10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2001

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

5700 West 96th Street
Los Angeles, California 90045

(Address of principal executive offices)

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

No change

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

YES [X]     NO [    ]

The number of shares of Common Stock, no par value, outstanding as of June 30, 2001, was 28,182,990.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	ITEM I. FINANCIAL STATEMENTS
		CONSOLIDATED STATEMENTS OF INCOME
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II. OTHER INFORMATION
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
SIGNATURES
EXHIBIT INDEX
Exhibit 3.1

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

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

In Thousands, except per share data)

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2001			2000			2001			2000
SALES:
	Non-Affiliated Customers	$	64,013		$	57,098		$	126,363		$	109,273
	Unconsolidated Affiliates		8,785			6,547			14,232			13,556
	Total Sales		72,798			63,645			140,595			122,829
COST OF SALES			31,196			28,865			60,212			55,154
	Gross Profit		41,602			34,780			80,383			67,675
OPERATING EXPENSES:
Selling			12,724			11,274			24,836			22,075
Research and Development			7,985			7,056			16,287			13,249
General and Administrative			6,271			6,720			12,798			13,294
Equity in Income of Affiliates			(746	)		(603	)		(1,601	)		(1,098	)
OPERATING EXPENSES — NET			26,234			24,447			52,320			47,520
	OPERATING INCOME		15,368			10,333			28,063			20,155
Interest/Other Income (Expense) — Net			(613	)		237			(700	)		(7	)
INCOME BEFORE TAXES AND MINORITY INTEREST			14,755			10,570			27,363			20,148
PROVISION FOR INCOME TAXES			4,486			3,160			8,319			6,129
MINORITY INTEREST			260			381			483			699
	NET INCOME	$	10,009		$	7,029		$	18,561		$	13,320
EARNINGS PER SHARE:
	BASIC	$	0.36		$	0.26		$	0.66		$	0.49
	DILUTED	$	0.34		$	0.25		$	0.63		$	0.48
WEIGHTED AVERAGE SHARES OUTSTANDING:
	BASIC		28,081			27,452			27,987			27,406
	DILUTED		29,440			27,754			29,246			27,612

2

DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)

(Dollars in Thousands)

		June 30,			December 31,
		2001			2000
Assets
CURRENT ASSETS:
	Cash and cash equivalents	$	18,290		$	26,395
	Accounts receivable — (including receivables from unconsolidated affiliates of $10,893 and $7,127) — net of allowance for doubtful accounts of $1,167 and $750		80,536			68,222
	Inventories		59,817			60,247
	Prepaid expenses and other current assets		876			528
	Deferred income taxes		2,881			2,881
	Total current assets		162,400			158,273
PROPERTY, PLANT AND EQUIPMENT:
	Land and buildings		35,868			37,394
	Machinery and equipment		70,573			66,137
	Leasehold improvements		7,257			7,242
	Construction in progress		10,813			3,607
	Total		124,511			114,380
	Less accumulated depreciation and amortization		63,867			61,367
	Property, plant and equipment — net		60,644			53,013
SALES-TYPE AND OPERATING LEASES — net			40,786			40,582
DEFERRED INCOME TAXES			2,536			2,536
INVESTMENTS IN AFFILIATED COMPANIES			14,922			13,465
EXCESS OF COST OVER NET ASSETS ACQUIRED —
	Net of accumulated amortization of $11,278 and $10,735		12,010			12,615
TOTAL ASSETS		$	293,298		$	280,484
Liabilities and Shareholders’ Equity
CURRENT LIABILITIES:
	Notes payable	$	13,258		$	15,557
	Accounts payable		25,261			24,987
	Accrued liabilities		9,363			11,409
	Income taxes payable		3,941			1,507
	Total current liabilities		51,823			53,460
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
	Common Stock—no par value, authorized 60,000,000 shares; outstanding 28,182,990 shares and 27,836,788 shares, respectively		49,433			44,838
	Retained earnings		223,674			208,465
	Accumulated other comprehensive loss		(31,632	)		(26,279	)
Total shareholders’ equity			241,475			227,024
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	293,298		$	280,484

3

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

(Dollars in Thousands)

				Six Months Ended June 30,
				2001			2000
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	18,561		$	13,320
		Adjustments to reconcile net income to net cash flows from operating activities:
			Depreciation and amortization		12,386			9,732
			Equity in undistributed income of unconsolidated affiliates		(1,601	)		(1,098	)
		Changes in operating assets and liabilities:
			Accounts receivable		(15,538	)		(15,183	)
			Inventories		(1,220	)		(141	)
			Prepaid expenses and other current assets		(348	)		(124	)
			Accounts payable		4,119			3,282
			Accrued liabilities		(2,046	)		(272	)
			Income taxes payable		2,637			(1,612	)
	Net cash flows from operating activities				16,950			7,904
CASH FLOWS USED FOR INVESTING ACTIVITIES:
			Additions to property, plant, and equipment		(15,517	)		(6,354	)
			Sales-type and operating leases		(10,081	)		(6,983	)
			Investment in affiliated companies		(851	)		(366	)
	Net cash flows used for investing activities				(26,449	)		(13,703	)
CASH FLOWS FROM FINANCING ACTIVITIES:
			(Repayment) borrowing of notes payable		(288	)		1,831
			Proceeds from exercise of stock options		4,595			1,823
			Cash dividends paid		(3,352	)		(3,289	)
	Net cash flows from financing activities				955			365
EFFECT OF EXCHANGE RATE CHANGES ON CASH					439			(216	)
NET DECREASE IN CASH AND CASH EQUIVALENTS					(8,105	)		(5,650	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD					26,395			14,547
CASH AND CASH EQUIVALENTS AT END OF PERIOD				$	18,290		$	8,897

4

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

Note 1 — Basis of Presentation

The information for the three and six months ended June 30, 2001 and 2000 has not been audited by independent 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 2000 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, 2001 are not necessarily indicative of the results to be expected for the year ending December 31, 2001.

Basic earnings per share is computed by dividing net income by the weighted-average number of shares outstanding. Diluted earnings per share includes the dilutive effect of stock options. All share and per share amounts have been adjusted to give effect to a 2 for 1 stock split occurring on June 1, 2001.

Note 2 — Inventories

Inventories by major categories are summarized as follows:

(Dollars in Thousands)	June 30,		December 31,
	2001		2000
Raw materials	$	25,986	$	23,381
Work in process		22,501		23,862
Finished goods		11,330		13,004
Total	$	59,817	$	60,247

     Note 3 — Comprehensive Income

     Comprehensive income is summarized as follows:

(Dollars in Thousands)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2001			2000			2001			2000
Net income	$	10,009		$	7,029		$	18,561		$	13,320
Foreign currency translation adjustment		(871	)		(2,959	)		(5,353	)		(3,998	)
Comprehensive income	$	9,138		$	4,070		$	13,208		$	9,322

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.

5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 — Segment and Product Line Information

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

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

(Dollars in Thousands)	Three Months Ended				Six Months Ended
	June 30,				June 30,
Sales:	2001		2000		2001		2000
IMMULITE	$	59,582	$	49,301	$	113,441	$	93,372
Radioimmunoassay (RIA)		8,581		8,753		17,218		17,797
Other (Includes DPC and non-DPC products)		4,635		5,591		9,936		11,660
	$	72,798	$	63,645	$	140,595	$	122,829

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

			Euro/DPC		DPC
			Limited		Biermann*			DPC Medlab*					Less:
	United		(United		(German			(Brazilian					Intersegment
(Dollars in Thousands)	States		Kingdom)		Group)			Group)		Other			Elimination			Total
Three Months Ended June 30, 2001
Sales	$	54,396	$	8,831	$	7,961		$	7,768	$	14,367		$	(20,525	)	$	72,798
Net income (loss)		7,420		1,411		150			330		1,198			(500	)		10,009
Three Months Ended June 30, 2000
Sales	$	44,067	$	8,269	$	7,533		$	7,383	$	13,335		$	(16,942	)	$	63,645
Net income (loss)		5,975		1,306		(70	)		486		(68	)		(600	)		7,029
Six Months Ended June 30, 2001
Sales	$	103,898	$	17,605	$	16,536		$	14,700	$	27,914		$	(40,058	)	$	140,595
Net income (loss)		13,901		2,757		438			613		2,052			(1,200	)		18,561
Six Months Ended June 30, 2000
Sales	$	83,994	$	16,008	$	15,491		$	13,953	$	25,862		$	(32,479	)	$	122,829
Net income (loss)		10,422		2,412		(220	)		891		115			(300	)		13,320

6

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

Note 5 — New Accounting Pronouncements

On June 29, 2001, the Financial Accounting Standards Board approved the issuance of Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Amortization of goodwill, including goodwill recorded in business combinations occurring prior to June 30, 2001, will cease upon adoption of this statement. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill, and the identification of reporting units for purposes of assessing potential future impairments of goodwill. Under SFAS Nos. 141 and 142, goodwill and other intangibles are initially assessed for impairment upon adoption of the statements with subsequent assessments required annually and when there is reason to suspect that their values have been diminished or impaired, with any corresponding write-downs recognized as necessary.

The Company is required to implement SFAS No. 141 on July 1, 2001, and has determined that the impact of this statement will not be material to its consolidated financial position or results of operations. The Company is required to implement SFAS No. 142 on January 1, 2002 and once adopted annual goodwill amortization of approximately $1.1 million will cease. Beyond the impact to its amortization of goodwill, the Company has not determined the impact that this statement will have on its consolidated financial position or results of operations.

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

Results of Operations

The Company’s sales increased 14% in the second quarter of 2001 to $72.8 million compared to sales of $63.6 million in the second quarter of 2000. Sales also increased 14% in the first six months of 2001 to $140.6 million from $122.8 million in the first six months of 2000. Sales of all IMMULITE products (instruments and reagents) in the second quarter of 2001 were $59.6 million, a 21% increase over the second quarter of 2000. Sales of IMMULITE products represented 82% of second quarter 2001 sales, compared to 77% of second quarter 2000 sales. Sales of all IMMULITE products in the first six months of 2001 were $113.4 million, a 21% increase over the first six months of 2000. IMMULITE products represented 81% of sales in the first six months of 2001 versus 76% in 2000.

IMMULITE reagents represented $45.1 million of 2001 second quarter sales, a 22% increase and $87.4 million in the first six months of 2001, a 26% increase over 2000. Sales of IMMULITE systems (including service revenue and parts) were $14.5 million, up 17% over the second quarter of 2000 and $26.0 million in the first six months of 2001, an 8% increase over 2000. Additionally, the Company expects to release its allergy product line for the IMMULITE 2000 in September 2001. The Company shipped a total of 312 IMMULITE systems during the 2001 second quarter, including 189 IMMULITE 2000 systems and 123 IMMULITE One systems. The total base of IMMULITE systems shipped grew to 6,520, including 1,465 of the IMMULITE 2000 systems.

Sales of the Company’s mature RIA products declined approximately 2% in the second quarter of 2001, and 3% in the first six months of 2001, representing 12% of sales in each period compared to 14% of sales in the second quarter and the first six months of 2000. The sales decline in this product line is expected to continue. Sales of other DPC products, including allergy reagents, fell by 12% over the second quarter of 2000 and by 14% in the first six months to 5% of 2001 second quarter sales, down from 6% in the second quarter in 2000 and 5% of sales in the first six months of 2001 from 6% in the first six months of 2000. Sales of non-DPC products through its consolidated international affiliates decreased 27% in the second quarter of 2001 to $1.3 million and decreased 18% in the first six months of 2001 to $3.1 million.

7

Due to the significance of foreign sales (73% of total sales in the second quarter and 73% in the first six months of 2001), particularly in Europe and South America, the Company is subject to currency risks based on the relative strength or weakness of the U.S. dollar. In periods when the U.S. dollar is strengthening, the effect of the translation of the financial statements of consolidated foreign affiliates is that of lower sales and net income. In the second quarter of 2001, the strong dollar had a 7% negative impact on sales. In the first six months of 2001, the strong dollar had a 7% negative impact on sales. Due to intense competition, the Company’s foreign distributors are generally unable to increase prices to offset the negative effect when the U.S. dollar is strong.

In the second quarter of 2001, domestic sales grew at 32%, to 27% of total sales, while foreign sales grew at 9%. In the first six months of 2001, domestic sales grew 35% to 27% of total sales while international sales grew at 8%.

Gross profit as a percentage of sales increased from 54.6% in the second quarter 2000 to 57.1% in the second quarter 2001 and from 55.1% in the first six months of 2000 to 57.2% in the first six months of 2001. These increases were due in part to a shift toward higher margin domestic sales from third party international sales, an increase in manufacturing volumes, and a shift toward IMMULITE 2000 reagent sales.

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

Selling and research and development expenses increased in absolute dollars in the second quarter and first six months of 2001 relative to the second quarter and first six months of 2000, but decreased as a percentage of sales. General and administrative expenses decreased in the second quarter and the first six months of 2001 in part due to the strong U.S. dollar. It is expected that general and administrative expenses will be closer to historical levels in the future.

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 $.7 million in the second quarter of 2001 from $.6 million in the second quarter of 2000. In the first six months of 2001, this amount increased to $1.6 million from $1.1 million for the comparable period in 2000.

Interest/other income (expense)-net includes interest income, interest expense, and foreign exchange transaction losses and gains. In the second quarter of 2001 the Company had other expenses of $613,000 versus income of $237,000 in 2000. In the first six months of 2001 the Company had other expenses of $700,000 versus $7,000 in the same period of 2000. The second quarter of 2001 included a $587,000 foreign currency translation loss versus a $148,000 foreign currency gain in 2000 and net interest expense versus net interest income in 2000. Also included in the first six months of 2000 is a gain of approximately $215,000 on the sale of a building in the United Kingdom.

The Company’s effective tax rate includes Federal, state, and foreign taxes. The Company’s tax rate increased to 30.4% in the second quarter of 2001 from 29.9% in the second quarter of 2000. The rate remained at 30.4% in the first six months of 2001, the same as that period in 2000.

Net income increased 42% to $10.0 million in the second quarter of 2001 or $.34 per diluted share from $7.0 million or $.25 per diluted share in the second quarter of 2000 on a split-adjusted basis. Net income increased 39% in the first six months of 2001 to $18.6 million or $.63 per diluted share from $13.3 million or $.48 per diluted share in 2000 on a split-adjusted basis.

Liquidity

The Company has adequate working capital and sources of capital to carry on its current business and to meet its existing capital requirements. Net cash flow from operating activities was $17.0 million in the first six months of 2001 and $7.9 million in the first six months of 2000. Additions to property, plant, and equipment in the first six months of 2001 were $15.5 million, principally the result of the Company’s continued construction of its new manufacturing facility in New Jersey, compared to $6.4 million in the first six months of 2000. Cash flow used for the placement of IMMULITE systems under sales-type and operating leases was $10.1 million in the first six months of 2001 compared to $7.0 million in the first six months of 2000. These leases have periods ranging from three to five years. The Company decreased borrowings by $0.3 million in the first six months of 2001 and increased borrowings by $1.8 million in the first six months of 2000.

8

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 purchased real property in New Jersey in 2000 at a cost of approximately $2.6 million. The Company is constructing an 80,000 square foot manufacturing facility, which should be completed by year-end, on this property at a cost of $10 million to $12 million. The Company has no other material commitments for capital expenditures in 2001.

The Company has a $20 million domestic unsecured line of credit under which there were no borrowings outstanding at June 30, 2001 or December 31, 2000. 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 $13.3 million at June 30, 2001 compared to $15.6 million at December 31, 2000. The Company received $4.6 million from the exercise of stock options in the first six months of 2001 versus $1.8 million in the first six months of 2000. The Company has paid a quarterly cash dividend of $.06 per share, on a split-adjusted basis, since 1995.

Euro Conversion

The Company has significant sales to European countries (the “participating countries”) which began converting to a common legal currency (the “Euro”) on January 1, 1999. During the transition period of January 1, 1999 to January 1, 2002, public and private parties may pay for goods and services using either the Euro or local currency. During the transition period, conversion rates are not computed directly from one local currency to another. Instead, local currencies are converted first to a Euro denomination and then to the second local currency. Beginning in January 2002, new Euro-denominated bills and coins become legal currency and all former currencies will, over the ensuing months, be withdrawn from circulation. The ultimate conversion to the Euro will eliminate currency exchange risk among the participating countries.

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

The Company has significant sales in Europe and is currently evaluating the business implications of the conversion to the Euro, including the need to adapt internal systems to accommodate Euro-denominated transactions, the competitive implications of cross-border price transparency, the impact on existing marketing programs, and other strategic implications. Due to the existence of many unknown variables, it is not permissible for the Company to predict the precise implications of the Euro conversion on its operations. The Company has implemented a plan to convert or upgrade certain of its European subsidiaries to a similar computer software system that will allow them to operate in the European currency environment and to create a central repository for all European information. The Company anticipates the software conversion will be completed in the fourth quarter of 2001, with an expected cost of approximately $1.0 million. Through June 30, 2001, the Company had expended approximately $340,000.

Forward-Looking Statements

Except for the historical information contained herein, this report contains forward-looking statements (identified by the words “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe,” “hope,” and similar expressions) that 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 degree of customer demand for the Company’s products, customer acceptance of the IMMULITE 2000 and other new products, the Company’s ability to keep abreast of technological innovations, the risks inherent in the development and release of new products (such as delays, unforeseen costs, and technical difficulties), competitive pressures, currency risks based on the relative strength or weakness of the U.S. dollar, health care regulation and cost containment measures, political and economic instability in certain foreign markets, and the impact of the conversion to the Euro.

9

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     There has been no material change during the quarter ended June 30, 2001, from the disclosures about market risk provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.

PART II. OTHER INFORMATION

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

The following persons were elected directors of the Company at the Annual Meeting of Shareholders held on May 8, 2001:

	Votes Cast
Name	For		Withheld
Sidney A. Aroesty		10,455,607		1,761,854
Frederick Frank		9,235,180		2,982,281
Maxwell H. Salter		11,212,133		1,005,328
James D. Watson		11,215,168		1,002,293
Ira Ziering		10,549,262		1,668,199
Michael Ziering		10,551,937		1,665,524

The Shareholders approved the following proposal:

	Votes Cast
	For		Against		Abstain		Not Voted
Amendment of the 1997 Stock Option Plan		7,470,481		4,004,734		20,471		2,445,888

The number of votes indicated has not been adjusted to reflect the 2 for 1 stock split on June 1, 2001.

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

(a)  Exhibits

3.1	Amended and Restated Articles of Incorporation
10.1	1997 Stock Option Plan as amended (incorporated by reference to the registrant’s registration statement on Form S-8 (File No. 333-60690) filed on May 11, 2001.

(b)  Reports on Form 8-K. None.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DIAGNOSTIC PRODUCTS CORPORATION
(Registrant)

/s/ Michael Ziering Michael Ziering	President and Chief Executive Officer and Chairman of the Board (Principal Executive Officer) Director	August 10, 2001
/s/ James L. Brill James L. Brill	Vice President-Finance (Principal Financial and Accounting Officer)	August 10, 2001

10

EXHIBIT INDEX

3.1	Amended and Restated Articles of Incorporation
10.1	1997 Stock Option Plan as amended (incorporated by reference to the registrant’s registration statement on Form S-8 (File No. 333-60690) filed on May 11, 2001.

11 EX-3.1 3 v74838ex3-1.txt EXHIBIT 3.1 1 EXHIBIT 3.1 ENDORSED - FILED in the office of the Secretary of State of the State of California JUN - 1 2001 BILL JONES, Secretary of State AMENDED AND RESTATED ARTICLES OF INCORPORATION OF DIAGNOSTIC PRODUCTS CORPORATION Michael Ziering and Marilyn Ziering certify that: 1. They are the President and Secretary, respectively, of Diagnostic Products Corporation, a California corporation. 2. The Articles of Incorporation of this corporation are amended and restated to read as follows: ARTICLE I The name of this corporation is: Diagnostic Products Corporation. ARTICLE II The county in the State of California where the principal office for the transaction of the business of this corporation is to be located in Los Angeles County. ARTICLE III The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. ARTICLE IV This corporation is authorized to issue only one class of shares of stock, designated "Common Stock"; and the total number of shares of Common Stock which this corporation is authorized to issue is sixty million (60,000,000). Upon amendment of this Article to read as herein set forth, each outstanding share of Common Stock is split up and converted into two (2) shares of Common Stock. 2 ARTICLE V All shares of the corporation shall be non-assessable. ARTICLE VI This corporation reserves the right to amend, alter, change or repeal any provision contained in these Restated Articles of Incorporation in the manner now or hereafter prescribed by statute. ARTICLE VII This corporation elects to be governed by all of the provisions of the General Corporation Law of California not otherwise applicable to it under Chapter 23 thereof. ARTICLE VIII If less than the affirmative vote or consent of 80% of the directors of this corporation is received with respect to a merger or consolidation of this corporation with or into another entity, the sale or disposition of all or substantially all of this corporation's properties or assets, any other "reorganization" as defined in Section 181 of the California Corporations Code, or a reclassification of this corporation's shares entitled to vote in the election of directors, then the affirmative vote or consent of the holders of not less than 66% of the issued and outstanding shares of Common Stock of this corporation shall be required to authorize any of such actions, notwithstanding that applicable law would otherwise permit such actions with the approval of a lesser percentage. ARTICLE IX (a) Limitation of Directors' Liability. The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. (b) Indemnification of Corporate Agents. The corporation is authorized to provide, whether by bylaw, agreement or resolution of the Board of Directors or shareholders of the corporation, for the indemnification of agents (as defined in Section 317 of the California General Corporation Law) of the corporation in excess of that expressly permitted by such Section 317, for breach of duty to the corporation and its shareholders to the fullest extent permissible under California law, subject only to the applicable limits set forth in Section 204 of the California General Corporation Law. (c) Repeal or Modification. Any repeal or modification of the foregoing provisions of this Article IX by the shareholders of the corporation shall 3 not adversely affect any right or protection of a director or agent of the corporation existing at the time of such repeal or modification. 3. The foregoing amendment and restatement of the Articles of Incorporation has been duly approved by the Board of Directors. 4. In accordance with Section 902(c) of the California Corporations Code, the foregoing amendment has been adopted by the Board of Directors alone in that the amendment effects only a stock split and an increase in the number of authorized shares in proportion thereto, and the corporation has only one class of shares outstanding. 5. The foregoing amendment and restatement shall become effective as of the close of business on June 1, 2001. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. Dated: May 30, 2001 /s/ Michael Ziering ------------------------------ Michael Ziering, President /s/ Marilyn Ziering ------------------------------ Marilyn Ziering, Secretary -----END PRIVACY-ENHANCED MESSAGE-----

EX-3.1

   1
                                                                     EXHIBIT 3.1

                                                                ENDORSED - FILED
                                         in the office of the Secretary of State
                                                      of the State of California

                                                                    JUN - 1 2001

                                                  BILL JONES, Secretary of State



                              AMENDED AND RESTATED
                            ARTICLES OF INCORPORATION
                                       OF
                         DIAGNOSTIC PRODUCTS CORPORATION



        Michael Ziering and Marilyn Ziering certify that:

        1. They are the President and Secretary, respectively, of Diagnostic
Products Corporation, a California corporation.

        2. The Articles of Incorporation of this corporation are amended and
restated to read as follows:


                                    ARTICLE I

        The name of this corporation is: Diagnostic Products Corporation.

                                   ARTICLE II

        The county in the State of California where the principal office for the
transaction of the business of this corporation is to be located in Los Angeles
County.

                                   ARTICLE III

        The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.

                                   ARTICLE IV

        This corporation is authorized to issue only one class of shares of
stock, designated "Common Stock"; and the total number of shares of Common Stock
which this corporation is authorized to issue is sixty million (60,000,000).
Upon amendment of this Article to read as herein set forth, each outstanding
share of Common Stock is split up and converted into two (2) shares of Common
Stock.



   2

                                    ARTICLE V

        All shares of the corporation shall be non-assessable.

                                   ARTICLE VI

        This corporation reserves the right to amend, alter, change or repeal
any provision contained in these Restated Articles of Incorporation in the
manner now or hereafter prescribed by statute.

                                   ARTICLE VII

        This corporation elects to be governed by all of the provisions of the
General Corporation Law of California not otherwise applicable to it under
Chapter 23 thereof.

                                  ARTICLE VIII

        If less than the affirmative vote or consent of 80% of the directors of
this corporation is received with respect to a merger or consolidation of this
corporation with or into another entity, the sale or disposition of all or
substantially all of this corporation's properties or assets, any other
"reorganization" as defined in Section 181 of the California Corporations Code,
or a reclassification of this corporation's shares entitled to vote in the
election of directors, then the affirmative vote or consent of the holders of
not less than 66% of the issued and outstanding shares of Common Stock of this
corporation shall be required to authorize any of such actions, notwithstanding
that applicable law would otherwise permit such actions with the approval of a
lesser percentage.

                                   ARTICLE IX

        (a) Limitation of Directors' Liability. The liability of the directors
of the corporation for monetary damages shall be eliminated to the fullest
extent permissible under California law.

        (b) Indemnification of Corporate Agents. The corporation is authorized
to provide, whether by bylaw, agreement or resolution of the Board of Directors
or shareholders of the corporation, for the indemnification of agents (as
defined in Section 317 of the California General Corporation Law) of the
corporation in excess of that expressly permitted by such Section 317, for
breach of duty to the corporation and its shareholders to the fullest extent
permissible under California law, subject only to the applicable limits set
forth in Section 204 of the California General Corporation Law.

        (c) Repeal or Modification. Any repeal or modification of the foregoing
provisions of this Article IX by the shareholders of the corporation shall


   3

not adversely affect any right or protection of a director or agent of the
corporation existing at the time of such repeal or modification.



        3. The foregoing amendment and restatement of the Articles of
Incorporation has been duly approved by the Board of Directors.

        4. In accordance with Section 902(c) of the California Corporations
Code, the foregoing amendment has been adopted by the Board of Directors alone
in that the amendment effects only a stock split and an increase in the number
of authorized shares in proportion thereto, and the corporation has only one
class of shares outstanding.

        5. The foregoing amendment and restatement shall become effective as of
the close of business on June 1, 2001.

        We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.

Dated:  May 30, 2001

                                        /s/ Michael Ziering
                                        ------------------------------
                                        Michael Ziering, President




                                        /s/ Marilyn Ziering
                                        ------------------------------
                                        Marilyn Ziering, Secretary