<PAGE>

                        SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                          For period ended September  30, 1996


[   ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from _______ to __________

                        Commission file number 0-15638

                           NORTH STAR UNIVERSAL, INC.

              (Exact name of registrant as specified in its charter)

          MINNESOTA                                      41-0498850
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


     6479 City West Parkway
     Eden Prairie, Minnesota                            55344
(Address of principal executive office)               (Zip Code)

     Registrant's telephone number, including area code:  (612)  941-3200

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______


At October 31, 1996, 9,913,000 shares of common stock of the registrant were
outstanding.



<PAGE>
                         PART I - FINANCIAL INFORMATION
                          ITEM 1 - FINANCIAL STATEMENTS

                    North Star Universal, Inc. and Subsidiaries
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                   (Unaudited, in thousands, except share data)

<TABLE>
<CAPTION>
                                             September 30,          December 31,
                                                 1996                   1995
                                             -----------------------------------
<S>                                            <C>                  <C>
ASSETS

Current Assets
  Cash and cash equivalents                  $     8,068            $     3,369
  Accounts receivable, net                         9,704                  8,784
  Inventories                                      6,629                  6,631
  Prepaid expenses and other current assets          773                  1,306
                                             ----------------------------------

    Total current assets                          25,174                 20,090

Property and equipment, net                        1,572                  1,453
Investment in unconsolidated subsidiaries         83,468                 83,542
Goodwill, net                                      4,841                  4,960
Other assets                                          26                    189
                                             ----------------------------------
                                             $   115,081            $   110,234
                                             ==================================

LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current Liabilities
  Notes payable to bank                      $     1,115            $       937
  Current portion of long-term debt               11,624                 13,161
  Accounts payable and accrued expenses           11,351                 10,401
                                             ----------------------------------
    Total current liabilities                     24,090                 24,499

Long-term debt, net of current maturities         22,310                 29,319
Deferred income taxes                             26,725                 21,935

Shareholders' Equity
  Common stock, $.25 par value
    100,000,000 shares authorized,
    issued and outstanding 9,913,000
    shares in 1996 and 9,448,000 in 1995           2,478                  2,362
  Additional paid-in-capital                      31,297                 31,105
  Retained earnings                                8,181                  1,014
                                             ----------------------------------
    Total shareholders' equity                    41,956                 34,481
                                             ----------------------------------
                                             $   115,081            $   110,234
                                             ==================================
</TABLE>

See accompanying notes to condensed consolidated financial statements.
<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (Unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                  Three Months Ended          Nine Months Ended
                                     September 30,              September 30,
                                -----------------------------------------------
                                    1996       1995            1996       1995
                                -----------------------------------------------
<S>                             <C>        <C>             <C>        <C>
Revenues                        $  17,358  $  14,339       $  49,151  $  40,593
Operating and product costs        12,644     10,409          36,147     29,075
                                -----------------------------------------------
  Gross profit                      4,714      3,930          13,004     11,518

Selling, general,
  and administrative expenses       4,471      3,841          12,744     11,065
                                -----------------------------------------------
  Operating income (loss)             243         89             260        453

Interest expense, net                (805)    (1,045)         (2,573)    (3,138)
Investment income                       -          -           7,713          -
                                -----------------------------------------------
Income (loss) before income taxes
  and equity in earnings of 
  unconsolidated subsidiaries        (562)      (956)          5,400     (2,685)

Income tax provision (benefit)       (200)      (325)          2,240       (860)
                                -----------------------------------------------
Income (loss) before equity in
  earnings of unconsolidated
  subsidiaries                       (362)      (631)          3,160     (1,825)

Equity in earnings of
  unconsolidated subsidiaries         631      1,353           2,750      3,885
                                -----------------------------------------------
Income from continuing
  operations                          269        722           5,910      2,060

Discontinued operations
  Loss from operations, net of 
    income tax benefits                 -          -               -       (934)
  Gain (loss) on disposition,
    net of income taxes                 -          -           1,257     (2,091)
                                -----------------------------------------------
                                        -          -           1,257     (3,025)
                                -----------------------------------------------
Net income (loss)               $     269  $     722      $    7,167  $    (965)
                                ===============================================

Income (loss) per share
  Continuing operations         $    0.03  $    0.07      $     0.59  $    0.22
  Discontinued operations            0.00       0.00            0.13      (0.32)
                                -----------------------------------------------
    Net income (loss)           $    0.03  $    0.07      $     0.72  $   (0.10)
                                ===============================================

Weighted average shares
  outstanding                   9,939,800  9,838,400      9,921,900   9,438,000
                                ===============================================
</TABLE>

See accompanying notes to condensed consolidated financial statements.


<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                    Nine Months Ended September 30, (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                  1996                    1995
                                             ----------------------------------
<S>                                          <C>                    <C>
Net cash used in operating activities        $   (1,951)            $    (3,402)

Cash flows from investing activities
  Capital expenditures                             (693)                   (458)
  Proceeds from sale of CorVel stock             11,052                       -
  Proceeds from divestiture                       3,196                   2,500
  Other                                             (77)                   (221)
                                             ----------------------------------

Net cash provided by investing activities        13,478                   1,821
                                             ----------------------------------

Cash flow from financing activities
  Issuance of common stock                          437                       -
  Proceeds from long-term debt                    1,345                  45,958
  Payments on long-term debt                     (9,891)                (46,465)
  Proceeds from notes payable                    50,238                       -
  Payments on notes payable                     (50,060)                      -
  Cash dividends received from Michael Foods      1,103                   1,103
                                             ----------------------------------

Net cash used in financing activities            (6,828)                    596 
                                             ----------------------------------

Net increase (decrease) in cash
  and cash equivalents                            4,699                    (985)

Cash and cash equivalents
  at beginning of period                          3,369                   5,102
                                             ----------------------------------

Cash and cash equivalents
  at end of period                           $    8,068             $     4,117
                                             ==================================
</TABLE>




See accompanying notes to condensed consolidated financial statements.


<PAGE>
                    North Star Universal, Inc. and Subsidiaries
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   Basis of Presentation --

     The accompanying unaudited condensed consolidated financial statements have
been prepared by North Star Universal, Inc. ("North Star" or the "Company"),
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission.  The information furnished in the condensed consolidated
financial statements includes normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of such financial
statements.  Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.  Although the Company believes that the disclosures are adequate to
make the information presented not misleading, it is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's latest
annual report on Form 10-K.

     Results for the three and nine months ended September 30 may not
necessarily be indicative of the results to be expected for the full year.

2.   Reorganization Agreement --

     On December 21, 1995, the Company entered into a reorganization agreement
with Michael Foods which the parties amended in September 1996 in connection
with Michael Foods' agreement to acquire Papetti's Hygrade Egg Products, Inc.
The effect of this agreement is to distribute the shares of Michael Foods
common stock owned by North Star directly to shareholders of North Star and
reposition North Star's continuing operations and investments into a new holding
company, ENStar Inc. ("ENStar"). Prior to the reorganization, the Company will
transfer to ENStar, its wholly owned subsidiary Americable, which owns
Transition, and its equity investment in CorVel.  The shares of ENStar will be
declared payable in a tax free dividend to North Star's shareholders of record
prior to the effective date of the reorganization and be distributed immediately
following the reorganization.

     Under the terms of the agreement, North Star will transfer indebtedness,
net of cash and cash equivalents, in the range of $15 million to $29 million to
Michael Foods, together with Michael Foods shares approximately equal to the
debt transferred.  The actual number of Michael Foods shares in the exchange
will be based on an average market price for a period of time prior to the
closing date, less a discount ranging from 6% to 9% depending on the actual
amount of debt transferred.  At the effective time of the reorganization, North
Star will effect a reverse stock split which reduces its shares outstanding to
the same number of shares it owns in Michael Foods reduced by the shares
redeemed in the transfer of the indebtedness.  In the reorganization, each
outstanding share of Michael Foods common stock will be exchanged for one share
of North Star common stock.  Following the reorganization, North Star will be
renamed Michael Foods, Inc. 

     The reorganization is subject to the receipt of a favorable ruling from the
Internal Revenue Service that the distributions are tax free to the shareholders
of Michael Foods and the Company, the approval of each company's shareholders
and other closing conditions.  The agreement can be terminated by either party
under various circumstances including if Michael Foods' stock price is outside a
predetermined price range.


<PAGE>
                    North Star Universal, Inc. and Subsidiaries
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Continued)

3.   Discontinued Operations --

     On April 26, 1996, the Company completed the sale of Eagle Engineering &
Manufacturing, Inc. ("Eagle") for approximately $3.7 million of cash and notes
The gain on disposition was approximately $1.3 million, net of an income tax 
provision of $804,000.  Eagle has been classified within net assets held for
sale.

     On May 5, 1995, the Company completed the sale of its shares in Dalworth
Holdings, Inc. and subsidiaries, including C.E. Services Inc. (collectively
"C.E. Services") to Amdahl Corporation for $2.5 million cash.  The loss on
disposition was approximately $2.1 million, net of an income tax benefit of
approximately $1.3 million.  The accompanying condensed consolidated statements
of operations for 1995 have been restated to reflect C.E. Services as
discontinued operations.  The following are summarized results of operations for
C.E. Services through the date of sale (in thousands):

<TABLE>
<CAPTION>
<S>                                                     <C>

Revenues                                                $   6,442
Gross profit                                                1,233
Pretax loss                                                (1,414)
Income tax benefit                                            480
Loss from operations                                         (934)
</TABLE>

4.   Investment in Unconsolidated Subsidiaries and Investment Income -- 

     The Company's unconsolidated subsidiaries consist of its investments in
Michael Foods, Inc. ("Michael Foods") and CorVel Corporation ("CorVel").  CorVel
has a fiscal year ended March 31.  The following is summarized balance sheet and
income statement information of the Company's unconsolidated subsidiaries as of,
and for the nine month period ended September 30, 1996 (in thousands):

<TABLE>
<CAPTION>
                                             Michael Foods             CorVel
                                             ----------------------------------
         <S>                                 <C>                    <C>
         Current assets                      $  114,372             $    44,898
         Noncurrent assets                      255,697                  17,711
         Current liabilities                    112,092                   9,095
         Noncurrent liabilities                  72,668                   2,880
         Revenues                               455,478                  84,826
         Gross profit                            52,211                  15,487
         Net income                               7,880                   5,712
</TABLE>

     In January 1996, the Company sold 350,000 shares of CorVel for
approximately $11 million, resulting in a pre-tax gain of approximately $7.7
million.


<PAGE>
                    North Star Universal, Inc. and Subsidiaries
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Continued)

5.   Inventories --

     Inventories are stated at the lower of average cost (first-in, first-out)
or market.  Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                              September 30,         December 31,
                                                  1996                 1995
                                             ---------------------------------
         <S>                                 <C>                    <C>
         Finished goods                      $    4,813             $    4,092
         Purchased parts and supplies             1,816                  2,539
                                             ---------------------------------
                                             $    6,629             $    6,631
                                             =================================
</TABLE>

6.   Earnings Per Share --

     Earnings per share are based on the average number of shares outstanding
during the period after giving effect to the assumed exercise of outstanding
stock options, except where the effects are antidilutive.

7.   Income Taxes --

     Deferred income taxes arise from temporary differences between financial
and tax reporting.  To the extent the Company's financial reporting basis in its
investment in unconsolidated subsidiaries exceeds its tax basis, and is not
expected to be realized in a tax-free manner, the Company records a deferred tax
liability.  At September 30, 1996, the deferred tax liability includes a
cumulative tax effect of approximately $24.8 million and $4.8 million for the
differences in the financial reporting and tax basis of the Company's
investments in Michael Foods and CorVel, respectively.

     As described in Note 2, the Company has entered into a reorganization
agreement with Michael Foods under which it may realize its investment in
Michael Foods in a tax-free manner. The agreement can be terminated by either
party under various circumstances.  Accordingly, the Company has continued to
carry a deferred tax liability related to its investment in Michael Foods.

8.   Reclassifications --

     Certain 1995 amounts have been reclassified to conform with the financial
statement presentation used in 1996.  Such reclassifications had no impact on
previously reported retained earnings or net income.

<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

     North Star Universal, Inc. ("North Star" or "the Company") is a holding
company.  The Company's three key holdings consist of Michael Foods, Inc.
("Michael Foods"), CorVel Corporation ("CorVel") and its computer businesses.
At September 30, 1996, the Company owned a 38% interest in Michael Foods and a
26% interest in CorVel.  The common stock of each of Michael Foods and
CorVel is included on the NASDAQ National Market System under the symbols MIKL
and CRVL.  The Company's investments in Michael Foods and CorVel are accounted
for as unconsolidated subsidiaries using the equity method of accounting.

     The Company's continuing operations consist of Americable, Inc.
("Americable") and Transition Networks, Inc., formerly Transition Engineering
("Transition").  Americable is a provider of connectivity and networking
products and services.  Transition designs, manufactures and markets
connectivity devices used in local area network ("LAN") applications.

     Americable has historically been a distributor of connectivity and
networking products.  As part of its business strategy, Americable has recently
focused on increasing its level of service revenues  which are generally more
profitable.  Service revenue is primarily derived from network integration
services such as network management, maintenance, design and implementation.
To achieve this strategy, Americable intends to continue to make internal
investments in additional sales, engineering and technical personnel in existing
and new geographic locations in order to enhance its ability to satisfy the
changing technology requirements of its customers.   Americable expects that
increased operating expenses resulting from these investments will reduce its
profitability over the next 12 months to the extent it is unable to maintain
its gross margins or continued sales growth.

     Historically, in excess of 90% of Transition's revenues have been
derived from the sale of its terminal and basic LAN products.  These products
have life cycles of 18 to 36 months and are generally sold based on price,
availability and functionality.  More recently, Transition has focused its
product development and marketing efforts on expanding its advanced LAN products
in an effort to increase sales with existing customers and participate in
broader market opportunities. Due to the increasing design and manufacturing
complexities associated with the integration of technologies, the development
of advanced LAN products require a more substantial investment in engineering
personnel and related costs.  As a result, Transition's future operations are
highly dependent on its ability to introduce advanced LAN products on a timely
basis that meet customers' demands.

<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following are unaudited summarized operating results for each of the
Company's continuing operations for the three and nine months ended September 30
(in thousands).

<TABLE>
<CAPTION>
                                           Three Months Ended       Nine Months Ended
                                                     September 30,           September 30,
                                                ---------------------------------------------
                                                    1996       1995          1996       1995
                                                ---------------------------------------------
<S>                                             <C>        <C>           <C>        <C>
Revenues
    Americable                                  $  13,301  $  11,281     $  38,221  $  31,050
    Transition Networks                             4,523      3,567        12,166     10,656
    Eliminations                                     (466)      (509)       (1,236)    (1,113)
                                                ---------------------------------------------
                                                $  17,358  $  14,339     $  49,151  $  40,593
                                                =============================================

Gross Profit
    Americable                                  $   3,010  $   2,553     $   8,494  $   7,551
    Transition Networks                             1,704      1,377         4,510      3,967
                                                ---------------------------------------------
                                                $   4,714  $   3,930     $  13,004  $  11,518
                                                =============================================

Selling, General and Administrative Expenses
    Americable                                  $   2,537  $   2,267     $   7,510  $   6,658
    Transition Networks                             1,605      1,176         4,261      3,328
    Corporate                                         329        398           973      1,079
                                                ---------------------------------------------
                                                $   4,471  $   3,841     $  12,744  $  11,065
                                                =============================================

Operating Income (Loss)
    Americable                                  $     473  $     286     $     984  $     893
    Transition Networks                                99        201           249        639
    Corporate                                        (329)      (398)         (973)    (1,079)
                                                ---------------------------------------------
                                                $     243  $      89     $     260  $     453
                                                =============================================

</TABLE>


<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (Continued)

RESULTS OF OPERATIONS 

THREE MONTHS ENDED SEPTEMBER 30, 1996 vs. THREE MONTHS ENDED SEPTEMBER 30, 1995

     Consolidated revenues increased $3 million or 21%, to $17.4 million from
$14.3 million in 1995.

     Revenues at Americable increased approximately $2 million or 18%, to
$13.3 million.  Higher customer demand resulted in increased sales of networking
products of approximately $1.8 million and cable assemblies of approximately
$275,000 along with increased revenues from installation and services of
approximately $450,000. For the quarter, sales of networking products and
revenues from services and installation were approximately $6.8 million or 51%,
and $1.2 million or 9%, of Americable's revenues, respectively.  Offsetting
these increases was approximately $500,000 of reduced volume of bulk cable and
other connectivity products to contractors and resellers.

     Revenues at Transition increased approximately $956,000 or 26.8%, to $4.5
million.  Sales of Transition's advanced LAN products increased approximately
$249,000, or 78%, to $567,000, reflecting the continued demand for new products
and product enhancements introduced during 1995 and 1996.  Sales from new
product introductions and enhancements during 1996 accounted for approximately
28% of net sales for the quarter ended September 30, 1996 versus 32% for the
comparable period in 1995.  Sales of basic LAN and terminal products increased 
approximately 22% to $4.0 million.  Sales to domestic customers increased
approximately $719,000 or 31%, to $3.0 million, which reflects higher demand
from its existing base of distributors and resellers. Sales to international
customers increased approximately $237,000 or 19%, to $1.5 million, which was
primarily a result of the addition of new distributors.

     Consolidated gross profit, as a percent of revenues, decreased to 27.2% in
1996 as compared to 27.4% in 1995. Decreased margins at Transition were a result
of lower pricing on certain product lines due to increased competition.  Margins
 at Americable were relatively unchanged between periods.

     The Company's selling, general and administrative expenses increased
$630,000 or 16.4%, to $4.5 million from $3.8 million in 1995.

     Operating expenses at Americable increased approximately $270,000 or 12%
for the period, which reflects approximately $176,000 of increased selling
expenses primarily attributable to higher sales commissions and the addition of
new sales personnel along with and costs related to its new catalog and employee
sales training.  In addition, this increase reflects approximately $121,000 of
higher engineering expense due to the addition of technical and engineering
personnel.  Overall, general and administrative expenses at Americable decreased
slightly between years.


<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (Continued)

     
     Transition had increased operating expenses of approximately $429,000 or
36%, which reflects increased engineering expenses of approximately $160,000
due to the addition of engineering personnel associated with new product
development.  In addition, selling expenses increased approximately $249,000
due primarily to the addition of new sales and marketing personnel and higher
expenses for advertising, trade shows, and other marketing-related programs.

     Net interest expense decreased $240,000 or 23% to $805,000 from $1,045,000
in 1995 due primarily to lower outstanding levels of debentures between years
and increased interest income resulting from a higher level of cash and cash
equivalents.

     The income tax benefits of $200,000 in 1996 and $325,000 in 1995 relate to
the elimination of deferred tax liabilities that will reverse as net operating
losses available for carryforward are utilized in future periods.  To the
extent loss carryforwards are realized in the future, deferred taxes will be
reinstated.

     Equity in earnings of unconsolidated subsidiaries decreased $722,000 to
$631,000 from $1,353,000 in the previous year.  This includes decreases of
$663,000 and $59,000 in the equity in earnings of Michael Foods and CorVel
Corporation, respectively, which is a result of lower earnings at Michael Foods
and the Company's lower ownership interest in CorVel.  Further information with
respect to the results of operations of Michael Foods and CorVel is contained in
the Management's Discussion and Analysis of Financial Condition and Results of
Operation section of their respective quarterly reports on Form 10-Q as filed
with the Securities and Exchange Commission.



<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (Continued)

RESULTS OF OPERATIONS (Continued) 

NINE MONTHS ENDED SEPTEMBER 30, 1996 vs. NINE MONTHS ENDED SEPTEMBER 30, 1995

     Consolidated revenues increased $8.5 million, or 21%, to $49.1 million
from $40.6 million in 1995.

     Revenues at Americable increased approximately $7.2 million, or 23%, to
$38.2 million. Increased sales of networking products of approximately $8.0
million and increased revenues from installation and services of approximately
$900,000, both due primarily to higher demand, contributed to the increase in
sales at Americable.  Included in these amounts is approximately $1.9 million of
higher sales of networking products to one customer, which is not expected to
continue during the remainder of the year and throughout 1997. For the period,
sales of networking products and revenues from services and installation were
approximately $20.1 million, or 53%, and $2.9 million, or 8%, of Americable's
revenues, respectively.  Sales of cable and other connectivity products
decreased approximately $1.5 million, due primarily to lower volume to
contractors and resellers and lower demand for certain types of bulk cable due
to increased market supply of such product during the first three quarters of
1996.  In addition, sales of cable assemblies decreased approximately $200,000,
due to lower demand experienced between periods.

     Revenues at Transition increased approximately $1.5 million, or 14.2%, to
$12.2 million. Sales of Transition's advanced LAN products increased
approximately $540,000, or 52% to $1.6 million, reflecting additional revenues
from new products and product enhancements introduced during 1995 and 1996.
Sales from new product introductions and enhancements accounted for
approximately 13% of net sales for the nine months ended September 30, 1996,
versus 41% for the comparable period in 1995. Sales of basic LAN and terminal
products increased approximately $970,000, or 10%, to $10.6 million.  Sales to
domestic customers increased approximately $1.1 million, or 16%, to $7.9
million, which primarily reflects higher demand for Transition's products.
Sales to international customers increased approximately $400,000, or 10%, to
$4.3 million, which was primarily a result of the addition of new customers.
Transition's ability to maintain its present level of sales and its continued
sales growth is highly dependent upon its ability to offer new products that
meet customers' demands in a rapidly changing market, particularly in light of
the relatively short life cycle of its products.

     Consolidated gross profit, as a percent of revenues, decreased to 26.5%
in 1996 as compared to 28.4% in 1995.  The reduced margins at Americable are
primarily attributable to a higher volume of lower margin networking products
and lower pricing on cable due to competition and overall higher market supply
on certain types of bulk cable.  Margins at Transition were relatively unchanged
between years. North Star expects its gross profit margins to decline due to
expected competitive pricing pressures on products sold by both Americable and
Transition.


<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (Continued)

RESULTS OF OPERATIONS (Continued) 

     The Company's selling, general and administrative expenses increased
$1.7 million or 15.2%, to $12.7 million from $11.1 million in 1995.  The
increase in operating expenses at Americable reflects increased selling expenses
of approximately $560,000 due to higher sales salaries, commissions and related
expenses and approximately $300,000 of higher engineering expenses due to the
addition of technical and engineering personnel.  General and administrative
expenses of Americable were relatively unchanged between years. Americable
expects that its selling expenses, as a percentage of revenues, may increase
during the remainder of 1996 and throughout 1997.  Such increases resulted from
the addition of sales and technical personnel and costs associated with the
release of a new catalog in the first quarter of 1996. If the company 
is unable to maintain current gross profit margins and continued sales growth,
the anticipated increases in operating expenses may result in a reduction in
operating profits at Americable.

     The Company's research and development expenses (incurred exclusively
within Transition) were approximately $1.1 millon verses $900,000 from the
9 month periods ended September 30, 1996 and 1995.

     Transition had increased operating expenses of approximately $933,000, or 
28%, which reflects increased engineering expenses of approximately $445,000 due
to the addition of engineering personnel associated with new product
development.  In addition, this increase also reflects higher sales and
marketing expenses of approximately $450,000, associated with advertising,
participation in trade shows, and other promotional expenses.  In an effort to 
successfully develop and launch new advanced LAN products, Transition
anticipates the increased levels of spending on engineering, marketing and
promotional costs to continue for the remainder of 1996 and throughout 1997.
If such increased level of spending does not result in the timely introduction
of commercially successful products, Transition may experience significantly
reduced levels of sales growth and operating results.

     Corporate expenses decreased approximately $106,000, or 9.8% primarily due
to lower professional fees.

     Investment income of $7.7 million represents the pre-tax gain recognized
from the January 1996 sale of 350,000 shares of CorVel.  Net interest expense
decreased $565,000, or 18%, to $2,573,000 from $3,138,000 in 1995, due primarily
to increased interest income resulting from a higher level of cash and cash
equivalents and lower interest rates and lower outstanding levels of debentures
between years.

     The income tax provision in 1996 reflects the Company's estimated effective
annual tax rate.  The income tax benefit in 1995 relates to the elimination of
deferred tax liabilities that will reverse as net operating losses available for
carryforward are utilized in future periods.  To the extent loss carryforwards
are realized in the future, deferred taxes will be reinstated.


<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (Continued)

RESULTS OF OPERATIONS (Continued) 

     Equity in earnings of unconsolidated subsidiaries decreased $1,135,000 to
$2,750,000 from $3,885,000 in the previous year.  A decrease of $979,000 
resulted from lower earnings at Michael Foods, and a decrease of approximately
$156,000 resulted from the Company's reduced ownership interest in CorVel
following the January 1996 sale of stock.  Further information with respect to
the results of operations of Michael Foods and CorVel is contained in the
Management's Discussion and Analysis of Financial Condition and Results of
Operation section of their respective annual and quarterly reports as filed on
Forms 10-K and 10-Q with the Securities and Exchange Commission.

     The gain from discontinued operations for the period represents the
disposition gain on the sale of Eagle which was completed April 26, 1996.
The loss from discontinued operations for 1995 includes the operating and
disposition losses of C.E. Services which was sold May 5, 1995 (see Note 3
to the Notes to Condensed Consolidated Financial Statements).


<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (Continued)

CAPITAL RESOURCES AND LIQUIDITY

     The Company has historically experienced cash flow deficits from
operations.  Cash used in operations was $1.95 million for the nine months ended
September 30, 1996, as compared to $3.4 million in 1995.  The Company expects
operating cash flow deficits to continue.

     The Company does not have the use of cash flow generated by either Michael
Foods or CorVel other than proceeds from quarterly dividends.  In each of the
nine month periods ended September 30, 1996 and 1995, the Company received
dividends of $1,103,000 from Michael Foods.  There can be no assurance that
Michael Foods will continue to declare such dividends.  Since its initial public
offering, CorVel has not declared any dividends, and has indicated that it does
not anticipate doing so for the foreseeable future.

     The Company has historically maintained a program whereby it sold 
subordinated debentures of various maturities to investors.  The debentures were
offered on a continuous basis at interest rates that change from time to time
depending on market conditions.  A substantial portion of maturing debentures
have historically been reinvested in new debentures.  At September 30, 1996, the
Company had approximately $33.8 million principal amount of subordinated
debentures outstanding.

     On November 7, 1995, in light of the negotiations with Michael Foods, the
Company ceased the sale of any new debentures under its debenture program.
Under the terms of the reorganization agreement, the amount of outstanding
debentures at the date of the reorganization will be effectively assumed by
Michael Foods.  In January 1996, the Company sold 350,000 shares of its holdings
in CorVel for approximately $11 million cash.  In addition, on April 26, 1996,
the Company completed the sale of Eagle resulting in net cash proceeds of
approximately $3.2 million.  Proceeds from these transactions will be used
primarily to fund scheduled maturities of debentures through the date of the
proposed reorganization.

     To the extent the reorganization agreement with Michael Foods is not
consummated, the Company plans to reinitiate the sale of debentures.  Under
these circumstances, however, there can be no assurance that future reinvested
and newly sold debentures will equal or exceed redemptions.  The Company has
been highly dependent on the continued sales of debentures under its debenture
program.  In the event that, after the sales of debentures are reinitiated,
redemptions substantially exceed reinvested and newly sold debentures or the
program is interrupted for an extended period, the Company would be required to
fund maturities through its existing cash on hand, asset sales, or other means
of financing.

     Long-term debt repayments for the nine months ended September 30, 1996 of
approximately $9.9 million consist primarily of redemptions of subordinated
debentures.  Proceeds from long-term debt of approximately $1.3 million
represents compounded interest on debentures.  The net activity under the
debenture program for the period ended September 30, 1996, resulted in a net
cash use to the Company of approximately $8.6 million.



<PAGE>
                    North Star Universal, Inc. and Subsidiaries
                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (Continued)

     In August 9, 1996, Americable and Transition amended the terms of their
revolving line of credit facility with First Bank National Association to
provide borrowings up to $4 million and $2 million, respectively, due in
September 1998.  Borrowings under the amended revolving credit facilities are
based on eligible accounts receivable and inventory with interest at prime,
(8.25% at September 30, 1996) with optional fixed rate advances at the London
Interbank Offered Rate ("LIBOR") plus 2.5%.  At September 30, 1996, there were
outstanding borrowings of approximately $1.1 million under the revolving line
of credit, including $857,000 of amounts transferred from the companies'
previous term loan facility which matured in May 1996.  In addition, there were
approximately $4.9 million of available borrowings under this credit facility
at September 30, 1996. Previously, the companies maintained a revolving line of
credit with interest at prime plus 1.5%, and term loan facility with interest
at 10.665%.

     The Company may from time to time, depending on market conditions and other
factors, sell a portion of its CorVel holdings to fund its corporate expenses
and maturing indebtedness prior to the merger with Michael Foods and to reduce
its indebtedness at the time of the merger.  The ability of the Company to sell
its CorVel holdings is limited, however, to sales pursuant to Rule 144 of the
Securities Act and the volume limitations thereof, and to private negotiated
sales, which may adversely affect the ability of the Company to sell a large
portion of the CorVel holdings at a given time.

     At September 30, 1996, North Star had approximately $7.9 million of cash
and cash equivalents, excluding cash of its operating subsidiaries.  The Company
believes that its available cash and cash equivalents along with the amounts
available under the credit facilities of its operating companies, will be
adequate to meet expected cash requirements, including debenture redemptions,
capital expenditures and potential acquisitions for the remainder of the year.


<PAGE>
                            PART II - OTHER INFORMATION
                    North Star Universal, Inc. and Subsidiaries


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits filed with this report on Form 10-Q:

              10.4   Commercial Lease Agreement between Americable, Inc. and
                     LaSalle National Trust

              27.1   Financial Data Schedules

         (b)  No reports on Form 8-K were filed during the quarter ended 
              September 30, 1996. 


<PAGE>




                                  SIGNATURES

Pursuant to the requirement 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.

                                           NORTH STAR UNIVERSAL, INC.
                                           --------------------------
                                           (Registrant)




Date        November 5, 1996           by    /s/ Jeffrey J. Michael
       ---------------------------         --------------------------
                                           Jeffrey J. Michael
                                           President and Chief Executive Officer


Date        November 5, 1996           by    /s/ Peter E. Flynn
       ---------------------------         --------------------------
                                           Peter E. Flynn
                                           Executive Vice President,
                                           Chief Financial Officer
                                           and Secretary
                                           (Principal Financial and Accounting
                                            Officer)



<PAGE>



                                       EXHIBIT INDEX

Exhibit
Number
----------


  10.4               Commercial Lease Agreement between Americable, Inc. and
                     LaSalle National Trust

  27.1               Financial Data Schedules