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

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

FOR THE YEAR ENDED DECEMBER 31, 1996       COMMISSION FILE NUMBER 1-9800
                                     OR
[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934

                            INCSTAR CORPORATION
          (Exact name of registrant as specified in its charter)

   MINNESOTA                                                 41-1254731
 (State of Incorporation)          (I.R.S. Employer Identification No.)

 1990 Industrial Boulevard
 Stillwater, Minnesota                                            55082
 (Address of principal executive offices)                    (Zip Code)
                               (612) 439-9710
            (Registrant's telephone number, including area code)


          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
                     SECURITIES EXCHANGE ACT OF 1934:

                                   None.


          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
                     SECURITIES EXCHANGE ACT OF 1934:
Common Stock, $.01 Par Value
      Per Share


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

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

 The aggregate market value of voting stock held by non-affiliates of the
Registrant as of March 27, 1996 was approximately $47,736,000.

 The number of shares of the Registrant's Common Stock outstanding on March
27, 1997 was 16,505,457.
<PAGE>

                                  PART I.
ITEM 1. BUSINESS

GENERAL

      INCSTAR   Corporation  and  its  subsidiaries  (the   "Company"   and
"INCSTAR") develop, manufacture, and market test kits and related  products
used  by  major hospitals, clinical reference laboratories and  researchers
involved  in  diagnosing  and  treating  immunological  conditions.   Since
December  1989,  the  Company  has been majority-owned  by  BioFin  Holding
International  B.V.  ("BFHI"), a subsidiary of Sorin Biomedica  Diagnostics
S.p.A. (Sorin) which is an Italian affiliate of Fiat, Inc. The Company  was
incorporated  in  Minnesota  in  1975 under  the  name  of  Immuno  Nuclear
Corporation. The Company's principal executive offices are located at  1990
Industrial Boulevard, Stillwater, Minnesota, 55082.

      On  March  10,  1997,  INCSTAR and the other parties  to  the  Merger
executed  the Agreement and Plan of Merger (the "Merger Agreement"),  among
American  Standard Inc., a Delaware corporation ("ASI"), American  Standard
Medical Systems, Inc., a Delaware corporation and a wholly owned subsidiary
of  ASI  ("ASM"),  ISTR Merger Corporation, a Minnesota corporation  and  a
wholly owned subsidiary of ASM ("Mergeco"), and INCSTAR, pursuant to  which
each share of INCSTAR Common Stock issued and outstanding immediately prior
to  the time when the Merger becomes effective, other than shares of Common
Stock   with  respect  to  which  dissenters'  rights  have  been  properly
exercised, will be converted into and become the right to receive $6.32 per
share  in  cash.  Pursuant to the Merger, Mergeco will merge with and  into
INCSTAR,   with  INCSTAR  as  the  surviving  corporation  (the  "Merger").
Consummation of the Merger is subject to the affirmative vote of a majority
of  shareholders entitled to vote at a special meeting of the  shareholders
of INCSTAR scheduled to be held in May 1997.

      The  Merger  Agreement has been signed concurrently with the  signing
of  the  Agreement,  dated  March 10, 1997, by and  among  Sorin  Biomedica
S.p.A.,  an  Italian  corporation, Sienna  Biotech  International  Inc.,  a
Delaware  corporation ("Sienna"), and ASI (the "European Agreement").   The
European Agreement provides for the sale to Sienna and ASI by Sorin of such
assets,  as  defined  in  the European Agreement, associated  with  Sorin's
European Diagnostics Division.

      Under  to the Merger Agreement the consummation of transactions under
the  European  Agreement  is  a condition to  the  closing  of  the  Merger
Agreement.

      It  is  currently anticipated that the Merger will be effected  prior
to June 30, 1997.

PRODUCTS

       The  Company currently markets, develops and manufactures individual
test  reagents  and  test  kits, using primarily radioimmunoassay  ("RIA"),
enzyme   immunoassay  ("EIA"),  immunoturbidimetric  assay   ("ITA")    and
immunofluorescent  assay ("IFA") technologies for clinical  diagnostic  and
medical   research  purposes.   The  Company  also  produces  and   markets
histochemical  antisera and natural and synthetic  peptides  also  used  in
clinical  diagnostic and medical research.  The Company's product focus  is
on  diagnostic tests for autoimmune, infectious disease, endocrinology  and
bone  and  mineral  metabolism product segments,  utilizing  a  variety  of
technologies.   The immunodiagnostic market is shifting  away  from  manual
testing  to  automated or semi-automated testing in  an  effort  to  reduce
laboratory  costs involved in processing medical diagnostic  tests.   As  a
result,  the research and development activities of the Company are  mainly
focused on developing non-isotopic tests that can be run on open instrument
systems  that are either currently in the customers labs, or can be  placed
there in a cost effective manner.

      DIAGNOSTIC AND RESEARCH KITS.  The Company believes that it is one of
the  largest producers of RIA products in the world.  The total RIA market,
however,  has  been significantly decreasing in recent  years  due  to  two
factors:   (1) isotopic technologies such as RIA are not easily convertible
to automated instrument testing systems and (2) disposal issues relative to
radioactive materials.  Current trends in the immunodiagnostic  market  are
to  employ  technologies such as EIA, which require less labor  to  process
test  results. Consequently, the challenge facing the Company is, and  will
continue  to be, to develop products that are non-isotopic and  amiable  to
semi and fully automated assay systems.  Although the current trend in  the
domestic  market,  and to a lesser degree in the international  market,  is
away from manual, RIA testing, the Company feels that its' strengths in RIA
manufacturing and marketing will allow it to maintain or grow its share  of
this declining market.  The Company believes that in the near-term its  RIA
products will provide it with the capital resources necessary to pursue new
research and development activities.

       RIA test procedures are used to precisely measure the extremely  low
levels  of certain hormones, peptides and other substances present  in  the
human body.  Antibodies are proteins produced by higher animals in response
to  some  foreign material, known as the "antigen," entering the  blood  or
tissue.   The  antibody protects the animal by binding to the  antigen  and
helping other body mechanisms destroy it.  When human hormones and peptides
are  injected  as  antigens into a laboratory animal, the  animal  develops
antibodies  to  eliminate the antigens.  Serum containing these  antibodies
(antiserum)  is  taken  from the laboratory animals and  processed  into  a
binding  reagent for the specific human hormone or peptide. The reagent  is
then  combined  with other reagents in a test kit to create  an  analytical
system to measure the level of that human hormone or peptide present in the
specimen to be tested.

      Precise amounts of antiserum, which act as the binder, are mixed with
radioactively-labeled (isotopic) tracer antigen and a  lower  concentration
unlabeled antigen. The tracer antigen and the unlabeled antigen compete for
binding  locations on the antibody in the antiserum. The bound  antigen  is
measured  by  a  radiation  counter and  the  level  of  bound  antigen  is
calculated.  The  results  of this controlled procedure  are  repeated  for
several concentrations of known antigen and a standard curve is plotted.  A
fluid specimen is then taken from a patient for testing and substituted for
the unlabeled antigen. The results of the competitive binding of the tracer
antigen  and  the  antigen  in the fluid specimen  are  compared  with  the
standard  curve,  and  the  precise quantity of hormone  or  peptide  being
measured  is  determined. The sensitivity and accuracy of RIA tests  depend
primarily upon the quality of the binding antisera and tracer antigen.

        The  Company  currently  markets  approximately  80  RIA  products,
primarily  used  in  the  analysis of endocrine, neuroendocrine,  bone  and
mineral metabolism, therapeutic drug monitoring and thyroid function.   The
majority  of  thyroid  function testing products  are  marketed  under  the
Clinical  Assays  trademark product line that the  Company,  together  with
Sorin,  acquired  in 1990 from Baxter International Inc. ("Baxter").   Each
RIA  kit  contains  the  following:  an  antiserum  consisting  of  primary
antibodies  and, in most cases, a reagent used to precipitate  the  primary
antigen antibody complex; a radioactively-labeled antigen to act as tracer;
a  non-radioactive  or  cold  antigen to act as  test  calibrators;  and  a
protocol booklet that provides specific test instructions.  The tracers  in
the  RIA  kits  have shelf lives of six to twelve weeks  depending  on  the
product.   The process of RIA testing requires the use of skilled labor  in
diagnostic laboratories.

      The  Company  markets  approximately 55 EIA  products  primarily  for
infectious disease and autoimmune disorders.  The basic principles  of  EIA
technology  is very similar to RIA in that a highly specific and  sensitive
reaction of an antigen and antibody must take place.  With EIA, the  result
is  measured by color development intensity rather than radioactivity.  EIA
technology  uses standard laboratory procedures and facilitates  throughput
of  large  testing  volumes such as those of a large reference  laboratory.
EIA  product  lines  include the Epstein Barr Virus ("EBV")  and  TheraTest
products,  as discussed below, and the ToRCH group of tests (toxoplasmosis,
rubella, cytomegalovirus and herpes).

       The  Company  also markets approximately 20 products  based  on  IFA
technology for infectious disease and autoimmune disorders.  The kits based
on IFA technology are employed in sophisticated diagnostic laboratories for
antibody   detection  and  semi-quantitation  in  infectious  disease   and
autoimmune  disorders.  Patient serum samples are incubated  on  microscope
slides  containing prepared antigen substrate, for example,  virus-infected
mammalian  cells.   The  antibody, if present, will bind  to  the  antigen.
After a saline rinse, which removes unbound serum, the microscope slide  is
reacted  with  a  fluorescein  conjugate  that  binds  to  antigen-antibody
complexes,  which  formed during initial incubation.   Following  a  saline
rinse,  the slides are viewed under a fluorescence microscope and  examined
for fluorescent staining on the specific antigen sites.  Immunofluorescence
kits  provide prepared multi-sample slides, positive and negative reference
serum  controls, fluorescein conjugate, buffered saline and mounting medium
as  ready-to-use stabilized reagents.  The Company's infectious disease IFA
assays  include  Toxoplasmosis, Cytomegalovirus, Herpes and a  confirmatory
test  for syphilis.  The autoimmune product offerings incorporate  a  broad
range  of  kits  and  components  intended  for  detection  of  antinuclear
antibodies  and  anti-native  DNA  antibodies  (useful  in  systemic  lupus
erythematosus testing), antimitochondrial antibody testing and  antithyroid
antibodies intended for diagnosis of primary biliary cirrhosis and  Grave's
disease, respectively.

       In  addition to the distribution of those products that the  Company
develops and manufactures, the Company is the exclusive distributor in  the
United  States  and  Canada  of  certain  of  Sorin's  hepatitis  in  vitro
diagnostic products.  Sorin has developed RIA and EIA hepatitis tests  that
are used worldwide in the diagnosis of Hepatitis A and Hepatitis B.

      SERUM  PROTEIN  MEASUREMENT.  The Company currently  markets  23  ITA
kits  for the assessment of specific human serum proteins.  Sold under  the
trade  name   "SPQ Test System," the tests are designed for use  on  common
automated  clinical chemistry analyzers.  The ITA kits are  utilized  on  a
large   number   of  different  automated  analyzers.   Consequently,   the
development  of  new instrument-specific applications  is  required  on  an
ongoing basis.  Each assay is based on the principle of immunoturbidimetric
or  immunonephelometric measurement of antigen-antibody  complexes.   These
antigen-antibody  complexes are formed when patient  samples  are  combined
with  the  specific antibody of the test kit.  As a part of  the  SPQ  Test
System,  specific  human  protein controls,  patient  sample  diluents  and
specific  antibodies  are  provided as separate products.   ITA  technology
offers  the clinical laboratory the advantages of superior speed, precision
and  automation.  Included in the ITA product line are specific assays  for
Apolipoprotein A-1, Apolipoprotein B and Lipoprotein(a), which  are  useful
in  cardiac  risk  assessment.  The remaining ITA assays in  the  SPQ  Test
System  are  used in the assessment of immunological disorders, nutritional
status, acute response and kidney failure.

      ANTISERA  PRODUCTS.  The antisera product lines from the Company  are
used  for the analysis of human serum proteins present in the human  serum.
Common  clinical laboratory procedures using the antisera products  include
immunofixation    electrophoresis,   immunoelectrophoresis    and    radial
immunodiffusion methods.  The techniques utilized by the laboratory  result
in  the  determination  of specific protein levels and  the  assessment  of
specific  protein components following the binding of the  antiserum  to  a
specific serum protein.  The presence of the serum protein is determined by
protein  staining  or  through the use of fluorescent  or  enzyme  staining
procedures.

       BULK  AND  CUSTOM ANTISERA PRODUCTS.  The bulk and  custom  antisera
products  produced  by  the  Company are used by major  medical  diagnostic
instrumentation  manufacturers worldwide in the  production  of  diagnostic
test kits to be used on their instruments.  The Company offers an extensive
line  of  antisera products to human serum proteins that are  monospecific,
avid,  and  of  high titer. Antisera products are produced as nephelometric
quality,  standard  antisera,  IgG  fractions  and  fluorescent  or  enzyme
conjugated preparations. The Company also produces calibrators to  be  used
as  reference  standards in conjunction with the various antisera  products
offered.

      Custom  antisera from the Company's standard supply are also produced
according  to  specifications  provided by  customers.   The  Company  also
performs  custom  immunization and development of specific antibodies  upon
customer request.

       HISTOCHEMICAL ANTISERA.  Unlike RIA, ITA and EIA methods, which  are
used  to  analyze  fluid samples taken from the human  body,  histochemical
antisera are utilized in an in vitro procedure to determine the presence of
hormones or peptides in body tissue.  A histochemical antiserum is used  as
a  binding  reagent for a specific hormone or peptide.   Once  binding  has
occurred,  the  presence  of  the  hormone  or  peptide  is  determined  by
fluorescent or enzyme staining procedures performed on the tissue specimen.
The  Company's  histochemical products are used in clinical  diagnoses  and
medical  research,  frequently  in  conjunction  with  RIA,  ITA   or   EIA
technologies.

RECENT DEVELOPMENTS

      During  the fourth quarter of 1996 the Company announced its  receipt
of  Food and Drug Administration ("FDA") approval for its second generation
tests   for   the   detection   of   the  infectious   diseases,   rubella,
cytomegalovirus  ("CMV")  and herpes simplex.   These  products  have  been
marketed  in  Europe for several years through the Company's affiliate  and
have  been  widely accepted as the gold standard in the industry,  offering
high sensitivity and ease of use.

      Also  during  the fourth quarter, the Company received  FDA  approval
for  its  25-OH-D  RIA assay, the first test method on  the  market  to  be
cleared  by  the  FDA  for  the  detection of 25-Hydroxyvitamin  D  in  the
bloodstream.  This detection is becoming an increasingly important tool  to
determine levels of vitamin D, which is necessary for the body's metabolism
of calcium.

      During  the  second  quarter  of  1995  the  Company  announced   the
completion  of  the  manufacturing transfer  of  its  TheraTest1  trademark
product  line  of  diagnostic assays to its Stillwater  facility.   INCSTAR
acquired this FDA-cleared EIA panel of autoimmune diagnostic assays in  May
1994  from TheraTest Laboratories, Inc. of Chicago.  The TheraTest products
are  used  as a confirmatory test for the diagnosis of rheumatoid arthritis
and  other  connective tissue diseases such as systemic lupus erythematosus
and  scleroderma.   The TheraTest products are also  an  extension  of  the
Company's  existing  immunofluorescence  autoimmunity  product   line   and
complement the Company's EIA product offerings.

      Also  during the second quarter of 1995 the Company received approval
from  the FDA for its second generation EBV diagnostic tests.  EBV  is  the
causative  agent  of  infectious mononucleosis, and  can  cause  lymphomas,
chronic fatigue syndrome and a variety of other diseases in patients with a
weakened  immune system.  International market introduction of these  tests
began in the third quarter of 1994.

      The  Company  launched two autoimmune products in  the  international
market  during the second quarter of 1995, a quantitative thyroid  receptor
autoantibodies  assay, which is used for the diagnosis of  Grave's  disease
and  the  complement activation enzyme assay ("CAE") which provides general
information about the immune system in disease states such as rheumatic and
rare  connective  tissue disorders as well as tissue injury.   The  Company
received  510(k) clearance from the FDA in the fourth quarter of  1995  for
its CAE kit.

      During  the third quarter of 1995 the Company launched worldwide  its
second  generation  Parathyroid Hormone-related  Protein  ("PTHrP")  assay.
PTHrP  is  the agent responsible for the condition of humoral hypercalcemia
of  malignancy.  This is a condition in which serum calcium is increased to
potentially life threatening levels.  This assay provides customers with  a
superior  product  that has significantly improved sensitivity  and  better
definition  of  the protein under investigation than the  first  generation
product.   This  product  is being distributed as  a  "research  use  only"
product  in  the  US  and  is  targeted to the  clinical  research  market.
Internationally,  the Company is pursuing registration in several  European
countries as well as Japan.

      During  the  third  quarter  of  1995,  the  Company  experienced  an
increase  in  demand for one of its hepatitis assays due to a  competitor's
kit  becoming  unavailable  to the market.  This  opportunity  resulted  in
approximately $2.9 million in sales during 1995.  The competitor re-entered
the marketplace during the first quarter of 1996.  Sales of this assay were
approximately $2.2 million during 1996.  While a portion of these sales has
been maintained since the competitor re-entered the market,  the impact  on
future sales is uncertain at this time.

      During  the fourth quarter of 1995 the Company received the  approved
licensure  from the FDA for the final two assays within the Hepatitis  line
which  gave  the  Company a complete panel of seven  EIA  approved/licensed
assays used in the diagnosis of hepatitis A and B infections.


MARKETING

       The  Company's  medical products are sold to commercial  and  public
health  laboratories, blood banks, research and teaching  institutions  and
hospital  laboratories,  which  use the Company's  kits  to  conduct  tests
ordered  by  physicians. Increased frequency of use of the  Company's  kits
will  depend, in part, upon the acceptance by practicing physicians of  the
need  and  desirability  for measuring certain therapeutic  drug,  hormone,
peptide  and  serology  levels  in  the evaluation  of  diseases  and  body
disorders.

            In North America, the Company's principal market for its medical
products  includes approximately 1,200 clinical reference laboratories  and
2,500  hospitals,  which  have laboratories that  perform  immunodiagnostic
testing.  In  the United States and Canada, the Company utilizes  a  direct
sales force, combined with selected independent distributors, to market its
products.

       The Company also utilizes foreign distributors in conjunction with a
subsidiary in the United Kingdom to market its products abroad.  Since 1989
Sorin has been the distributor for many of the Company's products in Italy,
Spain,  Portugal, Germany and the Benelux countries.  As part of  the  1990
acquisition  from Baxter, the Company manufactures and sells to  Sorin  the
Clinical  Assays products for distribution in the above mentioned countries
and  France. Pursuant to these arrangements, the Company recorded sales  to
Sorin  of  $7,965,000 for the year ended December 31, 1996, which comprised
18%  of  total  sales. Other transactions entered into with Sorin  and  its
subsidiaries  are  set  forth  in  Note 6  of  the  Company's  consolidated
financial  statements  contained elsewhere herein. Other  than  Sorin,  the
Company  is not dependent on any single customer for more than 15%  of  its
business.

       The  Company's international sales constitute 50% of sales  for  the
year ended December 31, 1996; 48% of sales for the year ended December  31,
1995 and 50% of sales for the year ended December 31, 1994.

       Because  of  the  limited  shelf life of the  Company's  radioactive
tracer, the Company delivers products by international air freight  to  its
foreign markets.
RESEARCH AND PRODUCT DEVELOPMENT

       The ability of the Company to compete effectively in the marketplace
will  depend  upon the success of its efforts to improve existing  products
and  to  develop  new  products, primarily non-isotopic  and  conducive  to
instrumentation,  that  are useful to the medical diagnostic  and  research
markets. The levels of research and development expenditures by the Company
during the periods shown below were as follows:

                                                       Percent of
                                         Amount        Net Sales

     Year ended December 31, 1996    $4,163,000           9.4%
     Year ended December 31, 1995    $3,748,000           8.2%
     Year ended December 31, 1994    $5,069,000          11.9%

        The  reduction in research spending in 1995 from the level in 1994,
resulted  primarily  from  the  discontinuance  of  a  development  program
discussed in Note 2 of the financial statements contained elsewhere herein.
      The  Company  has  established scientific  advisory  panels  for  its
autoimmune and bone and mineral metabolism product lines.  In addition, the
Company  intends  to establish a third scientific panel in  its  infectious
disease segment.  These panels are overseen by a scientific advisory board.
Prior to his death in March 1997, the scientific advisory board was led  by
Dr.  Pierre  M. Galletti, the Company's Chairman of the Board.   Also,  Dr.
Michael  Steffes, a director of the Company, is a member of the  Scientific
Advisory Board.

MANUFACTURING

       The  Company  manufactures its immunoassay kits  and  serum  protein
products   in  two  locations  within  the  United  States.   It  maintains
manufacturing  and administration activities in its principal  facility  in
Stillwater,   Minnesota,   which   consists   of   120,000   square   feet.
Additionally,  the Company is vertically integrated into the production  of
bulk antisera and maintains a USDA licensed animal facility on 116 acres in
Windham,  Maine  (the  Serum Proteins segment of the  Company's  business).
Management  believes  that it will have adequate  capability  to  meet  its
anticipated  manufacturing  needs in all  current  product  lines  for  the
foreseeable future.

       The  steps  involved in manufacturing the Company's immunoassay  and
serum  protein kits include the following:  i) the isolation and production
of  antigens;  ii) the development and production of antibodies;  iii)  the
design  and  development of the required reagent system; iv) the iodination
or  conjugation  of  precursors; v) the manufacture and  packaging  of  the
components in the kit format; and vi) ongoing quality control to  meet  all
regulatory requirements.

       As  a  result of strategic alliances and acquisitions over the  past
several  years, the Company has an extensive line of immunoassay and  serum
protein  assays  that  are manufactured in a cost  effective  manner  in  a
quality  environment.   The Company's products  and  kits  consist  of  the
components   necessary  to  perform  specific  assays  in  consistent   and
reproducible  fashion.  Antisera are a critical component in  the  products
which  are  manufactured using RIA, ITA, EIA and IFA technologies  and  the
Company  insures the quality of this raw material from its  source  in  its
Serum  Protein  segment of the business.  In addition to these  antiserums,
the  components  of  the  immunoassay  kits  include  specialized  chemical
reagents,  reference  standards and performance data required  to  properly
calibrate test results.  Raw materials used in these components meet design
specifications.   The  Company is not dependent on any particular  supplier
for  ongoing operations.  Some raw materials critical in the production  of
the  Company's  products have extensive lead times  for  supply.   Lack  of
supply of critical raw materials would have a materially adverse affect  on
the  Company.  For this reason the Company continually strives to  maintain
multiple sources for its most critical raw materials.


      The Company maintains quality controls for the assurance of accurate
and reliable test kits and to meet FDA good manufacturing practices
("GMP"). The Company also complies with procedures mandated by the Nuclear
Regulatory Commission (NRC) for the use and disposal of radioactive
materials.

COMPETITION

      Historically  the Company has developed and marketed  diagnostic  and
research products serving specialized markets not adequately served by  its
largest  competitors.  Included here are the fields of endocrinology,  bone
and  mineral  metabolism and therapeutic drug monitoring.   However,  as  a
result  of  the  Company's acquisition of the Clinical Assay product  lines
from  Baxter and relationship with Sorin, the Company now competes  with  a
number  of the larger immunodiagnostic companies offering similar lines  of
RIA and EIA products.

      The  Company's major competition, outside the specialty product area,
includes  Abbott  Diagnostics, Diagnostic Products Corporation,  Hybritech,
Ares-Serono,  and  CIBA  Corning  Diagnostic  Corporation.   The  principle
elements  of competition for the Company are based upon providing  quality,
consistent and reliable products and services.  Price is only a factor  for
those  tests in the larger, more competitive markets.  The Company  intends
to  maintain its competitive differentiation in the market by selecting new
and  innovative  technology approaches to both the  routine  and  specialty
market analytes.  Also, the Company intends to develop and maintain quality
customer relationships with health care professionals.

GOVERNMENT REGULATION

       Under the Medical Device Amendments of 1976, the Company is required
to  file  an  annual  registration statement with the FDA  and  to  provide
updated  device listings.  The Company is also required to  submit  a  pre-
market  notification submission to the FDA for each new diagnostic product.
This  submission may be either a 510(k), a premarket approval  application,
or  a  product license application, unless the product is being distributed
for  research or investigational use only. The FDA also imposes rules  with
respect  to  GMP.   The  Company believes it  is  in  compliance  with  FDA
regulations.    The   Company  also  complies   with   foreign   government
regulations, specifically for Japan, France, Germany, Canada,  England  and
other  countries where required.  These requirements include  adherence  to
GMP,  device  listings, premarket notifications, or product licenses  where
applicable.  Additionally, the Company is in the process of certifying  its
Quality  Assurance system to ISO 9000 standards and hopes to  complete  the
registration process under this standard by the end of 1997.

       Because the Company uses radioactive isotopes in the manufacture  of
some  of its products, it is required to maintain licenses authorizing  the
possession,  use  and distribution of radioactive material.   The  licenses
were  renewed in 1993 and will expire by their terms in 1998.  To  maintain
the  licenses,  the  Company is required to keep  certain  records  and  to
demonstrate continued compliance with NRC regulations and the conditions of
its  radioactive licenses.  Although not expected, loss of  these  licenses
would have a materially adverse affect on the Company.

       The Company believes it is in compliance with all federal, state and
local regulations regarding the discharge of material into the environment.
Additionally,  the  cost  to maintain licenses and meet  environmental  and
safety requirements is not material to the Company's consolidated financial
statements  and  the  Company  does  not  expect  any  material   financial
commitment in the near-term.


FOREIGN AND DOMESTIC OPERATIONS AND INTERNATIONAL SALES

       Company  information with respect to foreign and domestic operations
and  international  sales  is  set  forth  in  Note  12  to  the  Company's
consolidated financial statements contained elsewhere herein.

PATENTS

       The  Company  has been issued patents covering (i)  the  method  and
radioactive  tracers  used  for the immunoassay of  C-terminal  parathyroid
hormone,  (ii)  bioassay  for  parathyroid  hormone,  and  (iii)  usage  of
iodinated  or fluorescent forms of cyclosporin in immunoassay kits.   These
patents  expire  on  July 26, 1999; January 17, 2000; and  April  1,  2002,
respectively.

       The  Company  does  not believe that patent  protection  will  be  a
material  factor  for  its current product line offering,  because  of  the
Company's proprietary know-how regarding the production and development  of
its   product   lines.   Going  forward,  the  Company  has  filed   patent
applications  for several new product development programs,  and  has  also
negotiated  exclusive  licenses  to patent applications  filed  by  outside
product  development collaborators.  Certain other companies may have  been
issued  or  applied  for  patents with respect to  products  or  technology
manufactured  by, or of interest to the Company.  Management is  unable  at
this  time to determine the impact, if any, which any such patents may have
on the Company.

LICENSES AND TRADEMARKS

       The  Company  holds  certain licenses for  technology,  intellectual
property   and  distribution  rights.   The  Company  also  holds   certain
registered  trademarks  such  as CYCLO-Trac  registered  trademark,  N-tact
registered  trademark and PTH-MM registered trademark as  well  as  several
other   non-registered  trademarks.   The  terms  of  these  licenses   and
trademarks  vary.  The Company does not believe that any of these  licenses
or trademarks is material to its business or operations.

EMPLOYEES

      As of December 31, 1996 the Company had 282 employees, including part-
time employees.

EXECUTIVE OFFICERS OF THE COMPANY

The executive officers of the Company are listed below:


John J. Booth                  President and Chief Executive Officer  since
                               September,  1994 and Senior  Vice  President
                               and   Chief  Financial  Officer  since  May,
                               1992,  age 42.  Mr. Booth joined the Company
                               in  December,  1989  as  Vice  President  of
                               Finance  and  Administration  and  prior  to
                               that  was  Vice  President,  Controller  and
                               Secretary  of  CSI  from  October,  1989  to
                               December, 1989.

Stephen P. Gouze               Vice President of Sales and Marketing of
                               the Company since February 1997, age 45.
                               From October 1994 to February 1997, Mr.
                               Gouze was Vice President of Sales and
                               Marketing at PATHCOR, Inc., a Pathologist
                               Practice Management Company.  Prior to
                               joining PATHCOR, Mr. Gouze held a number of
                               sales and marketing positions, with Sanofi
                               Pasteur's Diagnostics Division, most
                               recently as Director of Marketing.

Fabio Lunghi                   Executive    Vice   President   and    Chief
                               Operating  Officer  of  the  Company   since
                               September,  1994, age 52.  Prior to  joining
                               the  Company, from 1986 to 1994  Mr.  Lunghi
                               was  Vice  President and General Manager  of
                               the  radiopharmaceutical  business  unit  at
                               Sorin Biomedica, S.p.A.

Gerald L. Majewski, Ph.D.      Vice  President of Research and  Development
                               since  October  1992,  age  47.   Prior   to
                               joining  the Company, from 1983 to 1992  Dr.
                               Majewski  held  a  variety of  positions  at
                               Fisher            Scientific/Instrumentation
                               Laboratory,  most recently  as  Director  of
                               Research     and    Development,    Reagents
                               Development from 1989 to 1992.

Thomas P. Maun                 Vice  President and Chief Financial  Officer
                               of  the  Company since September,  1994  and
                               Director  of  Finance since  January,  1990,
                               age  43.   Mr.  Maun joined the  Company  in
                               1987 as Corporate Controller.

George E. Wellock              Vice  President  of  Manufacturing  of   the
                               Company since March     1991, age 47.   From
                               June 1988 to March 1991, Mr. Wellock     was
                               Vice  President of Operations of Baxter Dade
                               in  Cambridge,   Massachusetts, a subsidiary
                               of    Baxter   International.    From   June
                               1984   to   June   1988,   he   served    as
                               Manufacturing  Manager  for         Travenol
                               Genentech Diagnostics and Baxter Dade.

      At each annual meeting of the Board of Directors, the board elects
executive officers as necessary.  Such elected officers hold office until
the next annual meeting of the directors or until their successors are
elected and qualified.

ITEM 2.  PROPERTIES

        The  Company  presently  owns  three  adjacent  concrete  buildings
totaling  approximately 120,000 square feet located on a 14  acre  site  in
Stillwater,  Minnesota,  which  is  part  of  the  metropolitan   area   of
Minneapolis-St. Paul. One building houses all manufacturing operations.   A
second  building  houses a research laboratory.  The third building  houses
the Company's executive offices.  The Company believes this capacity to  be
adequate  for present and future needs.  The Company owns a farm  operation
of  116  acres  and  related  buildings in  Windham,  Maine,  which  houses
laboratory animals.

ITEM 3. LEGAL PROCEEDINGS

      The Company is engaged in ordinary routine litigation incident to
its business, which management believes will not have an adverse effect
upon its operations or consolidated financial position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

                                  PART II

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

      The Company's Common Stock is currently traded on the Nasdaq National
Market  under  the  symbol  "ISTR".  As of December 31,  1996,  there  were
approximately 1,134 shareholders of record holding 16,505,457  shares.  The
following table sets forth for the calendar quarters indicated the high and
low sales prices as reported by the American Stock Exchange for the periods
prior  to  May 28, 1996 and by the Nasdaq National Market for  the  periods
thereafter.

                                         High        Low
          1995
             First Quarter            $ 2 3/4     $ 1 1/2
             Second Quarter             3 3/4       2 1/2
             Third Quarter              5 5/16      2 7/8
             Fourth Quarter             5           3 3/4

          1996
             First Quarter              6 1/4       4
             Second Quarter             6 3/4       4 1/4
             Third Quarter              5 5/8       3 5/8
             Fourth Quarter             4 7/8       2 5/8

DIVIDENDS.   The  Company did not pay cash dividends on  its  common  stock
during  1995 or 1996.  It is not currently anticipated that cash  dividends
will  be  paid  in the future on the Company's Common Stock. The  Board  of
Directors of the Company will review its dividend policy from time to time.
Any  future  determination as to the payment of dividends on the  Company's
Common  Stock  will  depend upon future earnings,  results  of  operations,
capital requirements, the financial condition of the Company and any  other
factors the Board of Directors of the Company may consider relevant.

<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
       Set  forth  below  is  selected  consolidated  historical  financial
information of the Company derived from the audited consolidated  financial
statements  of  the Company for the fiscal years ended December  31,  1996,
1995, 1994, 1993 and 1992.

SUMMARY OPERATIONS STATEMENT
                                                 Year Ended
                                                 December 31,

                        1996         1995          1994             1993             1992
<S>                   <C>          <C>           <C>              <C>             <C>
Domestic sales        $22,017,000  $23,832,000   $21,282,000      $23,321,000     $24,712,000
International sales    22,287,000   21,928,000    21,221,000       19,967,000      21,272,000
Net sales              44,304,000   45,760,000    42,503,000       43,288,000      45,984,000
Cost of goods sold     21,599,000   23,271,000    22,039,000       23,007,000      22,052,000
Inventory valuation
adjustment                    ---          ---       750,000 (a)          ---             ---
Gross profit           22,705,000   22,489,000    19,714,000       20,281,000      23,932,000
Operating expenses:
Selling, general and
administrative         13,206,000   12,592,000    12,853,000       12,761,000      13,621,000
Research and
development             4,163,000    3,748,000     5,069,000        5,719,000       3,277,000
Unusual items                 ---          ---     5,750,000 (a)      750,000 (a)         ---
Total operating
expenses               17,369,000   16,340,000    23,672,000       19,230,000      16,898,000
Operating income(loss)  5,336,000    6,149,000    (3,958,000)       1,051,000       7,034,000
Interest income
 (expense), net            96,000     (348,000)     (365,000)        (472,000)       (656,000)
Investment and other
 income (expense)         (21,000)      33,000        11,000          (42,000)         73,000

INCOME (LOSS) BEFORE
INCOME TAXES            5,411,000    5,834,000    (4,312,000)          537,000      6,451,000
Provision for income
 taxes                  1,299,000    1,571,000       193,000           284,000      1,577,000

NET INCOME (LOSS)     $ 4,112,000  $ 4,263,000  $ (4,505,000)      $   253,000    $ 4,874,000

NET INCOME (LOSS)
PER SHARE             $       .25  $      0.26  $      (0.28)      $      0.02    $      0.30
Weighted average
shares and equivalents 16,661,367   16,491,501    16,322,301        16,432,883     16,337,857

<CAPTION>
BALANCE SHEET INFORMATION                       December 31,

                         1996         1995         1994              1993            1992
<S>                   <C>          <C>           <C>              <C>             <C>
Total assets          $41,958,000  $38,761,000   $38,154,000      $43,426,000     $45,069,000
Working capital        19,189,000   14,947,000    13,873,000       14,555,000      13,863,000
Long-term debt                ---        3,000     4,143,000        6,501,000       8,167,000
Shareholders' equity   33,141,000   28,384,000    23,889,000       28,240,000      27,277,000
Book value per share         1.99         1.72          1.46             1.73            1.69
<FN>
Note 1.For information with respect to dividends, see Item 5 above.

(a)   Relates to the write off of certain tangible and intangible costs,
severance and related costs and inventory write downs as discussed in Note
2 to the consolidated financial statements contained elsewhere herein.
</FN>
</TABLE>
<PAGE>

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

RESULTS OF OPERATIONS
      Sales   in   1996  were  $44,304,000,  a  3  percent  decrease   from
$45,760,000  in 1995.  1995 and 1996 results included sales from  a  single
test that resulted from a competitor's product becoming unavailable to  the
market  from  June  1995  until  March  1996.   In  the  absence  of   this
development,  1995  and  1996 total sales would  have  remained  relatively
unchanged.   1995  sales  were 8 percent above 1994 sales  of  $42,503,000.
This  increase  was  due  primarily to sales from the  Company's  hepatitis
assays,  as  previously discussed, combined with sales  from  new  products
introduced  during  1995  and the latter part  of  1994  in  the  Company's
autoimmune  disease,  bone and mineral metabolism  and  infectious  disease
market segments.  Increased sales were partially offset by declines in  the
Company's  oncology and endocrinology market segments due to the  continued
shift  in  the  diagnostic industry from isotopic, manual testing  to  non-
isotopic, automated and semi-automated testing.

      Domestic  sales  decreased 8% from $23,832,000 to   $22,017,000.   As
discussed above, through February 1996, the Company experienced an increase
in  demand  for  one  of  its hepatitis assays due to  a  competitor's  kit
becoming unavailable to the market in June 1995.  Since the competitor's re-
entry  during  the  first quarter of 1996, the Company  has  experienced  a
decline of these product sales from their levels during the second half  of
1995.   This  opportunity resulted in approximately $2.2 million  and  $2.9
million  in sales during 1996 and 1995, respectively. In addition, domestic
sales have continued to be negatively impacted by declines in the Company's
oncology  and endocrinology market segments, as discussed above.  Partially
offsetting  these  declines  were continued  increases  in  the  autoimmune
disease  market  segment, increases in the Company's serum  protein  market
segment and increases in the Company's Vitamin D assays, which are part  of
the  bone and mineral metabolism market segment.  1995 sales increased  12%
from  $21,282,000 in 1994 due primarily to the increase in sales  from  the
hepatitis  assay described above, as well as increases in the  autoimmunity
segment  offset  with  declines in the endocrinology  and  oncology  market
segments.

      1996  international sales increased 2% to $22,287,000  compared  with
1995  sales  of  $21,928,000.  1995 sales increased 3% from 1994  sales  of
$21,221,000.  Sales were favorably impacted in 1996 and 1995 due  primarily
to the introduction of second generation Epstein Barr Virus diagnostic kits
during  1995.   Sales were negatively impacted in both  years  due  to  the
continued   declines  in  the  routine  endocrinology  and  transplantation
segments.

      Gross  margins  were  51 percent of sales in 1996  compared  with  49
percent  of  sales  in  1995 and 46 percent in 1994. The  decline  in  1994
margins  is  attributable to the $750,000 charge for excess inventories  as
discussed  in  Note  2  of the Company's consolidated financial  statements
contained  elsewhere herein. Exclusive of the inventory write  down,  gross
margins  were  48  percent of sales in 1994. Gross  margins  have  improved
during  the  last  two  years  due  to improved  product  mix  as  well  as
efficiencies  derived  from an operational restructuring.   Notwithstanding
this improvement, the Company's margins continue to be highly sensitive  to
product mix and volume changes.

      The  Company's ratio of selling, general and administrative  expenses
to sales was 30 percent in 1996, 28 percent in 1995 and 30 percent in 1994.
These expenses, as a percentage of sales, are expected to remain relatively
consistent with 1996.

      Research  and development expenses were $4,163,000 in 1996,  compared
with  $3,748,000 in 1995 and $5,069,000 in 1994. The increase  in  1996  is
primarily  due to increased emphasis on new product development,  including
the   establishment  of  scientific  advisory  panels  for  the   Company's
autoimmune  and  bone and mineral metabolism segments.   These  panels  are
intended  to  strengthen the Company's ties with the scientific  community.
The decrease in 1995 spending compared with 1994 levels is attributable  to
the discontinuance during 1994 of the Fluorescence Polarization Immunoassay
("FPIA")  development  project as discussed in  Note  2  of  the  Company's
consolidated financial statements contained elsewhere herein.  Exclusive of
FPIA,  these expenses represent 9 percent, 8 percent and 9 percent of sales
in  1996,  1995 and 1994, respectively.  Research and development  expenses
are  projected to increase slightly due to the Company's increased emphasis
on new development activities and increased scientific panel activity.

      Interest  income  net of expense was $96,000 in  1996  compared  with
interest  expense of $348,000 in 1995 and $365,000 in 1994.   The  interest
income  was  attributable to the elimination of all long term  debt  during
1995  and  higher  average cash balances in 1996.   1995  expense  includes
interest on certain tax obligations.

      Income  tax  expense  was  24  percent  of  income  before  taxes  or
$1,299,000, compared with 27 percent or $1,571,000 in 1995 and $193,000  in
1994.   The decline in the effective tax rate is due to the recognition  of
certain  deferred tax assets during 1996.  The tax expense in 1994  related
primarily to book reserves and liabilities not deductible for tax  purposes
until paid.  The effective rate is expected to remain relatively consistent
with 1996.

      Net  income  in 1996 was $4,112,000, or 25 cents per share,  compared
with  a  net income of $4,263,000, or 26 cents per share, in 1995  and  net
loss of $4,505,000, or 28 cents per share, in 1994.   The 1994 loss results
from  $6.5  million  in charges, as discussed in Note 2  to  the  Company's
consolidated financial statements contained elsewhere herein.

LIQUIDITY AND CAPITAL RESOURCES

      INCSTAR's  free  cash  flow  (operating  cash  flow  less  investment
activities)  was  $905,000  in 1996, compared to  $5,190,000  in  1995  and
$3,118,000  in  1994.  This decrease is attributable to  increased  capital
spending  associated with instrumentation, manufacturing  improvements  and
computer  upgrades  as  well as spending associated with  the  purchase  of
intellectual  property and purchased technology.  The  Company's  ratio  of
total debt to total capital was 16 percent in 1994.

      Working  capital  increased to $19,189,000  at  year-end  1996,  from
$14,947,000  at the end of 1995, resulting from increased cash  levels  and
higher  inventory balances combined with lower accrued compensation due  to
timing of payroll disbursements.

      Capital   expenditures  for  1996  were  $2,645,000,  compared   with
$1,557,000  in  1995 and $923,000 in 1994.  For 1997, capital  expenditures
are  expected  to  be  approximately $3.8  million,  primarily  for  a  new
enterprise   resource  planning  system,  manufacturing  improvements   and
instrumentation.

      The   Company's  primary  sources  of  liquidity  are  a  $1  million
revolving  bank  credit line secured by Company assets and a  $4.0  million
unsecured  credit line with Fiat Finance N.A., Inc. (Fiat).   At  year-end,
the  Company had no outstanding borrowings under these credit  lines.   The
Company anticipates that the generation of free cash flow and the resources
available  within  the  Fiat  Group  will  provide  sufficient  sources  of
liquidity for  planned capital and research and development expenditures.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The consolidated financial statements of the Company and financial
statement schedules are listed under Items 6,  14 (a) (1) and 14 (a) (2) of
this report and contained elsewhere herein.


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

None.






          [The remainder of this page left blank intentionally.]
<PAGE>
                                 PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

 Name                          Age Position

 John  J.  Booth                  42  President, Chief Executive  Officer,
                                       Director and Acting Chairman of the Board
 Thomas  P.  Maun                 43  Vice President and  Chief  Financial
                                       Officer
 Fabio  Lunghi                    54  Executive Vice  President  and  Chief
                                       Operating Officer
 Stephen P. Gouze                 47  Vice President of Sales and Marketing
 Gerald  L.  Majewski,  Ph.D.     49  Vice  President  of  Research   and
                                       Development
 George E. Wellock                49  Vice President of Manufacturing
 Ennio Denti                      64  Director
 George H. Dixon                  76  Director
 Franco Fornasari                 46  Director
 Ezio Garibaldi                   59  Director
 D. Ross Hamilton                 59  Director
 Umberto Rosa                     63  Director
 Michael W. Steffes, M.D., Ph.D.  53  Director
 Carlo Vanoli                     47  Director

      JOHN J. BOOTH  was appointed Acting Chairman of the Board on March 8,
1997, following the death of Pierre M. Galletti, M.D., Ph.D., who had  been
the  Chairman of the Board of the Company since March 1995.  Mr. Booth  has
been  President,  Chief Executive Officer, and a director  of  the  Company
since  September  1994, Senior Vice President and Chief  Financial  Officer
from  May  1992  to  September  1994, and Vice  President  of  Finance  and
Administration from 1989 to 1992.  Mr. Booth was Vice President, Controller
and  Secretary  of  Clinical Sciences, Inc. ("CSI") prior  to  joining  the
Company in 1989.

      THOMAS P. MAUN has been Vice President and Chief Financial Officer of
the  Company  since September, 1994 and Director of Finance since  January,
1990.  Mr. Maun joined the Company in 1987 as Corporate Controller.

      FABIO  LUNGHI  has been Executive Vice President and Chief  Operating
Officer  of  the  Company since September, 1994.   Prior  to   joining  the
Company,  from  1986  to  1994, Mr. Lunghi was Vice President  and  General
Manager of the radiopharmaceutical business unit at Sorin.

     STEPHEN P. GOUZE has been Vice President of Sales and Marketing of the
Company since February 1997.  From October 1994 to February 1997, Mr. Gouze
was  Vice  President of Sales and Marketing at PATHCOR, Inc., a Pathologist
Practice  Management Company.  Prior to joining PATHCOR, Mr. Gouze  held  a
number  of sales and marketing positions, with Sanofi Pasteur's Diagnostics
Division, most recently as Director of Marketing.

      GERALD  L.  MAJEWSKI, PH.D. has beenVice President  of  Research  and
Development since October 1992.  Prior to joining the Company, from 1983 to
1992,    Dr.   Majewski   held   a   variety   of   positions   at   Fisher
Scientific/Instrumentation  Laboratory,  most  recently  as   Director   of
Research and Development, Reagents Development from 1989 to 1992.

      GEORGE  E.  WELLOCK has been Vice President of Manufacturing  of  the
Company since March 1991.  From June 1988 to March 1991, Mr. Wellock served
as Vice President of Operations of Baxter Dade in Cambridge, Massachusetts,
a  subsidiary  of Baxter International.  From June 1984 to  June  1988,  he
served  as  Manufacturing  Manager for Travenol Genentech  Diagnostics  and
Baxter Dade.

      ENNIO  DENTI has been a director since December 1989.  Mr. Denti  was
Chairman of the Company from December 1989 to September 1994.  Mr. Denti is
Chairman  of  the Board of SNIARICERCHE S.p.A., a research and  development
company affiliated with SNIA.  Mr. Denti was General Manager of Sorin  from
1990 to 1992.  From 1981 to 1990, he was Vice President of External Affairs
of  Sorin.   Mr. Denti is also a director of Conbiotec S.p.A., an affiliate
of  Sorin  involved  in  research and development  activities  relating  to
medical diagnostics.  Prior to December 1989, Mr. Denti was Chairman of the
Board of CSI.

     GEORGE H. DIXON has been a director since February 1987.  Prior to his
retirement  in  November 1985, Mr. Dixon held various management  positions
with  First  Bank  System,  Inc., including Chairman  and  Chief  Executive
Officer from November 1983 to November 1985.

     FRANCO FORNASARI has been a director since May 1995.  Mr. Fornasari is
Executive  Vice President of Fiat U.S.A., Inc.  He was Vice  President  for
International Trade at Fiat from 1990 to 1995 and has served  as  Secretary
General of the International Advisory Board of Fiat since March 1994.  From
1985 to 1990, Mr. Fornasari held a variety of positions with the World Bank
organization.

     EZIO GARIBALDI has been a director since September 1994.  Mr. Garibaldi
has been President and Chief Executive Officer of Sorin since 1990.

     D. ROSS HAMILTON has been a director since December 1989.  Mr. Hamilton
was a director of CSI.  He is President and a director of Hamilton Research
Inc.,  a financial consulting firm.  Mr. Hamilton is also Chairman  of  the
Board  of Altris Software, Inc., an electronic document management company.
He  is  also a director of Luther Medical Products, Inc., a medical  device
company.

      UMBERTO ROSA has been a director since December 1989.  Professor Rosa
has been the Chief Executive Officer of SNIA since 1990.  Prior to that  he
was  Chief Executive Officer and General Manager of Sorin.  Professor  Rosa
is  also  President  of  Biofin, a wholly owned subsidiary  of  Sorin,  and
Executive   Vice  President  of  Technobiomedica  S.p.A.,  a  biotechnology
research holding company.  He is also a member of the Board of Directors of
Tecnogen  S.p.A., a biotechnology research company, and President  of  SNIA
Fibre S.p.A., a nylon fibers manufacturer.

      MICHAEL  W. STEFFES, M.D., PH.D. has been a director since  September
1984.   Dr.Steffes served as the Director of Clinical Laboratories  at  the
University  of Minnesota Hospital from October 1984 to July  1992  and  has
been a Professor in the Department of Laboratory Medicine and Pathology  at
the University of Minnesota since 1981.

   CARLO VANOLI has been a director since September 1994.  Mr. Vanoli has
been Vice President of Corporate Development of SNIA since 1994.  From 1992
to 1994, he served as President and Chief Executive Officer of Sorin
Biomedical, Inc., in Irvine, California, and, from 1987 to 1992, he served
as Strategic Planning Manager of merger and acquisition activities for
SNIA.
<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION

Summary Compensation Table

        The following table sets forth the cash and noncash compensation
for each of the last three years awarded to or earned by the Chief
Executive Office of the Company and the four highest paid executive
officers of the Company whose salaries and other compensation earned in
1996 exceeded $100,000.

                                                                 Long-Term
                              Annual Compensation               Compensation
                                                     Securities
                                                     Underlying   All Other
Name and Principal Positions   Year   Salary  Bonus   Options   Compensation(1)

John J. Booth (2)              1996 $251,900       0        0       4,500
 President and Chief Executive 1995  226,600 116,900        0       4,500
 Officer                       1994  166,800       0   50,000       4,500

Fabio Lunghi (3)               1996  197,700       0        0           0
 Executive Vice President and  1995  187,000  77,200        0           0
 Chief Operating Officer       1994        _       _        _           _

Gerald L. Majewski             1996  160,300       0        0       4,500
 Vice President of Research    1995  153,000  63,100        0       4,500
 and Development               1994  147,900       0        0       4,500

George  E. Wellock             1996  141,600       0        0       4,500
Vice President of Operations   1995  137,700  56,800        0       4,100
                               1994  133,400       0        0       4,400

Thomas P. Maun (4)             1996  111,500       0        0       4,100
 Vice President and Chief      1995  100,000  41,300        0       3,000
 Financial Officer             1994   76,100       0   27,000       2,400
___________________
(1)Includes  Company  contributions under a Salary Savings  Plan  qualified
   under  Section 401(k) of the Internal Revenue Code of 1986, as  amended.
   In   1996,  Company  contributions  equaled  50%  of  the  first  6%  of
   compensation  (or the allowable IRS limit, if less) contributed  by  the
   employee.
(2)Mr.  Booth  began  serving as the Company's Chief Executive  Officer  in
   September  1994; prior to that, he served as its Senior  Vice  President
   and Chief Financial Officer.
(3)Mr.  Lunghi  was  named  Executive Vice President  and  Chief  Operating
   Officer of the Company in September 1994.
(4)Mr. Maun was named Vice President and Chief Financial Officer in
   September 1994; prior to that, he served as the Company's Director of
   Finance.

EMPLOYMENT AGREEMENTS

         The Company has a written employment agreement with Mr. Booth, the
initial  term  of  which expired in December 1993 and  which  provides  for
automatic  one  year extensions unless one of the parties gives  notice  at
least  30  days  prior  to  the expiration date  that  the  agreement  will
terminate  at  the end of the current extension.  The employment  agreement
includes  provisions  with respect to base salary  level,  annual  cost  of
living  increases,  annual  bonus  and  termination  of  employment.    The
employment agreement also provides that one year of Mr. Booth's base salary
shall  be  paid  to him in the event the Company terminates his  employment
without cause.

  RETIREMENT ARRANGEMENTS

          The  Company has retirement arrangements with Mr. Booth which  is
intended  to  provide  continued  compensation  to  an  individual  or  his
respective  beneficiaries upon the later of (1) an individual's  retirement
from the Company after attainment of 60 years of age, (2) his attainment of
60 years of age following termination of employment or (3) his death during
the term of employment (each one a "triggering event").  Subject to vesting
requirements (the annual benefit amounts vest at the rate of 10%  per  year
of  employment), the retirement agreement provides for the payment  to  the
individuals  or their beneficiaries of annual benefits for a period  of  15
years  following the occurrence of a triggering event.  The amount  of  the
benefit  is adjusted annual to reflect changes in the cost of living.   The
annual benefit amount at December 31, 1996 for Mr. Booth was $62,800.

        The Company maintains an executive income continuation plan for the
benefit  of  Dr.  Majewski, Mr. Wellock and Mr. Maun.   The  plan  provides
payments  for  15 years to such officers or their respective  beneficiaries
upon  the  later  of  (1) an officer's retirement from  the  Company  after
attainment  of  60  years of age, (2) his attainment of  60  years  of  age
following  termination of employment or (3) his death during  the  term  of
employment.   The  annual retirement payment is the product  of  an  annual
benefit  rate  set by the Board of Directors ( in 1996) multiplied  by  the
number of years of employment, up to a maximum of 15 years, and as adjusted
to  reflect cost of living changes during the payment period.  An officer's
rights under the plan are fully vested after 10 years of employment.  As of
December 31, 1996, the estimated annual retirement payment amounts were  as
follows:  Dr. Majewski, $13,800; Mr. Wellock, $28,300 and Mr. Maun, $7,500.

<PAGE>
 ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following information is furnished as of March 21, 1997, to indicate
beneficial ownership of the Common Stock of the Company by (i) each  person
who  is known by the Company to be the beneficial owner of more than 5%  of
the  outstanding  shares, (ii) shares beneficially owned  by  each  of  the
Company's  directors (including shares subject to stock options  that  will
become   exercisable  as  a  result  of  the  Merger),  and  (iii)   shares
beneficially owned by directors and executive officers as a group.   Except
as  otherwise indicated, the persons listed have sole voting and investment
power over such shares.

 Amount and Nature
   of Beneficial                      Percent of
Name of Beneficial Owner          Ownership (1)(2)(3)   Outstanding Shares

  D. Ross Hamilton (4)                   198,461             1.2%
     130 East End Avenue
     New York, NY  10028
  John J. Booth dagger                   172,738              *
  George Wellock dagger                   56,000              *
  Gerald L. Majewski, Ph.D.dagger         40,000              *
  Ennio Denti                             24,035              *
     SNIARICHERCHE
     VIA Borgonuovo, 14
     20100 Milano
     Italy
  Thomas P. Maun dagger                   37,127              *
  Michael W. Steffes, M.D., Ph.D.         19,900              *
     1583 Fulham Street
     St. Paul, MN  55108
  George A. Dixon                         15,000              *
     121 Washington Avenue South, #617
     Minneapolis, MN  55401
  Umberto Rosa                            10,000              *
     SNIA BPD S.p.A.
     VIA Borgonuovo, 14
     20100 Milano
     Italy
  Fabio Lunghi dagger                      6,000              *
  Franco Fornasari                        10,000              *
     FIAT USA
     375 Park Avenue
     New York, NY  10152
  Ezio Garibaldi                          10,000              *
     Sorin Biomedica S.p.A.
     Via Crescentino
     13040 Saluggia (VC)
     Italy
  Carlo Vanoli                            10,000              *
     SNIA BPD S.p.A.
     VIA Borgonuovo, 14
     20121 Milano
     Italy
  All directors and executive
       officers as a group (13 persons)  609,261             3.7
______________
* Less than 1%

dagger INCSTAR Corporation, P.O. Box 285, Stillwater, MN  55082
(1)    Includes the following shares held by wives or children: Mr. Hamilton,
       27,108  shares;  Mr. Booth, 2,385 shares; Mr. Maun,  1,727  shares;  Dr.
       Steffes, 3,600 shares.
(2)    Includes the following shares that could be acquired within  60  days
       upon  exercise of outstanding options: Mr. Hamilton, 17,018 shares;  Mr.
       Booth,  123,333 shares; Mr. Wellock, 50,000 shares; Dr. Majewski, 40,000
       shares;  Dr. Denti, 24,035 shares; Mr. Maun, 25,567 shares; Dr. Steffes,
       10,000 shares; Mr. Dixon, 10,000 shares; Prof. Rosa, 10,000 shares;  Mr.
       Fornasari, 3,333 shares; Mr. Garibaldi, 6,667 shares; Mr. Vanoli,  6,667
       shares  and  all  directors and executive officers as a  group,  326,620
       shares.
(3)    Includes the following shares subject to stock options that will become
       exercisable  as a result of the Merger:  Mr. Booth, 16,667  shares;  Mr.
       Maun,  9,333  shares;  Mr. Garibaldi, 3,333 shares;  Mr.  Vanoli,  3,333
       shares and Mr. Fornasari, 6,667 shares.
(4)    Includes 51,000 shares held by R & C Partners, a partnership of which
       Mr.  Hamilton  is  a  general partner and 7,500  shares  held  by  Leeds
       Security, Inc., a corporation of which Mr. Hamilton is principal owner.


PRINCIPAL SHAREHOLDERS

        As of March 21, 1997, Biofin holds 8,507,707 shares of Common Stock
which consists of approximately 52% of the outstanding shares of Common
Stock, which excludes 730,720 shares that could be acquired within 60 days
upon exercise of outstanding warrants and 105,404 shares that could be
acquired within 60 days upon exercise of outstanding options, which Biofin
has agreed not to exercise pursuant to the European Agreement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   The  Company has an agreement with Fiat Finance N.A., Inc., an affiliate
of  the  Company, pursuant to which the Company may borrow up to $4,000,000
at an interest rate of LIBOR plus 1.00%.  At December 31, 1996, the Company
had no outstanding borrowings pursuant to the agreement.

   Pursuant  to  two  distributorship agreements between  the  Company  and
Sorin,  which  provide  for the distribution by the Company  and  Sorin  of
certain of each other's diagnostic products in specified areas, the Company
had  product  sales to and product purchases from Sorin in the  amounts  of
$7,965,000  and $2,272,000, respectively, for the year ended  December  31,
1995.   Pursuant  to certain other product distribution agreements  between
the  Company and Sorin, the Company accrued royalties to Sorin of  $582,000
during the year ended December 31, 1995.

   Reference  is  also  made to the second through fifth  paragraphs  under
Part I, Item 1. Business, General Section, describing the Merger Agreement.

<PAGE>
                                  PART IV


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

               (a)     List of documents filed as part of this report:

                       (1) Consolidated Statements of Operations -
                            Years Ended December 31, 1996, December 31, 1995,
                            and December 31, 1994
                           Consolidated Balance Sheets - As of December
                            31, 1996 and 1995
                           Consolidated Statements of Cash Flows -
                            Years Ended December 31, 1996, December 31, 1995;
                            and December 31, 1994
                           Consolidated Statements of Shareholders' Equity -
                            Years Ended December 31, 1996; December 31, 1995;
                            and December 31, 1994
                           Consolidated Quarterly Results (unaudited)
                            for the Years Ended December 31, 1996 and 1995
                           Notes to Consolidated Financial Statements
                           Independent Auditors' Report

                       (2) Financial Statement Schedule:
                           Schedule II - Valuation and Qualifying Accounts

           All other financial statement schedules not listed have been
           omitted since the required information is included in the
           consolidated financial statements or the notes thereto or is
           not applicable or required.

                       (3) Exhibits:

     Number          Description


       3.1      Restated  Articles  of  Incorporation  of
                INCSTAR  Corporation, as amended to date  [incorporated  by
                reference  to  Exhibit 4.1 to the Registrant's Registration
                Statement on Form S-8 (File No. 33-84498)].

       3.2      Bylaws of INCSTAR Corporation, as amended
                to  date [incorporated by reference to Exhibit 4.2  to  the
                Registrant's Registration Statement on Form S-8  (File  No.
                33-84498)].

       4.1      Specimen  Certificate  representing  the
                Registrant's  Common Stock [incorporated  by  reference  to
                Exhibit  4.1 to the Registrant's Registration Statement  on
                Form S-3 (File No. 33-37805)].

        4.2     Form of Warrant Certificate issued by the
                Registrant in favor of Bioengineering International B.V.
                (now BioFin Holding International B.V.) [incorporated by
                reference to Exhibit 10.11 of the Registrant's
                Registration Statement on Form S-4 (File No. 33-30785)].

        4.3     Form of Purchase Rights Agreement between
                Bioengineering International B.V. (now BioFin Holding
                International B.V.) and the Registrant [incorporated by
                reference to Exhibit 10.12 of the Registrant's
                Registration Statement on Form S-4 (File No. 33-30785)].

        10.1*   INCSTAR Corporation Stock Option Plan
                [incorporated by reference to Exhibit 10.1 of the
                Registrant's Report on From 10-K for the year ended
                December 31, 1995 (File No. 1-9800)].

        10.2*   Economic Value Sharing Plan [incorporated
                by reference to Exhibit 10.1 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1994 (File No. 1-
                9800)].

        10.3*   Form of Executive Survivor Benefit Income
                Continuation Agreement between the Registrant and certain
                of its employees [incorporated by reference to Exhibit
                10.4 of the Registrant's Registration Statement on Form S-
                4 (File No. 33-30785)].

        10.4*   Executive Survivor Benefit Income
                Continuation Plan covering certain executive officers of
                the Registrant [incorporated by reference to Exhibit 10.4
                of the Registrant's Report on Form 10-K for the year ended
                December 31, 1993 (File No. 1-9800)].

        10.5*   Form of Employment Agreement between the
                Registrant and John J. Booth [incorporated by reference to
                Exhibit 10.13 of the Registrant's Registration Statement
                on Form S-4 (File No. 33-30785)].

        10.6*   Amendments to Employment Agreement between
                the Registrant and John J. Booth [incorporated by
                reference to Exhibit 10.8 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1993 (File No. 1-
                9800)].

        10.7*   Employment Continuation Agreement between
                the Registrant and Orwin L. Carter [incorporated by
                reference to Exhibit 10.1 of the Registrant's report on
                Form 10-Q for the quarter ended September 30, 1994 (File
                No. 1-9800)].

        10.8*   Separation Agreement between the
                Registrant and Jacques A. Bagdasarian [incorporated by
                reference to Exhibit 10.1 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1994 (File No. 1-
                9800)].

        10.9    Form of Scientific Advisory Board
                agreement between the Registrant and Dr. Pierre M.
                Galletti and Dr. Michael Steffes [incorporated by
                reference to Exhibit 10.9 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1995 (File No. 1-
                9800)].

        10.10   Consulting Agreement between the
                Registrant and Dr. Michael Steffes [incorporated by
                reference to Exhibit 10.10 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1995 (File No. 1-
                9800)].


        10.11   Form of Distributorship Agreement between
                the Registrant and Sorin Biomedica S.p.A., without
                exhibits or schedules [incorporated by reference to
                Exhibit 10.15 of the Registrant's Registration Statement
                on Form S-4 (File No. 33-30785)].

        10.12   Form of Distributorship Agreement between
                Sorin Biomedica S.p.A. and the Registrant [incorporated by
                reference to Exhibit 10.16 of the Registrant's
                Registration Statement on Form S-4 (File No. 33-30785)].

        10.13   Distribution Agreement, dated October 30,
                1986, between Clinical Sciences Inc. and Sorin Biomedica
                S.p.A., as amended [incorporated by reference to Exhibit
                10.17 of the Registrant's Registration Statement on Form S-
                4 (File No. 33-30785)].

        10.14   Form of Technology Transfer Agreement
                between the Registrant and Sorin Biomedica S.p.A.
                [incorporated by reference to Exhibit 10.18 of the
                Registrant's Registration Statement on Form S-4 (File No.
                33-30785)].

        10.15   Distribution and Supply Agreement between
                Baxter International Inc. and the Registrant dated
                September 19, 1990 [incorporated by reference to Exhibit
                10(b) of the Registrant's report on Form 10-Q for the
                quarter ended September 30, 1990 (File No. 1-9800)].

        10.16   Product Distribution Agreement between
                Centocor, Inc. and the Registrant dated December 2, 1991
                [incorporated by reference to Exhibit 10.14 of the
                Registrant's Report on Form 10-K for the year ended
                December 31, 1991 (File No. 1-9800)].

        10.17.1 Letter agreements dated August 3, 1992 and
                February 19, 1993 amending the product distribution
                agreement filed as Exhibit 10.15 [incorporated by
                reference to Exhibit 10.14.1 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1993 (File No. 1-
                9800)].

        10.18   Revolving Credit, Security and Note
                Agreement, with exhibits thereto, dated as of December 27,
                1993 between Norwest Bank Minnesota, National Association
                and the Registrant [incorporated by reference to Exhibit
                10.1 of the Registrant's Report on Form 10-K for the year
                ended December 31, 1994 (File No. 1-9800)].

       10.18.1  First Amendment dated January 3, 1995 to
                Revolving Credit, Security and Note Agreement filed as
                Exhibit 10.16 [incorporated by reference to Exhibit 10.1
                of the Registrant's Report on Form 10-K for the year ended
                December 31, 1994 (File No. 1-9800)].

       10.18.2  Second Amendment dated February 15, 1995
                to Revolving Credit, Security and Note Agreement filed as
                Exhibit 10.16 [incorporated by reference to Exhibit 10.1
                of the Registrant's Report on Form 10-K for the year ended
                December 31, 1994 (File No. 1-9800)].

        10.18.3 Third Amendment dated January 29, 1996 to
                Revolving Credit, Security and Note Agreement filed as
                Exhibit 10.16 [incorporated by reference to Exhibit 10.1
                of the Registrant's Report on Form 10-K for the year ended
                December 31, 1995 (File No. 1-9800)].

        10.18.4+Fourth Amendment dated January 31, 1997 to
                Revolving Credit, Security and Note Agreement filed as
                Exhibit 10.16.

        10.19   Agreement for Purchase, Sale and
                Distribution of Assets between TheraTest Laboratories Inc.
                and the Registrant dated May 16, 1994 [incorporated by
                reference to Exhibit 10.1 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1994 (File No. 1-
                9800)].

        10.20+  Agreement and Plan of Merger, dated March
                10, 1997, among American Standard Inc., American Standard
                Medical Systems, Inc., ISTR Merger Corporation and INCSTAR
                Corporation.

        11+     Statement Re: Computation of  Net  Income (Loss) Per Common
                Share.

        21+     Subsidiaries of the Registrant.

        23+     Independent Auditors' Consent

        27+     Financial Data Schedules

        *Executive Compensation Plans and Arrangements
        +Filed with this Annual Report on Form 10-K

                (b) Reports on Form 8-K

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

<PAGE>
                                SIGNATURES

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

                                          INCSTAR CORPORATION


Dated: March 27, 1997          By:       /s/ John J. Booth
                                         John J. Booth
                                         President


      Pursuant  to the requirements of the Securities and Exchange  Act  of
1934,  this report has been signed below by the following persons on behalf
of the Registrant and in the capacities indicated on March 27, 1997.


/s/John  J.  Booth                       Acting  Chairman  of  the   Board,
John J. Booth                             President and Director
                                          (Principal Executive Officer)

/s/Thomas  P.  Maun                      Vice President and Chief  Financial
Thomas P. Maun                            Officer
                                          (Principal Accounting and Financial
                                          Officer)

/s/Ennio Denti                           Director
Ennio Denti

/s/Michael W. Steffes                    Director
Michael W. Steffes, M.D., Ph.D.

/s/George H. Dixon                       Director
George H. Dixon

/s/Unberto Rosa                          Director
Umberto Rosa

/s/Carlo Vanoli                          Director
Carlo Vanoli

/s/D. Ross Hamilton                      Director
D. Ross Hamilton

/s/Franco Fornasari                      Director
Franco Fornasari

/s/Ezio Garibaldi                        Director
Ezio Garibaldi

<PAGE>
                           INCSTAR CORPORATION
                   CONSOLIDATED STATEMENTS OF OPERATIONS

                                          Year Ended December 31,
                                     1996           1995           1994
Net sales                        $44,304,000     $45,760,000   $42,503,000
Cost of goods sold                21,599,000      23,271,000    22,039,000
Inventory valuation adjustment            --              --       750,000
     Gross profit                 22,705,000      22,489,000    19,714,000
Operating expenses:
  Selling, general and
   administrative                 13,206,000      12,592,000    12,853,000
  Research and development         4,163,000       3,748,000     5,069,000
  Unusual items                           --              --     5,750,000
     Total operating expenses     17,369,000      16,340,000    23,672,000
     Operating income (loss)       5,336,000       6,149,000    (3,958,000)
Interest income (expense), net        96,000        (348,000)     (365,000)
Investment and other income
 (expense)                           (21,000)         33,000        11,000
  INCOME (LOSS) BEFORE INCOME
    TAXES                          5,411,000       5,834,000    (4,312,000)
Provision for income taxes         1,299,000       1,571,000       193,000
     NET INCOME (LOSS)           $ 4,112,000     $ 4,263,000   $(4,505,000)
INCOME (LOSS) PER SHARE:
Net income (loss) per share      $      0.25     $      0.26   $     (0.28)
Weighted average shares and
  equivalents                     16,661,367      16,491,501     16,322,301


 The accompanying notes are an integral part of the consolidated financial
                                statements.
<PAGE>

                                     INCSTAR CORPORATION
                                 CONSOLIDATED BALANCE SHEETS

                                            December 31,      December 31,

                                                 1996              1995
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                    $ 1,554,000       $   460,000
Restricted cash                                  250,000           251,000
Accounts receivable, net of allowance
 for doubtful  accounts of $190,000 and
 $107,000, respectively                        7,573,000         7,575,000
Other receivables                                413,000            24,000
Inventories                                   14,302,000        13,445,000
Other current assets                             629,000           294,000
TOTAL CURRENT ASSETS                          24,721,000        22,049,000

PROPERTY AND EQUIPMENT:
Land and land improvements                     1,573,000         1,573,000
Buildings and improvements                    13,531,000        13,252,000
Equipment and furniture                       19,993,000        18,170,000
Construction in progress                          41,000             6,000
                                              35,138,000        33,001,000
Less allowance for depreciation and
 amortization                                (20,032,000)      (18,387,000)
                                              15,106,000        14,614,000
INTANGIBLE ASSETS, NET                           791,000         1,105,000
OTHER ASSETS                                   1,340,000           993,000
                                             $41,958,000       $38,761,000
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt            $     3,000       $    76,000
Accounts payable                               1,819,000         1,914,000
Accrued compensation                             898,000         1,972,000
Accrued expenses                               2,448,000         2,928,000
Income taxes payable                             364,000           212,000
TOTAL CURRENT LIABILITIES                      5,532,000         7,102,000

LONG-TERM DEBT                                       ---             3,000

OTHER NON-CURRENT LIABILITIES                  3,285,000         3,272,000

SHAREHOLDERS' EQUITY:
Undesignated stock, authorized
 5,000,000 shares                                 - - -             - - -
Common stock, par value $.01,
 authorized 25,000,000 shares; issued
 and outstanding 16,505,457 and
 16,363,477 shares, respectively                 165,000           164,000
Additional paid-in capital                    18,531,000        17,940,000
Foreign currency translation
 adjustment                                      (98,000)         (151,000)
Retained earnings                             14,543,000        10,431,000
TOTAL SHAREHOLDERS' EQUITY                    33,141,000        28,384,000
                                             $41,958,000       $38,761,000

 The accompanying notes are an integral part of the consolidated financial
                                statements.

<PAGE>
                            INCSTAR CORPORATION
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                   Year Ended December 31,
                                                 1996           1995            1994
<S>                                          <C>            <C>           <C>
OPERATING ACTIVITIES:
Net income (loss)                            $ 4,112,000    $ 4,263,000   $(4,505,000)
Adjustments to reconcile net income (loss)
 to net cash provided by operating
 activities:
 Provision for deferred income taxes            (555,000)            --            --
 Provision (payments) for unusual items and     (590,000)    (1,060,000)    5,371,000
  inventory valuation adjustment
 Provision for retirement plans                  261,000        272,000       529,000
 Depreciation and amortization                 2,882,000      2,910,000     3,395,000
 Changes in operating assets and liabilities:
   Accounts receivable                             2,000       (816,000)       39,000
   Other receivables                            (389,000)        95,000       (29,000)
   Inventories                                  (857,000)    (1,077,000)      194,000
   Other current assets                          (77,000)       212,000       (21,000)
   Accounts payable                              (95,000)       254,000      (229,000)
   Accrued compensation                       (1,074,000)       554,000      (108,000)
   Accrued expenses                             (105,000)       975,000        90,000
   Income taxes payable                          481,000        320,000       (56,000)
   Other, net                                     53,000        (33,000)       35,000
     Net cash provided by operating activities 4,049,000      6,869,000     4,705,000

INVESTING ACTIVITIES:
Additions to property and equipment, net      (2,645,000)    (1,557,000)     (923,000)
Payments for product distribution rights              --             --      (599,000)
Payments for intellectual property and          (407,000)       (86,000)           --
 purchased technology
Increase in other assets                         (92,000)       (36,000)      (65,000)
  Net cash used in investing activities       (3,144,000)    (1,679,000)   (1,587,000)

FINANCING ACTIVITIES:
Net repayments under lines of credit                  --             --      (422,000)
Net decrease in cash overdraft                        --       (602,000)     (512,000)
(Increase) decrease in restricted cash             1,000             --       (11,000)
Payments on long-term debt                       (76,000)    (4,342,000)   (2,364,000)
Issuance of common stock to employees            264,000         61,000       119,000
  Net cash provided by (used in) financing
   activities                                    189,000     (4,883,000)   (3,190,000)

   NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS                                1,094,000        307,000       (72,000)
Cash and cash equivalents at beginning of year   460,000        153,000       225,000
Cash and cash equivalents at end of year     $ 1,554,000    $   460,000    $  153,000
</TABLE>

 The accompanying notes are an integral part of the consolidated financial
                                statements.
<PAGE>
                            INCSTAR CORPORATION
              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                      Common Stock                      Foreign
                                                           Additional   Currency
                                 Number of                  Paid-In    Translation     Retained
                                  Shares        Amount      Capital     Adjustment     Earnings

<S>                             <C>          <C>          <C>         <C>            <C>
Balance at December 31, 1993    16,281,057   $   163,000  $17,557,000 $   (153,000)  $10,673,000
Common stock issued under
 employee stock purchase plan
 and upon exercise of stock
 options                            41,464             _      119,000            _            _
Translation adjustments                  _             _            _       35,000            _
Net loss                                 _             _            _            _    (4,505,000)
Balance at December 31, 1994    16,322,521   $   163,000  $17,676,000 $   (118,000)  $ 6,168,000
Common stock issued under
 employee stock purchase plan
 and upon exercise of stock
 options                            40,956         1,000       61,000            _            _
Translation adjustments                  _             _            _      (33,000)           _
Compensation expense on
 executive stock options                 _             _      203,000            _            _
Net income                               _             _            _            _     4,263,000
Balance at December 31, 1995    16,363,477   $   164,000  $17,940,000 $   (151,000)  $10,431,000
Common stock issued under
 employee stock purchase plan
 and upon exercise of stock
 options, net of tax effect         97,873         1,000      199,000            _            _
Issuance of shares to BFHI          44,107             _       64,000            _            _
Translation adjustments                  _             _            _       53,000            _
Compensation expense on
 executive stock options                 _             _      328,000            _            _
Net income                               _             _            _            _     4,112,000
Balance at December 31, 1996    16,505,457    $  165,000  $18,531,000  $   (98,000)  $14,543,000

</TABLE>

 The accompanying notes are an integral part of the consolidated financial
                                statements.
<PAGE>
                             INCSTAR CORPORATION
<TABLE>
<CAPTION>

QUARTERLY RESULTS (UNAUDITED):
(in thousands, except per share data)


Net                                       Gross
Sales                                     Profit


                 Year Ended                              Year Ended
                December 31,                            December 31,
Quarter        1996         1995           Quarter      1996       1995
<S>       <C>            <C>               <S>       <C>        <C>
First     $    11,455    $  11,117         First     $  5,916   $  5,130
Second         11,355       11,041         Second       5,679      5,319
Third          10,604       11,664         Third        5,479      5,873
Fourth         10,890       11,938         Fourth       5,631      6,167



<CAPTION>
Net Income                                Net Income Per Share



             Year Ended                                Year Ended
            December 31,                              December 31,
Quarter    1996     1995                  Quarter     1996     1995
<S>       <C>     <C>                     <S>       <C>      <C>
First     $1,158  $   799                 First     $  0.07  $  0.05
Second     1,119      827                 Second       0.07     0.05
Third        986    1,092                 Third        0.06     0.07
Fourth       849    1,545                 Fourth       0.05     0.09
</TABLE>
<PAGE>
                            INCSTAR CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1_SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS
      INCSTAR  Corporation  (the "Company") is a medical  immunodiagnostics
company  focused on the development, production and worldwide marketing  of
reagents,   particularly   for   bone/mineral  metabolism,   endocrinology,
infectious  and  autoimmune  diseases.  The Company  predominantly  markets
these products in North America, Europe and Asia.

       Since  December 1989, the Company has been majority-owned by  BioFin
Holding  International  B.V.  ("BFHI"), a  subsidiary  of  Sorin  Biomedica
Diagnostics S.p.A. ("Sorin") which is an Italian affiliate of Fiat, Inc.

PRINCIPLES OF CONSOLIDATION
      The   accompanying  consolidated  financial  statements  include  the
accounts   of  INCSTAR  Corporation   and  its  wholly-owned  subsidiaries,
Atlantic Antibodies, Inc., INCSTAR Ltd. and Immuno Nuclear Export Ltd.  All
material  inter-company accounts and transactions have been  eliminated  in
consolidation.   Certain  amounts  for periods  prior  to  the  year  ended
December  31,  1996  have  been reclassified to conform  with  the  current
classifications.

CASH EQUIVALENTS
       Cash  equivalents consist primarily of investments in  money  market
accounts with current maturities.

RESTRICTED CASH
        Through  December 31, 1995 the Company maintained  a  self  insured
workers  compensation insurance plan.  Pursuant to the  plan,  the  Company
holds  a  certificate of deposit with current maturity  as  a  compensating
balance  with  a bank.  These funds are restricted to assure future  credit
availability  for  the potential self insured aggregate  limits  under  the
plan.   The funds are required to be on deposit with a bank under Minnesota
state regulations and are expected to be released in the fourth quarter  of
1997.  As of January 1, 1996, the Company is no longer self insured.

INVENTORIES
        Inventories  are  valued  at  the  lower  of  average  cost,  which
approximates the first-in, first-out (FIFO) method, or market.

FAIR VALUE OF FINANCIAL INSTRUMENTS
        All  financial instruments are carried at amounts that  approximate
estimated fair value.

PROPERTY AND EQUIPMENT
       Property and equipment, including equipment under capital leases, is
reported   at   cost   less  accumulated  depreciation  and   amortization.
Maintenance  and  repairs are charged to expense as incurred.  The  Company
computes depreciation and amortization using the straight-line method based
on  estimated  useful  lives  of three to seven  years  for  equipment  and
furniture and seven to thirty years for buildings and improvements.

INTANGIBLE ASSETS
      Intangible assets includes patents, trademarks, intellectual property
and purchased technology, goodwill and product distribution rights. Patents
and  trademarks are amortized using the straight-line method over  a  five-
year  period.  Goodwill, which represents the cost in excess  of  the  fair
value  of net assets acquired, is amortized using the straight-line  method
over  a ten-year period. Intellectual property and purchased technology  is
amortized  using  the  straight line method over the  properties  estimated
useful  lives  which  range from seven to ten years.  Product  distribution
rights  are amortized using the straight line method over the life  of  the
agreement  or  the  estimated  product life,  whichever  is  shorter.   The
carrying  value of intangible assets is regularly reviewed by the  Company,
and  a  loss  is recognized when the net realizable value falls  below  the
unamortized cost.

RESEARCH and Development
     Research and development costs are expensed when incurred.

INCOME TAXES
      The Company accounts for income taxes in accordance with Statement of
Financial  Accounting  Standard ("SFAS") No.  109.   Under  the  asset  and
liability  method of SFAS No. 109, deferred tax assets and liabilities  are
recognized  for  the  future tax consequences attributable  to  differences
between  the  financial statement carrying amounts of existing  assets  and
liabilities  and  their  respective tax bases.   Deferred  tax  assets  and
liabilities  are  measured using enacted tax rates  expected  to  apply  to
taxable  income  in  the  years in which those  temporary  differences  are
expected  to  be recovered or settled.  Under SFAS No. 109, the  effect  on
deferred  tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.

INCOME (LOSS) PER SHARE
      Income (loss) per share is computed by dividing net income (loss)  by
the  weighted  average number of shares of common stock  and  common  stock
equivalents,  consisting of stock options and warrants, outstanding  during
the period.  For all periods presented, fully diluted and primary income or
loss  per  share are the same.  For 1994, the effects of stock options  and
warrants  were  excluded  from the computation of weighted  average  shares
outstanding because their effects were antidilutive.

FOREIGN CURRENCY TRANSLATION
      Assets and liabilities of foreign operations are translated at  rates
of  exchange  in effect at period end. Statement of operations amounts  are
translated at the average rate of exchange for the period. Gains and losses
resulting  from  translation are accumulated in  a  separate  component  of
shareholders' equity. Foreign currency transaction gains and losses,  which
are   not  material,  are  included  in  the  consolidated  statements   of
operations.

STOCK BASED COMPENSATION
      The  Company applies Accounting Principles Board Opinion No. 25  (APB
No.   25),   ACCOUNTING  FOR  STOCK  ISSUED  TO  EMPLOYEES,   and   related
interpretations in accounting for its plans.  Accordingly, no  compensation
expense  has been recognized for its stock-based compensation  plans.   The
Company  has  adopted  the  disclosure requirements  under  SFAS  No.  123,
Accounting and Disclosure of Stock-Based Compensation.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
      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.

NOTE 2_ UNUSUAL ITEMS AND INVENTORY VALUATION ADJUSTMENTS

    In December, 1994 the Company recorded a $750,000 charge related to the
write down of excess inventories and a $2,450,000 unusual charge related to
the termination of certain distribution and supply agreements ($540,000) as
well  as  severance  and other costs related to senior  management  changes
($1,910,000).   The  amount  remaining to be paid  at  December  31,  1996,
exclusive  of amounts included in noncurrent liabilities (Note 9, Executive
Retirement Plans) is $10,000, which is included in accrued expenses in  the
accompanying consolidated balance sheet.

     In  May,  1994  the  Company discontinued the development  of  certain
purchased  technology  acquired in 1992 from Robert  Dowben  Associates,  a
diagnostic  research  company, and incurred a one-time  pre-tax  charge  of
$3,300,000.   The  majority of this charge related  to  the  write  off  of
tangible  and  intangible assets ($1,560,000), costs incurred to  terminate
contracts  with  outside  vendors and consultants ($797,000),  as  well  as
severance and related costs for terminated employees ($943,000).   None  of
these amounts remain to be paid on December 31, 1996.

NOTE 3 - INVENTORIES

      Inventories consist of the following:

                                                 December 31,
                                              1996             1995
Raw materials                             $ 2,458,000      $ 2,281,000
Work in progress                            9,515,000        9,421,000
Finished goods                              2,329,000        1,743,000
                                          $14,302,000      $13,445,000

NOTE 4 - INTANGIBLE ASSETS

  Intangible assets consist of the following:

                                                   December 31
                                               1996            1995
Patents                                   $   717,000     $   717,000
Trademarks                                     17,000          17,000
Goodwill                                      619,000         619,000
Intellectual property and purchased         1,141,000         734,000
 technology
Product distribution rights                 2,700,000       2,700,000
                                            5,194,000       4,787,000
Less accumulated amortization              (4,403,000)     (3,682,000)
                                          $   791,000     $ 1,105,000


NOTE 5_LINE OF CREDIT,  LEASE AND ROYALTY COMMITMENTS

      Long-term debt consists of the following:

                                                       December 31,
                                                    1996           1995

Capitalized lease obligations, 8.0%, due
 through 1996                                         ---          72,000
Other                                               3,000           7,000
                                                    3,000          79,000
      Less current portion                         (3,000)        (76,000)
      Total long-term debt                       $    ---      $    3,000


      The Company has a revolving line of credit from a bank which provides
for  maximum borrowings of $1,000,000 through January 31, 1997, is  secured
by  accounts  receivable,  and has an interest  rate  based  on  the  prime
interest  rate  or  LIBOR  plus  2.50%.  In addition,  the  Company  has  a
$4,000,000  revolving  line of credit with Fiat Finance  N.A.,  Inc.  which
expires on October 1, 1997.

       At  December  31,  1996  and 1995, property and  equipment  includes
capital lease costs of $288,000 and $842,000, respectively, and accumulated
amortization  of  $288,000 and $773,000, respectively.  Lease  amortization
included  in depreciation was $40,000 for the year ended December 31,  1996
and $158,000 for the year ended December 31, 1995.

       The  Company  leases certain manufacturing and  other  equipment  in
connection with its normal operations.  Rent expense under these  operating
leases was $226,000, $295,000 and $238,000 for the years ended December 31,
1996,  1995 and 1994, respectively.  Future minimum lease payments for  all
noncancelable  operating leases having a remaining term in  excess  of  one
year   are   as   follows:   1997_$173,000;  1998_$116,000;   1999_$44,000;
2000_$5,000.

       The  Company  is  obligated to make royalty payments  under  several
distribution  and  licensing agreements.  The majority of these  agreements
call  for  payments based on  a percentage of sales and contain no  minimum
royalty  clause.  Royalty expense under these agreements was $1,563,000  in
1996, $1,715,000 in 1995 and $1,099,000 in 1994.

NOTE 6 -  RELATED PARTY TRANSACTIONS
<TABLE>
      As   part   of  the  ongoing  operations  of  the  Company,   various
transactions  were  entered  into during  1996,  1995  and  1994  with  its
affiliates,  Sorin, an affiliate of the Fiat group, and Fiat Finance  N.A.,
Inc.  The following tables summarize transactions and related balances:
<CAPTION>
OPERATING                             Sorin                Fiat Finance N.A., Inc.
STATEMENT DATA:                            Year Ended December 31,
                          1996        1995         1994      1996     1995     1994
<S>                  <C>         <C>           <C>          <C>      <C>      <C>
Product sales        $ 7,965,000 $ 7,625,000   $ 6,903,000  $  --- $    ---  $   ---
Product purchases      2,272,000   1,807,000     1,248,000     ---      ---      ---
Royalty expense          432,000     582,000       176,000     ---      ---      ---
Interest expense             ---         ---           ---   6,000  170,000   312,000

<CAPTION>
BALANCE SHEET DATA:                 Sorin
                                 December 31,
                                1996          1995
<S>                         <C>           <C>
Assets
Trade receivables           $ 2,442,000   $  1,965,000
Other receivables                59,000          6,000


Liabilities
Accounts payable            $   353,000   $    675,000
Accrued royalty                 798,000        480,000
</TABLE>

NOTE 7_INCOME TAXES

      The provision for income taxes is summarized as follows:

Year Ended December 31,          Federal     State     Foreign     Total
1996
Current                        $ 1,644,000  $ 212,000  $ (2,000)  $1,854,000
Deferred                          (491,000)   (64,000)    - - -     (555,000)
Provision for Income Taxes     $ 1,153,000  $ 148,000  $ (2,000)  $1,299,000

1995
Current                        $ 1,505,000  $  89,000  $(23,000)  $1,571,000
Deferred                             - - -      - - -     - - -       - - -
Provision for Income Taxes     $ 1,505,000  $  89,000  $(23,000)  $1,571,000

1994
Current                        $   123,000  $  34,000  $ 36,000   $  193,000
Deferred                             - - -      - - -     - - -        - - -
Provision for Income Taxes     $   123,000  $  34,000  $ 36,000   $  193,000



      The provision for income taxes differs from the statutory federal tax
rate of 34% applied to income (loss) before income taxes as follows:

                                            Year Ended December 31,
                                         1996          1995         1994

Federal  tax  calculated  at   the
 statutory rate                      $  1,840,000   $ 1,984,000  $(1,466,000)
Change  in the valuation allowance
 for deferred taxes                      (914,000)     (532,000)   1,872,000
Exempt   income  attributable   to
 foreign sales                           (266,000)     (333,000)    (288,000)
State   taxes,  net   of   federal
 benefit                                   98,000        59,000       22,000
Compensation expense on  executive
 stock options                            328,000       203,000        - - -
Other, net                                213,000       190,000       53,000
Provision for income taxes           $  1,299,000   $ 1,571,000  $   193,000


      The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1996 and
1995 are as follows:

                                              December 31,     December 31,
                                                   1996             1995
Deferred tax assets:
Accounts receivable, principally due to
 allowance for doubtful accounts             $      56,000    $      29,000
Accrued vacation pay                                33,000           27,000
Inventories, reserves and additional
 costs inventoried for tax purposes                637,000          728,000
Patents, due to different book and tax lives        24,000           27,000
Retirement plans                                 1,117,000        1,066,000
Tax credits                                         60,000          492,000
Accrual not currently deductible                   265,000              ---
Severance and related costs not currently              ---          189,000
 deductible
Other                                               35,000           26,000
Gross deferred tax assets                        2,227,000        2,584,000
Valuation allowance                             (1,639,000)      (2,553,000)
 Net deferred tax asset                      $     588,000   $       31,000

Deferred tax liabilities:
Plant and equipment, principally due to
 differences in depreciation and             $      44,000   $       41,000
 capitalized interest
Other                                                4,000            5,000
 Deferred tax liability                      $      48,000   $       46,000

Total net deferred tax asset (liability)     $     540,000   $     ( 15,000)

       The  valuation allowance for deferred tax assets as of December  31,
1996  and 1995 was $1,639,000 and $2,553,000, respectively.  The net change
in  the  valuation allowance for the year ended December  31,  1996  was  a
decrease  of  $914,000.   In assessing the realizability  of  deferred  tax
assets,  management considers whether it is more likely than not that  some
portion  or  all  of  the deferred tax assets will not  be  realized.   The
ultimate  realization  of  deferred  tax  assets  is  dependent  upon   the
generation  of  future  taxable income during the periods  in  which  those
temporary   differences  become  deductible.   Management   considers   its
projected future taxable income and tax planning strategies in making  this
assessment.

NOTE 8_EMPLOYEE SAVINGS RETIREMENT AND VALUE SHARING PLAN

     The  Company adopted a Salary Savings Plan under Section 401(k) of the
Internal  Revenue Code, effective November 1, 1985. Participants make  pre-
tax contributions of up to 15% of their wages subject to an annual limit of
$9,500.  The  Company  is  required to match 50% of  that  portion  of  the
participant's  pre-tax  contribution  which  does  not  exceed  6%  of  the
participant's compensation. The Company contributed $270,000 for  the  year
ended December 31, 1996, $262,000 for the year ended December 31, 1995, and
$273,000 for the year ended December 31, 1994.

     In  1994  the  Company  changed its profit  sharing  plan  to  a  non-
contributory  value sharing plan.  Cash payments to all eligible  employees
are  based  on  the  improvement in economic value as well  as  a  targeted
performance  factor  for  economic value added.  The  Company  incurred  $0
expense for the year ended December 31, 1996, $984,000 expense for the year
ended December 31, 1995 and $0 for the year ended December 31, 1994.


NOTE 9_EXECUTIVE RETIREMENT PLANS

      The   Company  has  individual  retirement  agreements  with  certain
current  and  prior  executive  officers  which  are  intended  to  provide
continued   compensation   to   such  individuals   or   their   respective
beneficiaries  upon the later of their retirement from  the  Company  after
attainment  of  sixty years of age (fifty-five years of age  for  one  plan
participant) or attainment of sixty years of age (fifty-five years  of  age
for  one  plan  participant) following termination of employment,  or  upon
death during the term of employment (the "triggering events").  Subject  to
vesting requirements, the retirement agreements provide for the payment  to
these individuals or their respective beneficiaries, of annual benefits for
a  period of fifteen years following the occurrence of a triggering  event.
The  amount  of annual benefits is adjusted annually to reflect changes  in
the cost of living.  The annual benefit amounts vest at the rate of 10% per
year.

      The  Company maintains an executive income continuation plan for  the
benefit  of  executive officers not covered under the agreements  discussed
above.   The  plan provides payments for fifteen years to such officers  or
their  respective  beneficiaries upon the later of an officer's  retirement
from  the  Company after attainment of sixty years of age or attainment  of
sixty  years  of  age following termination of employment,  or  upon  death
during  the  term  of  employment.  The annual retirement  payment  is  the
product of an annual benefit rate set by the Board of Directors ($3,333 for
1996)  multiplied by the number of years of employment, up to a maximum  of
fifteen years, and as adjusted to reflect the cost of living changes during
the  payment  period.  An officer's rights under the plan are fully  vested
after ten years of employment or upon change in the controlling interest of
the Company.

      In  connection  with  both  of the above  plans,  included  in  other
noncurrent  liabilities  at December 31, 1996 and 1995  is  $3,285,000  and
$3,136,000,  respectively, representing the present  value  of  the  future
liability.   Also, included in accrued expenses at December  31,  1996  and
December  31, 1995 is $145,000 and $31,000, respectively, representing  the
current  portion  of  this liability.  The Company  intends  to  fund  this
obligation  through life insurance contracts on the individual  executives.
Included  in  Other assets at December 31, 1996 and 1995 is $1,020,000  and
$934,000,  respectively, of cash surrender value in connection  with  these
policies.


NOTE 10_EMPLOYEE STOCK PURCHASE AND OPTION PLAN

        Under the Company's stock option plans, officers, directors,
consultants and key employees may be granted options to purchase the
Company's common stock at no less than 100% of the market price on the date
the option is granted.  Options generally become exercisable over two to
four years and have terms of five or ten years.

Option  activity  in the Company's various option plans  is  summarized  as
follows:

                                                Options Outstanding
                                                         Weighted-
                                   Shares                 Average
                                  reserved                 Option
                                  for grant   Shares       price

Balance December 31, 1993         337,168     842,175   $      3.88
 Exercised                            ---      (1,500)         1.79
 Canceled                         136,000    (136,000)         4.05
 Granted                         (119,000)    119,000          2.60

Balance December 31, 1994         354,168     823,675   $      3.68
 Exercised outside the plan                    (1,000)         1.44
 Canceled                         206,000    (206,000)         3.40
 Canceled outside the plan                    (14,035)         1.85
 Granted                         (103,000)    103,000          2.95

Balance December 31, 1995         457,168     705,640   $      3.66
 Exercised                            ---     (48,000)         2.50
 Canceled                          30,000     (30,000)         3.30
 Granted                          (42,000)     42,000          4.39

Balance December 31, 1996         445,168     669,640   $      3.81

      As  of  December 31, 1996 options for 538,140 shares were exercisable
at prices ranging from $1.44 to $8.25 per share.

      At  December  31,  1996, the range of exercise prices  and  weighted-
average  remaining contractual life of outstanding options was  $1.44-$8.25
and 6.12 years, respectively.

       The  Company  also had an Employee Stock Purchase Plan.   This  plan
enabled  eligible employees to purchase the Company's Common Stock  at  the
lower of 85% of the fair market value on the first or the last day of  each
plan  year.  The  number of shares reserved for sale under  this  plan  was
300,000,  of which all shares have been sold.  The Company does not  intend
to issue more shares under this plan.

       In  October  1995, the Financial Accounting Standards  Board  issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based   Compensation."   The  Company  has  adopted   the   disclosure-only
provisions.   Had compensation cost for the Company's stock  option  grants
and  employee stock purchase plan been determined consistent with SFAS 123,
the Company's net income and earnings per share would have been changed  to
the pro forma amounts indicated below:

                                          1996               1995
Net income (in 000s)  As reported       $  4,112        $    4,263
                      Pro forma            4,032             4,209

Earnings per share    As reported       $   0.25        $     0.26
                      Pro forma             0.24              0.26

        The effects of applying SFAS No. 123 in this pro forma disclosure
are not indicative of future amounts as compensation expense applicable to
awards made prior to 1995 are not considered.

        The fair value of stock options used to compute pro forma net
income and earnings per share disclosures is the estimated present value at
grant date using a Black-Scholes option-pricing model with the following
weighted average assumptions for 1996 and 1995:  dividend yield of 0%;
expected weighted average volatility of 63.7%; a weighted average risk free
interest rate of 5.9% and an expected holding period of 9.3 years.  The
weighted average values of the options granted are $3.40 and $1.98 for 1996
and 1995, respectively.


NOTE 11_SUPPLEMENTARY CASH FLOW INFORMATION

                                                Year Ended December 31,
                                             1996       1995       1994
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
    Interest                             $   17,000 $  192,000 $  369,000
    Income taxes, net                     1,295,000  1,151,000    242,000


NOTE 12_GEOGRAPHIC SEGMENT DATA

       Comparative  geographical  data  for  the  Company's  operations  is
summarized as follows:

                                     1996          1995           1994
SALES
United States                    $  22,017,000 $  23,832,000  $  21,282,000
Europe                              13,824,000    13,518,000     12,478,000
Asia                                 5,022,000     4,948,000      5,290,000
Other Foreign                        3,441,000     3,462,000      3,453,000
     Total                       $  44,304,000 $  45,760,000  $  42,503,000

OPERATING INCOME
United States                    $   2,305,000 $   3,052,000  $     877,000
Europe                               1,361,000     1,223,000        639,000
Asia                                   903,000     1,076,000        290,000
Other Foreign                          767,000       798,000        736,000
                                     5,336,000    6 ,149,000      2,542,000
Unusual items                              ---           ---     (5,750,000)
Inventory valuation adjustment             ---           ---       (750,000)
Other income(expenses), net             75,000      (315,000)      (354,000)
Income(loss) before  income taxes$   5,411,000 $   5,834,000  $  (4,312,000)

Total assets
United States                     $ 41,021,000  $ 38,059,000   $ 37,272,000
Europe                                 937,000       702,000        882,000
     Total                        $ 41,958,000  $ 38,761,000   $ 38,154,000


NOTE 13_WARRANTS AND STOCK PURCHASE RIGHTS

       The  Company has issued to BFHI a warrant to purchase up to  730,720
shares of Common Stock at the prevailing market price and has granted  BFHI
the  right to purchase additional Common Stock at a price identical to  any
new  issuances.   These agreements enable BFHI to maintain  a  minimum  51%
ownership in the Company.

NOTE 14_SUBSEQUENT EVENT

         On  January 24, 1997, the Company announced that it has  signed  a
Memorandum  of  Understanding  ("the Memorandum")  with  American  Standard
Inc.("ASI"),  a  subsidiary  of  American Standard  Companies  Inc.,  which
contemplates  acquisition of the Company by a subsidiary of ASI.   Pursuant
to  the  Memorandum, each INCSTAR common share would be converted into  the
right  to  receive $6.32 in cash, and INCSTAR  would become a  wholly-owned
subsidiary of ASI.  Under the merger proposal, INCSTAR would become part of
a newly formed Medical Systems Group within ASI.

         The  Memorandum of Understanding has been approved  by  a  Special
Committee  of independent INCSTAR directors and the boards of directors  of
INCSTAR and ASI.

         The  proposed  merger is subject to negotiation and  execution  of
mutually  satisfactory  definitive documentation, receipt  by  the  Special
Committee  and  the  board of directors of INCSTAR of a  fairness  opinion,
approval  of  the definitive merger agreement by the Special Committee  and
the  boards of directors of INCSTAR and ASI, approval of the merger by  the
holders  of  a  majority of the issued and outstanding  shares  of  INCSTAR
common stock, and receipt of all required regulatory approvals and material
third party consents.

         The  Merger  Agreement further provides for  the  payment  by  the
Company  to ASI of a $2.5 million termination fee if the Company terminates
the merger as defined in the Agreement.

         The Company also announced that BFHI, the majority shareholder  of
INCSTAR  and a wholly owned subsidiary of Sorin, has informed INCSTAR  that
Sorin has entered into a Memorandum of Understanding with ASI regarding the
proposed  sale  of  Sorin's  European Diagnostics  Division  to  ASI.   The
Memorandum of Understanding between ASI and INCSTAR contemplates  that  the
simultaneous closing of the Sorin sale of its European Diagnostics Division
will be a condition to the proposed merger.
<PAGE>


                       INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders of INCSTAR Corporation:

     We  have  audited  the  consolidated financial statements  of  INCSTAR
Corporation  and subsidiaries as listed in the accompanying index  in  Item
14(a)(1)  on  page  24. In connection with our audits of  the  consolidated
financial statements, we also have audited the financial statement schedule
as  listed  in  the accompanying index in Item 14(a)(2) on page  24.  These
consolidated financial statements and financial statement schedule are  the
responsibility  of  the  Company's management.  Our  responsibility  is  to
express an opinion on these consolidated financial statements and financial
statement 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, the consolidated financial statements  referred  to
above  present fairly, in all material respects, the financial position  of
INCSTAR Corporation and subsidiaries as of December 31, 1996 and 1995,  and
the  results of their operations and their cash flows for each of the years
in  the  three-year  period  ended December 31, 1996,  in  conformity  with
generally accepted accounting principles. Also in our opinion, the  related
financial  statement  schedule, when considered in relation  to  the  basic
consolidated financial statements taken as a whole, presents fairly, in all
material aspects, the information set forth therein.





                                                  KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 24, 1997
<PAGE>


              SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                   INCSTAR CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>

          Column A            Column B        Column C          Column D      Column E

                             Balance at
                                the             Charged to
                             Beginning  Charged    Other                    Balance at
                                of      to Costs  Accounts    Deductions_       the
                              Period   & Expenses Describe    (Describe)   End of Period

Allowance for doubtful
accounts receivable:
<S>                          <C>        <C>         <C>         <C>           <C>
Year ended December 31, 1996 $107,000   $118,000    $  - -      $ 35,000(A)   $190,000

Year ended December 31, 1995  113,000     16,000       - -        22,000(A)    107,000

Year ended December 31, 1994  195,000     23,000       - -       105,000(A)    113,000

<FN>
(A) Uncollectible accounts written off, net of recoveries
</FN>
</TABLE>
<PAGE>

                               EXHIBIT INDEX

(a)            List of documents filed as part of this report:

               (1) Consolidated Statements of Operations -
                    Years Ended December 31, 1996, December 31, 1995, and
                    December 31, 1994
                   Consolidated Balance Sheets - As of December
                    31, 1996 and 1995
                   Consolidated Statements of Cash Flows -
                    Years Ended December 31, 1996, December 31, 1995; and
                    December 31, 1994
                   Consolidated Statements of Shareholders' Equity -
                    Years Ended December 31, 1996; December 31, 1995;
                    and December 31, 1994
                   Consolidated Quarterly Results (unaudited)
                    for the Years Ended December 31, 1996 and 1995
                   Notes to Consolidated Financial Statements
                   Independent Auditors' Report

               (2) Financial Statement Schedule:
                   Schedule II - Valuation and Qualifying Accounts

           All other financial statement schedules not listed have been
           omitted since the required information is included in the
           consolidated financial statements or the notes thereto or is
           not applicable or required.

               (3) Exhibits:

    Number      Description

       3.1      Restated  Articles  of  Incorporation  of
                INCSTAR  Corporation, as amended to date  [incorporated  by
                reference  to  Exhibit 4.1 to the Registrant's Registration
                Statement on Form S-8 (File No. 33-84498)].

       3.2      Bylaws of INCSTAR Corporation, as amended
                to  date [incorporated by reference to Exhibit 4.2  to  the
                Registrant's Registration Statement on Form S-8  (File  No.
                33-84498)].

       4.1      Specimen  Certificate  representing  the
                Registrant's  Common Stock [incorporated  by  reference  to
                Exhibit  4.1 to the Registrant's Registration Statement  on
                Form S-3 (File No. 33-37805)].

        4.2     Form of Warrant Certificate issued by the
                Registrant in favor of Bioengineering International B.V.
                (now BioFin Holding International B.V.) [incorporated by
                reference to Exhibit 10.11 of the Registrant's
                Registration Statement on Form S-4 (File No. 33-30785)].

        4.3     Form of Purchase Rights Agreement between
                Bioengineering International B.V. (now BioFin Holding
                International B.V.) and the Registrant [incorporated by
                reference to Exhibit 10.12 of the Registrant's
                Registration Statement on Form S-4 (File No. 33-30785)].

        10.1*   INCSTAR Corporation Stock Option Plan
                [incorporated by reference to Exhibit 10.1 of the
                Registrant's Report on From 10-K for the year ended
                December 31, 1995 (File No. 1-9800)].

        10.2*   Economic Value Sharing Plan [incorporated
                by reference to Exhibit 10.1 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1994 (File No. 1-
                9800)].

        10.3*   Form of Executive Survivor Benefit Income
                Continuation Agreement between the Registrant and certain
                of its employees [incorporated by reference to Exhibit
                10.4 of the Registrant's Registration Statement on Form S-
                4 (File No. 33-30785)].

        10.4*   Executive Survivor Benefit Income
                Continuation Plan covering certain executive officers of
                the Registrant [incorporated by reference to Exhibit 10.4
                of the Registrant's Report on Form 10-K for the year ended
                December 31, 1993 (File No. 1-9800)].

        10.5*   Form of Employment Agreement between the
                Registrant and John J. Booth [incorporated by reference to
                Exhibit 10.13 of the Registrant's Registration Statement
                on Form S-4 (File No. 33-30785)].

        10.6*   Amendments to Employment Agreement between
                the Registrant and John J. Booth [incorporated by
                reference to Exhibit 10.8 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1993 (File No. 1-
                9800)].

        10.7*   Employment Continuation Agreement between
                the Registrant and Orwin L. Carter [incorporated by
                reference to Exhibit 10.1 of the Registrant's report on
                Form 10-Q for the quarter ended September 30, 1994 (File
                No. 1-9800)].

        10.8*   Separation Agreement between the
                Registrant and Jacques A. Bagdasarian [incorporated by
                reference to Exhibit 10.1 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1994 (File No. 1-
                9800)].

        10.9    Form of Scientific Advisory Board
                agreement between the Registrant and Dr. Pierre M.
                Galletti and Dr. Michael Steffes [incorporated by
                reference to Exhibit 10.9 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1995 (File No. 1-
                9800)].

        10.10   Consulting Agreement between the
                Registrant and Dr. Michael Steffes [incorporated by
                reference to Exhibit 10.10 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1995 (File No. 1-
                9800)].


        10.11   Form of Distributorship Agreement between
                the Registrant and Sorin Biomedica S.p.A., without
                exhibits or schedules [incorporated by reference to
                Exhibit 10.15 of the Registrant's Registration Statement
                on Form S-4 (File No. 33-30785)].

        10.12   Form of Distributorship Agreement between
                Sorin Biomedica S.p.A. and the Registrant [incorporated by
                reference to Exhibit 10.16 of the Registrant's
                Registration Statement on Form S-4 (File No. 33-30785)].

        10.13   Distribution Agreement, dated October 30,
                1986, between Clinical Sciences Inc. and Sorin Biomedica
                S.p.A., as amended [incorporated by reference to Exhibit
                10.17 of the Registrant's Registration Statement on Form S-
                4 (File No. 33-30785)].

        10.14   Form of Technology Transfer Agreement
                between the Registrant and Sorin Biomedica S.p.A.
                [incorporated by reference to Exhibit 10.18 of the
                Registrant's Registration Statement on Form S-4 (File No.
                33-30785)].

        10.15   Distribution and Supply Agreement between
                Baxter International Inc. and the Registrant dated
                September 19, 1990 [incorporated by reference to Exhibit
                10(b) of the Registrant's report on Form 10-Q for the
                quarter ended September 30, 1990 (File No. 1-9800)].

        10.16   Product Distribution Agreement between
                Centocor, Inc. and the Registrant dated December 2, 1991
                [incorporated by reference to Exhibit 10.14 of the
                Registrant's Report on Form 10-K for the year ended
                December 31, 1991 (File No. 1-9800)].

        10.17.1 Letter agreements dated August 3, 1992 and
                February 19, 1993 amending the product distribution
                agreement filed as Exhibit 10.15 [incorporated by
                reference to Exhibit 10.14.1 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1993 (File No. 1-
                9800)].

        10.18   Revolving Credit, Security and Note
                Agreement, with exhibits thereto, dated as of December 27,
                1993 between Norwest Bank Minnesota, National Association
                and the Registrant [incorporated by reference to Exhibit
                10.1 of the Registrant's Report on Form 10-K for the year
                ended December 31, 1994 (File No. 1-9800)].

       10.18.1  First Amendment dated January 3, 1995 to
                Revolving Credit, Security and Note Agreement filed as
                Exhibit 10.16 [incorporated by reference to Exhibit 10.1
                of the Registrant's Report on Form 10-K for the year ended
                December 31, 1994 (File No. 1-9800)].

       10.18.2  Second Amendment dated February 15, 1995
                to Revolving Credit, Security and Note Agreement filed as
                Exhibit 10.16 [incorporated by reference to Exhibit 10.1
                of the Registrant's Report on Form 10-K for the year ended
                December 31, 1994 (File No. 1-9800)].

        10.18.3 Third Amendment dated January 29, 1996 to
                Revolving Credit, Security and Note Agreement filed as
                Exhibit 10.16 [incorporated by reference to Exhibit 10.1
                of the Registrant's Report on Form 10-K for the year ended
                December 31, 1995 (File No. 1-9800)].

        10.18.4+Fourth Amendment dated January 31,
                1997 to Revolving Credit, Security and Note Agreement
                filed as Exhibit 10.16.

        10.19   Agreement for Purchase, Sale and
                Distribution of Assets between TheraTest Laboratories Inc.
                and the Registrant dated May 16, 1994 [incorporated by
                reference to Exhibit 10.1 of the Registrant's Report on
                Form 10-K for the year ended December 31, 1994 (File No. 1-
                9800)].

        10.20+  Agreement and Plan of Merger, dated March
                10, 1997, among American Standard Inc., American Standard
                Medical Systems, Inc., ISTR Merger Corporation and INCSTAR
                Corporation.

       11+      Statement Re: Computation of  Net  Income
                 (Loss) Per Common Share.

        21+     Subsidiaries of the Registrant.

        23+     Independent Auditors' Consent

        27+     Financial Data Schedules

        *Executive Compensation Plans and Arrangements
        + Filed with this Annual Report on Form 10-K