

OPERATING RESULTS

<S>                              <C>         <C>         <C>         <C>         <C>    
  Net sales                      $20,084     $25,185     $25,897     $24,213     $27,384
  Net income                     $    17     $   131     $ 2,833     $ 2,275     $ 3,598
                                                                               
  Net income per                                                               
   common share                  $   .00     $   .02     $   .34     $   .26     $   .41
                                                                               
                                                                               
                                                                               
FINANCIAL POSITION                                                             
                                                                               
  Working capital                $11,458     $13,615     $13,322     $15,736     $13,554
                                                                               
  Net property and                                                             
   equipment                     $ 4,908     $ 4,727     $ 6,419     $ 6,094     $ 5,268
                                                                               
  Total assets                   $24,278     $27,575     $29,000     $27,061     $26,139
                                                                               
  Long-term debt                 $    --     $    --     $    --     $    --     $    --
  Total                                                                        
   stockholders' equity          $21,918     $24,339     $26,169     $24,316     $22,420
                                                                               
  Cash dividends                                                               
   declared per                                                                
   common share                  $    --     $    --     $    --     $    --     $    --
</TABLE>
                                                                             
(a) 1995 results include net costs of implementing the Company's Restructuring
Plan amounting to $1,734,000. See Management's Discussion and Analysis of
Financial Condition and Results of Operations and note 12 to the consolidated
financial statements.

(b) See Note 3 to the Consolidated Financial Statements regarding certain
acquisitions completed in 1994.



                                       10
<PAGE>   11



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

        This Section and this entire Report on Form 10-K contain forward-looking
statements and include assumptions concerning the Company's operations, future
results and prospects. These forward-looking statements are based on current
expectations and are subject to a number of risks, uncertainties and other
factors. In connection with the Private Securities Litigation Reform Act of
1995, the Company provides the following cautionary statements identifying
important factors which, among other things, could cause the actual results and
events to differ materially from those set forth in or implied by the
forward-looking statements and related assumptions contained in this Section and
in this entire Report.

        Such factors include, but are not limited to: product demand and market
acceptance risks; the effect of economic conditions; the impact of competitive
products and pricing; product development; commercialization and technological
difficulties; capacity and supply constraints or difficulties; availability of
capital resources; general business and economic conditions; and changes in
government laws and regulations, including healthcare reimbursement guidelines
and taxes.

RESTRUCTURING PLAN

        On July 27, 1995, the Company announced plans for a major restructuring
designed to focus operations on clinical immunology segments which management
believes to have the greatest potential for future growth. The Restructuring
Plan, which was finalized in the fourth quarter of 1995, included 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 Restructuring Plan ($3,220,000) included
$2,371,000 of disposal costs and write-offs of inventories, the value of which
had 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
Restructuring 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 for the year ended
December 31, 1995. As of December 31, 1996, the Restructuring Plan was
essentially complete, actual aggregate costs incurred were materially consistent
with those anticipated, and no further significant net cash outlays are
expected.

                                       11
<PAGE>   12
         As part of the Restructuring Plan, the Company divested and
discontinued several product lines. The total revenues related to the divested
or discontinued product lines accounted for approximately 14%, 31% and 36% of
the Company's total revenues in 1996, 1995 and 1994, respectively.

         Although the Company believes that the sales growth resulting from the
focused efforts in the clinical immunology markets will eventually offset the
decrease in revenues resulting from the restructuring, the increase in total
revenues resulting from these efforts is not expected to begin until after 1997.
These expected increases in revenues are dependent upon continued market
penetration with the HY-TEC product line, the timing of new product
releases and the impact of competitive products and pricing in addition to the
other factors previously mentioned which could affect actual results.

         In addition to the expected decline in total revenues in 1996 as
compared to 1995, the increased investment in marketing and research and
development contemplated by the Restructuring Plan has caused increased expense
levels in 1996 (37% of sales) over 1995 (27% of sales).

         During 1997, the Company plans to increase its efforts to pursue the
expansion into the clinical immunology markets. This effort will include
aggressive pricing, both to its distributors and direct customers, as well as
increased spending in sales and marketing. Research and development costs are
expected to remain at current levels.

RESULTS OF OPERATIONS

1996 COMPARED TO 1995  1996 sales decreased 20% compared to 1995. Revenue
declines were due to loss of sales resulting from the Restructuring Plan and the
related discontinued product lines. 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.

         Gross profit as a percentage of sales improved from 52.6% in 1995 to
54.5% in 1996 due primarily to the $473,000 cost from the Restructuring Plan
included in cost of goods sold in 1995.

         Selling, general and administration expenses decreased $1,183,000 due
to the effects of implementing the Plan in 1995 partially offset by increased
marketing expenses (17% of sales in 1995 versus 23% in 1996) also as
contemplated by the Restructuring Plan.

         Research and development costs increased $134,000 (10% of sales in 1995
versus 14% in 1996) primarily due to the direct cost incurred as a result of the
Restructuring Plan which included expanding R&D programs.

                                       12
<PAGE>   13
         In 1996, interest income increased $81,000 over prior year due to
higher average monthly balances in cash and investments during the year as
compared to 1995. Funds generated in December of 1995 from the disposition of
certain assets as part of the Restructuring Plan were invested and increased
average balances for most of 1996.

         The gain on foreign currency transaction of $27,000 for the year ended
December 31, 1996, a decrease of $161,000 over prior year, relates principally
to reductions in the underlying transactions and balances.

         The provision (benefit) for income taxes decreased substantially from
51% to (57)% of income due to utilization of tax credits (see note 7 to the
consolidated financial statements).


1995 COMPARED TO 1994  1995 sales decreased 3% compared to 1994. Revenues were
impacted by the 1995 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.

         Gross profit as a percentage of sales declined from 55.8% in 1994 to
52.6% in 1995 due primarily to the allocation of a portion of the restructuring
charge to cost of sales ($473,000), 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 by $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 average monthly cash and investment
balances decreased over prior year.

         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 had 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.


                                       13
<PAGE>   14



FINANCIAL CONDITION

        In April 1993, January 1994, September 1995 and September 1996 the Board
of Directors authorized the repurchase of up to an aggregate of 2,440,000 shares
of the Company's common stock. As of December 31, 1996, 1,846,000 shares had
been purchased at a cost of $7,846,000. The Company decreased its working
capital $2,157,000 as of December 31, 1996 compared to December 31, 1995, due
primarily to cash used for the stock repurchase program of $2,385,000 partially
offset by increases of working capital from normal 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, 1996, investments decreased $1,633,000 compared to
December 31, 1995, primarily because of the stock repurchase program. The
decrease in receivables of $651,000 was due to the reduction in sales resulting
from the Restructuring Plan. These fluctuations do not have a significant
seasonal component.

        Inventories,  net of  allowances,  decreased  $26,000,  or 1%, as of 
December 31, 1996 compared to December 31, 1995 due to normal business
fluctuations.

        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.

        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 acquisitions are
completed, the Company's operating results and financial condition could change
significantly in future periods.

         At December 31, 1996, the Company did not have any outstanding
indebtedness. The Company expects to be able to fund future operations from
current working capital and profits generated from operations at currently
projected levels.


                                       14
<PAGE>   15
         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' Report                                     16
     Consolidated Balance Sheets as of                                17-18
         December 31, 1996 and 1995
     Consolidated Statements of Income                                19
         for the years ended December 31,
         1996, 1995 and 1994
     Consolidated Statements of Stockholders'                         20
         Equity for the years ended December 31,
         1996, 1995 and 1994
     Consolidated Statements of Cash                                  21-22
         Flows for the years ended December 31,
         1996, 1995 and 1994
     Notes to Consolidated Financial Statements                       23-32
</TABLE>



                                       15
<PAGE>   16




                          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, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1996. Our audit also
included the financial statement schedule listed in the index at Item 14 (a)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 Hycor Biomedical Inc. and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, 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.




/S/

DELOITTE & TOUCHE LLP

Costa Mesa, California
February 14, 1997


                                       16
<PAGE>   17
                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>

              ASSETS                                                1996            1995
              ------                                             ---------       ---------
<S>                                                            <C>             <C>       
CURRENT ASSETS:
  Cash and cash equivalents                                    $   631,404     $ 1,033,459
  Investments  (Note 4)                                          4,732,585       6,365,995
  Accounts receivable, net of allowance for
    doubtful accounts of $101,191 and
    $136,604 in 1996 and 1995, respectively                      3,028,689       3,679,419
  Income tax receivable (Note 7)                                   409,242              --
  Inventories (Note 5)                                           3,922,543       3,948,564
  Prepaid expenses and other current assets                        602,533         685,399
  Deferred income tax benefit (Note  7)                            491,000       1,138,000
                                                               -----------     -----------
      Total current assets                                      13,817,996      16,850,836
                                                               -----------     -----------
PROPERTY AND EQUIPMENT, at cost: 
  Land and buildings                                             1,432,639       1,428,258
  Leasehold improvements                                         1,664,580       1,619,272
  Machinery and equipment                                        5,937,881       5,115,424
  Furniture, fixtures and office equipment                       2,402,512       2,306,821
                                                               -----------     -----------
                                                                11,437,612      10,469,775

  Accumulated depreciation and amortization                     (6,529,718)     (5,742,459)
                                                               -----------     -----------
  Property and equipment, net                                    4,907,894       4,727,316
                                                               -----------     -----------

GOODWILL AND OTHER INTANGIBLE ASSETS, net of
  accumulated amortization of $870,110 and
  $1,015,082 in 1996 and 1995, respectively (Notes 3 and 7)      4,368,658       4,773,904
DEFERRED INCOME TAX BENEFIT (Note 7)                               854,000         877,000
OTHER ASSETS                                                       329,373         346,316
                                                               -----------     -----------
      Total assets                                             $24,277,921     $27,575,372
                                                               ===========     ===========
</TABLE>



                 See notes to consolidated financial statements

                                       17


<PAGE>   18


                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
    LIABILITIES AND STOCKHOLDERS' EQUITY                                       1996                  1995
    ------------------------------------                                    ---------             ---------
<S>                                                                        <C>                   <C>         
CURRENT LIABILITIES:
  Accounts payable                                                         $  1,053,400          $    982,646
  Accrued liabilities                                                           726,474             1,252,718
  Accrued payroll expenses                                                      580,089             1,000,542
                                                                           ------------          ------------
      Total current liabilities                                               2,359,963             3,235,906
                                                                           ------------          ------------
                                                                                                 
                                                                                                 
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: 7,218,063                                                            
    shares in 1996 and 7,730,291 shares in 1995                                  72,181                77,303
  Paid-in capital                                                            12,605,636            14,806,686
  Retained earnings                                                           9,232,541             9,215,989
  Accumulated foreign currency translation adjustments                           31,275               254,445
  Unrealized losses on investments, net of tax benefit                          (23,675)              (14,957)
                                                                           ------------          ------------
      Total stockholders' equity                                             21,917,958            24,339,466
                                                                           ------------          ------------
      Total liabilities and stockholders' equity                           $ 24,277,921          $ 27,575,372
                                                                           ============          ============
                                                                                        
</TABLE>









                 See notes to consolidated financial statements

                                       18

<PAGE>   19



                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>

                                                         1996            1995            1994
                                                     ------------    ------------    ------------

<S>                                                  <C>             <C>             <C>         
NET SALES (Note 10)                                  $ 20,083,610    $ 25,184,742    $ 25,896,591
COST OF SALES (Note 12)                                 9,145,300      11,947,276      11,450,936
                                                     ------------    ------------    ------------
      Gross profit                                     10,938,310      13,237,466      14,445,655
                                                     ------------    ------------    ------------
OPERATING EXPENSES:
  Selling, general and
    administrative (Note 12)                            8,628,939       9,812,090       8,558,752
  Research and development                              2,728,796       2,594,468       1,836,830
  Restructure charge (Note 12)                               --         1,069,301            --
                                                     ------------    ------------    ------------
                                                       11,357,735      13,475,859      10,395,582
                                                     ------------    ------------    ------------
OPERATING INCOME (LOSS)                                  (419,425)       (238,393)      4,050,073

INTEREST INCOME, net                                      403,314         321,765         374,125
GAIN ON FOREIGN CURRENCY TRANSACTIONS                      26,663         187,878         208,898
                                                     ------------    ------------    ------------
INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES         10,552         271,250       4,633,096


PROVISION (BENEFIT) FOR INCOME TAXES (Note 7)              (6,000)        140,000       1,800,000
                                                     ------------    ------------    ------------
NET INCOME                                           $     16,552    $    131,250    $  2,833,096
                                                     ============    ============    ============


NET INCOME PER SHARE (Note 2)                        $        .00    $        .02    $        .34
                                                     ============    ============    ============
</TABLE>


                 See notes to consolidated financial statements

                                       19
<PAGE>   20
                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
                                                                          Common Stock
                                                                   ---------------------------
                                                                     Number of          Par          Paid-in        Retained
                                                                      Shares           Value         Capital        Earnings
                                                                   -------------     ---------    ------------    -----------
<S>                                                                 <C>               <C>         <C>              <C>       
BALANCE AT JANUARY 1, 1994                                          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

ISSUANCE OF COMMON STOCK, PRINCIPALLY UNDER EMPLOYEE
 BENEFIT PLANS, including related income tax benefits (Note 8)         76,672             767         178,452              --

COMMON STOCK PURCHASED                                               (588,900)         (5,889)     (2,379,502)             --

NET INCOME                                                                 --              --              --          16,552

FOREIGN CURRENCY TRANSLATION ADJUSTMENT (Note 2)                           --              --              --              --

NET UNREALIZED INVESTMENT LOSSES, net of tax (Note 2)                      --              --              --              --
                                                                    ---------         -------     -----------      ----------
BALANCE AT DECEMBER 31, 1996                                        7,218,063         $72,181     $12,605,636      $9,232,541
                                                                    =========         =======     ===========      ==========

</TABLE>



<TABLE>
<CAPTION>

                                                                 Accumulated
                                                              Foreign Currency    Unrealized
                                                                 Translation      Investment
                                                                 Adjustments     Gains (Losses)        Total
                                                              ----------------   -------------   -------------
<S>                                                                  <C>             <C>          <C>        
BALANCE AT JANUARY 1, 1994                                          $    --         $    --       $24,316,234

ISSUANCE OF COMMON STOCK, PRINCIPALLY UNDER EMPLOYEE
 BENEFIT PLANS, including related income tax benefits (Note 8)           --              --           314,359

ISSUANCE OF COMMON STOCK IN CONJUNCTION WITH
ACQUISITION OF MSI (Note 3)                                              --              --           732,000

COMMON STOCK PURCHASED                                                   --              --        (2,057,225)

NET INCOME                                                               --              --         2,833,096

FOREIGN CURRENCY TRANSLATION ADJUSTMENT (Note 2)                      144,138            --           144,138

NET UNREALIZED INVESTMENT LOSSES, net of tax (Note 2)                    --          (113,284)       (113,284)
                                                                    ---------       ---------     -----------
BALANCE AT DECEMBER 31, 1994                                          144,138        (113,284)     26,169,318

ISSUANCE OF COMMON STOCK, PRINCIPALLY UNDER EMPLOYEE
 BENEFIT PLANS, including related income tax benefits (Note 8)           --              --           294,758

COMMON STOCK PURCHASED                                                   --              --        (2,514,104)

TAX BENEFITS FROM EXERCISE OF COMMON STOCK OPTIONS                       --              --            49,610

NET INCOME                                                               --              --           131,250

FOREIGN CURRENCY TRANSLATION ADJUSTMENT (Note 2)                      110,307            --           110,307

NET UNREALIZED INVESTMENT GAINS, net of tax (Note 2)                     --            98,327          98,327
                                                                    ---------       ---------     -----------
BALANCE AT DECEMBER 31, 1995                                          254,445         (14,957)     24,339,466

ISSUANCE OF COMMON STOCK, PRINCIPALLY UNDER EMPLOYEE
 BENEFIT PLANS, including related income tax benefits (Note 8)           --              --           179,219

COMMON STOCK PURCHASED                                                   --              --        (2,385,391)

NET INCOME                                                               --              --            16,552

FOREIGN CURRENCY TRANSLATION ADJUSTMENT (Note 2)                     (223,170)           --          (223,170)

NET UNREALIZED INVESTMENT LOSSES, net of tax (Note 2)                    --            (8,718)         (8,718)
                                                                    ---------       ---------     -----------
BALANCE AT DECEMBER 31, 1996                                        $  31,275       $ (23,675)    $21,917,958
                                                                    =========       =========     ===========
</TABLE>
                 See notes to consolidated financial statements

                                       20


<PAGE>   21





                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>

                                                                             1996             1995            1994
                                                                          ---------        ---------        ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                      <C>             <C>               <C>       
  Net income                                                             $   16,552      $   131,250       $2,833,096
  Adjustments to reconcile net income to net cash                                                       
      provided by operating activities:                                                                 
    Depreciation and amortization                                         1,765,099        2,168,151        1,745,123
    Deferred income tax provision                                           676,000         (569,000)         419,000
    Loss on disposition of property, equipment, and other intangibles          --            522,092             --
    Gain on sale of subsidiary                                                 --         (1,286,427)            --
    Gain on foreign currency transactions                                   (26,663)        (187,878)        (208,898)
    Change in assets and liabilities, net of effects of acquisitions,                                   
       dispositions and foreign currency adjustments                                                    
      Accounts receivable                                                   627,449          348,390          893,080
      Inventories                                                            (4,128)       1,634,932       (1,491,133)
      Prepaid expenses and other current assets                              82,697            7,763           47,515
      Other assets                                                           11,050              376           86,156
      Accounts payable                                                       89,246          (27,676)        (357,903)
      Accrued liabilities                                                  (865,476)         666,740         (265,702)
      Accrued payroll expenses                                             (418,744)         198,279          152,495
                                                                        -----------      -----------      -----------
          Total adjustments                                               1,936,530        3,475,742        1,019,733
                                                                        -----------      -----------      -----------
    Net cash provided by operating activities                             1,953,082        3,606,992        3,852,829
                                                                        -----------      -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                   
  Purchases of investments                                                     --         (4,119,291)      (1,893,632)
  Proceeds from sales of investments                                      1,543,046          313,279        6,105,132
  Purchases of property, plant and equipment                             (1,623,192)      (1,496,707)      (1,420,115)
  Purchases of intangible assets                                            (72,010)         (71,550)         (23,704)
  Proceeds from sale of property and equipment                                 --               --             40,544
  Proceeds from collection of notes receivable                                5,893           27,754           24,215
  Business acquisitions, net of cash acquired                                  --               --         (4,272,405)
  Proceeds from sale of business                                               --          3,325,275             --
                                                                        -----------      -----------      -----------
    Net cash used in investing activities                                  (146,263)      (2,021,240)      (1,439,965)
                                                                        -----------      -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                   
  Proceeds from issuance of common stock                                    176,219          344,368          314,359
  Purchases of Hycor common stock                                        (2,385,391)      (2,514,104)      (2,057,225)
                                                                        -----------      -----------      -----------
    Net cash used in financing  activities                               (2,209,172)      (2,169,736)      (1,742,866)
                                                                        -----------      -----------      -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                      (2,702)         212,906           50,966
                                                                        -----------      -----------      -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           (405,055)        (371,078)         720,964
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                              1,033,459        1,404,537          683,573
                                                                        -----------      -----------      -----------
CASH AND CASH EQUIVALENTS, END OF YEAR                                   $  631,404      $ 1,033,459       $1,404,537
                                                                        ===========      ===========      ===========
                                                                                                      
</TABLE>

                 See notes to consolidated financial statements
                                       21


<PAGE>   22


                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>

                                                                                   1996           1995          1994
                                                                                ---------       ---------     ---------
<S>                                                                            <C>            <C>            <C>        
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                          
  Cash paid during the year - income taxes                                     $   330,650    $ 1,811,199    $ 1,306,547
                                                                                                           
SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS:                                                             
During 1994, the Company acquired certain businesses in                                                    
   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                                                             $    57,000    $   287,385    $        --
                                                                               ===========    ===========    ===========
                                                                                                           
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
                                       22

<PAGE>   23

HYCOR BIOMEDICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994

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 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.

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


INVESTMENTS The Company accounts for investments pursuant to Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." At December 31, 1996 and 1995, 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.


                                       23
<PAGE>   24

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
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.

STOCK BASED COMPENSATION The Company accounts for stock based awards to
employees using the intrinsic value method in accordance with APB No. 25,
"Accounting for stock issued to employees." 

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>
                                                 1996                    1995                    1994
-----------------------------------------------------------------------------------------------------
Weighted average number
<S>                                         <C>                     <C>                     <C>      
 of shares outstanding                      7,598,969               8,208,218               8,233,867
Common stock equivalents                      124,386                  49,805                 218,939
-----------------------------------------------------------------------------------------------------

                                            7,723,355               8,258,023               8,452,806
=====================================================================================================
</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 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.


                                       24
<PAGE>   25

RECLASSIFICATIONS Certain items in the 1995 and 1994 consolidated financial
statements have been reclassified to conform with the 1996 presentation.


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.

On October 3, 1994, the Company completed the acquisition of Medical Specialties
International, Inc. (MSI) of South Plainfield, New Jersey, for a combination of
cash and 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, 1996, 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 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 are as follows:

<TABLE>
<CAPTION>
                                                  1994

<S>                                          <C>        
Net sales                                    $26,763,000
Net income                                     2,072,000
Net income per common share                          .24
</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 of future results of operations.


                                       25
<PAGE>   26



NOTE 4: INVESTMENTS

Investments consist principally of corporate debt securities, categorized as
available for sale, with scheduled maturities at December 31, 1996 of $4,732,585
and $4,771,397, fair value and cost respectively, due after one year through
five years.

Gross unrealized holding gains and losses at December 31, 1996 were $3,406 and
$42,218, respectively. For the purpose of determining gross realized gains and
losses, the cost of securities sold is based upon specific identification.
During 1996, the Company sold investments with an aggregate book value of
$1,558,911 for total cash proceeds of $1,543,046, resulting in a net realized
loss of $15,865.


NOTE 5: INVENTORIES

Inventories at December 31, 1996 and 1995 consisted of:
<TABLE>
<CAPTION>

                                                          1996                        1995


<S>                                                  <C>                        <C>        
Raw materials                                        $ 1,144,049                $ 1,325,973
Work in process                                        1,625,809                  1,787,292
Finished goods                                         2,518,496                  2,774,801
Allowance for discontinued
product lines and excess, obsolete
  and short-dated inventories                         (1,365,811)                (1,939,502)
                                                     -----------                -----------
                                                     $ 3,922,543                $ 3,948,564   

</TABLE>

NOTE 6:  STOCKHOLDERS' EQUITY

At December 31, 1996 the Company had warrants outstanding to purchase 496,232
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 $11.21 per
share and expiring in August 1998.



                                       26
<PAGE>   27



NOTE 7:  INCOME TAXES

The provision for income taxes consists of the following:
<TABLE>
<CAPTION>

                                               1996                  1995                   1994
-----------------------------------------------------------------------------------------------------
Current:
<S>                                       <C>                  <C>                      <C>       
  Federal                                 $(351,000)           $ 307,000                $  817,000
    State                                     4,000              181,000                   341,000
  Foreign                                  (335,000)             221,000                   223,000
-----------------------------------------------------------------------------------------------------
  Total                                    (682,000)             709,000                 1,381,000

Deferred:
  Federal                                   648,000             (395,000)                 396,000
  State                                     (44,000)            (174,000)                  23,000
  Foreign                                    72,000                   --                       --
-----------------------------------------------------------------------------------------------------
  Total                                     676,000             (569,000)                 419,000
-----------------------------------------------------------------------------------------------------
                                          $  (6,000)            $140,000               $1,800,000 
=====================================================================================================
</TABLE>



A reconciliation of the Company's effective tax rate compared to the federal
statutory tax rate is as follows:
<TABLE>
<CAPTION>
                                             1996                  1995                    1994
-----------------------------------------------------------------------------------------------------
<S>                                       <C>                    <C>                 <C>       
Provision computed at federal
 statutory rate                           $  4,000               $ 93,000            $1,574,000
Increase (reduction)resulting from:
 State taxes, net                          (26,000)                 5,000               237,000
 Foreign tax rate differential              (2,000)                54,000                82,000
 Research and development credits          (75,000)               (58,000)             (122,000)
 Foreign sales corporation                 (35,000)               (26,000)             (50,000)
 Amort.of goodwill and trademarks           46,000                 57,000                27,000
 Meals and entertainment                    15,000                 15,000                17,000
 Change in valuation allowance              66,000                      -                     -
  Other                                      1,000                     -                 35,000

                                          $ (6,000)           $ 140,000              $1,800,000
=====================================================================================================
</TABLE>

                                       27
<PAGE>   28


The components of the Company's deferred income tax benefit as of December 31,
1996 and 1995 are as follows:
<TABLE>
<CAPTION>
                                                 1996             1995
--------------------------------------------------------------------------------
<S>                                       <C>              <C>         
Allowance for doubtful accounts           $    39,000      $    53,000
Inventory reserves                            363,000          815,000
Depreciation                                 (223,000)        (157,000)
Currently non-deductible accruals              75,000          120,000
Research and Development credits              348,000               --
Net operating loss carryforwards            1,961,000        7,592,000
Deferred state taxes                         (110,000)         (28,000)
Restructuring reserve                         246,000          484,000
Capital loss carryforwards                      7,000           29,000
Unrealized foreign exchange gain              (65,000)         (57,000)
Bond market valuation                           9,000          (54,000)
--------------------------------------------------------------------------------
         Subtotal                           2,650,000        8,797,000
                                                          
Valuation allowance                        (1,305,000)      (6,782,000)
--------------------------------------------------------------------------------
                                                          
Total                                     $ 1,345,000      $ 2,015,000
================================================================================
</TABLE>

The financial statement benefit from the utilization of acquired net operating
losses is being accounted for as a reduction of goodwill in the year utilized
until the corresponding goodwill is reduced to zero, at which point any
additional benefit will be accounted for as a reduction of income tax expense.
In 1995, the Company utilized approximately $2,079,000 of these net operating
losses, resulting in a reduction of goodwill of $560,000. In 1996, goodwill was
reduced by approximately $57,000 as a result of utilization of net operating
losses. During 1996, it was determined that due to statutory limitations on the
ability to utilize acquired net operating losses, approximately $11.6 million of
federal and state carryforwards would expire in years after 2001. Accordingly,
deferred taxes and the corresponding valuation allowance were reduced by
approximately $5 million. Of the remaining $6 million of federal and state net
operating loss carryforwards, approximately $1.4 Million when realized will
reduce goodwill, and the remainder when realized will reduce income tax expense.



                                       28
<PAGE>   29






NOTE 8:  EMPLOYEE BENEFIT PLANS

STOCK OPTION PLANS At December 31, 1996, the Company had reserved 1,643,837
shares of common stock for issuance to employees and directors under five stock
option plans. Options are generally granted at fair market value and become
exercisable over periods of up to ten years. These options generally expire 10
years from the date of grant.



Option activity under the plans is as follows:
<TABLE>
<CAPTION>
                                                                      Weighted
                                                  Number of Shares     Average 
                                                                      Exercise
                                                                        Price
------------------------------------------------------------------------------
<S>                                                  <C>             <C>     
Outstanding, January 1, 1994                         1,254,737          $3.20
Granted                                                111,500           4.67
Exercised                                              254,500           0.64
Canceled                                                76,364           3.08
                                                     ---------          
Outstanding, December 31, 1994 (720,373              1,035,373           3.84
  exercisable at a weighted average price                         
  of $3.70)                                                       
Granted (Weighted average fair value                   218,500           3.36
  of $1.88)                                                       
Exercised                                               55,557           1.42
Canceled                                                99,500           4.97
                                                     ---------          
Outstanding, December 31, 1995 (729,317              1,098,816           3.77
  exercisable at a weighted average price                         
  of $4.00)                                                       
Granted (weighted average fair value                   635,500           4.63
  of $1.88)                                                       
Exercised                                               49,000           1.56
Canceled                                               211,500           2.69
                                                     ---------          
Outstanding, December 31, 1996                       1,473,816           4.37
                                                     =========
</TABLE>
                                                              

Additional information regarding options outstanding as of December 31, 1996 is
as follows:


<TABLE>
<CAPTION>

                                             Options Outstanding                            Options Exercisable
                                             -------------------                            -------------------
                                               Weighted Avg.
                                                 Remaining         Weighted Avg.                            Weighted Avg.
 Range of Exercise    Number Outstanding     Contractual Life      Exercise Price    Number Exercisable    Exercise Price
      Prices                                       (yrs)
-------------------------------------------------------------------------------------------------------------------------

<S>                       <C>                        <C>             <C>                 <C>                  <C>  
$1.13 -2.47               200,549                    1.3             $1.69               200,549              $1.69
 3.41 -4.50               259,434                    7.1              4.23               174,725               4.18
 4.63 -4.89               853,833                    8.2              4.68               193,333               4.82
 5.75 -6.63               160,000                    4.8              6.29               160,000               6.29

</TABLE>


At December 31, 1996, 170,000 shares were available for grant.



                                       29
<PAGE>   30


ADDITIONAL STOCK PLAN INFORMATION As discussed in Note 2, the Company continues
to account for its stock-based awards using the intrinsic value method in
accordance with Accounting Principles Board No. 25, "Accounting for stock issued
to employees" and its related interpretations. Accordingly, no compensation
expense has been recognized in the financial statements for employee stock
arrangements.

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," (SFAS 123) requires the disclosure of pro forma net income and
net income per share had the Company adopted the fair value method as of the
beginning of fiscal 1995. Under SFAS 123, the fair value of stock-based awards
to employees is calculated through the use of option pricing models, even though
such models were developed to estimate the fair value of freely tradable, fully
transferable options without vesting restrictions, which significantly differ
from the Company's stock option awards. These models also require subjective
assumptions, including future stock price volatility and expected time to
exercise, which greatly affect the calculated values. The Company's calculations
were made using the Black-Scholes option pricing model with the following
weighted average assumptions: expected life, 72 months following vesting; stock
volatility, 28% in 1996 and 30% in 1995; risk free interest rates, 6.1% in 1996
and 6.5% in 1995; and no dividends during the expected term. The Company's
calculations are based on a single option valuation approach and forfeitures are
recognized as they occur. If the computed fair values of the 1995 and 1996
awards had been amortized to expense over the vesting period of the awards, pro
forma net income (loss) would have been $86,000 ($0.01 per share) in 1995 and
$(157,000) ($(0.02) per share) in 1996. However, the impact of outstanding stock
options granted prior to 1995 has been excluded from the pro forma calculation;
accordingly, the 1995 and 1996 pro forma adjustments are not indicative of
future period pro forma adjustments, when the calculation will apply to all
applicable stock options.


STOCK PURCHASE PLAN The Company has reserved 237,764 shares of its common stock
for issuance to employees under an employee stock purchase plan. The plan allows
eligible employees to have salary withholdings to purchase shares of common
stock at a price equal to 85% of the lower of the market value of the stock at
the beginning or end of each six-month offer period, subject to an annual
limitation. Stock issued under the plan was 22,724, 20,894 and 34,785 shares in
1996, 1995 and 1994 at weighted average prices of $3.57, $4.42 and $2.72,
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 4,948, 15,723 and 11,778
shares of its common stock under this plan in 1996, 1995 and 1994, respectively.
Compensation expense related to these plans was $188,525, $249,324 and $156,701
in 1996, 1995 and 1994, respectively.



                                       30
<PAGE>   31

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, 1996, 1995 and 1994 was approximately
$895,000, $1,069,000 and $723,000, respectively. Future annual minimum lease
payments under the noncancelable operating leases as of December 31, 1996 are:
<TABLE>
<CAPTION>
                                        Year                         Amount
--------------------------------------------------------------------------------
<S>                                     <C>                        <C>       
                                        1997                       $  986,000
                                        1998                          975,000
                                        1999                          942,000
                                        2000                          960,000
                                        2001                          602,000
                                       Thereafter                     883,000
--------------------------------------------------------------------------------
                                                                   $5,348,000
================================================================================
</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 19% and 15% of net product
sales in 1996; 18% and 12% in 1995 and 18% and 14% in 1994 respectively. 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 $3,319,000 or
17% of product sales in 1996; $4,231,000 or 17% in 1995; and $4,778,000 or 18%
in 1994. The primary geographical area was Europe, which, including sales by the
Company and its German subsidiary, accounted for sales of $5,660,000 in 1996,
$6,909,000 in 1995 and $6,826,000 in 1994.


NOTE 11:  RESULTS BY QUARTER (UNAUDITED)

The unaudited results by quarter for the years ended December 31, 1996 and 1995
are shown below.
<TABLE>
<CAPTION>

                                           First                  Second                  Third                Fourth
1996                                       Quarter                Quarter                 Quarter              Quarter
-----------------------------------------------------------------------------------------------------------------------------

<S>                                   <C>                     <C>                    <C>                    <C>       
Revenues                              $5,306,880              $5,171,387             $4,736,927             $4,868,416
Gross profit                           2,842,525               3,024,007              2,482,620              2,589,158
Net income(loss)                          68,088                  78,340               (131,056)                 1,180
Net income(loss)
 per share                            $     0.01              $     0.01             $      .02)            $     0.00

</TABLE>
<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>



                                       31
<PAGE>   32

NOTE 12: 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 restructuring charges ($1,069,000) in the accompanying
consolidated statements of income.

As of December 31, 1996, the restructuring plan is essentially complete, actual
aggregate costs incurred were materially consistent with those anticipated, and
no further significant net cash outlays are expected.


                                       32
<PAGE>   33




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 "Section 16(a), Beneficial
Ownership Reporting Compliance" of the Company's Proxy Statement for the 1997
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 1997 Annual
Meeting of Stockholders and is incorporated herein by reference; provided,
however, that the Compensation Committee Report on Executive Compensation and
the Performance 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 1997 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

(A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT.

        1.         FINANCIAL STATEMENT SCHEDULES

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

                  Schedule                                             Page
                   Number    Description                              Number
                   ------    -----------                              ------

                    II         Valuation and Qualifying                 S-1
                                Accounts

                   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.


                                       33
<PAGE>   34


<TABLE>
2.       EXHIBITS

<S>               <C>                   <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.


                  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.
</TABLE>



                                       34
<PAGE>   35


<TABLE>


<S>               <C>                   <C>                                   
                  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(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.
</TABLE>


                                       35
<PAGE>   36




<TABLE>
<S>               <C>                  <C>                               
                  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 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, by and between ALK
                                        Laboratories, Inc. and Hycor Biomedical
                                        Inc., previously filed as Exhibit 10.01
                                        to the Company's Current Report on Form
                                        8-K dated December 1, 1995 and
                                        incorporated herein by reference.


                  21.                   Subsidiaries of Hycor Biomedical Inc.

                  23.                   Consent of Deloitte & Touche LLP, dated 
                                        March 27, 1997.


                  27.                   Financial Data Schedule



(B)      REPORTS ON FORM 8-K

         None

</TABLE>



                                       36
<PAGE>   37





                                   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.
                                        
<TABLE>
<S>                             <C>                                           
                                Hycor Biomedical Inc.
                                (Registrant)
                                
Date:  3/25/97                  By: /s/ Richard D. Hamill
       -------                  ------------------------------------------------
                                Richard D. Hamill
                                Chairman, President and
                                Chief Executive Officer
</TABLE>
                               
         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:  3/25/97                  By: /s/Richard D. Hamill
       -------                  ------------------------------------------------
                                Richard D. Hamill
                                Chairman of the Board, President,
                                Chief Executive Officer and Director


Date:  3/25/97                  By: /s/Samuel D. Anderson
       ------                   ------------------------------------------------
                                Samuel D. Anderson
                                Director
 
Date:  3/25/97                  By: /s/David S. Gordon
       -------                 ------------------------------------------------
                                David S. Gordon
                                Director
                                                                        
Date: 3/25/97                   By:/s/Reginald P. Jones
      -------                  ------------------------------------------------
                                Reginald P. Jones
                                Senior Vice President, Chief
                                Financial Officer, Secretary,     
                                Treasurer,   Director   and
                                Principal Financial Officer

Date:  3/25/97                  By: /s/James R. Phelps
       -------                  ------------------------------------------------
                                James R. Phelps
                                Director

Date:  3/25/97                  By: /s/Richard E. Schmidt
       -------                  ------------------------------------------------
                                Richard E. Schmidt
                                Director

Date:  3/25/97                  By: /s/David A. Thompson
       -------                  ------------------------------------------------
                                David A. Thompson
                                Director

Date:  3/25/97                  By: /s/Armando Correa
       -------                  ------------------------------------------------
                                Armando Correa
                                Director, Finance and
                                Principal Accounting Officer
</TABLE>



                                       37
<PAGE>   38




                                                                     Schedule II
                     HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
                      VALUATION AND QUALIFYING ACCOUNTS (1)
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>

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

<S>                                          <C>                   <C>           <C>                <C>            <C>        
1994                                         $   317,255           $ 62,280      $  (145,000)       $  63,694      $   170,841

1995                                             170,841                ---           50,512           84,749          136,604

1996                                             136,604                ---          (20,815)          14,598          101,191


Allowance for excess, obsolete,
  and short-dated inventory
  balance sheet

1994                                         $   756,515           $ 23,993      $   330,806         $341,227      $   770,087
                                             
1995                                             770,087            (76,121)       1,755,001          509,465        1,939,502
                                             
1996                                           1,939,502                ---          400,774          974,465        1,365,811
                                             
                                             
</TABLE>
                                             
                                          
(1)  Medical Specialties International Inc. acquired on October 3, 1994.
     Meridian Biomedical Inc. sold on December 1, 1995.


                                      S-1

                                       38











<PAGE>   39






<TABLE>
<CAPTION>
Exhibit List                                                                  Page
Exhibit No.                         Name of Exhibit                           Number
-----------                         ---------------                           ------

<S>                         <C>                                                <C>
21.                         Subsidiaries of Hycor Biomedical Inc.               40

23.                         Consent of Deloitte & Touche LLP,
                               dated March 27, 1997.                            41

27.                         Financial Data Schedule                             42
</TABLE>












                                       39