-----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, JtxmeI/TiKuNTZ24wtirbuWLsZZwleJQErPRV0EQuQN1a6Nx15aqGtnOPsE6EN/r yeUvhTgFVrCJTlnzqaGmpg== 0001096906-01-000136.txt : 20010410 0001096906-01-000136.hdr.sgml : 20010410 ACCESSION NUMBER: 0001096906-01-000136 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010405 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UTAH MEDICAL PRODUCTS INC CENTRAL INDEX KEY: 0000706698 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 870342734 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-12575 FILM NUMBER: 1595949 BUSINESS ADDRESS: STREET 1: 7043 S 300 WEST CITY: MIDVALE STATE: UT ZIP: 84047 BUSINESS PHONE: 8015661200 10-K/A 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Amendment No. 1) For the fiscal year ended December 31, 2000. Commission File No. 0-11178 ------- UTAH MEDICAL PRODUCTS, INC. --------------------------- (Exact name of registrant as specified in its charter) Utah 87-0342734 ------------------------------- ----------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7043 South 300 West Midvale, UT 84047 ------------------- (Address of principal executive offices) Registrant's telephone number: (801) 566-1200 ------------------ Securities registered pursuant to Section 12(b) of the Act: None ---- Securities registered pursuant to Section 12(g) of the Act: Title of each Class ------------------------------- Common Stock, $.01 par value Preferred Stock Purchase Rights 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) 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 as of March 9, 2001, based on NASDAQ/NMS closing price: $46,374,000. - ----------- The number of shares outstanding of the registrant's common stock as of March 9, 2001: 5,013,366. --------- DOCUMENTS INCORPORATED BY REFERENCE List herein the documents incorporated by reference: The Company's definitive proxy statement for the Annual Meeting of Shareholders is incorporated by reference into Part III, Items 10, 11, 12, and 13 of this Form 10-K. NOTE: This amendment includes amended financial statements to correct the format of the Consolidated Statement of Cash Flows line item for "(Recovery of) provision for losses on accounts receivable". PART II ------- ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See index to financial statements and financial statement schedule at page F-1. PART IV. -------- ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) The following documents are filed as part of this report or incorporated herein by reference. 1. Financial Statements. (See Index to Consolidated Financial Statements at page F-1.) 2. Supplemental Schedule. Financial Statement Schedules are omitted because they are inapplicable or the required information is otherwise included in the accompanying Financial Statements and the notes thereto. 3. Exhibits.
SEC Exhibit # Reference # Title of Document Location - ---------- ----------- ----------------- --------- 1 3 Articles of Restatement of the Articles of Incorporated by Incorporation Reference(1) 2 3 Bylaws Incorporated by Reference(1) 3 4 Rights Agreement dated as of October 28, 1994, Incorporated by between Utah Medical Products, Inc., and Reference(1) Registrar and Transfer Company 4 4 Designation of Rights, Privileges, and Preferences Incorporated by of Series "A" Preferred Stock Reference(1) 5 10 Employment Agreement dated December 21, 1992 Incorporated by with Kevin L. Cornwell* Reference(2) 6 10 Amendment, effective May 15, 1998, to Employment Incorporated by Agreement dated December 21, 1992 with Kevin L. Reference(3) Cornwell* 7 10 Utah Medical Products, Inc., 1986 Incentive Incorporated by Stock Option Plan* Reference(2) 8 10 Utah Medical Products, Inc., 1994 Employee Incorporated by Incentive Stock Option Plan* Reference(1) 9 10 Utah Medical Products, Inc., 1993 Directors' Incorporated by Stock Option Plan Reference(1) 10 10 Utah Medical Products, Inc., Performance Incorporated by Option Plan* Reference(1) 11 10 Business Loan Agreement, dated April 14, 2000 Incorporated by Between Utah Medical Products, Inc and Key Bank Reference(4) National Association 12 21 Subsidiaries of Utah Medical Products, Inc. Incorporated by Reference(5) 13 23 Consent of Tanner + Co., Company's independent This Filing auditors for the years ending December 31, 2000, December 31, 1999, and December 31, 1998 * Management contract or compensatory plan or arrangement required to be filed pursuant to Item 14(c). (1) Incorporated by reference from the Company's registration statement on form S-8 filed with the Commission effective February 10, 1995. (2) Incorporated by reference from the Company's annual report on form 10-K filed with the Commission for the year ended December 31, 1992. (3) Incorporated by reference from the Company's annual report on form 10-K filed with the Commission for the year ended December 31, 1998. (4) Incorporated by reference from the Company's quarterly report on form 10-Q filed with the Commission for the quarter ended March 31, 2000. (5) Incorporated by reference from the Company's annual report on form 10-K filed with the Commission for the year ended December 31, 1999.
(b) Reports on Form 8-K. On January 29, 2001, UTMD filed a report on Form 8-K, Item 5, Other Events, providing additional financial information prior the filing of this Form 10-K. On November 17, 2000, UTMD filed a report on Form 8-K, Item 5, Other Events, reporting its October 31, 2000 balance sheet, demonstrating that it was in compliance with Nasdaq Market Marketplace Rule 4450(a)(3) which requires issuers to maintain net tangible assets of at least $4.0 million. UTMD's net tangible assets were $4.3 million at October 31, 2000, compared to $3.9 million at September 30, 2000. 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 this 4th day of April, 2001. UTAH MEDICAL PRODUCTS, INC. By: /s/ Kevin L. Cornwell ---------------------------------------- Kevin L. Cornwell Chairman and CEO UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES December 31, 2000 and 1999 Consolidated Financial Statements UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Index to Consolidated Financial Statements - -------------------------------------------------------------------------------- Page ---- Independent Auditors' Report F-2 Consolidated balance sheet F-3 Consolidated statement of income F-4 Consolidated statement of stockholders' equity F-5 Consolidated statement of cash flows F-6 Notes to consolidated financial statements F-8 F-1 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Utah Medical Products, Inc. We have audited the consolidated balance sheet of Utah Medical Products, Inc. as of December 31, 2000 and 1999, and the related consolidated statements of income, stockholders' equity, and cash flows for the years ended December 31, 2000, 1999 and 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Utah Medical Products, Inc. as of December 31, 2000 and 1999, and the results of their operations and their cash flows for the years ended December 31, 2000, 1999 and 1998 in conformity with generally accepted accounting principles. /s/ Tanner + Co. Salt Lake City, Utah January 16, 2001 F-2 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Consolidated Balance Sheet (In Thousands) December 31, - -------------------------------------------------------------------------------- Assets 2000 1999 ------ --------- -------- Current assets: Cash $ 414 $ 647 Accounts receivable, net (note 2) 3,979 4,077 Inventories (note 2) 3,005 3,190 Prepaid expenses and other current assets 137 165 Deferred income taxes (note 6) 529 459 --------- -------- Total current assets 8,064 8,538 Property and equipment, net (note 3) 9,789 11,013 Other assets, net (note 2) 7,570 8,205 --------- -------- Total $ 25,423 $ 27,756 --------- -------- - -------------------------------------------------------------------------------- Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Accounts payable $ 683 $ 544 Accrued expenses (note 2) 1,963 2,117 --------- -------- Total current liabilities 2,646 2,661 Notes payable (note 4) 10,000 5,934 Deferred income taxes (note 6) 430 372 --------- -------- Total liabilities 13,076 8,967 --------- -------- Commitments and contingencies (notes 5 and 10) -- -- Stockholders' equity: Preferred stock $.01 par value; authorized 5,000 shares; no shares issued or outstanding -- -- Common stock $.01 par value; authorized 50,000 shares; issued 5,003 shares in 2000 and 6,453 shares in 1999 50 64 Cumulative foreign currency translation adjustment (1,559) (1,250) Retained earnings 13,856 19,975 --------- -------- Total stockholders' equity 12,347 18,789 --------- -------- Total $ 25,423 $ 27,756 --------- -------- See accompanying notes to consolidated financial statements. F-3 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Consolidated Statement of Income (In Thousands, Except Per Share Amounts) Years Ended December 31, - -------------------------------------------------------------------------------- 2000 1999 1998 --------- --------- --------- Net sales (notes 9 and 10) $ 27,193 $ 29,444 $ 27,677 Cost of sales (note 10) 12,068 13,648 13,503 --------- --------- --------- Gross margin 15,125 15,796 14,174 Expenses: Selling, general and administrative 6,190 6,795 6,605 Research and development 568 719 946 --------- --------- --------- Income from operations 8,367 8,282 6,623 Other income (expense): Dividend and interest income 39 34 58 Royalty income 452 529 678 Interest expense (496) (296) (310) Other, net 58 (4) 474 --------- --------- --------- Income before income tax expense 8,420 8,545 7,523 Income tax expense (note 6) (3,047) (3,077) (2,665) --------- --------- --------- Net income $ 5,373 $ 5,468 $ 4,858 --------- --------- --------- Earnings per common share (basic) (notes 7 and 8) $ .90 $ .76 $ .59 --------- --------- --------- Earnings per common share (diluted) (notes 7 and 8) $ .90 $ .76 $ .59 --------- --------- --------- Other comprehensive income - foreign currency translation net of taxes of $(109), $(252) and $50 (200) (489) 98 --------- --------- --------- Total comprehensive income $ 5,173 $ 4,979 $ 4,956 --------- --------- --------- See accompanying notes to consolidated financial statements. F-4
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Consolidated Statement of Stockholders' Equity (In Thousands) Years Ended December 31, 2000, 1999 and 1998 - ---------------------------------------------------------------------------------------------------------- Cumulative Foreign Common Stock Additional Currency --------------------- Paid-In Translation Retained Shares Amount Capital Adjustment Earnings Total -------------------------------------------------------------------- Balance, January 1, 1998 8,305 $ 83 $ -- ($ 657) $ 23,209 $ 22,635 Shares issued upon exercise of employee stock options for cash 8 -- 58 -- -- 58 Tax benefit attributable to appreciation of stock options -- -- 4 -- -- 4 Common stock purchased and retired (267) (3) (62) -- (1,621) (1,686) Foreign currency translation -- -- -- 148 -- 148 adjustment Net income -- -- -- -- 4,858 4,858 -------------------------------------------------------------------- Balance, December 31, 1998 8,046 80 -- (509) 26,446 26,017 Shares issued upon exercise of employee stock options for cash 13 -- 98 -- -- 98 Tax benefit attributable to appreciation of stock options -- -- 5 -- -- 5 Common stock purchased and retired (1,606) (16) (103) -- (11,939) (12,058) Foreign currency translation -- -- -- (741) -- (741) adjustment Net Income -- -- -- -- 5,468 5,468 -------------------------------------------------------------------- Balance, December 31, 1999 6,453 64 -- (1,250) 19,975 18,789 Shares issued upon exercise of employee stock options for cash 13 -- 85 -- -- 85 Tax benefit attributable to appreciation of stock options -- -- 7 -- -- 7 Common stock purchased and retired (1,463) (14) (92) -- (11,492) (11,598) Foreign currency translation adjustments -- -- -- (309) -- (309) Net income -- -- -- -- 5,373 5,373 -------------------------------------------------------------------- Balance, December 31, 2000 5,003 $ 50 $ -- ($ 1,559) $ 13,856 $ 12,347 -------------------------------------------------------------------- See accompanying notes to consolidated financial statements.
F-5
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Consolidated Statement of Cash Flows (In Thousands) Years Ended December 31, - ------------------------------------------------------------------------------------- 2000 1999 1998 -------------------------------- Cash flows from operating activities: Net income $ 5,373 $ 5,468 $ 4,858 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,191 2,192 2,058 (Recovery of) provision for losses on accounts receivable 27 (16) 22 (Gain) loss on disposal of assets 1 (1) 438 Deferred income taxes (13) (81) 52 Tax benefit attributable to exercise of stock options 7 5 5 (Increase) decrease in: Accounts receivable 57 1 55 Accrued interest, grant claims, and other receivables (12) 404 68 Inventories 165 903 2,317 Prepaid expenses and other current assets 27 (14) (43) Increase (decrease) in: Accounts payable 149 21 (328) Accrued expenses (147) 221 45 Deferred revenue -- (2) (84) -------------------------------- Net cash provided by operating activities 7,825 9,101 9,463 -------------------------------- Cash flows from investing activities: Capital expenditures for: Property and equipment (361) (684) (480) Intangible assets (250) (2) (306) Proceeds from sale of property and equipment 11 1 12 Net cash paid in acquisition -- -- (4,188) -------------------------------- Net cash used in investing activities (600) (685) (4,962) -------------------------------- Cash flows from financing activities: Proceeds from issuance of common stock 85 98 58 Common stock purchased and retired (11,598) (12,058) (1,686) Increase (decrease) in note payable 4,066 2,840 (2,470) -------------------------------- Net cash (used in) provided by financing activities (7,447) (9,120) (4,098) -------------------------------- Effect of exchange rate changes on cash (11) (16) 13 -------------------------------- Net (decrease) increase in cash (233) (720) 416 Cash at beginning of year 647 1,367 951 -------------------------------- Cash at end of year $ 414 $ 647 $ 1,367 -------------------------------- See accompanying notes to consolidated financial statements. F-6
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Consolidated Statement of Cash Flow (In Thousands) Continued - -------------------------------------------------------------------------------- Supplemental disclosures of cash flow information: Years Ended December 31, ------------------------------- 2000 1999 1998 ------------------------------- Cash paid during the year for: Income taxes $3,308 $2,972 $2,197 ------------------------------- Interest $ 496 $ 296 $ 310 ------------------------------- During the year ended December 31, 1998, the Company purchased assets from Gesco International, Inc. The Company paid cash, and recorded net assets from the acquisition as follows: Inventory $ 635 Property and equipment 48 Intangibles 3,505 ------- Net cash investment $ 4,188 -------- See accompanying notes to consolidated financial statements. F-7 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2000, 1999, and 1998 - -------------------------------------------------------------------------------- 1. Summary of Significant Accounting Policies Organization Utah Medical Products, Inc. and its wholly owned subsidiaries, principally Utah Medical Products Ltd., which operates a manufacturing facility in Ireland, and Columbia Medical, Inc. (the Company) are in the business of producing cost-effective devices for the health care industry. The Company's broad range of products includes those used in critical care areas and the labor and delivery departments of hospitals, as well as outpatient clinics and physician's offices. Products are sold in both domestic U.S. and international markets. Basis of Presentation Effective July 1, 1997, the Company acquired Columbia Medical, Inc. (Columbia) in a purchase transaction. Operations of Columbia have been included in the consolidated operations since the date of purchase. Principles of Consolidation The consolidated financial statements include those of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents For purposes of the consolidated statement of cash flows, the Company considers cash on deposit and short-term investments with original maturities of three months or less to be cash and cash equivalents. Grant Claims Receivable Grant claims receivable consists of amounts due from the Industrial Development Agency (Ireland) under capital and employment grant agreements for the construction and operation of the Company's Ireland manufacturing facility. Inventories Finished products, work-in-process, and raw materials and supplies inventories are stated at the lower of cost (computed on a first-in, first-out method) or market (see Note 2). Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line and units-of-production methods over estimated useful lives as follows: Building and improvements 30-40 years Furniture, equipment, and tooling 3-10 years F-8 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 1. Summary of Significant Accounting Policies Continued Intangible Assets Costs associated with the acquisition of patents, trademarks, goodwill, license rights, and non-compete agreements are capitalized and amortized using the straight-line method over periods ranging from 5 to 17 years. Income Taxes The Company accounts for income taxes under SFAS No. 109, "Accounting for Income Taxes," whereby deferred taxes are computed under the asset and liability method. Earnings per Share The computation of basic earnings per common share is based on the weighted average number of shares outstanding during each year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents which would arise from the exercise of stock options and warrants outstanding using the treasury stock method and the average market price per share during the year. Translation of Foreign Currencies Assets and liabilities of the Company's foreign subsidiary are translated into U.S. dollars at the applicable exchange rates at year-end. Income and expense items are translated at the average rate of exchange during the year. Net gains or losses resulting from the translation of the Company's assets and liabilities are reflected as a separate component of stockholders' equity. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of trade receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses which, when realized, have been within the range of management's expectations. F-9 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 1. Summary of Significant Accounting Policies Continued The Company's customer base consists primarily of healthcare providers. Although the Company is directly affected by the well-being of the medical industry, management does not believe significant credit risk exists at December 31, 2000. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles 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. Reclassifications Certain changes to the presentation of the 1998 consolidated financial statement have been made to conform with the 2000 and 1999 presentation. F-10 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 2.Detail of Certain Balance Sheet Accounts December 31, -------------------------- 2000 1999 -------------------------- Accounts receivable (in thousands): Trade receivables $ 3,979 $ 4,074 Grant claim receivables 42 51 Accrued interest and other 38 5 Less allowance for doubtful accounts (80) (53) -------------------------- $ 3,979 $ 4,077 -------------------------- Inventories (in thousands): Finished products $ 882 $ 846 Work-in-process 764 962 Raw materials 1,359 1,382 -------------------------- $ 3,005 $ 3,190 -------------------------- Other assets (in thousands): Goodwill $ 8,533 $ 8,533 Patents 1,893 1,744 License rights 293 293 Trademarks 224 224 Non-compete agreements 175 75 -------------------------- 11,118 10,869 Accumulated amortization (3,548) (2,664) -------------------------- $ 7,570 $ 8,205 -------------------------- Accrued expenses (in thousands): Payroll and payroll taxes $ 858 $ 956 Reserve for litigation costs 662 477 Other 443 684 -------------------------- $ 1,963 $ 2,117 -------------------------- F-11 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 3. Property and Equipment Property and equipment consists of the following (in thousands): December 31, ------------------------- 2000 1999 ------------------------- Land $ 945 $ 967 Buildings and improvements 7,328 7,549 Furniture, equipment, and tooling 13,548 13,300 Construction-in-progress 54 161 ----------------------- 21,875 21,977 Accumulated depreciation and amortization (12,086) (10,964) ----------------------- $ 9,789 $ 11,013 ------------------------ Included in the Company's consolidated balance sheet are the assets of its manufacturing facilities in Utah, Oregon and Ireland. Property and equipment, by location are as follows (in thousands): December 31, 2000 -------------------------------------------- Utah Oregon Ireland Total -------------------------------------------- Land $ 621 $ -- $ 324 $ 945 Building and improvements 3,827 32 3,469 7,328 Furniture, equipment, and tooling 11,611 1,262 675 13,548 Construction-in-progress 54 -- -- 54 -------------------------------------------- Total 16,113 1,294 4,468 21,875 Accumulated depreciation and amortization (10,428) (959) (699) (12,086) -------------------------------------------- Property and equipment, net $ 5,685 $ 335 $ 3,769 $ 9,789 -------------------------------------------- December 31, 1999 -------------------------------------------- Utah Oregon Ireland Total -------------------------------------------- Land $ 621 $ -- $ 346 $ 967 Building and improvements 3,817 32 3,700 7,549 Furniture, equipment, 11,309 1,253 738 13,300 and tooling Construction-in-progress 161 -- -- 161 -------------------------------------------- Total 15,908 1,285 4,784 21,977 Accumulated depreciation and amortization (9,648) (717) (599) (10,964) -------------------------------------------- Property and equipment, net $ 6,260 $ 568 $ 4,185 $ 11,013 -------------------------------------------- F-12 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 4. Notes Payable The Company has a bank line-of-credit agreement which allows the Company to borrow a maximum amount (in thousands) of $14,500 at an interest rate equal to either the bank's LIBOR rate plus 1.45%, or 1.0% below the bank's prime rate. The line-of-credit matures on April 14, 2002, is unsecured and had outstanding balances of (in thousands) $10,000 and $5,934 at December 31, 2000 and 1999, respectively. 5.Commitments and Contingencies Operating Leases The Company has an operating lease agreement for land adjoining the Company's Utah facility for a term of forty years commencing on September 1, 1991. On September 1, 1996 and subsequent to each fifth lease year, the basic rental is adjusted for published changes in a price index. The Company also leases certain buildings under noncancelable operating leases. Rent expense charged to operations under these operating lease agreements was approximately (in thousands) $98, $103 and $75 for the years ended December 31, 2000, 1999 and 1998, respectively. Future minimum lease payments under the operating lease obligations as of December 31, 2000 were as follows (in thousands): Year ending December 31: Amount ----------------------- -------- 2001 $ 62 2002 35 2003 35 2004 35 2005 35 Thereafter 895 -------- Total future minimum lease payments $ 1,097 -------- Product Liability The Company is self-insured for product liability risk. Litigation The Company is involved in lawsuits which are an expected consequence of its operations and in the ordinary course of business. The Company believes that pending litigation will not have a materially adverse effect on its financial condition or results of operations. F-13 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 6. Income Taxes Deferred tax assets (liabilities) consist of the following temporary differences (in thousands): December 31, ------------------------------------- 2000 1999 ------------------------------------- Current Long- Current Long- term term ------------------------------------- Inventory write-down and unicap $ 153 $ - $ 153 $ - Allowance for doubtful accounts 27 - 18 - Accrued liabilities and reserves 278 - 250 - Other 71 - 38 - ------------------------------------- Depreciation and amortization - (196) - (210) Earnings from subsidiary - (234) - (162) ------------------------------------- Deferred income taxes, net $ 529 ($430) $ 459 ($372) ------------------------------------- The components of income tax expense are as follows (in thousands): Years Ended December 31, -------------------------------------- 2000 1999 1998 -------------------------------------- Current $ 3,039 $ 3,158 $2,613 Deferred 8 (81) 52 -------------------------------------- Total $ 3,047 $ 3,077 $2,665 -------------------------------------- Income tax expense differed from amounts computed by applying the statutory federal rate to pretax income as follows (in thousands): Years Ended December 31, ------------------------------------- 2000 1999 1998 ------------------------------------- Federal income tax expense at the statutory rate $ 2,863 $ 2,905 $ 2,558 State income taxes 436 427 376 Foreign sales corporation (79) (75) (76) Other (173) (180) (193) ------------------------------------- Total $ 3,047 $ 3,077 $ 2,665 ------------------------------------- F-14 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 7. Stockholders' Equity Options The Company has stock option plans which authorize the grant of stock options to eligible employees, directors, and other individuals to purchase up to an aggregate 4,300,000 shares of common stock. All options granted under the plans may be exercised between six months and ten years following the date of grant. The plans are intended to advance the interest of the Company by attracting and ensuring retention of competent directors, employees, and executive personnel, and to provide incentives to those individuals to devote their utmost efforts to the advancement of the Company. Changes in stock options were as follows: Price Range Shares Per Share ------------------------------------- 2000 Granted 96,200 $ 6.63 - $ 7.75 Expired or canceled 107,500 6.50 - 14.25 Exercised 12,524 6.50 - 7.75 Total outstanding at December 31 1,074,833 6.50 - 14.25 Total exercisable at December 31 821,462 6.50 - 14.25 1999 Granted 267,000 $ 6.50 - $ 7.75 Expired or canceled 147,174 6.50 - 14.25 Exercised 13,950 6.75 - 7.25 Total outstanding at December 31 1,098,657 6.50 - 14.25 Total exercisable at December 31 665,533 6.50 - 14.25 1998 Granted 267,500 $ 6.75 - $ 8.06 Expired or canceled 155,067 6.75 - 14.25 Exercised 8,000 7.25 - 7.25 Total outstanding at December 31 992,781 6.75 - 14.25 Total exercisable at December 31 478,902 6.75 - 14.25 For the years ended December 31, 2000, 1999 and 1998, the Company reduced current income taxes payable and increased additional paid-in capital by (in thousands) $7, $5 and $5, respectively, for the income tax benefit attributable to appreciation of common stock related to stock options. F-15 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 7. Stockholders' Equity Continued Stock-Based Compensation The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized in the financial statements. Had compensation cost for the Company's stock option plans been determined based on the fair value at the grant date for awards starting in 1995 consistent with the provisions of SFAS No. 123, the Company's net earnings and earnings per share would have been reduced to the pro forma amounts indicated below (in thousands, except per share amounts): Years Ended December 31, ---------------------------------- 2000 1999 1998 ---------------------------------- Net income as reported $ 5,373 $ 5,468 $ 4,858 Net income pro forma $ 4,970 $ 4,888 $ 4,382 Earnings per share assuming dilution as reported $ .90 $ .76 $ .59 Earnings per share assuming dilution pro forma $ .83 $ .68 $ .53 The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: Years Ended December 31, --------------------------------- 2000 1999 1998 --------------------------------- Expected dividend yield $ - $ - $ - Expected stock price volatility 45.9% 47.5% 49.9% Risk-free interest rate (weighted average) 6.6% 4.7% 5.4% Expected life of options 4.5 years 3.5 years 3.8 years --------------------------------- The per-share weighted average fair value of options granted during 2000, 1999 and 1998 is $3.09, $2.56 and $3.20, respectively. F-16 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 7. Stockholders' Equity Continued The following table summarizes information about stock options outstanding at December 31, 2000:
Options Outstanding Options Exercisable ------------------------------------- ---------------------------- Weighted Average Remaining Weighted Weighted Range of Contractual Average Average Exercise Number Life Exercise Number Exercise Prices Outstanding (Years) Price Exercisable Price - --------------------------------------------------------------------------------- $6.50 - 8.00 663,208 6.83 $6.95 421,891 $7.02 9.50 - 14.25 411,625 4.95 11.74 399,571 11.75 - --------------------------------------------------------------------------------- $6.50 - 14.25 1,074,833 6.11 $8.79 821,462 $9.32 - ---------------------------------------------------------------------------------
8. Earnings Per Share Financial accounting standards require companies to present basic and diluted earnings per share (EPS) along with additional informational disclosures. Information related to EPS is as follows (in thousands, except per share amounts): Years Ended December 31, ----------------------------- 2000 1999 1998 ----------------------------- Basic EPS: Net income available to common stockholders $ 5,373 $ 5,468 $ 4,858 ----------------------------- Weighted average common shares 5,954 7,187 8,269 ----------------------------- Net income per share $ .90 $ .76 $ .59 ----------------------------- Diluted EPS: Net income available to common stockholders $ 5,373 $ 5,468 $ 4,858 ----------------------------- Weighted average common shares 5,978 7,197 8,273 ----------------------------- Net income per share $ .90 $ .76 $ .59 ----------------------------- F-17 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 9. Geographic Sales Information The Company had sales in the following geographic areas (in thousands): Year United States Other ----------------------------- 2000 $21,768 $5,425 1999 $23,894 $5,550 1998 $22,945 $4,732 10. Product Sale and Purchase Commitments The Company has license agreements for the rights to develop and market certain products owned by unrelated parties. Under the terms of such agreements, the Company is required to pay royalties ranging from 1.5% to 5% of sales, and in one case certain payments to the developer contingent upon the product achieving certain annual revenue thresholds. The Company has license agreements with unrelated companies to provide exclusive and nonexclusive rights to purchase, market, distribute, or manufacture the Company's products, from which the Company receives royalties and license fees. 11. Employee Benefit Plan The Company has a contributory 401(k) savings plan for employees who work 30 hours or more each week, who are at least 21 years of age, and have a minimum of one year of service with the Company. The Company's contribution is determined annually by the Board of Directors and was approximately (in thousands) $80, $87and $63 for the years ended December 31, 2000, 1999 and 1998, respectively. F-18 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Continued - -------------------------------------------------------------------------------- 12. Fair Value of Financial Instruments None of the Company's financial instruments are held for trading purposes. The Company estimates that the fair value of all financial instruments at December 31, 2000, does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgement is necessarily required in interpreting market data to develop the estimates of fair value, and, accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange. 13. Recent Accounting Pronounce- ments In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities- Deferral of the Effective Date of FASB Statement No. 133." SFAS 133 establishes accounting and reporting standards for derivative instruments and requires recognition of all derivatives as assets or liabilities in the statement of financial position and measurement of those instruments at fair value. SFAS 133 is now effective for fiscal years beginning after June 15, 2000. The Company believes that the adoption of SFAS 133 will not have any material effect on the financial statements of the Company. F-19 EX-23 2 0002.txt EXHIBIT 13 CONSENT OF TANNER + CO., COMPANY'S INDEPENDENT AUDITORS FOR THE YEARS ENDING DECEMBER 31, 2000, DECEMBER 31, 1999, AND DECEMBER 31, 1998 INDEPENDENT AUDITORS' CONSENT ----------------------------- Utah Medical Products, Inc. We consent to the incorporation by reference in Registration Statement Nos. 33-24781, 33-44100, 33-89394, and 33-89434 of Utah Medical Products, Inc. on Forms S-8 of our report dated January 16, 2001, appearing in this Annual Report on Form 10-K of Utah Medical Products, Inc. for the years ended December 31, 2000, December 31, 1999, and December 31, 1998. /s/ Tanner + Co. Salt Lake City, Utah April 4, 2001 -----END PRIVACY-ENHANCED MESSAGE-----