Diagnostic Products 10K/A 2002 Annual report (amended)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A-1


x		Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the year ended December 31, 2002


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

Securities registered pursuant to Section 12(b) of the Act:


		Name of each exchange
Title of each class Common Stock, no par value		on which registered New York Stock Exchange

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).
[ YES ü] [NO ]

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 ü] [NO ]

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

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $827,477,000 as of June 30, 2002.

The number of shares of Common Stock, no par value, outstanding as of March 6, 2003, was 28,623,309.

Documents Incorporated by Reference

Portions of the proxy statement for the 2003 Annual Shareholders Meeting are incorporated by reference into Part III of this report.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Documents filed as part of Report:

	1.		Financial Statements:
			Independent Auditors’ Report
			Consolidated Balance Sheets as of December 31, 2002 and 2001.
			Consolidated Statements of Income for each of the three years in the period ended December 31, 2002.
			Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended December 31, 2002.
			Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2002.
			Notes to Consolidated Financial Statements

	2.		Supplementary Financial Data.

	3.		(a) Exhibits – See “Exhibit Index” which appears after the signature page of this report.

(b) Reports on Form 8-K – none filed in the fourth quarter of 2002.

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders:

We have audited the accompanying consolidated balance sheets of Diagnostic Products Corporation and its subsidiaries (the “Company”) as of December 31, 2002 and 2001, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Diagnostic Products Corporation and its subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, effective January 1, 2002, the Company changed its method of accounting for goodwill and other intangible assets to conform to Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

/s/Deloitte & Touche LLP

Los Angeles, California
February 21, 2003

CONSOLIDATED BALANCE SHEETS


*(Dollars in Thousands)*		December 31,

		2002			2001

Assets
CURRENT ASSETS:
	Cash and cash equivalents	$	54,284		$	31,834
	Accounts receivable – (including receivables from unconsolidated affiliates of $7,256 and $6,636) – net of allowance for doubtful accounts of $2,181 and $1,719		78,676			74,630
	Inventories		75,860			62,815
	Prepaid expenses and other current assets		5,542			981
	Deferred income taxes		5,616			3,225

	Total current assets		219,978			173,485

PROPERTY, PLANT AND EQUIPMENT:
	Land and buildings		54,021			49,922
	Machinery and equipment		69,069			64,650
	Leasehold improvements		10,022			7,242
	Construction in progress		2,487			6,278

	Total		135,599			128,092
	Less accumulated depreciation and amortization		(65,714	)		(63,989	)

	Property, plant and equipment – net		69,885			64,103

SALES-TYPE AND OPERATING LEASES – net			66,653			56,570
DEFERRED INCOME TAXES			1,367			1,111
INVESTMENTS IN AFFILIATED COMPANIES			22,245			17,242
GOODWILL – net of accumulated amortization of $11,896 and $11,852			13,319			13,256

TOTAL ASSETS		$	393,447		$	325,767

Liabilities and Shareholders’ Equity
CURRENT LIABILITIES:
	Notes payable	$	19,727		$	17,014
	Accounts payable		15,608			15,722
	Accrued liabilities		27,039			19,718
	Income taxes payable		4,955			3,336

	Total current liabilities		67,329			55,790

MINORITY INTEREST			2,554			3,073

SHAREHOLDERS’ EQUITY:
	Common Stock–no par value, authorized 60,000,000 shares at December 31, 2002 and 2001; outstanding 28,603,779 shares and 28,343,170 shares, respectively		60,807			55,068
	Retained earnings		281,228			240,748
	Accumulated other comprehensive loss		(18,471	)		(28,912	)

Total shareholders’ equity			323,564			266,904

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	393,447		$	325,767

SEE ACCOMPANYING NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.

CONSOLIDATED STATEMENTS OF INCOME


*(In Thousands, except per Share Data)*
		Year Ended December 31,

		2002			2001			2000

SALES
	Non-Affiliated Customers	$	293,283		$	256,099		$	222,712
	Unconsolidated Affiliates		30,804			27,030			24,893

	Total Sales		324,087			283,129			247,605
COST OF SALES			137,746			120,690			110,522

GROSS PROFIT			186,341			162,439			137,083

OPERATING EXPENSES:
	Selling		53,471			49,685			44,102
	Research and Development		36,817			31,447			26,464
	General and Administrative		30,682			26,788			26,415
	Equity in Income of Affiliates		(3,841	)		(3,304	)		(1,755	)

OPERATING EXPENSES –NET			117,129			104,616			95,226

OPERATING INCOME			69,212			57,823			41,857
	Interest/Other Income (Expense) –Net		(1,220	)		(7	)		666

INCOME BEFORE INCOME TAXES
	AND MINORITY INTEREST		67,992			57,816			42,523
PROVISION FOR INCOME TAXES			(21,078	)		(17,812	)		(12,864	)
MINORITY INTEREST			399			(975	)		(1,409	)

NET INCOME		$	47,313		$	39,029		$	28,250

EARNINGS PER SHARE:
	BASIC	$	1.66		$	1.39		$	1.03
	DILUTED	$	1.60		$	1.32		$	1.00
WEIGHTED AVERAGE SHARES OUTSTANDING:
	BASIC		28,487			28,128			27,555
	DILUTED		29,628			29,474			28,149

SEE ACCOMPANYING NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


*(Dollars in Thousands)*			Common Stock
							Retained			Accumulated Other			Comprehensive
			Shares		Amount		Earnings			Comprehensive Loss			Income

BALANCE, JANUARY 1, 2000				27,345,508	$	37,816	$	186,826		$	(17,745	)
Comprehensive income:
	Net income							28,250					$	28,250
		Foreign currency translation adjustment									(8,534	)		(8,534	)

	Total comprehensive income												$	19,716

Income tax benefit received upon exercise of certain stock options						1,219
Issuance of shares upon exercise of stock options				491,280		5,803
Cash dividends ($.24 per share)								(6,611	)

BALANCE, DECEMBER 31, 2000				27,836,788		44,838		208,465			(26,279	)
Comprehensive income:
	Net income							39,029					$	39,029
		Foreign currency translation adjustment									(2,633	)		(2,633	)

	Total comprehensive income												$	36,396

Income tax benefit received upon exercise of certain stock options						3,566
Issuance of shares upon exercise of stock options				506,382		6,664
Cash dividends ($.24 per share)								(6,746	)

BALANCE, DECEMBER 31, 2001				28,343,170		55,068		240,748			(28,912	)
Comprehensive income:
	Net income							47,313					$	47,313
		Foreign currency translation adjustment									10,441			10,441

	Total comprehensive income												$	57,754

Income tax benefit received upon exercise of certain stock options						1,820
Issuance of shares upon exercise of stock options				260,609		3,919
Cash dividends ($.24 per share)								(6,833	)

BALANCE, DECEMBER 31, 2002				28,603,779	$	60,807	$	281,228		$	(18,471	)

SEE ACCOMPANYING NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS.

CONSOLIDATED STATEMENTS OF CASH FLOWS


*(Dollars in Thousands)*					Year Ended December 31,

					2002			2001			2000

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	47,313		$	39,029		$	28,250
			Adjustments to reconcile net income to net cash flows from operating activities:
				Depreciation and amortization		34,741			26,912			18,792
				Equity in income of affiliates		(3,841	)		(3,304	)		(1,755	)
				Deferred income taxes		(2,647	)		1,081			112
			Changes in operating assets and liabilities:
				Accounts receivable		(4,570	)		(8,606	)		(15,162	)
				Inventories		(11,094	)		(3,576	)		(2,683	)
				Prepaid expenses and other current assets		(2,856	)		(453	)		20
				Accounts payable		1,224			(3,206	)		11,842
				Accrued liabilities		8,311			8,309			3,319
				Income taxes payable		2,391			5,509			(1,014	)

	Net cash flows from operating activities					68,972			61,695			41,721

CASH FLOWS USED FOR INVESTING ACTIVITIES:
			Additions to property, plant and equipment			(12,468	)		(27,303	)		(9,574	)
			Sales-type and operating leases			(31,415	)		(27,950	)		(18,004	)
			Investment in affiliated companies			(1,202	)		(4,418	)		846

	Net cash used for investing activities					(45,085	)		(59,671	)		(26,732	)

CASH FLOWS FROM (USED FOR) FINANCING ACTIVITIES:
		Borrowing (repayment) of notes payable				(277	)		2,726			921
		Proceeds from exercise of stock options				3,919			6,664			5,803
		Cash dividends paid				(6,833	)		(6,746	)		(6,611	)

	Net cash (used for) from financing activities					(3,191	)		2,644			113

EFFECT OF EXCHANGE RATE CHANGES ON CASH						1,754			771			(3,254	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS						22,450			5,439			11,848
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR						31,834			26,395			14,547

CASH AND CASH EQUIVALENTS AT END OF YEAR					$	54,284		$	31,834		$	26,395

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid during the year for income taxes				$	18,721		$	11,669		$	12,257

	Cash paid during the year for interest				$	1,270		$	1,269		$	1,011

SEE ACCOMPANYING NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Diagnostic Products Corporation and its majority-owned subsidiaries (together referred to herein as “DPC” or the “Company”) after elimination of intercompany accounts and transactions. Investments in non-majority-owned companies are accounted for using the equity method. Minority interest represents the 44% of the Company’s Brazilian subsidiary not owned by the Company.

Factors That May Affect Future Results

The Company’s future operating results are dependent on its ability to research, develop, manufacture, and market innovative products that meet customers’ needs. Inherent in this process are a number of risks that the Company must successfully manage in order to achieve favorable operating results.

The Company’s products which are sold in the United States, whether manufactured in the United States or elsewhere, require product clearance by the United States Food and Drug Administration.

The operations of the Company involve the use of substances regulated under various Federal, State, and international laws governing the environment. Environmental costs are presently not material to the Company’s operations or financial position.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company purchases certain chemical compounds that are key components in the IMMULITE system from Lumigen, Inc. and Tropix, Inc., the sole suppliers of these chemical compounds, pursuant to agreements that terminate in 2005. Tropix also supplies the Company with certain other chemical compounds for use in veterinary kits. Upon termination of these supply agreements, the Company will be required to enter into new supply agreements or use alternate technologies. If obtainable, such technology must have the same performance characteristics of the technology currently in use. The Company owns an 8% interest in Lumigen, Inc. and accounts for this interest using the equity method.

Although the Company believes that it has the products and resources needed for continuing success, future revenue and margin trends cannot be reliably predicted and may cause the Company to adjust its operations. Because of the foregoing factors, recent trends may not be reliable indicators of future financial performance.

Financial Instruments

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash equivalents and trade receivables. The Company’s cash equivalents are in high quality securities placed with major banks. Concentrations of credit risk with respect to receivables are limited due to the large number of customers and their dispersion across worldwide geographic areas. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. The fair value of the Company’s financial instruments approximates cost due to their short-term nature or, in the case of notes payable, because the notes are at interest rates competitive with those that would be available to the Company in the current market environment.

Cash Equivalents

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Included in cash and cash equivalents at December 31, 2002 and 2001 is $42,500,000 and $19,900,000, respectively, of short-term, high-quality, commercial paper.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventories

Inventories are stated at the lower of cost, determined on the first-in, first-out basis, or market.

Property, Plant and Equipment

Property, plant and equipment is stated at cost, less accumulated depreciation and amortization, which is computed using straight-line and declining-balance methods over the estimated useful lives (5 to 50 years) of the related assets. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the related lease.

The Company reviews property, plant, and equipment for impairment whenever events or changes in circumstance indicate that the carrying amount of an asset may not be recoverable. An impairment loss, measured by the difference in the estimated fair value and the carrying value of the related asset, is recognized when the future cash flows (based on undiscounted cash flows) are less than the carrying amount of the asset. For purposes of estimating future cash flows for possibly impaired assets, the Company groups assets at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets.

Investments in Affiliated Companies

Investments in affiliated companies represent equity investments in foreign distributors in which the Company owns a 50% or less equity interest. The investments are stated at cost plus advances, plus the Company’s equity in the undistributed net income since acquisition.

Goodwill

Goodwill represents the difference between the cost and underlying fair value of assets purchased and relates to the purchase of certain of the Company’s foreign distributors. The goodwill was being amortized over 20 years using the straight-line method. Prior to 2002, the Company periodically reviewed goodwill to assess recoverability; an impairment would be recognized if a permanent diminution in value were determined to have occurred. Effective January 1, 2002, amortization of goodwill ceased and the carrying value is subjected to an annual impairment test. See “New Accounting Pronouncements.”

Foreign Currency Translation

The functional currency for foreign subsidiaries is generally the local currency. Assets and liabilities of foreign subsidiaries and affiliates are translated into U.S. dollars at the exchange rate prevailing at the balance sheet date, and income and expense accounts are translated at the weighted average rate in effect during the year. Foreign exchange translation adjustments are included as a component of comprehensive income and are accumulated in a separate component of shareholders’ equity. Gains and losses resulting from foreign currency transactions are included in income. Transaction losses of approximately $493,000, $575,000 and $518,000 were included in income for the years ended December 31, 2002, 2001, and 2000 respectively.

Foreign Exchange Instruments

In June 1998, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”). SFAS 133, as amended, establishes accounting and reporting standards for derivative instruments and hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. The Company adopted SFAS 133 on January 1, 2001. The initial adoption of SFAS 133 did not have a material effect on the Company’s consolidated financial position or results of operations.

The Company hedges specific foreign currency exposures by purchasing foreign exchange contracts. Such foreign exchange contracts are generally entered into by the Company’s European subsidiaries. The subsidiaries purchase foreign exchange contracts to hedge firm or anticipated commitments, denominated in other than their functional currency, to acquire inventory for resale. The Company does not engage in speculative transactions. The Company’s foreign exchange contracts do not subject the Company to exchange rate risk as any gains or losses on the transactions being hedged offset losses or gains on these contracts. The Company had outstanding foreign exchange contracts to buy the U.S. dollars equivalent of approximately $14,650,000 and $500,000, at December 31, 2002 and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2001, respectively. The carrying value of these contracts at December 31, 2001 did not differ significantly from their fair value.

Revenue Recognition

The Company recognizes sales of its instruments and kits upon shipment to the customer unless the equipment is subject to an operating lease in which case revenue is recognized over the term of the lease agreement. See Note 4. Service contract revenue is recognized over the related contract life.

Research and Development

Research and development costs are expensed as incurred.

Stock Options

Stock options issued by the Company are accounted for in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) as permitted by SFAS No. 123, “Accounting for Stock-Based Compensation.” The Company follows the disclosure requirements of SFAS No. 123, as amended by 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, and 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.

Had the fair value method of accounting been applied to the Company’s stock option plans, the tax-effected impact would be as follows:


*(Dollars in Thousands, except per Share Data)*		2002			2001			2000

Net income, as reported		$	47,313		$	39,029		$	28,250
Deduct: Compensation expense from stock options determined under fair value based method for all awards, net of related tax effects			(2,692	)		(2,347	)		(1,373	)

Proforma net income		$	44,621		$	36,682		$	26,877

Earnings per share:
	Basic – as reported	$	1.66		$	1.39		$	1.03

	Basic – pro forma	$	1.57		$	1.30		$	0.98

	Diluted – as reported	$	1.60		$	1.32		$	1.00

	Diluted – pro forma	$	1.51		$	1.24		$	0.95

Income Taxes

Deferred income taxes represent the income tax consequences on future years of differences between the income tax basis of assets and liabilities and their basis for financial reporting purposes multiplied by the applicable statutory income tax rate. Valuation allowances are established against deferred income tax assets if it is more likely than not that they will not be realized.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

approach. Amortization of goodwill ceased upon adoption of this statement on January 1, 2002. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill, and the identification of reporting units for purposes of assessing potential future impairments of goodwill. Under SFAS No. 142, goodwill and other intangibles are initially assessed for impairment upon adoption of the statement with subsequent assessments required annually and when there is reason to suspect that their values have been diminished or impaired, with any corresponding write-downs recognized as necessary.

In connection with the adoption of SFAS No. 142, the Company evaluated its intangibles including goodwill and determined that reclassification of such balances was not necessary. Accordingly, the Company’s intangibles consist solely of goodwill generated in connection with the purchase of certain of its international distributors. Effective January 1, 2002, the Company adopted SFAS No. 142. Accordingly, amortization of goodwill ceased, effective January 2002, and would have been $282,000 in the fourth quarter and $1,117,000 for the year ended December 31, 2002 had the non-amortization provisions of SFAS No. 142 not been adopted. Pro forma net income for the quarter ended December 31, 2001, had the non-amortization provisions of SFAS No. 142 been applied to that period, would have been $11,619,000, on an after-tax basis, or $.39 per diluted share versus the $11,337,000 or $.38 per diluted share actually reported. Pro forma net income for the year 2001 would have been $40,146,000, or $1.36 per diluted share versus the $39,029,000 or $1.32 per diluted share actually reported. Pro forma net income for the year ended December 31, 2000, had the non-amortization provisions of SFAS No. 142 been applied to that period, would have been $29,318,000, on an after-tax basis, or $1.04 per diluted share versus the $28,250,000 or $1.00 per diluted share actually reported. As required under SFAS No. 142, the Company has completed its annual impairment testing and does not believe that goodwill has been impaired.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” The Company does not believe the impact of SFAS No. 143 will be material to the Company’s consolidated financial position or results of operations.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” for the disposal of a segment of a business. The Company adopted SFAS No. 144 effective January 1,2002. The adoption of this standard did not have a material impact on the Company’s consolidated financial position or results of operations.

In April 2002, the Financial Accounting Standards Board issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 rescinds or amends, effective immediately, several other existing authoritative pronouncements to make various technical corrections, clarifying meanings, or describe their applicability under changed conditions. 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. The Company does not believe that SFAS Nos. 145 or 146 will have a material impact to its consolidated financial position or results of operations.

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 believe that FASB Interpretation No. 45 will have a material impact on its consolidated financial statements. The Company does not currently provide any third party guarantees.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 2002, the Financial Accounting Standards Board 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, and 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. As of December 31, 2002, the Company has adopted the amended disclosure requirements of SFAS No. 148.

Reclassifications

Certain amounts have been reclassified in 2000 and 2001 to conform to the 2002 presentation.

Note 2 – Business Acquisitions

As of December 31, 2001, the Company’s Brazilian subsidiary acquired a 100% interest in a laboratory testing company in Brazil, Medlab Productos Diagnosticos Ltda. for $2,035,000. This company was previously owned by the Company’s Brazilian subsidiary’s minority shareholder.

As of January 22, 2002, the Company’s Brazilian subsidiary acquired a 51% interest in DPC Medlab Bolivia Ltda.

These acquisitions were not material to the Company’s financial position or results of operations.

Note 3 – Inventories

Inventories by major categories are summarized as follows:


*(Dollars in Thousands)*	December 31,

	2002		2001

Raw materials	$	35,257	$	27,884
Work in process		30,814		23,611
Finished goods		9,789		11,320

	$	75,860	$	62,815

Note 4 – Sales-Type and Operating Leases

In addition to outright sales, the Company places IMMULITE instruments with customers under sales-type and operating leases for periods generally from three to five years. Sales-type leases are recorded as revenue and as a receivable at the inception of the lease in an amount equal to the present value of the future minimum lease payments to be received over the lease term. For operating leases, the cost of the equipment is amortized on a straight-line basis over their estimated lives, which range from three to five years. Sales-type and Operating Leases are comprised of the receivable from sales-type leases and the cost of equipment (net of depreciation) subject to operating leases.

Sales-type and operating leases are summarized as follows:


*(Dollars in Thousands)*		December 31,

		2002		2001

Operating leases		$	150,141	$	115,437
	Less accumulated amortization		85,235		60,299

	Net		64,906		55,138

Sales-type leases			1,747		1,432

Total		$	66,653	$	56,570

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 – Sales-Type and Operating Leases (cont.)

Future minimum lease payments to be received under these lease agreements as of December 31, 2002 are as follows:


*(Dollars in Thousands)*

2003	$	19,902
2004		16,785
2005		14,069
2006		8,809
2007		5,341

Total	$	64,906

Note 5 – Investment in Affiliated Companies

The Company has equity interests in three non-consolidated foreign affiliates. The affiliates distribute the Company’s products in their respective countries. The countries and the Company’s ownership interest are as follows: Portugal, 45%; Italy, 45%; and Greece, 50%.

The following represents condensed financial information for all of the Company’s investments in non-consolidated affiliated companies and the results of their operations.


*(Dollars in Thousands)*			December 31,

	2002		2001		2000

Current assets	$	44,065	$	37,746	$	25,610
Property and other assets		44,535		37,536		36,877

Total assets	$	88,600	$	75,282	$	62,487

Current liabilities	$	34,364	$	30,426	$	25,082
Non-current liabilities		10,435		8,854		18,276
Shareholders’ equity		43,801		36,002		19,129

Total liabilities and shareholders’ equity	$	88,600	$	75,282	$	62,487

Sales	$	65,087	$	57,285	$	54,379

Net income	$	7,216	$	6,455	$	4,433

The Company had sales to non-consolidated affiliates of $30,804,000 in 2002, $27,030,000 in 2001, and $24,893,000 in 2000, including sales to Italy of $23,306,000 in 2002, $20,124,000 in 2001, and $18,453,000 in 2000.

The Company’s cumulative equity in undistributed earnings of non-consolidated affiliated companies at December 31, 2002 is $15,557,000. It is anticipated that additional income taxes payable on earnings of foreign affiliates, if distributed, would be substantially offset by U.S. tax credits for foreign taxes paid.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 – Notes Payable

Notes payable consist of borrowings by certain of the Company’s foreign subsidiaries (some guaranteed by DPC) that are payable in the subsidiaries’ local currency. The notes, translated into U.S. Dollars, are summarized as follows:


*(Dollars in Thousands)*		December 31,

		2002		2001

Notes payable to a bank in Germany, at an average interest rate of approximately 5%, payable through 2007		$	8,550	$	7,703
Notes payable to a bank in France, at an interest rate of approximately 5%, payable through 2007			6,913		4,977
Notes payable to a bank in Spain, at an interest rate of approximately 4%, payable through 2007			1,795		1,691
Notes payable to a bank in Sweden, at an interest rate of approximately 7%, payable through 2007			1,907		1,916
Other			562		727

	Total	$	19,727	$	17,014

Aggregate future maturities of long-term debt outstanding at December 31, 2002 are $6,714,000 in 2003, $4,398,000 in 2004, $3,422,000 in 2005, $2,104,000 in 2006, and $3,089,000 in 2007.

The Company also has a line of credit with a bank, under which it may borrow up to $20 million, which matures in May of 2003. Standby letters of credit under the line of credit totaled $386,000 at December 31, 2001. There were no standby letters of credit outstanding at December 31, 2002. There were no borrowings outstanding at December 31, 2002, 2001, and 2000 under the line of credit.

Note 7 – Employee Benefit Plans

The Company has a defined contribution money purchase pension plan, the Diagnostic Products Corporation Retirement Plan (the “Plan”), covering substantially all U.S. employees over 21 years of age. The Plan offers three primary benefits to employees: a money purchase pension, a profit-sharing plan, and a salary deferral plan under the provisions of Section 401(k) of the Internal Revenue Code.

Contributions under the money purchase pension are made annually in an amount equal to 10% of the compensation of all participants for such year. Contributions related to the pension benefit were $5,201,000 for 2002, $4,544,000 for 2001, and $3,864,000 for 2000. Contributions related to the profit-sharing component for any year are made at the discretion of the Board of Directors of the Company, but cannot exceed 15% of the compensation of all participants for such year. The Company contributed $1,001,000 to the profit-sharing component for 2002, $1,384,000 for 2001, and $773,000 for 2000. Contributions under the 401(k) salary deferral are at the option of the employee in percentage increments of the employee’s salary not to exceed the maximum allowable under Federal law. The Company matches these contributions at a rate of 50 percent of the first $1,000 of compensation contributed by the employee. The Company contributed 401(k) employer matches of $489,000 for 2002, $461,000 for 2001, and $431,000 for 2000.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 – Income Taxes

Income before income taxes is summarized as follows:


*(Dollars in Thousands)*		Year Ended December 31,

		2002		2001		2000

	Domestic	$	47,317	$	39,805	$	29,369
	Foreign		20,675		18,011		13,154

Total income before income taxes		$	67,992	$	57,816	$	42,523

The provision for income taxes is summarized as follows:


*(Dollars in Thousands)*		Year Ended December 31,

		2002			2001			2000

CURRENT:
	Federal	$	11,841		$	11,881		$	8,018
	State		(133	)		(500	)		258
	Foreign		9,939			5,350			4,476
	Deferred income taxes		(569	)		1,081			112

Total provision for income taxes		$	21,078		$	17,812		$	12,864

The provision for income taxes, for the year ended December 31, 2002, excludes an income tax benefit of approximately $2,078,000 related to exchange losses on permanently invested notes to foreign subsidiaries, as the benefit is recorded against the loss in accumulated other comprehensive loss in the accompanying consolidated balance sheet. Such amounts in the prior years were immaterial.

Temporary differences comprising the net deferred taxes shown on the consolidated balance sheets are as follows:


*(Dollars in Thousands)*	Year Ended December 31,

	2002			2001

State net operating losses	$	264		$	258
Inventory		641			2,235
Depreciation and amortization		855			(150	)
Research and development credit carryforwards		1,369			1,369
Tax benefit of exchange losses on permanently invested notes in Foreign subsidiaries		2,078
Other		2,217			1,065
Valuation allowance		(441	)		(441	)

Total	$	6,983		$	4,336

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reconciliation between the provision for income taxes computed by applying the federal statutory tax rate to income before income taxes and the actual provision for income taxes is as follows:


*(Dollars in Thousands)*	Year Ended December 31,

	2002			%			2001			%			2000			%

Provision for income taxes at statutory rate	$	23,797			35		$	20,236			35		$	14,883			35
Foreign income subject to tax other than federal statutory rate		1,154			2			(235	)		(1	)		466			1
Extra Territorial Income/Foreign Sales Corp benefit		(1,892	)		(3	)		(1,375	)		(3	)		(1,281	)		(3	)
Research and development tax credit		(1,236	)		(2	)		(733	)		(1	)		(575	)		(1	)
Equity in income of affiliates		(1,334	)		(2	)		(1,156	)		(2	)		(614	)		(1	)
Valuation allowance								441			1
Other		589			1			634			2			(15	)

Provision for income taxes	$	21,078			31		$	17,812			31		$	12,864			31

Note 9 – Commitments and Contingent Liabilities

In the fourth quarter of the year ended December 31, 2002, the Company discovered internally that its Chinese subsidiary had made payments to certain customers in China that may have violated foreign and U.S. laws, including the Foreign Corrupt Practices Act. The Company stopped the payments immediately, and the audit committee conducted an independent investigation of the nature of the payments, involvement of Company personnel, and whether similar situations existed at the Company’s other foreign operations. Based on the results of the investigation, the audit committee concluded that senior management of the Company was not implicated in the payments 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. For the year ended December 31, 2002, the Company’s Chinese subsidiary had revenues of approximately $9.0 million, less than 3% of the Company’s total sales. Depending on how this matter is resolved, the Company’s sales in China could be significantly impacted. In connection with this matter the Company accrued $1.5 million for costs incurred through December 31, 2002 and for estimated penalties and/or fines which the Company may incur to resolve this matter. In addition, the Company recorded a charge of $1.4 million to its fourth quarter tax provision related to the possible non-deductibility of the payments in China.

The Company has a non-cancelable operating lease for a portion of its Los Angeles manufacturing facility with a partnership comprised of persons who are executive officers, directors, and/or shareholders of the Company. The agreement extends through December 31, 2004. The Company paid approximately $966,000 in each of 2000, 2001, and 2002 under the facility lease agreement.

Future minimum lease commitments as of December 31, 2002 are as follows:


*(Dollars in Thousands)*	2003		2004		2005		Total

Non-related		3,324		3,103		2,078		8,505
Related party		1,035		1,035		—		2,070

		4,359		4,138		2,078		10,575

Aggregate rental expense under operating leases approximated $4,429,000 in 2000, $4,302,000 in 2001, and $4,965,000 in 2002.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 – Earnings per Share

The following table is a reconciliation of the weighted-average shares used in the computation of basic and diluted EPS for the income statements presented herein.


*(Shares in Thousands)*	Year Ended December 31,

	2002		2001		2000

Basic		28,487		28,128		27,555
Assumed exercise of stock options		1,141		1,346		594

Diluted		29,628		29,474		28,149

Net income as presented in the consolidated income statement is used as the numerator in the EPS calculation for both the basic and diluted computations.

Stock options to purchase 256,000 shares of common stock in 2002 were outstanding but not included in the computation of diluted earnings per common share because the option price was greater than the average market price of the common shares. There were no such options outstanding in 2001 or 2000.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11 – Stock Option Plans

Under the Company’s stock option plans, incentive stock options may be granted and are exercisable at prices not less than 100% of the fair market value on the date of the grant (110% with respect to optionees who are 10% or more shareholders of the Company). Additionally under the plans, non-qualified stock options may be granted and are exercisable at prices not less than 85% of fair market value at the date of grant. Options generally become exercisable after one year, in installments (generally over 3 to 9 years), and may be exercised on a cumulative basis at any time before expiration. Options expire no later than ten years from the date of grant.


				Weighted
	Number			Average		Weighted
	of			Exercise		Average
	Shares			Price		Fair Value

Options outstanding, December 31, 1999 (961,740 exercisable)		2,702,660		$	13.28
Granted		400,000			15.36	$	7.35
Exercised		(491,280	)		11.81
Canceled		(161,600	)		13.58

Options outstanding, December 31, 2000 (759,978 exercisable)		2,449,780			13.88
Granted		584,000			31.97		13.61
Exercised		(506,382	)		13.31
Canceled		(35,380	)		14.80

Options outstanding December 31, 2001 (547,383 exercisable)		2,492,018			18.22
Granted		179,000			39.26		16.70
Exercised		(260,609	)		15.17
Canceled		(18,600	)		21.96

Options Outstanding December 31, 2002 (742,742 exercisable)		2,391,809		$	20.10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes information about stock options outstanding at December 31, 2002:


			Weighted	Weighted				Weighted
Range of	Number		Average	Average		Number		Average
Exercise	Outstanding		Remaining	Exercise		Exercisable		Exercise
Prices	at 12/31/02		Life	Price		at 12/31/02		Price

$5.00-9.99		38,400	1.0 years	$	9.20		30,400	$	9.15
$10.00-19.99		1,548,375	5.1 years	$	13.71		597,774	$	13.49
20.00-29.99		284,634	7.8 years	$	23.75		47,434	$	23.46
30.00-39.99		268,400	8.9 years	$	34.51		34,734	$	33.74
40.00-49.99		252,000	8.9 years	$	41.56		32,400	$	41.20

		2,391,809					742,742

Pursuant to the plans, 2,391,809 shares of common stock are reserved for issuance upon the exercise of outstanding options. In addition, the Company has 1,559,600 options available for future grant.

As permitted by SFAS No. 123, the Company has chosen to continue accounting for stock options at their intrinsic value. Accordingly, no compensation expense has been recognized for its stock option compensation plans as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. Had the fair value method of accounting been applied to the Company’s stock option plans, the tax-effected impact would be as follows:


*(Dollars in Thousands, except per Share Data)*
		2002			2001			2000

Weighted Average Assumptions for Pro forma Disclosure:
Expected option life		7 years			7 years			10 years
Dividend yield			0.75	%		1.00	%		1.00	%
Volatility			36	%		36	%		30.1	%
Risk-free interest rate			4.42	%		5.04	%		5.69	%
Forfeiture rate			5	%		5	%		5	%
Net income, as reported		$	47,313		$	39,029		$	28,250
Deduct: Compensation expense from stock options determined under fair value based method for all awards, net of related tax effects			(2,692	)		(2,347	)		(1,373	)

Pro forma net income		$	44,621		$	36,682		$	26,877

Earnings per share:
	Basic – as reported	$	1.66		$	1.39		$	1.03

	Basic – pro forma	$	1.57		$	1.30		$	0.98

	Diluted – as reported	$	1.60		$	1.32		$	1.00

	Diluted – pro forma	$	1.51		$	1.24		$	0.95

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - Segment and Product Line Information

The Company considers its manufactured instruments and medical immunodiagnostic test kits to be one operating segment as defined under SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” 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 at facilities located in the United States and the United Kingdom. Kits and instruments are sold to hospitals, medical centers, clinics, physicians, and other clinical laboratories throughout the world through a network of distributors including consolidated distributors located in the United Kingdom, Germany, Czech Republic, Poland, Spain, The Netherlands, Belgium, Luxembourg, Finland, Norway, France, Estonia, Sweden, Australia, China, Brazil, Uruguay, Venezuela, Costa Rica, Honduras, El Salvador, Guatemala, and Panama.

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


*(Dollars in Thousands)*		Year Ended December 31,

		2002		2001		2000

Sales:
	IMMULITE (includes service)	$	276,776	$	230,412	$	192,820
	Radioimmunoassay (“RIA”)		29,859		33,772		33,706
	Other		17,452		18,945		21,079

		$	324,087	$	283,129	$	247,605

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, as defined under SFAS No. 131, is prepared on the same basis as the consolidated financial statements and is as follows:


*(Dollars in Thousands)*	December 31, 2002

				Euro/DPC			DPC			DPC
				Limited			Biermann			Medlab						Less:
	United			(United			(German			(Brazilian						Intersegment
	States			Kingdom)			Group)			Group)			Other			Elimination			Total

Sales	$	227,369		$	44,791		$	40,632		$	29,011		$	70,756		$	(88,472	)	$	324,087
Operating expenses		78,316			8,024			9,469			7,570			17,591						120,970
Interest income (expense), net		3,415			(207	)		(1,158	)		(1,280	)		(1,027	)					(257	)
Other income (expense), net		266						1,146			(3,378	)		1,003						(963	)
Minority interest											(120	)					519			399
Provision for income taxes expense		(13,016	)		(4,088	)		(413	)		467			(4,028	)					(21,078	)
Net income		34,302			9,468			625			(906	)		3,305			519			47,313
Segment assets:
Long-lived assets		87,735			18,688			32,995			8,803			23,881						172,102
Total assets		416,758			44,958			49,071			21,055			69,932			(208,327	)		393,447
Capital expenditures		5,955			1,994			853			365			3,301						12,468

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


*(Dollars in Thousands)*	December 31, 2001

				Euro/DPC			DPC			DPC
				Limited			Biermann			Medlab						Less:
	United			(United			(German			(Brazilian						Intersegment
	States			Kingdom)			Group)			Group)			Other			Elimination			Total

Sales	$	210,087		$	37,463		$	33,269		$	29,561		$	56,576			($83,827	)	$	283,129
Operating expenses		70,388			7,289			8,555			7,263			14,425						107,920
Interest income (expense) net		4,135			(450	)		(1,178	)		(1,244	)		(873	)					390
Other income expense (net)		(397	)																	(397	)
Minority interest											975									975
Provision for income taxes expense		12,462			2,755			287			1,142			1,166						17,812
Net income		27,345			6,055			522			1,239			3,868						39,029
Segment assets:
Long-lived assets		72,801			16,695			26,248			11,394			24,033						151,171
Total assets		349,158			38,003			38,860			23,036			57,912			(181,202	)		325,767
Capital expenditures		18,698			2,838			1,272			691			3,804						27,303


*(Dollars in Thousands)*	December 31, 2000

				Euro/DPC		DPC			DPC
				Limited		Biermann			Medlab						Less:
	United			(United		(German			(Brazilian						Intersegment
	States			Kingdom)		Group)			Group)			Other			Elimination			Total

Sales	$	173,194		$	31,341	$	30,135		$	29,541		$	49,761			($66,367	)	$	247,605
Operating expenses		60,234			6,983		7,554			8,319			13,891						96,981
Interest income (expense), net		3,863					(776	)		(1,306	)		(1,096	)					685
Other income (expense), net		(19	)																(19	)
Minority interest										1,409									1,409
Provision (benefit) for income taxes expense		8,388			1,752		213			1,728			783						12,864
		20,986			4,134		125			1,795			1,210						28,250
Segment assets:
Long-lived assets		50,584			15,811		20,704			11,016			21,560						119,675
Total assets		287,459			24,381		31,865			21,391			51,299			(135,911	)		280,484
Capital expenditures		5,736			1,686		322			403			1,427						9,574

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s export sales to unaffiliated customers are summarized as follows:


*(Dollars in Thousands)*	Western		South		Other		Total
	Europe		America		Exports		Exports

2000	$	3,871	$	8,035	$	21,142	$	33,048
2001		3,501		7,666		24,114		35,281
2002		4,358		6,529		25,787		36,674

SUPPLEMENTARY FINANCIAL DATA

Unaudited quarterly financial information for the years ended December 31, 2002 and 2001 is summarized as follows:


*(In Thousands, Except per Share Data)*
		Quarter Ended

		March 31,		June 30,		September 30,		December 31,		Year Ended
		2002		2002		2002		2002		2002

Sales		$	74,640	$	84,536	$	79,412	$	85,499	$	324,087
Gross profit			43,970		48,844		45,184		48,343		186,341
Income taxes			4,955		6,276		4,248		5,599		21,078
Net income			10,807		14,050		9,906		12,550		47,313
Earnings per share:
	Basic		.38		.49		.35		.44		1.66
	Diluted		.37		.47		.34		.42		1.60
Weighted Average Shares Outstanding:
	Basic		28,360		28,465		28,540		28,583		28,487
	Diluted		29,517		29,723		29,506		29,700		29,628


		Quarter Ended

		March 31,		June 30,		September 30,		December 31,		Year Ended
		2001		2001		2001		2001		2001

Sales		$	67,719	$	72,741	$	67,779	$	74,890	$	283,129
Gross profit			38,703		41,545		38,930		43,261		162,439
Income taxes			3,833		4,486		4,176		5,317		17,812
Net income			8,552		10,009		9,131		11,337		39,029
Earnings per share:
	Basic		.31		.36		.32		.40		1.39
	Diluted		.29		.34		.31		.38		1.32
Weighted Average Shares Outstanding:
	Basic		27,892		28,081		28,221		28,319		28,128
	Diluted		29,052		29,440		29,601		29,802		29,474

SIGNATURES

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

DIAGNOSTIC PRODUCTS CORPORATION


/s/ Michael Ziering Michael Ziering		President and Chief Executive Officer and Chairman of the Board (Principal Executive Officer) Director		March 31, 2003

CERTIFICATION

I, Michael Ziering, certify that:

1.		I have reviewed this annual report on Form 10-K of Diagnostic Products Corporation;

2.		Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.		Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	c)		presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize, and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated March 31, 2003

/s/ Michael Ziering

Michael Ziering, Chief Executive Officer

CERTIFICATION

I, James L. Brill, certify that:

1.		I have reviewed this annual report on Form 10-K of Diagnostic Products Corporation;

2.		Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.		Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	c)		presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

	a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize, and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Dated March 31, 2003

/s/ James L. Brill

James L. Brill, Chief Financial Officer

EXHIBIT INDEX


3.1		Amended and Restated Articles of Incorporation (2)

3.2		Bylaws (8)

4.1		Stock Certificate (3)

*10.1		Form of Indemnification Agreement with Officers and Directors (1)

*10.2		1990 Stock Option Plan as amended (5)

10.3		Standard Industrial Lease with 5700 West 96th Street, general partnership, dated February 18, 1991 (4) and second addendum dated April 1, 2002 (7)

*10.4		1997 Stock Option Plan as amended (6)

21		Subsidiaries of Registrant (8)

23		Independent Auditors’ Consent (8)

99.1		Officers’ Certification


		*		Management contracts, compensation plans, or arrangements

		(1)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1988. (File No. 1-9957)

		(2)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001. (File No. 1-9957)

		(3)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1988. (File No. 1-9957)

		(4)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1990. (File No. 1-9957)

		(5)		Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999. (File No. 1-9957)

		(6)		Incorporated by reference to Registrant’s registration statement on Form S-8 (file no. 333-60690) filed on May 11, 2001.

		(7)		Incorporated by reference to registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2002. (File No. 1-9957)

		(8)		Incorporated by reference to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003. (File No. 1-9957)

Diagnostic Products (DP) Inactive 10-K/A2002 FY Annual report (amended)