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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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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 June 30, 2003                                            
| 
|o |  | 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

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 [   ]

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).

YES [X] NO [   ]

The number of shares of Common Stock, no par value, outstanding as of August 1,
2003, was 28,747,432.



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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                           
|                              | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION   
|                              | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                 
|                              | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                                    
|SIGNATURES                   
|EXHIBIT INDEX                
|EX-31.1                      
|EX-31.2                      
|EX-32                        



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##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM I. FINANCIAL STATEMENTS




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

|                                          |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |         | 
|----------------------------------------- | ------------------------- |  | --------------------------------------------- | ------ | ---------------- |  | ------ | ------ | ---- |  | ------ | ------- |  |  | ------ | ------- | 
|                                          |                           |  | Three Months Ended                            |        | Six Months Ended
|                                          |                           |  | June 30,                                      |        | June 30,        
|                                          |                           |  |                                               |        |                 
|                                          |                           |  | 2003                                          |        | 2002             |  | 2003   |        | 2002
|                                          |                           |  |                                               |        |                  |  |        |        |     
|                                          |                           |  | (Dollars In Thousands, except per share data)
|SALES:                                    |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|                                          | Non-Affiliated Customers  |  | $                                             | 88,186 |                  |  | $      | 76,102 |      |  | $      | 168,433 |  |  | $      | 143,553 | 
|                                          | Unconsolidated Affiliates |  |                                               | 7,765  |                  |  |        | 8,434  |      |  |        | 14,398  |  |  |        | 15,623  | 
|                                          |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|                                          | Total Sales               |  |                                               | 95,951 |                  |  |        | 84,536 |      |  |        | 182,831 |  |  |        | 159,176 | 
|COST OF SALES                             |                           |  | 39,964                                        |        |                  |  | 35,692 |        |      |  | 76,520 |         |  |  | 66,362 |        
|                                          |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|                                          | Gross Profit              |  |                                               | 55,987 |                  |  |        | 48,844 |      |  |        | 106,311 |  |  |        | 92,814  | 
|                                          |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|OPERATING EXPENSES:                       |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|Selling                                   |                           |  | 15,622                                        |        |                  |  | 13,448 |        |      |  | 31,055 |         |  |  | 26,598 |        
|Research and Development                  |                           |  | 10,047                                        |        |                  |  | 9,319  |        |      |  | 20,050 |         |  |  | 18,030 |        
|General and Administrative                |                           |  | 8,308                                         |        |                  |  | 7,560  |        |      |  | 16,908 |         |  |  | 14,217 |        
|Equity in Income of Affiliates            |                           |  | (1,463                                        | )      |                  |  | (1,118 | )      |      |  | (2,921 | )       |  |  | (1,830 | )      
|                                          |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|OPERATING EXPENSES  NET                  |                           |  | 32,514                                        |        |                  |  | 29,209 |        |      |  | 65,092 |         |  |  | 57,015 |        
|                                          |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|                                          | OPERATING INCOME          |  |                                               | 23,473 |                  |  |        | 19,635 |      |  |        | 41,219  |  |  |        | 35,799  | 
|Interest/Other Income  Net               |                           |  | 124                                           |        |                  |  | 610    |        |      |  | 153    |         |  |  | 431    |        
|                                          |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|INCOME BEFORE TAXES
AND MINORITY INTEREST |                           |  | 23,597                                        |        |                  |  | 20,245 |        |      |  | 41,372 |         |  |  | 36,230 |        
|PROVISION FOR INCOME TAXES                |                           |  | 6,843                                         |        |                  |  | 6,276  |        |      |  | 11,998 |         |  |  | 11,231 |        
|MINORITY INTEREST                         |                           |  | 132                                           |        |                  |  | (81    | )      |      |  | 45     |         |  |  | 142    |        
|                                          |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|                                          | NET INCOME                |  | $                                             | 16,622 |                  |  | $      | 14,050 |      |  | $      | 29,329  |  |  | $      | 24,857  | 
|                                          |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|EARNINGS PER SHARE:                       |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|                                          | BASIC                     |  | $                                             | .58    |                  |  | $      | .49    |      |  | $      | 1.02    |  |  | $      | .87     | 
|                                          | DILUTED                   |  | $                                             | .56    |                  |  | $      | .47    |      |  | $      | .99     |  |  | $      | .84     | 
|WEIGHTED-AVERAGE SHARES OUTSTANDING:      |                           |  |                                               |        |                  |  |        |        |      |  |        |         |  |  |        |        
|                                          | BASIC                     |  |                                               | 28,690 |                  |  |        | 28,465 |      |  |        | 28,656  |  |  |        | 28,413  | 
|                                          | DILUTED                   |  |                                               | 29,659 |                  |  |        | 29,723 |      |  |        | 29,576  |  |  |        | 29,625  | 

See Accompanying Notes to Consolidated Financial Statements

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DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)

|                                                                  |                                                                                                                                                                                           |   |                        |         |              |   |         |         |  
|----------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------------------- | ------- | ------------ | - | ------- | ------- | -
|                                                                  |                                                                                                                                                                                           |   | June 30,               |         | December 31,
|                                                                  |                                                                                                                                                                                           |   | 2003                   |         | 2002        
|                                                                  |                                                                                                                                                                                           |   |                        |         |             
|                                                                  |                                                                                                                                                                                           |   | (Dollars in Thousands)
|Assets                                                            |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|CURRENT ASSETS:                                                   |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|                                                                  | Cash and cash equivalents                                                                                                                                                                 |   | $                      | 40,441  |              |   | $       | 54,284  |  
|                                                                  | Accounts receivable (including receivables from unconsolidated affiliates of $9,248 and $7,256, respectively)
 net of
allowance for doubtful accounts of $2,508 and $2,181,
respectively |   |                        | 90,592  |              |   |         | 78,676  |  
|                                                                  | Inventories                                                                                                                                                                               |   |                        | 82,917  |              |   |         | 75,860  |  
|                                                                  | Prepaid expenses and other current assets                                                                                                                                                 |   |                        | 8,282   |              |   |         | 5,542   |  
|                                                                  | Deferred income taxes                                                                                                                                                                     |   |                        | 5,518   |              |   |         | 5,616   |  
|                                                                  |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|                                                                  | Total current assets                                                                                                                                                                      |   |                        | 227,750 |              |   |         | 219,978 |  
|PROPERTY, PLANT, AND EQUIPMENT:                                   |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|                                                                  | Land and buildings                                                                                                                                                                        |   |                        | 56,518  |              |   |         | 54,021  |  
|                                                                  | Machinery and equipment                                                                                                                                                                   |   |                        | 72,844  |              |   |         | 69,069  |  
|                                                                  | Leasehold improvements                                                                                                                                                                    |   |                        | 9,205   |              |   |         | 10,022  |  
|                                                                  | Construction in progress                                                                                                                                                                  |   |                        | 25,587  |              |   |         | 2,487   |  
|                                                                  |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|                                                                  | Total                                                                                                                                                                                     |   |                        | 164,154 |              |   |         | 135,599 |  
|                                                                  | Less accumulated depreciation and amortization                                                                                                                                            |   |                        | (69,254 | )            |   |         | (65,714 | )
|                                                                  |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|                                                                  | Property, plant, and equipment  net                                                                                                                                                      |   |                        | 94,900  |              |   |         | 69,885  |  
|SALES-TYPE AND OPERATING LEASES  net                             |                                                                                                                                                                                           |   | 73,375                 |         |              |   | 66,653  |        
|DEFERRED INCOME TAXES                                             |                                                                                                                                                                                           |   | 1,367                  |         |              |   | 1,367   |        
|INVESTMENTS IN AFFILIATED COMPANIES                               |                                                                                                                                                                                           |   | 27,054                 |         |              |   | 22,245  |        
|GOODWILL  Net of accumulated amortization of $11,923
and $11,896 |                                                                                                                                                                                           |   | 13,361                 |         |              |   | 13,319  |        
|                                                                  |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|TOTAL ASSETS                                                      |                                                                                                                                                                                           | $ | 437,807                |         |              | $ | 393,447 |        
|                                                                  |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|Liabilities and Shareholders Equity                              |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|CURRENT LIABILITIES:                                              |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|                                                                  | Accounts payable                                                                                                                                                                          |   | $                      | 17,109  |              |   | $       | 15,608  |  
|                                                                  | Accrued liabilities                                                                                                                                                                       |   |                        | 25,395  |              |   |         | 27,039  |  
|                                                                  | Income taxes payable                                                                                                                                                                      |   |                        | 6,861   |              |   |         | 4,955   |  
|                                                                  | Notes payable                                                                                                                                                                             |   |                        | 23,035  |              |   |         | 19,727  |  
|                                                                  |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|                                                                  | Total current liabilities                                                                                                                                                                 |   |                        | 72,400  |              |   |         | 67,329  |  
|MINORITY INTEREST                                                 |                                                                                                                                                                                           |   | 2,605                  |         |              |   | 2,554   |        
|SHAREHOLDERS EQUITY:                                             |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|                                                                  | Common Stockno par value, authorized 60,000,000 shares;
outstanding 28,719,942 shares and 28,603,779 shares,
respectively                                                                |   |                        | 62,531  |              |   |         | 60,807  |  
|                                                                  | Retained earnings                                                                                                                                                                         |   |                        | 307,118 |              |   |         | 281,228 |  
|                                                                  | Accumulated other comprehensive loss                                                                                                                                                      |   |                        | (6,847  | )            |   |         | (18,471 | )
|                                                                  |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|Total shareholders equity                                        |                                                                                                                                                                                           |   | 362,802                |         |              |   | 323,564 |        
|                                                                  |                                                                                                                                                                                           |   |                        |         |              |   |         |        
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                        |                                                                                                                                                                                           | $ | 437,807                |         |              | $ | 393,447 |        
|                                                                  |                                                                                                                                                                                           |   |                        |         |              |   |         |        

See Accompanying Notes to Consolidated Financial Statements

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

|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |         |         |         |   | 
|------------------------------------------------ | -------------------------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------------------------- | ------- | ------- | ---------------------- | ------ | ------- | ------- | ------- | - | 
|                                                 |                                              |                                                                                  |                                                             |         |         | Six Months Ended      
|                                                 |                                              |                                                                                  |                                                             |         |         | June 30,              
|                                                 |                                              |                                                                                  |                                                             |         |         |                       
|                                                 |                                              |                                                                                  |                                                             |         |         | 2003                   |        | 2002   
|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |        
|                                                 |                                              |                                                                                  |                                                             |         |         | (Dollars in Thousands)
|CASH FLOWS FROM OPERATING ACTIVITIES:            |                                              |                                                                                  |                                                             |         |         |                        |        |        
|                                                 | Net income                                   |                                                                                  | $                                                           | 29,329  |         |                        | $      | 24,857  |        
|                                                 |                                              | Adjustments to reconcile net income to net cash
flows from operating activities: |                                                             |         |         |                        |        |         |         |        
|                                                 |                                              |                                                                                  | Depreciation and amortization                               |         |         | 16,487                 |        |         |         | 12,715  |  
|                                                 |                                              |                                                                                  | Equity in undistributed income of unconsolidated affiliates |         |         | (2,474                 | )      |         |         | (1,830  | )
|                                                 |                                              |                                                                                  | Deferred income taxes                                       |         |         | 432                    |       
|                                                 |                                              | Changes in operating assets and liabilities:                                     |                                                             |         |         |                        |        |         |         |        
|                                                 |                                              |                                                                                  | Accounts receivable                                         |         |         | (7,238                 | )      |         |         | (10,764 | )
|                                                 |                                              |                                                                                  | Inventories                                                 |         |         | (5,183                 | )      |         |         | (4,788  | )
|                                                 |                                              |                                                                                  | Prepaid expenses and other current assets                   |         |         | (1,768                 | )      |         |         | (1,971  | )
|                                                 |                                              |                                                                                  | Accounts payable                                            |         |         | (1,864                 | )      |         |         | (10,560 | )
|                                                 |                                              |                                                                                  | Accrued liabilities                                         |         |         | (2,963                 | )      |         |         | 6,416   |  
|                                                 |                                              |                                                                                  | Income taxes payable                                        |         |         | 1,522                  |        |         |         | 2,744   |  
|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |        
|                                                 | Net cash flows from operating activities     |                                                                                  |                                                             | 26,280  |         |                        |        | 16,819  |        
|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |        
|CASH FLOWS USED FOR INVESTING ACTIVITIES:        |                                              |                                                                                  |                                                             |         |         |                        |        |        
|                                                 |                                              | Additions to property, plant, and equipment                                      |                                                             |         | (27,881 | )                      |        |         | (5,412  | )      
|                                                 |                                              | Sales-type and operating leases                                                  |                                                             |         | (11,068 | )                      |        |         | (15,343 | )      
|                                                 |                                              | Investment in affiliated companies                                               |                                                             |         |        |                        |        |         | (946    | )      
|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |        
|                                                 | Net cash flows used for investing activities |                                                                                  |                                                             | (38,949 | )       |                        |        | (21,701 | )      
|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |        
|CASH FLOWS FROM FINANCING ACTIVITIES:            |                                              |                                                                                  |                                                             |         |         |                        |        |        
|                                                 |                                              | Borrowing of notes payable-net                                                   |                                                             |         | 1,320   |                        |        |         | 1,581   |        
|                                                 |                                              | Proceeds from exercise of stock options                                          |                                                             |         | 1,724   |                        |        |         | 2,964   |        
|                                                 |                                              | Cash dividends paid                                                              |                                                             |         | (3,439  | )                      |        |         | (3,404  | )      
|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |        
|                                                 | Net cash flows from financing activities     |                                                                                  |                                                             | (395    | )       |                        |        | 1,141   |        
|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |        
|EFFECT OF EXCHANGE RATE CHANGES ON CASH          |                                              |                                                                                  | (779                                                        | )       |         |                        | 1,402  |        
|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |        
|NET DECREASE IN CASH AND CASH EQUIVALENTS        |                                              |                                                                                  | (13,843                                                     | )       |         |                        | (2,339 | )      
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |                                              |                                                                                  | 54,284                                                      |         |         |                        | 31,834 |        
|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |        
|CASH AND CASH EQUIVALENTS
AT END OF PERIOD       |                                              | $                                                                                | 40,441                                                      |         |         | $                      | 29,495 |        
|                                                 |                                              |                                                                                  |                                                             |         |         |                        |        |        

See Accompanying Notes to Consolidated Financial Statements

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

Note 1  Basis of Presentation

The information for the three and six-month periods ended June 30, 2003 and
2002 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 2002 Annual Report on Form 10-K as filed with
the Securities and Exchange Commission.

The results of operations for the three and six-month periods ended June 30,
2003 are not necessarily indicative of the results to be expected for the year
ending December 31, 2003. 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.

Pro Forma Stock-Based Compensation

The Company has stock option plans under which options have been granted at
exercise prices equal to the market price at the date of grant. Options
granted vest over periods of three to nine years and expire ten years from the
date of grant.

Pursuant to Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation, the Company has elected to account
for its employee stock options under Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees, which recognizes
expense based on the intrinsic value at the date of grant. As stock options
have been issued with exercise prices equal to the respective market prices at
grant date, no compensation expense has resulted. In December 2002, the
Financial Accounting Standards Board (FASB) issued SFAS No. 148, Accounting
for Stock-Based CompensationTransition and Disclosure, an amendment of FASB
Statement No. 123, which provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. SFAS No. 148 also amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The
Company elected to maintain the intrinsic method of accounting for stock
options under APB No. 25. Had compensation cost for all options granted been
determined based on the fair value at grant date consistent with SFAS No. 123,
the Companys net earnings and earnings per share would have been as follows:

|                       |                      |   |        |                                               |   |                  |        |       |   |      |        |       |   |   |        |       |   | 
|---------------------- | -------------------- | - | ------ | --------------------------------------------- | - | ---------------- | ------ | ----- | - | ---- | ------ | ----- | - | - | ------ | ----- | - | 
|                       |                      |   |        | Three Months Ended                            |   | Six Months Ended
|                       |                      |   |        | June 30,                                      |   | June 30,        
|                       |                      |   |        |                                               |   |                 
|                       |                      |   |        | 2003                                          |   | 2002             |        | 2003  |   | 2002
|                       |                      |   |        |                                               |   |                  |        |       |   |     
|                       |                      |   |        | (Amounts in Thousands, except per share data)
|Net Earnings           |                      |   |        |                                               |   |                  |        |       |   |      |        |       |   |   |        |      
|As Reported            |                      | $ | 16,622 |                                               |   | $                | 14,050 |       |   | $    | 29,329 |       |   | $ | 24,857 |      
|Pro Forma expense      |                      |   | (738   | )                                             |   |                  | (673   | )     |   |      | (1,476 | )     |   |   | (1,346 | )    
|                       |                      |   |        |                                               |   |                  |        |       |   |      |        |       |   |   |        |      
|Pro Forma              |                      | $ | 15,884 |                                               |   | $                | 13,377 |       |   | $    | 27,853 |       |   | $ | 23,511 |      
|                       |                      |   |        |                                               |   |                  |        |       |   |      |        |       |   |   |        |      
|Net Earnings Per Share |                      |   |        |                                               |   |                  |        |       |   |      |        |       |   |   |        |      
|Basic:                 |                      |   |        |                                               |   |                  |        |       |   |      |        |       |   |   |        |      
|                       | As Reported          |   | $      | 0.58                                          |   |                  | $      | 0.49  |   |      | $      | 1.02  |   |   | $      | 0.87  |  
|                       | Pro Forma Adjustment |   |        | (0.03                                         | ) |                  |        | (0.02 | ) |      |        | (0.05 | ) |   |        | (0.04 | )
|                       |                      |   |        |                                               |   |                  |        |       |   |      |        |       |   |   |        |      
|                       | Pro Forma            |   | $      | 0.55                                          |   |                  | $      | 0.47  |   |      | $      | 0.97  |   |   | $      | 0.83  |  
|                       |                      |   |        |                                               |   |                  |        |       |   |      |        |       |   |   |        |      
|                       | Diluted:             |   |        |                                               |   |                  |        |       |   |      |        |       |   |   |        |       |  

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| |                      |  |   |                                               |   |                  |   |       |   |      |   |       |   |  |   |       |   | 
| | -------------------- |  | - | --------------------------------------------- | - | ---------------- | - | ----- | - | ---- | - | ----- | - |  | - | ----- | - | 
| |                      |  |   | Three Months Ended                            |   | Six Months Ended
| |                      |  |   | June 30,                                      |   | June 30,        
| |                      |  |   |                                               |   |                 
| |                      |  |   | 2003                                          |   | 2002             |   | 2003  |   | 2002
| |                      |  |   |                                               |   |                  |   |       |   |     
| |                      |  |   | (Amounts in Thousands, except per share data)
| | As Reported          |  | $ | 0.56                                          |   |                  | $ | 0.47  |   |      | $ | 0.99  |   |  | $ | 0.84  |  
| | Pro Forma Adjustment |  |   | (0.02                                         | ) |                  |   | (0.02 | ) |      |   | (0.05 | ) |  |   | (0.05 | )
| |                      |  |   |                                               |   |                  |   |       |   |      |   |       |   |  |   |      
| | Pro Forma            |  | $ | 0.54                                          |   |                  | $ | 0.45  |   |      | $ | 0.94  |   |  | $ | 0.79  |  
| |                      |  |   |                                               |   |                  |   |       |   |      |   |       |   |  |   |      

Note 2  Inventories

Inventories by major categories are summarized as follows:

|                |  |                        |        |              |  |   |        | 
|--------------- |  | ---------------------- | ------ | ------------ |  | - | ------ | 
|                |  | June 30,               |        | December 31,
|                |  | 2003                   |        | 2002        
|                |  |                        |        |             
|                |  | (Dollars in Thousands)
|Raw materials   |  | $                      | 35,813 |              |  | $ | 35,257 | 
|Work in process |  |                        | 36,398 |              |  |   | 30,814 | 
|Finished goods  |  |                        | 10,706 |              |  |   | 9,789  | 
|                |  |                        |        |              |  |   |        | 
|Total           |  | $                      | 82,917 |              |  | $ | 75,860 | 
|                |  |                        |        |              |  |   |        | 

Note 3  Comprehensive Income

Comprehensive income is summarized as follows:

|                                        |  |                        |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|--------------------------------------- |  | ---------------------- | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                        |  | Three Months Ended     |        | Six Months Ended
|                                        |  | June 30,               |        | June 30,        
|                                        |  |                        |        |                 
|                                        |  | 2003                   |        | 2002             |  | 2003 |        | 2002
|                                        |  |                        |        |                  |  |      |        |     
|                                        |  | (Dollars in Thousands)
|Net income                              |  | $                      | 16,622 |                  |  | $    | 14,050 |      |  | $ | 29,329 |  |  | $ | 24,857 | 
|Foreign currency translation adjustment |  |                        | 9,281  |                  |  |      | 7,774  |      |  |   | 11,624 |  |  |   | 5,917  | 
|                                        |  |                        |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|Comprehensive income                    |  | $                      | 25,903 |                  |  | $    | 21,824 |      |  | $ | 40,953 |  |  | $ | 30,774 | 
|                                        |  |                        |        |                  |  |      |        |      |  |   |        |  |  |   |        | 

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, Croatia, Slovenia, Spain, The Netherlands, Belgium,
Luxemborg, 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:

|                                          |  |                        |        |                  |  |      |        |      |  |   |         |  |  |   |         | 
|----------------------------------------- |  | ---------------------- | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------- | 
|                                          |  | Three Months Ended     |        | Six Months Ended
|                                          |  | June 30,               |        | June 30,        
|                                          |  |                        |        |                 
|                                          |  | 2003                   |        | 2002             |  | 2003 |        | 2002
|                                          |  |                        |        |                  |  |      |        |     
|                                          |  | (Dollars in Thousands)
|Sales:                                    |  |                        |        |                  |  |      |        |      |  |   |         |  |  |   |         | 
|IMMULITE (includes service)               |  | $                      | 85,173 |                  |  | $    | 71,683 |      |  | $ | 160,827 |  |  | $ | 133,987 | 
|Radioimmunoassay (RIA)                  |  |                        | 6,935  |                  |  |      | 7,903  |      |  |   | 13,727  |  |  |   | 15,767  | 
|Other (Includes DPC and
non-DPC products) |  |                        | 3,843  |                  |  |      | 4,950  |      |  |   | 8,277   |  |  |   | 9,422   | 
|                                          |  |                        |        |                  |  |      |        |      |  |   |         |  |  |   |         | 
|                                          |  | $                      | 95,951 |                  |  | $    | 84,536 |      |  | $ | 182,831 |  |  | $ | 159,176 | 
|                                          |  |                        |        |                  |  |      |        |      |  |   |         |  |  |   |         | 

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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:

|                                 |  |                        |        |                  |  |                  |        |         |  |            |        |             |  |       |       |              |  |       |        |  |  |   |         |   |  |   |        | 
|-------------------------------- |  | ---------------------- | ------ | ---------------- |  | ---------------- | ------ | ------- |  | ---------- | ------ | ----------- |  | ----- | ----- | ------------ |  | ----- | ------ |  |  | - | ------- | - |  | - | ------ | 
|                                 |  |                        |        |                  |  |                  |        |         |  | DPC        |        |             |  |       |       |              |  |       |        |  |  |   |         |   |  |  
|                                 |  |                        |        |                  |  |                  |        |         |  | Biermann   |        | DPC Medlab  |  |       |       |              |  | Less: |        |  |  |  
|                                 |  |                        |        |                  |  | Euro/DPC Limited |        | (German |  | (Brazilian |        |             |  |       |       | Intersegment |  |       |        | 
|                                 |  | United States          |        | (United Kingdom) |  | Group)*          |        | Group)* |  | Other      |        | Elimination |  | Total
|                                 |  |                        |        |                  |  |                  |        |         |  |            |        |             |  |      
|                                 |  | (Dollars in Thousands)
|Three Months Ended June 30, 2003 |  |                        |        |                  |  |                  |        |         |  |            |        |             |  |       |       |              |  |       |        |  |  |   |         |   |  |   |        | 
|Sales                            |  | $                      | 61,455 |                  |  | $                | 16,804 |         |  | $          | 13,012 |             |  | $     | 7,742 |              |  | $     | 22,025 |  |  | $ | (25,087 | ) |  | $ | 95,951 | 
|Net income (loss)                |  |                        | 9,859  |                  |  |                  | 3,343  |         |  |            | 386    |             |  |       | 300   |              |  |       | 2,815  |  |  |   | (81     | ) |  |   | 16,622 | 
|Three Months Ended June 30, 2002 |  |                        |        |                  |  |                  |        |         |  |            |        |             |  |       |       |              |  |       |        |  |  |   |         |   |  |   |        | 
|Sales                            |  | $                      | 60,966 |                  |  | $                | 11,775 |         |  | $          | 10,159 |             |  | $     | 8,833 |              |  | $     | 18,756 |  |  | $ | (25,953 | ) |  | $ | 84,536 | 
|Net income (loss)                |  |                        | 8,873  |                  |  |                  | 2,660  |         |  |            | 453    |             |  |       | (71   | )            |  |       | 2,009  |  |  |   | 126     |   |  |   | 14,050 | 

|                               |  |                        |         |                  |  |                  |        |         |  |            |        |             |  |       |        |              |  |       |        |  |  |   |         |   |  |   |         | 
|------------------------------ |  | ---------------------- | ------- | ---------------- |  | ---------------- | ------ | ------- |  | ---------- | ------ | ----------- |  | ----- | ------ | ------------ |  | ----- | ------ |  |  | - | ------- | - |  | - | ------- | 
|                               |  |                        |         |                  |  |                  |        |         |  | DPC        |        |             |  |       |        |              |  |       |        |  |  |   |         |   |  |  
|                               |  |                        |         |                  |  |                  |        |         |  | Biermann   |        | DPC Medlab  |  |       |        |              |  | Less: |        |  |  |  
|                               |  |                        |         |                  |  | Euro/DPC Limited |        | (German |  | (Brazilian |        |             |  |       |        | Intersegment |  |       |        | 
|                               |  | United States          |         | (United Kingdom) |  | Group)*          |        | Group)* |  | Other      |        | Elimination |  | Total
|                               |  |                        |         |                  |  |                  |        |         |  |            |        |             |  |      
|                               |  | (Dollars in Thousands)
|Six Months Ended June 30, 2003 |  |                        |         |                  |  |                  |        |         |  |            |        |             |  |       |        |              |  |       |        |  |  |   |         |   |  |   |         | 
|Sales                          |  | $                      | 118,133 |                  |  | $                | 31,877 |         |  | $          | 25,687 |             |  | $     | 13,944 |              |  | $     | 43,169 |  |  | $ | (49,979 | ) |  | $ | 182,831 | 
|Net income (loss)              |  |                        | 16,883  |                  |  |                  | 6,226  |         |  |            | 806    |             |  |       | 103    |              |  |       | 5,242  |  |  |   | 69      |   |  |   | 29,329  | 
|Six Months Ended June 30, 2002 |  |                        |         |                  |  |                  |        |         |  |            |        |             |  |       |        |              |  |       |        |  |  |   |         |   |  |   |         | 
|Sales                          |  | $                      | 116,007 |                  |  | $                | 21,540 |         |  | $          | 19,229 |             |  | $     | 16,235 |              |  | $     | 34,338 |  |  | $ | (48,173 | ) |  | $ | 159,176 | 
|Net income (loss)              |  |                        | 16,571  |                  |  |                  | 4,411  |         |  |            | 454    |             |  |       | 323    |              |  |       | 3,145  |  |  |   | (47     | ) |  |   | 24,857  | 

|                  |  |                        |         |                  |  |                  |        |         |  |            |        |             |  |       |        |              |  |       |        |  |  |   |          |   |  |   |         | 
|----------------- |  | ---------------------- | ------- | ---------------- |  | ---------------- | ------ | ------- |  | ---------- | ------ | ----------- |  | ----- | ------ | ------------ |  | ----- | ------ |  |  | - | -------- | - |  | - | ------- | 
|                  |  |                        |         |                  |  |                  |        |         |  | DPC        |        |             |  |       |        |              |  |       |        |  |  |   |          |   |  |  
|                  |  |                        |         |                  |  |                  |        |         |  | Biermann   |        | DPC Medlab  |  |       |        |              |  | Less: |        |  |  |  
|                  |  |                        |         |                  |  | Euro/DPC Limited |        | (German |  | (Brazilian |        |             |  |       |        | Intersegment |  |       |        | 
|                  |  | United States          |         | (United Kingdom) |  | Group)*          |        | Group)* |  | Other      |        | Elimination |  | Total
|                  |  |                        |         |                  |  |                  |        |         |  |            |        |             |  |      
|                  |  | (Dollars in Thousands)
|Total Assets      |  |                        |         |                  |  |                  |        |         |  |            |        |             |  |       |        |              |  |       |        |  |  |   |          |   |  |   |         | 
|June 30, 2003     |  | $                      | 461,136 |                  |  | $                | 53,076 |         |  | $          | 52,810 |             |  | $     | 27,241 |              |  | $     | 80,030 |  |  | $ | (236,486 | ) |  | $ | 437,807 | 
|December 31, 2002 |  |                        | 416,758 |                  |  |                  | 44,958 |         |  |            | 49,071 |             |  |       | 21,055 |              |  |       | 69,932 |  |  |   | (208,327 | ) |  |   | 393,447 | 

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

Note 5  New Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities. The
standard requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. Examples of costs covered by the standard include lease
termination costs and certain employee severance costs that are associated with
a restructuring, discontinued operation, plant closing, or other exit or
disposal activity. SFAS No. 146 is to be applied prospectively to exit or
disposal activities initiated after

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December 31, 2002. As required, the Company will apply provisions of SFAS No.
146 prospectively to exit or disposal activities, if any, initiated after
December 31, 2002.

During November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others, which is
an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB
Interpretation No. 34. The initial recognition and measurement provisions of
this Interpretation are applicable on a prospective basis to guarantees issued
or modified after December 31, 2002, and the disclosure requirements are
effective for financial statements of periods ending after December 15, 2002.
This interpretation addresses the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under guarantees,
and also clarifies the requirements related to the recognition of a liability
by a guarantor at the inception of a guarantee for the obligations the
guarantor has undertaken in issuing that guarantee. The Company does not
currently provide any third-party guarantees.

On April 30, 2003, the Financial Accounting Standards Board issued SFAS No.
149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities. SFAS No. 149 amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS No. 133. The new guidance
amends SFAS No. 133 for decisions made as part of the Derivatives
Implementation Group (DIG) process that effectively required amendments to
SFAS No. 133, and decisions made in connection with other FASB projects dealing
with financial instruments and in connection with implementation issues raised
in relation to the application of the definition of a derivative and
characteristics of a derivative that contains financing components. In
addition, it clarifies when a derivative contains a financing component that
warrants special reporting in the statement of cash flows. SFAS No. 149 is
effective for contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. The Company is currently
assessing the impact of SFAS No. 149 on its Consolidated Financial Statements.

In May, the Financial Accounting Standards Board issued SFAS No. 150
Accounting for Financial Instruments with the Characteristics of Both
Liabilities and Equities. SFAS No. 150 establishes standards regarding the
manner in which an issuer classifies and measures certain types of financial
instruments having characteristics of both liabilities and equity. Pursuant to
SFAS No. 150, such freestanding financial instruments (i.e., those entered into
separately from an entitys other financial instruments or equity transactions
or that are legally detachable and separately exercisable) must be classified
as liabilities or, in some cases, assets. In addition, SFAS No. 150 requires
that financial instruments containing obligations to repurchase the issuing
entitys equity shares and, under certain circumstances, obligations that are
settled by delivery of the issuers shares be classified as liabilities. The
Statement is effective for financial instruments entered into or modified after
May 31, 2003 and for other instruments at the beginning of the first interim
period beginning after June 15, 2003. The Company does not currently have any
financial instruments that will be impacted by SFAS No. 150.

Note 6  Commitments and Contingent Liabilities

In the fourth quarter of 2002, the Company discovered internally that its
Chinese subsidiary had made certain improper payments that may have violated
foreign and U.S. laws. An independent investigation by the audit committee
concluded that no senior management of the Company was involved and that there
are no apparent similar issues with respect to the Companys other foreign
operations. The Company has implemented additional policies and procedures to
ensure compliance with applicable laws and the Company is cooperating with the
SEC in its review of this matter. The termination of the improper payments in
China may have a significant adverse effect on sales in China. For the year
ended December 31, 2002, the Chinese subsidiary had revenues of approximately
$9.0 million, less than 3% of total sales. In the fourth quarter of 2002, the
Company accrued $1.5 million for actual and estimated costs to resolve this
matter. As of June 30, 2003, $1.4 million remains in the accrual. In addition,
the Company recorded a charge of $1.4 million to its 2002 fourth quarter tax
provision related to the possible non-deductibility of the payments in China.
Additional legal expenses of approximately $750,000 have been incurred and
charged to general and administrative expense during the six month period ended
June 30, 2003.

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##### Table of Contents






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;                                                                                         
|
| |  |  | 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;                                                                                                   
|
| |  |  | environmental risks related to substances regulated by various federal, state, and international laws;                                                                                         
|
| |  |  | 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;                                                                                                                                 
|
| |  |  | changes in accounting standards promulgated by the Financial
Accounting Standards Board, the Securities and Exchange Commission, or
the American Institute of Certified Public Accountants; and
|
| |  |  | the effects of governmental or other actions relating to certain
payments by the Companys Chinese subsidiary.                                                                                 

Results of Operations

The sale of IMMULITE products continues to drive the Companys performance.
The Companys sales increased 13.5% in the second quarter of 2003 to $96.0
million compared to sales of $84.5 million in the second quarter of 2002. In
the first six months of 2003, the Companys sales increased 14.9% to $182.8
million from $159.2 million in the first six months of 2002. Sales of all
IMMULITE products (instruments and reagents) in the second quarter of 2003 were
$85.2 million, a 19% increase over the second quarter of 2002. In the first
six months of 2003, sales of all IMMULITE products were $160.8 million, a 20%
increase over the same period of 2002. Sales of IMMULITE products represented
89% of second quarter 2003 sales, compared to 85% of second quarter 2002 sales.
In the first six months of 2003, sales of IMMULITE products represented 88% of
sales versus 84% in the same period of 2002. Various categories of IMMULITE
product line sales in the second quarter and in the first six months of 2003
and 2002 are shown in the following chart:

IMMULITE Product Line Sales

|                                   |                         |   |                             |        |                           |  |          |      |       |   |           |        |       |   |         |         |          |  |      |       |    |   |         |        | 
|---------------------------------- | ----------------------- | - | --------------------------- | ------ | ------------------------- |  | -------- | ---- | ----- | - | --------- | ------ | ----- | - | ------- | ------- | -------- |  | ---- | ----- | -- | - | ------- | ------ | 
|                                   |                         |   | Three Months ended June 30, |        | Six Months ended June 30,
|                                   |                         |   |                             |        |                          
|                                   |                         |   | 2003                        |        | 2002                      |  | 2003     |      | 2002 
|                                   |                         |   |                             |        |                           |  |          |      |      
|                                   |                         |   |                             |        |                           |  | % change |      |       |   |           |        |       |   |         |         | % change |  |      |       |   
|                                   |                         |   | Sales                       |        | from 2002                 |  | Sales    |      | Sales |   | from 2002 |        | Sales
|                                   |                         |   |                             |        |                           |  |          |      |       |   |           |        |      
|                                   |                         |   | (Dollars In Thousands)     
|IMMULITE 2000                      |                         |   |                             |        |                           |  |          |      |       |   |           |        |       |   |         |         |          |  |      |       |    |   |         |       
|                                   | Reagents                |   | $                           | 46,132 |                           |  |          | 39.8 | %     |   | $         | 32,992 |       |   | $       | 87,427  |          |  |      | 44.5  | %  |   | $       | 60,508 | 
|                                   | Instruments and
Service |   |                             | 7,902  |                           |  |          | (5.8 | %)    |   |           | 8,387  |       |   |         | 13,145  |          |  |      | (12.6 | %) |   |         | 15,042 | 
|                                   |                         |   |                             |        |                           |  |          |      |       |   |           |        |       |   |         |         |          |  |      |       |    |   |         |       
|                                   | Total                   |   | $                           | 54,034 |                           |  |          | 30.6 | %     |   | $         | 41,379 |       |   | $       | 100,572 |          |  |      | 33.1  | %  |   | $       | 75,550 | 
|                                   |                         |   |                             |        |                           |  |          |      |       |   |           |        |       |   |         |         |          |  |      |       |    |   |         |       
|IMMULITE (including
IMMULITE 1000) |                         |   |                             |        |                           |  |          |      |       |   |           |        |       |   |         |         |          |  |      |       |    |   |         |       
|                                   | Reagents                |   | $                           | 26,629 |                           |  |          | 4.2  | %     |   | $         | 25,548 |       |   | $       | 51,885  |          |  |      | 6.3   | %  |   | $       | 48,821 | 
|                                   | Instruments and
Service |   |                             | 4,510  |                           |  |          | (5.2 | %)    |   |           | 4,756  |       |   |         | 8,370   |          |  |      | (13.0 | %) |   |         | 9,616  | 
|                                   |                         |   |                             |        |                           |  |          |      |       |   |           |        |       |   |         |         |          |  |      |       |    |   |         |       
|                                   | Total                   |   | $                           | 31,139 |                           |  |          | 2.8  | %     |   | $         | 30,304 |       |   | $       | 60,255  |          |  |      | 3.1   | %  |   | $       | 58,437 | 
|                                   |                         |   |                             |        |                           |  |          |      |       |   |           |        |       |   |         |         |          |  |      |       |    |   |         |       
|IMMULITE                           |                         |   |                             |        |                           |  |          |      |       |   |           |        |       |   |         |         |          |  |      |       |    |   |         |       
|Product Line Sales                 |                         | $ | 85,173                      |        |                           |  | 18.8     | %    |       | $ | 71,683    |        |       | $ | 160,827 |         |          |  | 20.0 | %     |    | $ | 133,987 |       
|                                   |                         |   |                             |        |                           |  |          |      |       |   |           |        |       |   |         |         |          |  |      |       |    |   |         |       

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The Company shipped a total of 201 IMMULITE systems during the second quarter
of 2003, including 123 IMMULITE 2000 systems and 78 IMMULITE One and 1000
systems. The total base of IMMULITE systems shipped grew to 8,570, including
2,655 IMMULITE 2000 systems. In the second quarter of 2002 the Company shipped
a total of 315 IMMULITE systems, including 183 IMMULITE 2000 systems.

The reduction in the number of instruments shipped resulted in lower instrument
revenue in the second quarter of 2003 as compared to the second quarter of
2002. It is anticipated that for the year the Company will ship closer to 500
IMMULITE 2000 instruments rather than 600 previously expected. Instruments are
placed in customer locations based on many different forms of agreements. In
general, instruments are sold, rented, or placed in a customers laboratory
with an agreement to purchase a certain amount of reagents. Instrument revenue
will vary based on the method of instrument placement. In the United States,
the Company has placed more instruments in the first six months of 2003 based
on minimum reagent usage commitments which are reflected in reagent revenues
only.

One measure of the penetration of reagent sales is the average amount of
reagents sold per instrument shipped. It takes a number of weeks or months
after an instrument is shipped for it to become fully functional with regard to
reagent utilization. The Company calculates quarterly reagent utilization per
instrument by dividing the reagent sales for the current quarter by the total
number of instruments shipped as of the end of the previous quarter. For the
second quarter of 2003, IMMULITE 2000 reagent utilization per instrument was
$18,220 and IMMULITE reagent utilization per instrument was $4,562 as compared
to the second quarter of 2002, when they were $17,174 and $4,736 respectively.
Increases in utilization on the IMMULITE 2000 are in part a result of a larger
test menu including Hepatitis B tests and the strength of the Euro relative to
the dollar. The drop in average utilization per instrument on the IMMULITE is
expected to continue as high volume IMMULITE installations are replaced with
IMMULITE 2000s and incremental IMMULITE placements go into lower volume
environments.

Sales of the Companys RIA products declined approximately 12% in the second
quarter of 2003, representing 7% of sales, compared to 9% of sales in the
second quarter of 2002. This trend is expected to continue. Sales of other
DPC products, including non-IMMULITE allergy reagents, decreased by 24% from
the second quarter of 2002 and fell to 3% of sales from 4% in 2002. Sales of
non-DPC products, primarily through its consolidated international affiliates,
decreased 22% in the second quarter of 2003 to $1.3 million or 1% of sales.

In the second quarter of 2003, sales to domestic customers grew by 19%, and
increased to 29% of total sales, due to increased penetration into most
customer segments, including a positive response to the Companys Hepatitis B
assays. Sales to foreign customers grew at 11%. Due to the significance of
foreign sales (71% 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, and when the dollar weakens
the effect is the opposite, higher sales and net income. In the second quarter
of 2003, the strong Euro net of the weak Real had a positive impact on sales of
approximately 7%. 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.

Gross profit as a percentage of sales increased to 58.3% in the second quarter
of 2003 from 57.8% in the second quarter of 2002. The increase in gross margin
was due in part to an increase in reagent sales, particularly IMMULITE 2000
reagent sales, relative to instrument sales and the strength of the Euro
relative to the dollar, as a majority of the reagents are manufactured in the
United States and their cost is based in dollars. In addition, sales to United
States end users increased faster than those to third party distributors, which
typically have lower gross margins. In the first six months of 2003 gross
profit as a percentage of sales was 58.1%, slightly less than 58.3% in the
first six months of 2002. Gross margins are also impacted by product mix,
customer mix, and currency movements.

Selling expense increased by 16% in dollar terms and as a percentage of sales
increased slightly to 16.3% in the second quarter of 2003 from 15.9% in 2002.
In the first six months of 2003 selling expense increased by 17% and increased
as a percent of sales as well, to 17.0% from 16.7% in 2002. The increase in
selling expense was primarily related to the increase in sales and the strength
of the Euro. Research and development expense increased by 8% in the second
quarter of 2003 but decreased to 10.5% of sales in 2003 from 11.0% in the
second quarter of 2002. In the first six months of 2003 research and
development expense increased by 11% and decreased as a percent of sales to
11.0% from 11.3% in 2002.

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General and administrative expenses increased by 10% in the second quarter of
2003 compared to the second quarter of 2002 and decreased as a percentage of
sales to 8.7% in 2003, from 8.9% in 2002. In the first six months of 2003
General and Administrative expenses increased 19% to 9.3% of sales from 8.9% in
2002. Included in general and administrative expenses in the first quarter of
2003 was approximately $650,000 in legal fees related to the Companys internal
investigation of certain payments by its Companys Chinese subsidiary.
Although a review of this matter is ongoing, those expenses were significantly
lower at approximately $100,000 in the second quarter. It is anticipated that
these expenses will continue to be lower in future periods. See note 6 of notes
to consolidated financial statements for a discussion of the Chinese subsidiary
matter. The strong Euro also resulted in higher general and administrative
expenses.

Equity in income of affiliates represents the Companys share of earnings of
non-consolidated affiliates, principally the 45%-owned Italian distributor.
This amount increased to $1.5 million in the second quarter of 2003 from $1.1
million in the second quarter of 2002, and in the first six months of 2003 this
amount increased to $2.9 million from $1.8 million. The increases were due
primarily to increased income in the Companys Italian distributor.

Interest/other income-net includes interest income, interest expense, and
foreign exchange transaction losses and gains. The net amount was income of
$124,000 in the second quarter of 2003 versus income of $610,000 in 2002. This
difference was driven in part by a $158,000 decrease in foreign currency
transaction gains from a gain of $769,000 in 2002 to a gain of $611,000 in
2003, net of increases in interest paid and other expense of $326,000. Foreign
currency transaction gains increased to $1.1 million in the first six months of
2003 from $687,000 in 2002 while interest paid and other expense increased to
$959,000 in the first six months of 2003 from $258,000 in 2002.

The Companys effective tax rate includes federal, state, and foreign taxes.
The Companys income tax rate decreased to 29.0% in the second quarter and
first six months of 2003 from 31.0% in the second quarter and first six months
of 2002.

Net income increased 18% to $16.6 million in the second quarter of 2003 or $.56
per diluted share from $14.1 million or $.47 per diluted share in the second
quarter of 2002. Net income for the first six months of 2003 increased 18% to
$29.3 million or $.99 per diluted share from $24.9 million or $.84 per diluted
share in 2002.

Contractual Obligations and Commitments

Managements beliefs regarding contractual obligations and commitments 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.

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, 2002.

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. At June 30,
2003 and December 31, 2002, the Company had cash and cash equivalents of $40.4
million and $54.3 million, respectively. Net cash flow from operating
activities was $26.3 million in the first six months of 2003 and $16.8 million
in the first six months of 2002. The increase is a result of net income,
depreciation and amortization, and other non-cash items of $8.0 million and
a decrease in cash used by changes in operating assets and liabilities of $1.5
million. Additions to property, plant, and equipment in the first six months
of 2003 were $27.9 million, compared to $5.4 million in the first six months of
2002. The increase was primarily due to the purchase of a new corporate
headquarters building for approximately $22 million in cash. An additional
$8-10 million is expected to be spent to fit out this building. It is
anticipated that it will be occupied in early 2004. Cash flow used for the
placement of IMMULITE systems under sales-type and operating leases was $11.1
million in the first six months of 2003 compared to $15.3 million in the first
six months of 2002. These leases typically have periods ranging from three to
five years. The Company increased borrowings in its foreign affiliates by $1.3
million in the first six months of 2003 and by $1.6 million in the first six
months of 2002.

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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 June 30, 2003 or December 31, 2002.
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 $23.0 million at June 30, 2003
compared to $19.7 million at December 31, 2002. The Company received $1.7
million from the exercise of stock options in the first six months of 2003
versus $3.0 million in the first six months of 2002. The Company has paid a
quarterly cash dividend of $.06 per share, on a split-adjusted basis, since
1995.

New Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities. The
standard requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. Examples of costs covered by the standard include lease
termination costs and certain employee severance costs that are associated with
a restructuring, discontinued operation, plant closing, or other exit or
disposal activity. SFAS No. 146 is to be applied prospectively to exit or
disposal activities initiated after December 31, 2002. As required, the
Company will apply provisions of SFAS No. 146 prospectively to exit or disposal
activities, if any, initiated after December 31, 2002.

During November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others, which is
an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB
Interpretation No. 34. The initial recognition and measurement provisions of
this Interpretation are applicable on a prospective basis to guarantees issued
or modified after December 31, 2002, and the disclosure requirements are
effective for financial statements of periods ending after December 15, 2002.
This interpretation addresses the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under guarantees,
and also clarifies the requirements related to the recognition of a liability
by a guarantor at the inception of a guarantee for the obligations the
guarantor has undertaken in issuing that guarantee. The Company does not
currently provide any third-party guarantees.

On April 30, 2003, the Financial Accounting Standards Board issued SFAS No.
149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities. SFAS No. 149 amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS No. 133. The new guidance
amends SFAS No. 133 for decisions made as part of the Derivatives
Implementation Group (DIG) process that effectively required amendments to
SFAS No. 133, and decisions made in connection with other FASB projects dealing
with financial instruments and in connection with implementation issues raised
in relation to the application of the definition of a derivative and
characteristics of a derivative that contains financing components. In
addition, it clarifies when a derivative contains a financing component that
warrants special reporting in the statement of cash flows. SFAS No. 149 is
effective for contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. The Company is currently
assessing the impact of SFAS No. 149 on the Consolidated Financial Statements.

In May, the Financial Accounting Standards Board issued SFAS No. 150
Accounting for Financial Instruments with the Characteristics of Both
Liabilities and Equities. SFAS No. 150 establishes standards regarding the
manner in which an issuer classifies and measures certain types of financial
instruments having characteristics of both liabilities and equity. Pursuant to
SFAS No. 150, such freestanding financial instruments (i.e., those entered into
separately from an entitys other financial instruments or equity transactions
or that are legally detachable and separately exercisable) must be classified
as liabilities or, in some cases, assets. In addition, SFAS No. 150 requires
that financial instruments containing obligations to repurchase the issuing
entitys equity shares and, under certain circumstances, obligations that are
settled by delivery of the issuers shares be classified as liabilities. The
Statement is effective for financial instruments entered into or modified after
May 31, 2003 and for other instruments at the beginning of the first interim
period beginning after June 15, 2003. The Company does not currently have any
financial instruments that will be impacted by SFAS No. 150.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change during the quarter ended June 30, 2003, from
the disclosures about market risk provided in the Companys Annual Report on
Form 10-K for the year ended December 31, 2002.




ITEM 4. CONTROLS AND PROCEDURES

Based on their evaluation of the Companys disclosure controls and procedures
as of June 30, 2003, the Chief Executive Officer and Chief Financial Officer of
the Company have concluded that such disclosure controls and procedures were
adequate and effective and designed to ensure that material information
relating to the Company and its consolidated subsidiaries would be made known
to them by others within those entities. There has been no change in the
Companys internal controls over financial reporting identified in connection
with such evaluation that occurred during the Companys last fiscal quarter
that has materially affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting.




PART II. OTHER INFORMATION




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The following persons were elected Directors at the Annual Meeting of
Shareholders held May 6, 2003:

|                    |  |            |            |          |  |  |           | 
|------------------- |  | ---------- | ---------- | -------- |  |  | --------- | 
|                    |  | Votes Cast
|                    |  |           
|                    |  | For        |            | Withhold
|                    |  |            |            |         
|Sidney A. Aroesty   |  |            | 22,204,632 |          |  |  | 4,021,468 | 
|Frederick Frank     |  |            | 21,480,821 |          |  |  | 4,745,279 | 
|Kenneth A. Merchant |  |            | 26,104,211 |          |  |  | 121,889   | 
|Maxwell H. Salter   |  |            | 21,792,054 |          |  |  | 4,434,050 | 
|James D. Watson     |  |            | 21,781,692 |          |  |  | 4,444,408 | 
|Ira Ziering         |  |            | 21,937,082 |          |  |  | 4,289,018 | 
|Michael Ziering     |  |            | 21,957,582 |          |  |  | 4,268,518 | 




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

(a) Exhibits

|     |  |                                       
|---- |  | --------------------------------------
|31.1 |  | Certificate of Chief Executive Officer
|31.2 |  | Certificate of Chief Financial Officer
|32.1 |  | Section 906 Officers Certification   

(b) Reports on Form 8-K.

| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | The Registrant filed a current report on Form 8-K to report on Item 7 and
9 on April 23, 2003.




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 |  | August 12, 2003
|                                    
|/s/ James L. Brill

James L. Brill   |  | Vice President-Finance
(Principal Financial and Accounting
Officer)                                    |  | August 12, 2003

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EXHIBIT INDEX

|        |  |                                       
|------- |  | --------------------------------------
|Exhibit |  |                                       
|Number  |  | Description                           
|        |  |                                       
|31.1    |  | CERTIFICATE OF CHIEF EXECUTIVE OFFICER
|31.2    |  | CERTIFICATE OF CHIEF FINANCIAL OFFICER
|32.1    |  | SECTION 906 OFFICERS CERTIFICATION