-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KQcnPCw4FQ4aXoJN09yyJdelzLu+W+xany+Um0KYR198UafxkM1KrR4xS6Qg8dm8 XSp8XTNKJ1+GfAPKlQoS8A== 0000950148-99-001694.txt : 19990729 0000950148-99-001694.hdr.sgml : 19990729 ACCESSION NUMBER: 0000950148-99-001694 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAGNOSTIC PRODUCTS CORP CENTRAL INDEX KEY: 0000702259 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 952802182 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09957 FILM NUMBER: 99671666 BUSINESS ADDRESS: STREET 1: 5700 W 96TH ST CITY: LOS ANGELES STATE: CA ZIP: 90045 BUSINESS PHONE: 2137760180 10-Q 1 FORM 10-Q 1 ================================================================================ 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, 1999 [ ] 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 (I.R.S. Employer incorporation or organization) 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, 1999, was 13,669,629. ================================================================================ 2 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, ------------------------ ------------------------ 1999 1998 1999 1998 --------- --------- --------- --------- SALES $ 54,593 $ 49,278 $ 105,059 $ 95,382 --------- --------- --------- --------- COSTS AND EXPENSES: Cost of sales 24,160 21,429 47,366 41,824 Selling 10,300 9,094 19,862 18,106 Research and development 6,140 5,761 11,946 11,170 General and administrative 6,613 5,980 13,367 11,906 Equity in income of affiliates (404) (280) (884) (624) Interest income-net 122 (90) (150) (208) --------- --------- --------- --------- Total costs and expenses 46,931 41,894 91,507 82,174 --------- --------- --------- --------- INCOME BEFORE INCOME TAXES 7,662 7,384 13,552 13,208 PROVISION FOR INCOME TAXES 2,150 2,190 3,940 3,910 --------- --------- --------- --------- NET INCOME $ 5,512 $ 5,194 $ 9,612 $ 9,298 ========= ========= ========= ========= EARNINGS PER SHARE: BASIC $ .40 $ .38 $ .70 $ .68 DILUTED .40 .37 .70 .67 AVERAGE SHARES OUTSTANDING: BASIC 13,673 13,779 13,671 13,762 DILUTIVE EFFECT OF STOCK OPTIONS 66 165 108 163 --------- --------- --------- --------- DILUTED 13,739 13,944 13,779 13,925 ========= ========= ========= =========
1 3 DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in Thousands) June 30, December 31, 1999 1998 --------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 11,275 $ 18,650 Accounts receivable-net of allowance for doubtful accounts of $126 and $136 55,758 50,440 Inventories 55,443 54,078 Prepaid expenses and other current assets 578 580 Deferred income taxes 3,305 3,305 --------- --------- Total current assets 126,359 127,053 PROPERTY, PLANT AND EQUIPMENT: Land and buildings 34,475 35,878 Machinery and equipment 61,739 60,196 Leasehold improvements 7,153 7,135 Construction in progress 934 351 --------- --------- Total 104,301 103,560 Less accumulated depreciation and amortization 52,067 49,348 --------- --------- Property, plant and equipment - net 52,234 54,212 SALES-TYPE AND OPERATING LEASES 30,686 33,372 DEFERRED INCOME TAXES 2,005 2,005 INVESTMENTS IN AFFILIATED COMPANIES 14,534 15,509 EXCESS OF COST OVER NET ASSETS ACQUIRED- Net of amortization of $9,022 and $8,478 13,898 14,073 --------- --------- TOTAL ASSETS $ 239,716 $ 246,224 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 16,691 $ 21,178 Accounts payable 14,563 15,306 Accrued liabilities 4,613 6,218 Income taxes payable 4,700 3,350 --------- --------- Total current liabilities 40,567 46,052 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common Stock-no par value, authorized 30,000,000 shares; outstanding 13,669,629 shares and 13,661,594 shares 37,670 37,531 Retained earnings 179,231 172,900 Accumulated other comprehensive income (17,752) (10,259) --------- --------- Total shareholders' equity 199,149 200,172 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 239,716 $ 246,224 ========= =========
2 4 DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in Thousands) Six Months Ended June 30, ---------------------- 1999 1998 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 9,612 $ 9,298 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 9,300 8,704 Equity in undistributed income of unconsolidated affiliates (884) (299) Accounts receivable (8,076) (6,454) Inventories (2,040) (2,513) Prepaid expenses and other current assets 2 (177) Accounts payable 2,210 1,289 Accrued liabilities (1,605) (1,276) Income taxes payable 1,233 2,456 -------- -------- Net cash flows from operating activities 9,752 11,028 CASH FLOWS FROM (USED FOR) INVESTING ACTIVITIES: Additions to property, plant and equipment (3,677) (4,493) Sales-type and operating leases (7,255) (6,215) Investment in affiliated companies (169) (2,612) -------- -------- Net cash flows from (used for) investing activities (11,101) (13,320) CASH FLOWS FROM (USED FOR) FINANCING ACTIVITIES: Borrowing (repayments) - net (2,340) 901 Repurchase of common stock (224) Proceeds from exercise of stock options 363 1,312 Cash dividends paid (3,281) (3,302) -------- -------- Net cash flows from (used for) financing activities (5,482) (1,089) EFFECT OF EXCHANGE RATE CHANGES ON CASH (544) (19) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,375) (3,400) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 18,650 20,372 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,275 $ 16,972 ======== ========
3 5 DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1-- BASIS OF PRESENTATION The information for the six months ended June 30, 1999 and 1998 has not been audited by independent accountants, but includes all adjustments (consisting of normal recurring accruals) which 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 generally accepted accounting principles 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 1998 annual report on Form 10-K as filed with the Securities and Exchange Commission. The results of operations for the six-month period ending June 30, 1999 are not necessarily indicative of the results to be expected for the year ended December 31, 1999. 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. NOTE 2-- INVENTORIES Inventories by major categories are summarized as follows:
(Dollars in Thousands) June 30, December 31, 1999 1998 -------- ------------ Raw materials $19,850 $19,235 Work in process 19,368 19,317 Finished goods 16,225 15,526 ------- ------- Total $55,443 $54,078 ======= =======
NOTE 3-- COMPREHENSIVE INCOME Comprehensive income is summarized as follows:
(Dollars in Thousands) Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 1999 1998 1999 1998 ------- ------- ------- ------- Net income $ 5,512 $ 5,194 $ 9,612 $ 9,298 Foreign currency translation adjustment (1,068) 394 (7,493) (23) ------- ------- ------- ------- Comprehensive income $ 4,444 $ 5,588 $ 2,119 $ 9,275 ======= ======= ======= =======
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. 4 6 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 defined under SFAS 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 manufacturers its instruments and kits principally from facilities in the United States and the United Kingdom. Kits and instruments are sold to hospitals, medical centers, clinics, physicians, and other clinical laboratories throughout the world through a network of distributors including consolidated distributors located in the United Kingdom, Germany, Czech Republic, Poland, Spain, The Netherlands, Belgium, Luxembourg, Finland, Norway, France, Australia, New Zealand, China, Brazil, Uruguay, Venezuela, Costa Rica, Honduras, El Salvador, Guatemala, Sweden, Estonia, Latvia, and Lithuania. 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, --------------------- --------------------- 1999 1998 1999 1998 -------- -------- -------- -------- Sales: IMMULITE $ 37,326 $ 30,314 $ 70,523 $ 57,654 Radioimmunoassay ("RIA") 9,962 11,231 19,934 22,103 Other 7,305 7,733 14,602 15,625 -------- -------- -------- -------- $ 54,593 $ 49,278 $105,059 $ 95,382 ======== ======== ======== ========
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 131, is prepared on the same basis as the consolidated financial statements and is as follows:
Euro/DPC DPC DPC Med- Less: Limited Biermann lab Interseg- United (United (German (Brazilian ment States Kingdom) Group) Group) Other Elimination Total -------- --------- ---------- ------------ -------- ------------- -------- (Dollars in Thousands) Three Months Ended June 30, 1999 Sales $ 35,678 $ 7,301 $ 7,686 $ 6,566 $ 12,070 $(14,708) $ 54,593 Net income (loss) 2,773 1,108 (186) 493 824 500 5,512 Three Months Ended June 30, 1998 Sales $ 32,387 $ 6,820 $ 8,510 $ 5,904 $ 9,566 $(13,909) $ 49,278 Net income (loss) 3,477 1,042 (117) 234 458 100 5,194 Six Months Ended June 30, 1999 Sales $ 68,020 $ 14,492 $ 16,255 $ 11,597 $ 23,400 $(28,705) $105,059 Net income (loss) 4,730 2,238 (218) 495 1,267 1,100 9,612 Six Months Ended June 30, 1998 Sales $ 62,107 $ 13,152 $ 17,225 $ 10,726 $ 18,513 $(26,341) $ 95,382 Net income (loss) 6,728 1,934 (207) 277 566 9,298
5 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS The Company's sales increased 10.8% in the second quarter ended June 30, 1999 to $54.6 million compared to sales of $49.3 million in the second quarter of 1998. Sales increased 10.1% from $95.4 million in the first six months of 1998 to $105.1 million in the first six months of 1999. Sales of all IMMULITE products in the three and six months ended June 30, 1999 were $37.3 million and $70.5 million, an increase of 23% and 22% over the corresponding periods of 1998. Sales of IMMULITE products represented 67% of sales in the first six months of 1999, compared to 60% of sales in first six months of 1998. IMMULITE reagents represented $28.2 million of 1999 second quarter sales, a 22% increase over the second quarter of 1998, and $53.7 million of sales in the first six months of 1999, a 23% increase over the first six months of 1998. Sales of IMMULITE systems (including service and parts) were $9.1 million in the 1999 second quarter, up 26% over the second quarter of 1998. In the first six months of 1999, sales of IMMULITE systems (including service and parts) increased 20% to $16.1 million compared to the first six months of 1998. The Company shipped a total of 216 IMMULITE systems during the second quarter of 1999, including 78 IMMULITE 2000 systems and 138 IMMULITE One systems. The total base of IMMULITE systems shipped grew to approximately 4,400, including 450 of the IMMULITE 2000 systems. The Company's goal is to ship 400 IMMULITE 2000 systems in 1999, of which 156 have been shipped at June 30, 1999. Because the IMMULITE 2000 system first became commercially available in April 1998, shipments of this product did not make a meaningful contribution to first quarter 1998 results. Sales of the Company's mature RIA products declined approximately 11% and 10% in the three and six month periods of 1999, representing 18% and 19% of sales compared to approximately 23% of sales in each of the three and six month periods of 1998. This trend is expected to continue. Sales of other DPC products, including allergy reagents, represented about 9% of sales in each of the three and six months periods ended June 30, 1999. Sales of non-DPC products decreased 13% and 12% in the three and six month periods of 1999 over the corresponding 1998 periods to approximately 5% of sales, due to the discontinuation of non-DPC OEM products previously sold by some consolidated international affiliates. The devaluation of the Brazilian currency in January 1999 resulted in a pretax exchange loss of $536,000 or an after tax loss of $.03 per share, for the six months ended June 30, 1999, which related to the first quarter. The exchange loss is included in general and administrative expenses. In addition, the Company recorded a currency translation adjustment of $4.2 million in the first six months of 1999, resulting from the Company's long-term intercompany advances to Brazil. In accordance with the provisions of Statement of Financial Accounting Standards No. 52, gains and losses arising from intercompany foreign currency transactions that are of a long-term investment nature (i.e. transactions for which settlement is not planned or anticipated in the foreseeable future) are accumulated in a separate component of shareholders' equity. The Brazilian devaluation also impacted ongoing operations in Brazil, where the Company is the market leader. The Brazil affiliate increased prices to partially offset the effects of the devaluation. When measured in the local currency ("Real"), sales by the Brazil affiliate in the second quarter and first six months of 1999 were 11.2 million Real and 20.1 million Real compared to 6.8 million Real and 12.2 million Real, in the second quarter and first six months of 1998. When measured in U.S. dollars, sales by the Brazil affiliate were $6.6 million in the second quarter of 1999 (12% of total sales) compared to $5.9 million (12% of total sales) in the second quarter of 1998. Although the devaluation has slowed the Company's rapid sales expansion in that country, the Company believes that the situation has stabilized. Due to the significance of foreign sales (79% of total sales), in particular in Europe, 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. Had the value of the U.S. dollar relative to other currencies remained constant with the second quarter of 1998, sales for the three and six month periods of 1999 would 6 8 have increased 18.9% and 18% over the 1998 periods, after giving effect to the currency devaluation in Brazil and price increases in Brazil. Net income in the three and six month periods of 1999 would have increased 12% and 7.5%. 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. Cost of sales as a percentage of sales increased from approximately 43.5% and 43.8% in the three and six months ended June 30, 1998, to 44.3% and 45.1% in the corresponding 1999 periods, due to a product mix with more instrumentation systems, a stronger dollar and a lower selling price on IMMULITE 2000 reagents. The Company is in the process of automating a number of IMMULITE 2000 reagent manufacturing procedures which will improve manufacturing efficiencies. Selling expense remained stable at approximately 19% of sales in the three and six month periods of 1999 and 1998. General and administrative expenses also remained stable, representing approximately 12.5% of sales in these periods. The 1999 six month period included the exchange loss from the Brazilian devaluation discussed above (related to the first quarter), which was not a factor in 1998 general and administrative expenses. Included in general and administrative expenses is the amortization of the excess of cost over net assets acquired and minority interest. 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 approximately 42% in the first six months of 1999 compared to the first six months of 1998 primarily due to increased earnings by the Italian and Portuguese distributors. The Company's effective tax rate includes Federal, state and foreign taxes representing its estimate of the effective tax rate for 1999. 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 $9.8 million in the first six months of 1999 compared to $11 million in the first six months of 1998. Additions to property, plant and equipment in the first six months of 1999 were $3.7 million compared to $4.5 million in the first six months of 1998. Cash flow used for the placement of IMMULITE systems under sales-type and operating leases (for periods of generally three to five years) was $7.3 million in the first six months of 1999 compared to $6.2 million in the first six months of 1998. The Company used cash to reduce borrowings by $2.3 million in the first six months of 1999 compared to $0.9 million cash provided by borrowings in the first six months of 1998. The Company's foreign operations, particularly, at this time, its operations in Brazil, are subject to risks, such as currency devaluations, associated with political and economic instability. See discussion above under "Results of Operations" regarding the effects of the Brazilian devaluation. The Company expects to purchase real property in New Jersey in 1999 at a cost of approximately $2.8 million. The Company plans to construct an 80,000 square foot manufacturing facility on this property over the next several years at a cost of $8-10 million. The Company has no other material commitments for capital expenditures in 1999. The Company has a $20 million unsecured line of credit under which there were no borrowings outstanding at June 30, 1999, and December 31, 1998. Standby letters of credit under the line of credit were zero at June 30, 1999 and $2 million at December 31, 1998. The Company had notes payable (consisting of bank borrowings by the Company's foreign consolidated subsidiaries payable in the local currency which are guaranteed by the U.S. parent company) of $16.7 million at June 30, 1999 compared to $21.2 million at December 31, 1998. The Company has paid a quarterly cash dividend of $.12 per share since 1995. On October 14, 1998 the Company announced a plan under which it could repurchase up to one million shares of its common stock from time to time in open market transactions. Through June 30, 1999, the Company had repurchased a total of 218,288 shares at a cost of $4.5 million. The Company utilized existing cash to finance such purchases. Additional repurchases, if any, will depend on the prevailing market price of the Common Stock and could require bank borrowings. 7 9 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 the local currency. During the transition period, conversion rates will not be computed directly from one local currency to another. Instead, local currencies will be converted first to a euro denomination and then to the second local currency. Beginning 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 which 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 at this early stage, it is not at this time possible for the Company to predict the precise implications of the euro conversion on its operations. YEAR 2000 The Company has completed its program that addressed Year 2000 readiness of its information and business systems. The Company has tested and repaired all critical systems and tested and repaired or replaced all non-compliant workstations. The Company has instituted a comprehensive vendor/supplier compliance verification program to assure that the Company will have an uninterrupted supply of goods, services and materials. The Company has requested compliance verification from all vendors/suppliers. The Company believes that with the completed modifications to existing software, the Year 2000 issue will not pose significant operational problems for the Company or its affiliates. However, material impact to operations could occur if third parties with whom the Company does business such as communications or power providers are unable to provide these services because of their Year 2000 problems. The Company also has a program to determine whether its instrumentation products are Year 2000 compliant. The Company's website contains a regularly updated product compliance status page which customers can access to obtain information regarding the compliance status of their DPC products. The Company is also providing customer support and customer satisfaction services to all of its customers regarding Year 2000 issues. The IMMULITE 2000 instrument, which the Company began shipping in March 1998, is Year 2000 compliant. The Company has determined that the IMMULITE One instrument was not Year 2000 compliant and has so informed the FDA, and has supplied all required upgrades to its customers. A relatively few older products are not compliant and will not be upgraded due to obsolescence. The costs incurred to date and expected to be incurred to upgrade products are not material. While the Company currently believes that it has brought its own systems and products into Year 2000 compliance, if the Company encounters unforeseen problems it could be subject to legal claims (with or without merit), increased warranty costs, or customer dissatisfaction which could result in a material adverse effect on the Company's business, financial condition and results of operations. 8 10 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," "will" and similar expressions) which are based upon Management's current expectations and speak only as of the date made. These forward-looking statements are subject to risks, uncertainties and factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements. These risks and uncertainties include the 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, and political and economic instability in certain foreign markets. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. There has been no material change during the quarter ended June 30, 1999, from the disclosures about market risk provided in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. 9 11 PART II. OTHER INFORMATION. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Company's annual Meeting of Shareholders was held on May 25, 1999. In connection with the election of directors, each nominee received the following votes:
NOMINEE FOR WITHHELD - ------- --- -------- Sigi Ziering 12,167,922 111,530 Sidney A. Aroesty 12,168,236 111,126 Maxwell H. Salter 12,171,983 107,469 James D. Watson 12,175,872 103,580 Michael Ziering 12,171,547 107,905 Frederick Frank 12,175,045 104,407
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits 27 Financial Data Schedule (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) JULY 28, 1999 SIGI ZIERING - ------------------------------ ------------------------------------------ Date Sigi Ziering, Ph.D., Chairman of the Board Chief Executive Officer JULY 28, 1999 JULIAN R. BOCKSERMAN - ------------------------------ ------------------------------------------ Date Julian R. Bockserman, Vice President Chief Financial Officer 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 11,275 0 55,758 126 55,443 126,359 104,301 52,067 239,716 40,567 0 0 0 37,670 161,479 239,716 105,059 105,059 47,366 47,366 44,141 0 0 13,552 3,940 9,612 0 0 0 9,612 0.70 0.70
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