##### Table of Contents



---

---

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




---



FORM 10-Q

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[X]   |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 
|     
|      |  | For the quarterly period ended March 31, 2002                                           
|     
|[   ] |  | Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
|     
|      |  | For the transition period from _____________to ____________                             
|     
|      |  | Commission file number 1-9957                                                           

Diagnostic Products Corporation

(Exact name of registrant as specified in its charter)


|                                                                          |  |                                             
|------------------------------------------------------------------------- |  | --------------------------------------------
|California
(State or other jurisdiction of
incorporation or organization) |  | 95-2802182
(IRS Employer
Identification No.)

5700 West 96th Street
Los Angeles, California 90045
(Address of principal executive offices)

Registrants telephone number: (310) 645-8200

No change

(Former name, former address, and former fiscal year, if changed since last report)

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  [   ]

The number of shares of Common Stock, no par value, outstanding as of March 31,
2002, was 28,379,440.



---

---





---

TABLE OF CONTENTS



|                              |                                                                                               |                                            |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM I. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME         
|                              |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II. OTHER INFORMATION   
|                              | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                                    
|SIGNATURES                   
|EXHIBIT INDEX                
|EXHIBIT 10.1                 



---



##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM I. FINANCIAL STATEMENTS




DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

|                                              |                                      |  |                    |        |      |  |        |        | 
|--------------------------------------------- | ------------------------------------ |  | ------------------ | ------ | ---- |  | ------ | ------ | 
|(Dollars In Thousands, except per share data)
|                                              |                                      |  | Three Months Ended
|                                              |                                      |  | March 31,         
|                                              |                                      |  |                   
|                                              |                                      |  | 2002               |        | 2001
|                                              |                                      |  |                    |        |     
|SALES:                                        |                                      |  |                    |        |      |  |        |       
|                                              | Non-Affiliated Customers             |  | $                  | 67,538 |      |  | $      | 61,635 | 
|                                              | Unconsolidated Affiliates            |  |                    | 7,189  |      |  |        | 6,162  | 
|                                              |                                      |  |                    |        |      |  |        |       
|                                              | Total Sales                          |  |                    | 74,727 |      |  |        | 67,797 | 
|COST OF SALES                                 |                                      |  | 30,670             |        |      |  | 29,016 |       
|                                              |                                      |  |                    |        |      |  |        |       
|                                              | Gross Profit                         |  |                    | 44,057 |      |  |        | 38,781 | 
|                                              |                                      |  |                    |        |      |  |        |       
|OPERATING EXPENSES:                           |                                      |  |                    |        |      |  |        |       
|Selling                                       |                                      |  | 13,237             |        |      |  | 12,112 |       
|Research and Development                      |                                      |  | 8,711              |        |      |  | 8,302  |       
|General and Administrative                    |                                      |  | 6,657              |        |      |  | 6,527  |       
|Equity in Income of Affiliates                |                                      |  | (712               | )      |      |  | (855   | )     
|                                              |                                      |  |                    |        |      |  |        |       
|OPERATING EXPENSES  NET                      |                                      |  | 27,893             |        |      |  | 26,086 |       
|                                              |                                      |  |                    |        |      |  |        |       
|                                              | OPERATING INCOME                     |  |                    | 16,164 |      |  |        | 12,695 | 
|Interest/Other Expense  Net                  |                                      |  | 179                |        |      |  | 87     |       
|                                              |                                      |  |                    |        |      |  |        |       
|INCOME BEFORE TAXES AND MINORITY INTEREST     |                                      |  | 15,985             |        |      |  | 12,608 |       
|PROVISION FOR INCOME TAXES                    |                                      |  | 4,955              |        |      |  | 3,833  |       
|MINORITY INTEREST                             |                                      |  | 223                |        |      |  | 223    |       
|                                              |                                      |  |                    |        |      |  |        |       
|                                              | NET INCOME                           |  | $                  | 10,807 |      |  | $      | 8,552  | 
|                                              |                                      |  |                    |        |      |  |        |       
|EARNINGS PER SHARE:                           |                                      |  |                    |        |      |  |        |       
|                                              | BASIC                                |  | $                  | .38    |      |  | $      | .31    | 
|                                              | DILUTED                              |  | $                  | .37    |      |  | $      | .29    | 
|                                              | WEIGHTED AVERAGE SHARES OUTSTANDING: |  |                    |        |      |  |        |        | 
|                                              | BASIC                                |  |                    | 28,360 |      |  |        | 27,892 | 
|                                              | DILUTED                              |  |                    | 29,517 |      |  |        | 29,052 | 

2



---



##### Table of Contents






DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)

|                                                      |                                                                                                                                                                             |           |         |              |   |   |         |         |  
|----------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ------- | ------------ | - | - | ------- | ------- | -
|(Dollars in Thousands)                                |                                                                                                                                                                             | March 31, |         | December 31,
|                                                      |                                                                                                                                                                             | 2002      |         | 2001        
|                                                      |                                                                                                                                                                             |           |         |              |  
|Assets                                                |                                                                                                                                                                             |           |         |              |   |   |         |        
|CURRENT ASSETS:                                       |                                                                                                                                                                             |           |         |              |   |   |         |        
|                                                      | Cash and cash equivalents                                                                                                                                                   |           | $       | 28,605       |   |   | $       | 31,834  |  
|                                                      | Accounts receivable (including receivables from unconsolidated affiliates of $9,409 and $6,635)  net of allowance
for doubtful accounts of $1,861 and $1,719, respectively |           |         | 77,558       |   |   |         | 74,630  |  
|                                                      | Inventories                                                                                                                                                                 |           |         | 65,486       |   |   |         | 62,815  |  
|                                                      | Prepaid expenses and other current assets                                                                                                                                   |           |         | 4,623        |   |   |         | 981     |  
|                                                      | Deferred income taxes                                                                                                                                                       |           |         | 3,225        |   |   |         | 3,225   |  
|                                                      |                                                                                                                                                                             |           |         |              |   |   |         |        
|                                                      | Total current assets                                                                                                                                                        |           |         | 179,497      |   |   |         | 173,485 |  
|PROPERTY, PLANT, AND EQUIPMENT:                       |                                                                                                                                                                             |           |         |              |   |   |         |        
|                                                      | Land and buildings                                                                                                                                                          |           |         | 49,224       |   |   |         | 49,922  |  
|                                                      | Machinery and equipment                                                                                                                                                     |           |         | 63,358       |   |   |         | 64,650  |  
|                                                      | Leasehold improvements                                                                                                                                                      |           |         | 10,594       |   |   |         | 7,242   |  
|                                                      | Construction in progress                                                                                                                                                    |           |         | 1,044        |   |   |         | 6,278   |  
|                                                      |                                                                                                                                                                             |           |         |              |   |   |         |        
|                                                      | Total                                                                                                                                                                       |           |         | 124,220      |   |   |         | 128,092 |  
|                                                      | Less accumulated depreciation and amortization                                                                                                                              |           |         | (60,162      | ) |   |         | (63,989 | )
|                                                      |                                                                                                                                                                             |           |         |              |   |   |         |        
|                                                      | Property, plant, and equipment  net                                                                                                                                        |           |         | 64,058       |   |   |         | 64,103  |  
|SALES-TYPE AND OPERATING LEASES  net                 |                                                                                                                                                                             |           | 58,738  |              |   |   | 56,570  |        
|DEFERRED INCOME TAXES                                 |                                                                                                                                                                             |           | 1,111   |              |   |   | 1,111   |        
|INVESTMENTS IN AFFILIATED COMPANIES                   |                                                                                                                                                                             |           | 17,968  |              |   |   | 17,242  |        
|GOODWILL 
Net of accumulated amortization of $11,852 |                                                                                                                                                                             |           | 13,256  |              |   |   | 13,256  |        
|                                                      |                                                                                                                                                                             |           |         |              |   |   |         |        
|TOTAL ASSETS                                          |                                                                                                                                                                             | $         | 334,628 |              |   | $ | 325,767 |        
|                                                      |                                                                                                                                                                             |           |         |              |   |   |         |        
|Liabilities and Shareholders Equity                  |                                                                                                                                                                             |           |         |              |   |   |         |        
|CURRENT LIABILITIES:                                  |                                                                                                                                                                             |           |         |              |   |   |         |        
|                                                      | Notes payable                                                                                                                                                               |           | $       | 17,837       |   |   | $       | 17,014  |  
|                                                      | Accounts payable                                                                                                                                                            |           |         | 16,120       |   |   |         | 22,173  |  
|                                                      | Accrued liabilities                                                                                                                                                         |           |         | 15,544       |   |   |         | 13,267  |  
|                                                      | Income taxes payable                                                                                                                                                        |           |         | 7,127        |   |   |         | 3,336   |  
|                                                      |                                                                                                                                                                             |           |         |              |   |   |         |        
|                                                      | Total current liabilities                                                                                                                                                   |           |         | 56,628       |   |   |         | 55,790  |  
|MINORITY INTEREST                                     |                                                                                                                                                                             |           | 3,246   |              |   |   | 3,073   |        
|SHAREHOLDERS EQUITY:                                 |                                                                                                                                                                             |           |         |              |   |   |         |        
|                                                      | Common Stockno par value, authorized 60,000,000 shares;
outstanding 28,379,440 shares and 28,343,170 shares,
respectively                                                  |           |         | 55,670       |   |   |         | 55,068  |  
|                                                      | Retained earnings                                                                                                                                                           |           |         | 249,853      |   |   |         | 240,748 |  
|                                                      | Accumulated other comprehensive loss                                                                                                                                        |           |         | (30,769      | ) |   |         | (28,912 | )
|                                                      |                                                                                                                                                                             |           |         |              |   |   |         |        
|Total shareholders equity                            |                                                                                                                                                                             |           | 274,754 |              |   |   | 266,904 |        
|                                                      |                                                                                                                                                                             |           |         |              |   |   |         |        
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY            |                                                                                                                                                                             | $         | 334,628 |              |   | $ | 325,767 |        
|                                                      |                                                                                                                                                                             |           |         |              |   |   |         |        

3



---



##### Table of Contents






DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

|                                                 |                                              |                                                                                  |                                                             |        |                    |        |        |         |   |        |  
|------------------------------------------------ | -------------------------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------------------------- | ------ | ------------------ | ------ | ------ | ------- | - | ------ | -
|                                                 |                                              |                                                                                  |                                                             |        | Three Months Ended
|(Dollars in Thousands)                           |                                              | March 31,                                                                       
|                                                 |                                              |                                                                                 
|                                                 |                                              |                                                                                  |                                                             |        | 2002               |        | 2001  
|                                                 |                                              |                                                                                  |                                                             |        |                    |        |       
|CASH FLOWS FROM OPERATING ACTIVITIES:            |                                              |                                                                                  |                                                             |        |                    |        |        |        
|                                                 | Net income                                   |                                                                                  | $                                                           | 10,807 |                    |        | $      | 8,552   |  
|                                                 |                                              | Adjustments to reconcile net income to net cash
flows from operating activities: |                                                             |        |                    |        |        |         |   |       
|                                                 |                                              |                                                                                  | Depreciation and amortization                               |        |                    | 5,725  |        |         |   | 6,292  |  
|                                                 |                                              |                                                                                  | Equity in undistributed income of unconsolidated affiliates |        |                    | (712   | )      |         |   | (855   | )
|                                                 |                                              | Changes in operating assets and liabilities:                                     |                                                             |        |                    |        |        |         |   |       
|                                                 |                                              |                                                                                  | Accounts receivable                                         |        |                    | (4,399 | )      |         |   | (8,043 | )
|                                                 |                                              |                                                                                  | Inventories                                                 |        |                    | (2,966 | )      |         |   | (842   | )
|                                                 |                                              |                                                                                  | Prepaid expenses and other current assets                   |        |                    | (2,708 | )      |         |   | 222    |  
|                                                 |                                              |                                                                                  | Accounts payable                                            |        |                    | (5,217 | )      |         |   | 92     |  
|                                                 |                                              |                                                                                  | Accrued liabilities                                         |        |                    | 1,152  |        |         |   | (4,057 | )
|                                                 |                                              |                                                                                  | Income taxes payable                                        |        |                    | 3,713  |        |         |   | 2,876  |  
|                                                 |                                              |                                                                                  |                                                             |        |                    |        |        |        
|                                                 | Net cash flows from operating activities     |                                                                                  |                                                             | 5,395  |                    |        |        | 4,237   |  
|                                                 |                                              |                                                                                  |                                                             |        |                    |        |        |        
|CASH FLOWS USED FOR INVESTING ACTIVITIES:        |                                              |                                                                                  |                                                             |        |                    |        |        |        
|                                                 |                                              |                                                                                  | Additions to property, plant, and equipment                 |        |                    | (2,153 | )      |         |   | (7,665 | )
|                                                 |                                              |                                                                                  | Sales-type and operating leases                             |        |                    | (6,544 | )      |         |   | (4,131 | )
|                                                 |                                              |                                                                                  | Investment in affiliated companies                          |        |                    |        |        |         |   | (480   | )
|                                                 |                                              |                                                                                  |                                                             |        |                    |        |        |        
|                                                 | Net cash flows used for investing activities |                                                                                  |                                                             | (8,697 | )                  |        |        | (12,276 | )
|                                                 |                                              |                                                                                  |                                                             |        |                    |        |        |        
|CASH FLOWS FROM FINANCING ACTIVITIES:            |                                              |                                                                                  |                                                             |        |                    |        |        |        
|                                                 |                                              |                                                                                  | Borrowing of notes payable                                  |        |                    | 1,099  |        |         |   | 692    |  
|                                                 |                                              |                                                                                  | Proceeds from exercise of stock options                     |        |                    | 602    |        |         |   | 1,756  |  
|                                                 |                                              |                                                                                  | Cash dividends paid                                         |        |                    | (1,702 | )      |         |   | (1,670 | )
|                                                 |                                              |                                                                                  |                                                             |        |                    |        |        |        
|                                                 | Net cash flows used for financing activities |                                                                                  |                                                             | (1     | )                  |        |        | 778     |  
|                                                 |                                              |                                                                                  |                                                             |        |                    |        |        |        
|EFFECT OF EXCHANGE RATE CHANGES ON CASH          |                                              |                                                                                  | 74                                                          |        |                    |        | (47    | )      
|                                                 |                                              |                                                                                  |                                                             |        |                    |        |        |        
|NET DECREASE IN CASH AND CASH EQUIVALENTS        |                                              |                                                                                  | (3,229                                                      | )      |                    |        | (7,308 | )      
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |                                              |                                                                                  | 31,834                                                      |        |                    |        | 26,395 |        
|                                                 |                                              |                                                                                  |                                                             |        |                    |        |        |        
|CASH AND CASH EQUIVALENTS
AT END OF PERIOD       |                                              | $                                                                                | 28,605                                                      |        |                    | $      | 19,087 |        
|                                                 |                                              |                                                                                  |                                                             |        |                    |        |        |        

4



---



##### Table of Contents






DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1  Basis of Presentation

The information for the three months ended March 31, 2002 and 2001 has not been
audited by independent public accountants, but includes all adjustments
(consisting of normal recurring accruals) that are, in the opinion of
management, necessary to a fair statement of the results for such periods.

Certain information and footnote disclosure normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been omitted pursuant to the requirements
of the Securities and Exchange Commission, although the Company believes that
the disclosures included in these financial statements are adequate to make the
information not misleading.

The consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Companys
2001 Annual Report on Form 10-K as filed with the Securities and Exchange
Commission.

The accompanying December 31, 2001 balance
sheet contains a reclassification of amounts included in the Companys 2001 Annual Report on
Form 10-K to conform to the March 31, 2002 presentation. Current liabilities at
December 31, 2001 totaled $55,790,000 in the accompanying December 31, 2001
balance sheet, compared with $58,863,000 reported in the Annual Report on Form
10-K, reflecting a $3,073,000 reclassification of minority interest to a
separate financial statement line item.

The results of operations for the three-month period ended March 31, 2002 are
not necessarily indicative of the results to be expected for the year ending
December 31, 2002. Basic earnings per share is computed by dividing net income
by the weighted-average number of shares outstanding. Diluted earnings per
share includes the dilutive effect of stock options. All share and per share
amounts have been adjusted to give effect to a 2 for 1 stock split
which occurred on
June 1, 2001.

Note 2  Inventories

Inventories by major categories are summarized as follows:

|                       |  |           |        |              |  |   |        | 
|---------------------- |  | --------- | ------ | ------------ |  | - | ------ | 
|(Dollars in Thousands) |  | March 31, |        | December 31,
|                       |  | 2002      |        | 2001        
|                       |  |           |        |             
|Raw materials          |  | $         | 30,817 |              |  | $ | 27,884 | 
|Work in process        |  |           | 24,971 |              |  |   | 23,611 | 
|Finished goods         |  |           | 9,698  |              |  |   | 11,320 | 
|                       |  |           |        |              |  |   |        | 
|Total                  |  | $         | 65,486 |              |  | $ | 62,815 | 
|                       |  |           |        |              |  |   |        | 

5



---



##### Table of Contents



Note 3  Comprehensive Income

Comprehensive income is summarized as follows:

|                                        |  |                    |        |      |  |   |        |  
|--------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|(Dollars in Thousands)                  |  | Three Months Ended
|                                        |  | March 31,         
|                                        |  |                   
|                                        |  | 2002               |        | 2001
|                                        |  |                    |        |     
|Net income                              |  | $                  | 10,807 |      |  | $ | 8,552  |  
|Foreign currency translation adjustment |  |                    | (1,857 | )    |  |   | (4,482 | )
|                                        |  |                    |        |      |  |   |        |  
|Comprehensive income                    |  | $                  | 8,950  |      |  | $ | 4,070  |  
|                                        |  |                    |        |      |  |   |        |  

The Company does not provide for U.S. income taxes on foreign currency
translation adjustments because it does not provide for such taxes on
undistributed earnings of foreign subsidiaries.

Note 4  Segment and Product Line Information

The Company considers its manufactured instruments and medical immunodiagnostic
test kits as one operating segment, as the kits are required to run the
instruments and utilize similar technology and instrument manufacturing
processes. The Company manufactures its instruments and kits principally from
facilities in the United States and the United Kingdom. Kits and instruments
are sold to hospitals, medical centers, clinics, physicians, and other clinical
laboratories throughout the world through a network of distributors, including
consolidated distributors located in the United Kingdom, Germany, Czech
Republic, Poland, Spain, The Netherlands, Belgium, Luxembourg, Finland, Norway,
France, Australia, New Zealand, China, Brazil, Uruguay, Bolivia, Venezuela,
Costa Rica, Panama, Sweden, Latvia, Lithuania, Estonia, and Denmark.

The Company sells its instruments and immunodiagnostic test kits under several
product lines. Product line sales information is as follows:

|                                          |  |                    |        |      |  |   |        | 
|----------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | 
|(Dollars in Thousands)                    |  | Three Months Ended
|                                          |  | March 31,         
|                                          |  |                   
|Sales:                                    |  | 2002               |        | 2001
|                                          |  |                    |        |     
|IMMULITE (includes service)               |  | $                  | 62,391 |      |  | $ | 53,859 | 
|Radioimmunoassay (RIA)                  |  |                    | 7,864  |      |  |   | 8,638  | 
|Other (Includes DPC and
non-DPC products) |  |                    | 4,472  |      |  |   | 5,300  | 
|                                          |  |                    |        |      |  |   |        | 
|                                          |  | $                  | 74,727 |      |  | $ | 67,797 | 
|                                          |  |                    |        |      |  |   |        | 

The Company is organized and managed by geographic area. Transactions between
geographic segments are accounted for as normal sales for internal reporting
and management purposes with all intercompany amounts eliminated in
consolidation. Sales are attributed to geographic area based on the location
from which the instrument or kit is shipped to the customer. Information
reviewed by the Companys chief operating decision maker on significant
geographic segments is prepared on the same basis as the consolidated financial
statements and is as follows:

|                                  |  |        |        |          |  |          |       |            |  |        |       |             |  |              |       |       |  |   |        |  |  |   |         |   |  |   |        | 
|--------------------------------- |  | ------ | ------ | -------- |  | -------- | ----- | ---------- |  | ------ | ----- | ----------- |  | ------------ | ----- | ----- |  | - | ------ |  |  | - | ------- | - |  | - | ------ | 
|                                  |  |        |        |          |  | Euro/DPC |       | DPC        |  | DPC    |       |             |  |              |       |       |  |   |        |  |  |  
|                                  |  |        |        |          |  | Limited  |       | Biermann   |  | Medlab |       |             |  |              |       | Less: |  |   |        | 
|                                  |  | United |        | (United  |  | (German  |       | (Brazilian |  |        |       |             |  | Intersegment |       |       |  |  
|                                  |  | States |        | Kingdom) |  | Group)*  |       | Group)*    |  | Other  |       | Elimination |  | Total       
|                                  |  |        |        |          |  |          |       |            |  |        |       |             |  |             
|(Dollars in Thousands)            |  |        |        |          |  |          |       |            |  |        |       |             |  |              |       |       |  |   |        |  |  |   |         |   |  |   |        | 
|Three Months Ended March 31, 2002 |  |        |        |          |  |          |       |            |  |        |       |             |  |              |       |       |  |   |        |  |  |   |         |   |  |   |        | 
|Sales                             |  | $      | 55,041 |          |  | $        | 9,765 |            |  | $      | 9,070 |             |  | $            | 7,402 |       |  | $ | 15,669 |  |  | $ | (22,220 | ) |  | $ | 74,727 | 
|Net income                        |  |        | 7,698  |          |  |          | 1,751 |            |  |        | 1     |             |  |              | 393   |       |  |   | 1,137  |  |  |   | (173    | ) |  |   | 10,807 | 
|Three Months Ended March 31, 2001 |  |        |        |          |  |          |       |            |  |        |       |             |  |              |       |       |  |   |        |  |  |   |         |   |  |   |        | 
|Sales                             |  | $      | 49,502 |          |  | $        | 8,775 |            |  | $      | 8,575 |             |  | $            | 6,932 |       |  | $ | 13,546 |  |  | $ | (19,533 | ) |  | $ | 67,797 | 
|Net income                        |  |        | 6,481  |          |  |          | 1,346 |            |  |        | 288   |             |  |              | 506   |       |  |   | 631    |  |  |   | (700    | ) |  |   | 8,552  | 

6



---



##### Table of Contents



*DPC Biermann includes the Companys operations in Germany, the Czech Republic,
and Poland. DPC Medlab includes the Companys operations in Brazil, Uruguay,
Venezuela, Costa Rica, and Panama.

Note 5  New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 141,
Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. SFAS No. 142 changes the accounting for
goodwill from an amortization method to an impairment-only approach.
Amortization of goodwill ceased upon adoption of this statement.
In addition, the standard includes provisions for the reclassification of
certain existing recognized intangibles as goodwill, reassessment of the useful
lives of existing recognized intangibles, reclassification of certain
intangibles out of previously reported goodwill, and the identification of
reporting units for purposes of assessing potential future impairments of
goodwill. Under SFAS Nos. 141 and 142, goodwill and other intangibles are
initially assessed for impairment upon adoption of the statements with
subsequent assessments required annually and when there is reason to suspect
that their values have been diminished or impaired, with any corresponding
write-downs recognized as necessary.

In connection with the adoption of SFAS No. 141, the Company evaluated its
intangibles including goodwill and determined that reclassification of such
balances was not necessary. Accordingly, the Companys intangibles consist
solely of goodwill generated in connection with the purchase of certain of its
affiliates. Effective January 1, 2002, the Company adopted SFAS
No. 142. Accordingly, goodwill amortization was
ceased, effective January 1, 2002, and would have been $260,000 had the
non-amortization provisions of SFAS No. 142 not been adopted. Pro forma net
income for the three-month period ended March 31, 2001, had the
non-amortization provisions of SFAS No. 142 been applied to that
period, would
have been $8,812,000, an increase of $260,000 on an after-tax basis,
or $.30 per
diluted share versus the $8,552,000 or $.29 on a split-adjusted basis, actually
reported. As a result of preliminary transitional impairment tests completed
during the three months ended March 31, 2002, the Company does not believe that
an impairment of its goodwill is necessary. However, as required under SFAS
No. 142, the Company will complete its transitional impairment tests by June 30, 2002.

During the third quarter of 2001, the Financial Accounting Standards Board
issued SFAS No. 143, Accounting for Asset Retirement
Obligations, and SFAS No.
144, Accounting for the Impairment and Disposal of Long-Lived Assets. These
new standards clarify and supersede existing guidance for the reporting and
accounting for asset impairments and asset retirements. SFAS No. 143 will be
effective for the Company beginning January 1, 2003. The Company does not
believe that the impact of SFAS No. 143 will be material to the Companys
consolidated financial statements or results of operations. The Company
adopted SFAS No. 144 effective January 1, 2002. The adoption of this standard
did not have a material impact on the Companys consolidated financial position
and results of operations.

Note 6  Related Party
Transaction

On April 1, 2002, the Company
amended its lease relating to 116,000 square feet of its Los
Angeles facility. The original lease expires on December 31,
2002. The amendment extends the term of the lease for two years
through December 31, 2004 and increases the rent to
approximately $.75 from $.70 per square foot, for a total annual
rent of $1,035,000. The Company also has the option to extend the
term for two years at $.79 per square foot. The lease is with a
partnership comprised of Michael Ziering, CEO and director, Ira
Ziering, VP and director, Marilyn Ziering, VP, and other children of
Mrs. Ziering who are shareholders of the Company. The rent was
determined on the basis of an independent appraisal, and the terms of
the lease amendment were approved unanimously by the non-interested
members of the board of directors.




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Except for the historical information contained herein, this report and
the following discussion in particular contain forward-looking statements
(identified by the words estimate, project, anticipate, plan, expect,
intend, believe, hope, and similar expressions) which are based upon
managements current expectations and speak only as of the date made. These
forward-looking statements are subject to risks, uncertainties, and factors
that could cause actual results to differ materially from the results
anticipated in the forward-looking statements. These risks and uncertainties
include 



| |  |  | the Companys ability to successfully market new and existing
products;                                                
| | - |  | -----------------------------------------------------------------------------------------------------------------------
|
| |  |  | the Companys ability to keep abreast of technological innovations
and successfully incorporate them into new products;
|
| |  |  | the Companys current dependence on sole suppliers for key chemical
components in the IMMULITE assays;                 

7



---



##### Table of Contents





| |  |  | the risks inherent in the development and release of new products,
such as delays, unforeseen costs, technical difficulties, and
regulatory approvals;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | competitive pressures, including technological advances and patents obtained by competitors;                                                          
|
| |  |  | currency risks based on the relative strength or weakness of the U.S. dollar;                                                                         
|
| |  |  | domestic and foreign governmental health care regulation and cost containment measures;                                                               
|
| |  |  | political and economic instability in certain foreign markets.                                                                                        

Results of Operations

The demand for the IMMULITE products continues to drive the Companys
performance. The Companys sales increased 10.2% in the first quarter of 2002
to $74.7 million compared to sales of $67.8 million in the first quarter of
2001. Sales of all IMMULITE products (instruments and reagents) in the first
quarter of 2002 were $62.4 million, a 16% increase over the first quarter of
2001. Sales of IMMULITE products represented 83% of first quarter 2002 sales,
compared to 79% of first quarter 2001 sales.

IMMULITE reagents represented $50.9 million of 2002 first quarter sales, a 20%
increase. Sales of IMMULITE systems (including rental revenue) were $8.2
million in the 2002 first quarter, down 14% from the first quarter of 2001.
The Company shipped a total of 245 IMMULITE systems during the first quarter of
2002, including 155 IMMULITE 2000 systems and 90 IMMULITE One systems. Service
and parts revenue increased to $3.3 million in 2002 from $1.9 million in 2001.
The total base of IMMULITE systems shipped grew to 7,315, including 1,921
IMMULITE 2000 systems.

Sales of the Companys RIA products declined approximately 9% in the
first quarter of 2002, representing 11% of sales, compared to 13% of sales in
the first quarter of 2001. This trend is expected to continue. Sales of other
DPC products, including non-IMMULITE allergy reagents, decreased by 21% from
the first quarter of 2001 to 4% of 2002 first quarter sales, down from 5% in
the first quarter in 2001. Sales of non-IMMULITE allergy reagents will
continue to be negatively impacted due to the successful introduction of the
IMMULITE 2000 allergy line in September 2001. Sales of non-DPC products,
primarily through its consolidated international affiliates, decreased 7% in
the first quarter of 2002 to $1.8 million or 2% of sales.

Due to the significance of foreign sales (72% of total sales), in particular in
Europe and Brazil, the Company is subject to currency risks based on the
relative strength or weakness of the U.S. dollar. In periods when the U.S.
dollar is strengthening, the effect of the translation of the financial
statements of consolidated foreign affiliates is that of lower sales and net
income. In the first quarter of 2002, the strong dollar had a 4% negative
impact on sales. Due to intense competition, the Companys foreign
distributors are generally unable to increase prices to offset the negative
effect when the U.S. dollar is strong.

In the first quarter of 2002, sales to domestic customers grew at 14%, to 28%
of total sales, due in part to increased penetration of large accounts, while
sales to foreign customers grew at 9%. First quarter 2002 domestic sales
growth was lower than the 37% experienced in the first quarter of 2001 due in
part to the increased historical level of sales and the extended sales cycle of
the U.S. hospital market.

Gross profit as a percentage of sales increased to 59.0% in the first quarter
of 2002 from 57.2% in the first quarter of 2001, due in part to a shift from
lower margin equipment sales and rentals to higher margin reagent sales as
percentage of sales in 2002 versus 2001, and manufacturing efficiencies on
higher levels of production.

The Company believes that because it sells to its affiliates in dollars, a
strengthening dollar as well as potential increases in product sales to large
customers in the United States could put pressure on gross margins in the
future.

Selling expense increased by 9% in dollar terms but as a percentage of sales
decreased slightly to approximately 17.7% in the first quarter of 2002 from
17.9% in 2001. Research and development expense increased by 5% in dollar
terms but decreased to 11.7% of sales in 2002 from 12.2% in the first quarter
of 2001.

General and administrative expenses increased slightly in the first quarter of
2002 compared to the first quarter of 2001 and decreased as a percentage of
sales to 8.9% in 2002, from 9.6% in 2001. The amortization of goodwill has ceased in accordance with Statement of Financial
Standards No. 142, Goodwill and Other Intangible Assets. In the first
quarter of 2001, this amount was approximately $260,000 and was included in
general and administrative expenses.

8



---



##### Table of Contents



Equity in income of affiliates represents the Companys share of earnings of
non-consolidated affiliates, principally the 45%-owned Italian distributor.
This amount decreased to $712,000 in the first quarter of 2002 from $855,000 in
the first quarter of 2001.

Interest/other expense-net includes interest income, interest expense, and
foreign exchange transaction losses and gains. The net expense increased by
approximately $90,000 in the first quarter of 2002 from the first quarter of
2001 due primarily to a decrease in interest income of approximately $200,000,
a decrease of other income of $200,000, and a reduction of foreign currency
transaction losses of approximately $340,000.

The Companys effective tax rate includes Federal, state, and foreign taxes.
The Companys tax rate increased to 31.0% in the first quarter of 2002 from
30.4% in the first quarter of 2001.

Net income increased 26% to $10.8 million in the first quarter of 2002 or $.37
per diluted share from $8.6 million or $.29 per diluted share on a
split-adjusted basis in the first quarter of 2001.

Critical Accounting Policies

Managements beliefs regarding significant accounting policies have not changed
significantly from those disclosed in Item 7 of the Companys Annual Report on
Form 10-K for the year ended December 31, 2001.

Liquidity and Capital Resources

The Company has adequate working capital and sources of capital to carry on its
current business and to meet its existing capital requirements. Net cash flow
from operating activities was $5.4 million in the first quarter of 2002 and
$4.2 million in the first quarter of 2001. Additions to property, plant, and
equipment in the first quarter of 2002 were $2.2 million, compared to $7.7
million in the first quarter of 2001 due to the completion of construction of a
new manufacturing facility in New Jersey in 2001 and the implementation of a
new computer system in Los Angeles in 2002. Cash flow used for the placement
of IMMULITE systems under sales-type and operating leases was $6.5 million in
the first quarter of 2002 compared to $4.1 million in the first quarter of
2001. These leases have periods ranging from three to five years. The Company
increased borrowings by $1.1 million in the first quarter of 2002 and increased
borrowings by $692,000 in the first quarter of 2001.

The Companys foreign operations are subject to risks, such as currency
devaluations, associated with political and economic instability. See
discussion above under Results of Operations.

The Company has a $20 million domestic unsecured line of credit under which
there were no borrowings outstanding at March 31, 2002 or December 31, 2001.
The Company had other notes payable (consisting of bank borrowings by the
Companys foreign consolidated subsidiaries payable in their local currency,
some of which are guaranteed by the Company) of $17.8 million at March 31, 2001
compared to $17.0 million at December 31, 2001. The Company received $602,000
from the exercise of stock options in the first quarter of 2002 versus $1.8
million in the first quarter of 2001. The Company has paid a quarterly cash
dividend of $.06 per share, on a split-adjusted basis, since 1995.

Contractual Obligations and Commitments

On April 1, 2002, the Company amended its lease relating to 116,000 square feet
of its Los Angeles facility. The original lease expires on December 31, 2002.
The amendment extends the term of the lease for two years through December 31,
2004 and increases the rent to approximately $.75 from $.70 per square foot,
for a total annual rent of $1,035,000. The Company also has the option to
extend the term for two years at $.79 per square foot. The lease is with a
partnership comprised of Michael Ziering, CEO and director, Ira Ziering, VP and
director, Marilyn Ziering, VP, and other children of Mrs. Ziering who are
shareholders of the Company. The rent was determined on the basis of an
independent appraisal, and the terms of the lease amendment were approved
unanimously by the non-interested members of the board of directors. The
Company decided not to sign a long-term lease for this facility so that it will
have the flexibility to consider all options to meet its future space
requirements.

9



---



##### Table of Contents



Euro Conversion

The Company has significant sales to European countries (the participating
countries) which converted to a common legal currency (the Euro) on January
1, 2002. The conversion to the Euro will eliminate currency exchange risk
among the participating countries.

The Company sells its products in the participating countries through
affiliated and non-affiliated distributors that determine sales prices in their
respective territories. The use of a single currency in the participating
countries may affect this variable pricing in the various European markets
because of price transparency. Nevertheless, other market factors such as
local taxes, customer preferences, and product assortment may reduce the need
for price equalization.

The Company has significant sales in Europe and is currently evaluating the
business implications of the conversion to the Euro, but at this time the
Company does not expect the Euro conversion to have a material impact on its
business. The Company has converted or upgraded certain of its European
subsidiaries to a similar computer software system that will allow them to
operate in the European currency environment and to create a central repository
for all European information.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 141, Business Combinations and
SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. SFAS No. 142 changes the accounting for
goodwill from an amortization method to an impairment-only approach.
Amortization of goodwill ceased upon adoption of this statement.
In addition, the standard includes provisions for the reclassification of
certain existing recognized intangibles as goodwill, reassessment of the useful
lives of existing recognized intangibles, reclassification of certain
intangibles out of previously reported goodwill, and the identification of
reporting units for purposes of assessing potential future impairments of
goodwill. Under SFAS Nos. 141 and 142, goodwill and other intangibles are
initially assessed for impairment upon adoption of the statements with
subsequent assessments required annually and when there is reason to suspect
that their values have been diminished or impaired, with any corresponding
write-downs recognized as necessary.

In connection with the adoption of SFAS No. 141, the Company evaluated its
intangibles including goodwill and determined that reclassification of such
balances was not necessary. Accordingly, the Companys intangibles consist
solely of goodwill generated in connection with the purchase of certain of its
affiliates. Effective January 1, 2002, the Company adopted SFAS No. 142.
Accordingly, goodwill amortization was ceased, effective January 1, 2002, and
would have been $260,000 had the non-amortization provisions of SFAS No. 142
not been adopted. Pro forma net income for the three-month period ended March
31, 2001, had the non-amortization provisions of SFAS No. 142 been applied to
that period would have been $8,812,000, an increase of $260,000 on an after-tax
basis, or $.30 per diluted share versus the $8,552,000 or $.29 on a
split-adjusted basis, actually reported. As a result of preliminary
transitional impairment tests completed during the three months ended March 31,
2002, the Company does not believe that an impairment of its goodwill is
necessary. However, as required under SFAS No. 142, the Company will complete
its transitional impairment tests by June 30, 2002.

During the third quarter of 2001, the Financial Accounting Standards Board
issued SFAS No. 143, Accounting for Asset Retirement Obligations and SFAS No.
144, Accounting for the Impairment and Disposal of Long-Lived Assets. These
new standards clarify and supersede existing guidance for the reporting and
accounting for asset impairments and asset retirements. SFAS No. 143 will be
effective for the Company beginning January 1, 2003. The Company does not
believe that the impact of SFAS No. 143 will be material to the Companys
consolidated financial statements or results of operations. The Company
adopted SFAS No. 144 effective January 1, 2002. The adoption of this standard
did not have a material impact on the Companys consolidated financial position
and results of operations.

10



---



##### Table of Contents






ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change during the quarter ended March 31, 2002, from
the disclosures about market risk provided in the Companys Annual Report on
Form 10-K for the year ended December 31, 2001.




PART II. OTHER INFORMATION




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits

10.1  Second Addendum to Standard Industrial Lease

(b)  Reports on Form 8-K. None.




SIGNATURES

Pursuant to the requirements 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.

DIAGNOSTIC PRODUCTS CORPORATION
(Registrant)

|                                     |  |                                                                                                        |  |             
|------------------------------------ |  | ------------------------------------------------------------------------------------------------------ |  | ------------
|/s/ Michael Ziering

Michael Ziering |  | President and
Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
Director |  | May 14, 2002
|                                    
|/s/ James L. Brill

James L. Brill   |  | Vice President-Finance
(Principal Financial and
Accounting Officer)                                    |  | May 14, 2002

11



---



##### Table of Contents






EXHIBIT INDEX

10.1 Second Addendum to Standard Industrial Lease.

12