UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑Q

Quarterly Report Under Section 13 or 15(d) of

The Securities Exchange Act of 1934

For quarter ended: March 31, 2017

Commission File No. 001-12575

UTAH MEDICAL PRODUCTS, INC.

(Exact name of Registrant as specified in its charter)

UTAH	87‑0342734
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7043 South 300 West

Midvale, Utah 84047

Address of principal executive offices

Registrant's telephone number: (801) 566‑1200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of May 4, 2017: 3,716,134.

UTAH MEDICAL PRODUCTS, INC.

INDEX TO FORM 10‑Q

PART I - FINANCIAL INFORMATION			PAGE

	Item 1.	Financial Statements

		Consolidated Condensed Balance Sheets as of March 31, 2017 and December 31, 2016	1

		Consolidated Condensed Statements of Income for the three months ended March 31, 2017 and March 31, 2016	2

		Consolidated Condensed Statements of Cash Flows for three months ended March 31, 2017 and March 31, 2016	3

		Notes to Consolidated Condensed Financial Statements	4

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	6

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13

	Item 4.	Controls and Procedures	13

PART II – OTHER INFORMATION

	Item 1.	Legal Proceedings	14

	Item 1A.	Risk Factors	14

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16

	Item 6.	Exhibits	16

SIGNATURES			17

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS AS OF
MARCH 31, 2017 AND DECEMBER 31, 2016
(in thousands)

	(unaudited)			(audited)
ASSETS	MARCH 31, 2017			DECEMBER 31, 2016
Current assets:
Cash	$	30,679		$	26,296
Investments, available-for-sale		64			64
Accounts & other receivables, net		4,178			3,211
Inventories		4,764			4,542
Other current assets		831			754
Total current assets		40,516			34,867
Property and equipment, net		10,015			9,966
Goodwill		13,587			13,487
Other intangible assets		32,420			31,947
Other intangible assets - accumulated amortization		(14,370	)		(13,683	)
Other intangible assets, net		18,050			18,264
Total assets	$	82,168		$	76,584

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,025		$	906
Accrued expenses		4,341			2,116
Total current liabilities		5,366			3,022
Deferred tax liability - intangible assets		3,160			3,209
Deferred income taxes		1,103			1,109
Total liabilities		9,629			7,340

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 - March 31, 2017, 3,715 shares and December 31, 2016, 3,713 shares		37			37
Accumulated other comprehensive income (loss)		(11,588	)		(12,243	)
Additional paid-in capital		467			378
Retained earnings		83,623			81,072
Total stockholders' equity		72,539			69,244

Total liabilities and stockholders' equity	$	82,168		$	76,584

see notes to consolidated condensed financial statements

UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND MARCH 31, 2016
(in thousands, except per share amounts)
(unaudited)

	THREE MONTHS ENDED
	MARCH 31,
	2017		2016
Sales, net	$	10,259	$	10,301

Cost of goods sold		3,724		4,078
Gross profit		6,535		6,223

Operating expense
Selling, general and administrative		1,692		1,801
Research & development		118		110
Total operating expenses		1,810		1,911
Operating income		4,725		4,312

Other income (expense)		26		101
Income before provision for income taxes		4,751		4,413

Provision for income taxes		1,215		1,196
Net income	$	3,536	$	3,217

Earnings per common share (basic)	$	0.95	$	0.86
Earnings per common share (diluted)	$	0.95	$	0.85

Shares outstanding (basic)		3,714		3,753
Shares outstanding (diluted)		3,728		3,770

Other comprehensive income (loss):
Foreign currency translation net of taxes of $0 and $0	$	655	$	(410	)
Unrealized gain (loss) on investments net of taxes of $0 and $(4)		0		(7	)
Total comprehensive income	$	4,191	$	2,800

see notes to consolidated condensed financial statements

UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND MARCH 31, 2016
(in thousands - unaudited)

	MARCH 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,536		$	3,217
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		166			149
Amortization		508			592
Provision for (recovery of) losses on accounts receivable		(1	)		(13	)
Deferred income taxes		(118	)		(117	)
Stock-based compensation expense		36			21
Tax benefit attributable to exercise of stock options		10			19
Changes in operating assets and liabilities:
Accounts receivable		(934	)		(782	)
Accrued interest and other receivables		(5	)		(16	)
Inventories		(154	)		(133	)
Prepaid expenses and other current assets		(56	)		(45	)
Accounts payable		117			337
Accrued expenses		1,202			923
Total adjustments		771			935
Net cash provided by operating activities		4,307			4,152

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for:
Property and equipment		(65	)		(48	)
Intangible assets		-			(4	)
Net cash provided by (used in) investing activities		(65	)		(52	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - options		53			148
Payment of dividends		-			-
Net cash provided by (used in) financing activities		53			148

Effect of exchange rate changes on cash		88			(10	)
Net increase (decrease) in cash and cash equivalents		4,383			4,238
Cash at beginning of period		26,296			23,278
Cash at end of period	$	30,679		$	27,516

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes	$	442		$	345
Cash paid during the period for interest		-			-

see notes to consolidated condensed financial statements

UTAH MEDICAL PRODUCTS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(unaudited)

(1) The unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States. These statements should be read in conjunction with the financial statements and notes included in the Utah Medical Products, Inc. ("UTMD" or "the Company") annual report on Form 10‑K for the year ended December 31, 2016. In the opinion of management, the accompanying financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. Currency amounts are in thousands except per-share amounts and where noted.

(2) Recent Accounting Standards. In March 2016, new accounting guidance was issued to simplify several aspects of accounting for employee share-based payment (including stock option) transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under the guidance, entities recognize all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. UTMD adopted this standard on January 1, 2017, which had an insignificant impact on its consolidated financial statements. UTMD made a determination to continue to account for forfeitures by estimating the number of awards that are expected to vest. Because UTMD primarily issues incentive stock options, excess tax benefits and tax deficiencies have historically been minimal.

In May 2014, new accounting guidance was issued that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. This guidance becomes effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted for periods beginning after December 15, 2016. Because the vast majority of its revenue is recognized when a physical product is shipped, UTMD expects that the 2018 adoption of this standard will have an insignificant impact on its consolidated financial statements.

In February 2016, new accounting guidance was issued which requires recording most leases on the balance sheet. The new lease standard requires disclosure of key information about lease arrangements and aligns many of the underlying principles of this new model with those in the new revenue recognition standard noted above. This guidance becomes effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. UTMD has yet to assess the impact that this standard will have on its consolidated financial statements when it is adopted. The only significant lease the Company anticipates it will have at that time is for the parking lot at its Utah facility.

(3) Inventories at March 31, 2017 and December 31, 2016 consisted of the following:

	March 31,		December 31,
	2017		2016
Finished goods	$	1,148	$	1,327
Work‑in‑process		1,172		942
Raw materials		2,444		2,273
Total	$	4,764	$	4,542

(4) Stock-Based Compensation. At March 31, 2017, the Company has stock-based employee compensation plans which authorize the grant of stock options to eligible employees and directors. The Company accounts for stock compensation under FASB Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation. This statement requires the Company to recognize compensation cost based on the grant date fair value of options granted to employees and directors. In the quarters ended March 31, 2017 and 2016, the Company recognized $36 and $21, respectively, in stock based compensation cost.

(5) Warranty Reserve. The Company's published warranty is: "UTMD warrants its products to conform in all material respects to all published product specifications in effect on the date of shipment, and to be free from defects in material and workmanship for a period of thirty (30) days for supplies, or twenty-four (24) months for equipment, from date of shipment. During the warranty period UTMD shall, at its option, replace any products shown to UTMD's reasonable satisfaction to be defective at no expense to the Purchaser or refund the purchase price."

UTMD maintains a warranty reserve to provide for estimated costs which are likely to occur. The amount of this reserve is adjusted, as required, to reflect its actual experience. Based on its analysis of historical warranty claims and its estimate that existing warranty obligations were immaterial, no warranty reserve was made at December 31, 2016 or March 31, 2017.

(6) Fair Value Measurements. The Company follows ASC 820, Fair Value Measurement to determine fair value of its financial assets. The following table provides financial assets carried at fair value measured as of March 31, 2017:

				Fair Value Measurements Using
Description	Total Fair Value at 3/31/2017			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3 )
Equities		$	64		$	64		$	0		$	0

(7) Subsequent Events. UTMD has evaluated subsequent events through the date the financial statements were issued, and concluded there were no other events or transactions during this period that required recognition or disclosure in its financial statements.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

General

Utah Medical Products, Inc. (UTMD) manufactures and markets a well-established range of specialty medical devices. The Company's Form 10-K Annual Report for the year ended December 31, 2016 provides a detailed description of products, technologies, markets, regulatory issues, business initiatives, resources and business risks, among other details, and should be read in conjunction with this report. Because of the relatively short span of time, results for any given three month period in comparison with a previous three month period may not be indicative of comparative results for the year as a whole. Currency amounts in the report are in thousands, except per share amounts or where otherwise noted. Currencies in this report are denoted as $ or USD = U.S. Dollars; AUD = Australia Dollars; £ or GBP = UK Pound Sterling; C$ or CAD = Canadian Dollars; and € or EUR = Euros.

Analysis of Results of Operations

a) Overview

In the first calendar quarter (1Q) of 2017, UTMD achieved results representing a strong start to achieving its previously announced goals for year 2017.

Income statement results in 1Q 2017 compared to 1Q 2016 were as follows:

	1Q 2017		1Q 2016		change
Net Sales	$	10,259	$	10,301		(0.4	%)
Gross Profit		6,535		6,223		+5.0	%
Operating Income		4,725		4,312		+9.6	%
Income Before Tax		4,750		4,413		+7.6	%
Net Income		3,536		3,217		+9.9	%
Earnings per Share		.948		.853		+11.1	%

The Company began selling its Femcare devices directly to medical facilities in Canada and France in 1Q 2017, rather than through third party distributors.

The volatility of foreign currency exchange (FX) rates for sales outside the U.S. (OUS) continued to have a significant impact on period-to-period financial results. FX rates for income statement purposes are transaction-weighted averages. The average FX rates from the applicable foreign currency to USD during 1Q 2017 and 1Q 2016 follow:

	1Q 2017		1Q 2016		change
GBP		1.239		1.432		(13.5%)
EUR		1.065		1.106		(3.7%)
AUD		0.760		0.724		+5.0%
CAD		0.755		n/a

The weighted average negative impact on all foreign currency sales was 6.3%, reducing reported USD sales by $168. Despite the continued negative FX pressure, UTMD's total consolidated 1Q 2017 sales were about the same as in 1Q 2016 (0.4% lower). In constant currency terms, i.e. using the same FX rates as in 1Q 2016, total consolidated 1Q 2017 sales were up $126 (+1%).

UTMD's consolidated 1Q 2017 gross profit margin (GPM) benefited substantially from UTMD starting to distribute directly to established Femcare users in Canada and France.

UTMD's Operating Income Margin (OIM) gained leverage from two factors; 1) operating resources, particularly in Sales & Marketing (S&M), required to implement direct sales to France were absorbed by existing UK operations without increase, and 2) the weaker GBP reduced Identifiable Intangible Asset (IIA) amortization expense, which comprises a significant portion of General & Administrative (G&A) operating expenses, in USD terms.

Comparing 1Q 2017 to 1Q 2016, Income Before Tax (EBT) did not increase in the same proportion as the increase in OI because 1Q 2017 non-operating income was only $26 compared to $101 in 1Q 2016. This was because the gain in value of remeasured EUR bank balances held by UTMD's UK subsidiary, which is included in non-operating income (NOI), increased only $3 in 1Q 2017 compared to $80 in 1Q 2016.

Profit margins in 1Q 2017 significantly improved as follows:

	1Q 2017		1Q 2016
Gross Profit Margin (gross profits/ sales):		63.7%		60.4%
Operating Profit Margin (operating income/ sales):		46.1%		41.9%
EBT Margin (income before income taxes/ sales):		46.3%		42.8%
Net Income Margin (income after taxes/ sales):		34.5%		31.2%

UTMD's Balance Sheet, in the absence of debt, also improved markedly. March 31, 2017 ending Cash and Investments were up $4.4 million and Stockholders' Equity was up $3.3 million from December 31, 2016. FX rates for Balance Sheet purposes are the applicable rates at the end of each reporting period. The FX rates from the applicable foreign currency to USD for assets and liabilities at the end of 1Q 2017 and the end of 1Q 2016 follow:

	1Q 2017		1Q 2016		change
GBP		1.253		1.438		(12.8%)
EUR		1.070		1.139		(6.1%)
AUD		0.764		0.768		(0.5%)
CAD		0.751		n/a

b) Revenues

The Company believes that revenue should be recognized at the time of shipment as title generally passes to the customer at the time of shipment, or completion of services performed under contract. Revenue recognized by UTMD is based upon documented arrangements and fixed contracts in which the selling price is fixed prior to acceptance and completion of an order. Revenue from product or service sales is generally recognized at the time the product is shipped or service completed and invoiced, and collectibility is reasonably assured. Over 99% of UTMD's revenue is recognized at the time UTMD ships a physical medical device to a customer or a customer's designated inventory location, where the selling price for the item shipped was agreed prior to UTMD's acceptance and completion of the customer order. There are no post-shipment obligations which have been or are expected to be material to financial results.

There are circumstances under which revenue may be recognized when product is not shipped, which meet the criteria of SAB 104: the Company provides engineering services, for example, design and production of manufacturing tooling that may be used in subsequent UTMD manufacturing of custom components for other companies. This revenue is recognized when UTMD's service has been completed according to a fixed contractual agreement.

Terms of sale are established in advance of UTMD's acceptance of customer orders. In the U.S., Canada, Ireland, UK, France and Australia, UTMD generally accepts orders directly from and ships directly to end user clinical facilities, as well as third party med/surg distributors, under UTMD's Standard Terms and Conditions (T&C) of Sale. About 14% of UTMD's U.S. domestic end user sales go through third party med/surg distributors which contract separately with clinical facilities to provide purchasing, storage and scheduled delivery functions for the applicable facility. UTMD's T&C of Sale are substantially the same in the U.S., Canada, Ireland, UK, France and Australia. In other geographic regions, UTMD sells its devices to third party distributors which then distribute the devices to medical facilities within their designated territories. UTMD's T&C of Sale for its international distributors are substantially the same.

UTMD may have separate discounted pricing agreements with a clinical facility or group of affiliated facilities based on volume of purchases. Pricing agreements which are documented arrangements with clinical facilities, or groups of affiliated facilities, if applicable, are established in advance of orders accepted or shipments made. For existing customers, past actual shipment volumes determine the fixed price by part number for the next agreement period of one or two years. For new customers, the customer's best estimate of volume is accepted by UTMD for determining the ensuing fixed prices for the agreement period. New customers typically have no longer than one-year agreements. Except on rare occasions such as when customers do not meet prepayment agreements, prices are not adjusted after an order is accepted. For the sake of clarity, the separate pricing agreements with clinical facilities based on volume of purchases disclosure is not inconsistent with UTMD's disclosure above that the selling price is fixed prior to the acceptance of a specific customer order.

Total 1Q 2017 consolidated sales were $42 (0.4%) lower than in 1Q 2016. Comparing 1Q 2017 to 1Q 2016, total U.S. domestic sales were 1% lower and OUS sales were 1% higher.

Domestic sales in 1Q 2017 were $5,218 compared to $5,294 in 1Q 2016. The components of domestic sales include 1) "direct sales" of UTMD's medical devices to user facilities (and med/surg stocking distributors for hospitals), 2) "OEM sales" of components and other products manufactured by UTMD for other medical device and non-medical device companies, and 3) sales of Filshie Clip System devices by UTMD's UK subsidiary, Femcare-Nikomed Ltd, to CooperSurgical Inc. (CSI) for distribution in the U.S. under an exclusive distribution agreement between CSI and Femcare executed prior to UTMD's acquisition of Femcare in 2011. Direct sales, representing 63% of total domestic sales, were $44 (1%) lower in 1Q 2017 than in 1Q 2016. OEM sales, representing 15% of total domestic sales, were $4 (+1%) higher. CSI sales, representing 23% of 1Q 2017 total domestic sales, were $36 (3%) lower. CSI's current forecasts indicate that its sales will be substantially higher on a comparative basis for the remainder of 2017.

OUS sales in 1Q 2017 were $5,041 compared to $5,007 in 1Q 2016. This was despite the fact that OUS sales invoiced in GBP, EUR and AUD currencies were reduced 6.3% as a result of changes in FX rates shown above. 1Q 2017 was the first quarter that UTMD invoiced Canada medical facilities directly in CAD. Previously, Femcare's discontinued Canada distributor had been invoiced by UTMD subsidiaries in EUR or GBP. Foreign currency OUS sales in 1Q 2017 were $2,486, which was 49% of all OUS sales and 24% of total consolidated sales. Foreign currency OUS sales in 1Q 2016 were $2,910, which was 58% of all OUS sales and 28% of total consolidated sales. Constant currency (using same FX rates as in 1Q 2016) OUS foreign currency sales were $2,654 in 1Q 2017. The negative 1.6% impact of FX rates on 1Q 2017 total consolidated sales was somewhat larger than the negative 1.2% impact of FX rates in 1Q 2016.

Trade sales are sales to third parties, excluding sales from one UTMD entity to another. Ireland subsidiary 1Q 2017 trade sales were $497 lower than in 1Q 2016 due to Ireland sales of Sterishot II kits into Canada and France becoming intercompany sales rather than trade sales to distributors in 2017, lower sales of BPM kits to Pulsion in Germany and the impact on sales of a 4% weaker EUR.

Trade sales by UTMD's UK subsidiary, Femcare-Nikomed Ltd, were $140 lower. The impact of a 13% weaker GBP alone lowered actual sales by $141. The incremental direct sales to France medical facilities at end user prices higher than the previous distributor sales were offset by the loss of distributor marketing rights payments and trade sales which are now intercompany sales.

Sales by UTMD's Australia subsidiary to Australia end user facilities in 1Q 2017 were $4 higher than in 1Q 2016.

Sales by UTMD's Canada subsidiary direct to Canada end user facilities were $717 in 1Q 2017. In 1Q 2016, sales to Femcare's Canada distributor were included in Ireland subsidiary and UK subsidiary trade sales.

The following table provides USD sales amounts divided into general product categories for total sales and the subset of OUS sales:

Global revenues (USD) by product category:

	1Q 2017		%		1Q 2016		%
Obstetrics	$	1,039		10	$	1,108		11
Gynecology/ Electrosurgery/ Urology		5,837		57		5,727		56
Neonatal		1,571		15		1,655		16
Blood Pressure Monitoring and Accessories*		1,812		18		1,811		17
Total:	$	10,259		100	$	10,301		100

OUS revenues (USD) by product category:

	1Q 2017		%		1Q 2016		%
Obstetrics	$	144		3	$	181		4
Gynecology/ Electrosurgery/ Urology		3,559		71		3,353		67
Neonatal		518		10		613		12
Blood Pressure Monitoring and Accessories*		820		16		860		17
Total:	$	5,041		100	$	5,007		100

*includes molded components sold to OEM customers.

c) Gross Profit

Gross Profit (GP) results from subtracting the cost of manufacturing and shipping products to customers (direct materials, direct labor, manufacturing overhead and shipping costs), or the purchase price of distributed finished products manufactured by other companies, from revenues. At UTMD, manufacturing overhead costs fully absorb indirect costs including depreciation on manufacturing equipment and facilities, quality assurance, materials requirements planning and purchasing, manufacturing engineering, production supervision, shipping, royalties paid to other entities and health plan benefits for both direct and indirect manufacturing personnel. UTMD's GP margin (GPM) is GP as a percentage of revenues. GP in 1Q 2017 was $6,535 (63.7% GPM) compared to $6,223 (60.4% GPM) in 1Q 2016. The higher GP and GPM resulted primarily from the change to direct sales in Canada and France.

d) Operating Income

Operating income (OI) is the profit remaining after subtracting operating expenses (OE) from GP. OE include sales and marketing (S&M) expenses, product development (R&D) expenses and general and administrative (G&A) expenses. UTMD's operating income margin (OIM) is OI divided by revenues. OI in 1Q 2017 was $4,725 (46.1% OIM) compared to $4,312 (41.9% OIM) in 1Q 2016. OI was 9.6% higher due to the 5% higher GP combined with 5% lower OE.

Consolidated 1Q 2017 USD OE were $1,811 (17.7% of sales) compared to $1,911 (18.5% of sales) in 1Q 2016. The lower UK and Ireland FX rates helped reduce OUS OE in USD, as the 1Q 2017 OE of UTMD's foreign subsidiaries in the aggregate would have been $109 higher using 1Q 2016 FX rates.

Consolidated S&M expenses in 1Q 2017 were $381 (3.7% of sales) compared to $405 (3.9% of sales) in 1Q 2016.

S&M expenses include all customer support costs including training. In general, training is not required for UTMD's products since they are well-established and have been clinically widely used. Written "Instructions For Use" are packaged with all finished devices. Although UTMD does not have any explicit contracts with customers to provide training, it does have agreements in the U.S. and UK under which it agrees to provide hospital members inservice and clinical training as required and reasonably requested.

UTMD promises prospective customers that it will provide, at no charge in reasonable quantities, copies of instruction materials developed for the use of its products. UTMD provides customer support from offices in the U.S., Canada, the UK, Ireland and Australia by telephone, and employed representatives on a geographically dispersed basis, to answer user questions and help troubleshoot any user issues. Occasionally, on a case-by-case basis, UTMD may utilize the services of an independent practitioner to provide educational assistance to clinicians. All inservice and training expenses are routinely expensed as they occur. All of these services are allocated from S&M overhead costs included in OE. Historically, marginal consulting costs have been immaterial to financial results.

R&D expenses in 1Q 2017 were $118 (1.2% of sales) compared to $110 (1.1% of sales) in 1Q 2016.

Consolidated G&A expenses were $1,312 (12.8% of sales) in 1Q 2017 compared to $1,396 (13.5% of sales) in 1Q 2016. The G&A expenses in 1Q 2017 included $494 (4.8% of sales) of non-cash expense from the amortization of identifiable intangible assets resulting from the Femcare acquisition, which were $576 (5.6% of sales) in 1Q 2016. The lower USD amortization expense was the result of the weaker GBP, as the amortization expense in GBP was £399 in 1Q 2017 compared to £403 in 1Q 2016.

G&A expenses include the cost of outside financial auditors and corporate governance activities related to the implementation of SEC rules resulting from the Sarbanes-Oxley Act of 2002, as well as estimated stock-based compensation cost, a noncash expense. Option compensation expense included in G&A expenses was $36 in 1Q 2017 compared to $21 in 1Q 2016.

Summary comparison of (USD) consolidated OE:

	1Q 2017		1Q 2016
S&M Expense	$	381	$	405
R&D Expense		118		110
G&A Expense		1,312		1,396
Total Operating Expenses:	$	1,811	$	1,911

e) Non-operating expense (NOE)/ Non-operating income (NOI)

NOE/NOI includes the combination of 1) expenses from loan interest and bank fees; 2) expenses or income from losses or gains from remeasuring the value of EUR cash bank balances in the UK, and GBP cash balances in Ireland, in USD terms; and 3) income from rent of underutilized property, investment income and royalties received from licensing the Company's technology. Negative NOE is NOI. Net NOI in 1Q 2017 was $26 compared to $101 NOI in 1Q 2016. The total gain on remeasured foreign currency balances in 1Q 2017 was $1 compared to a gain of $73 in 1Q 2016. Royalties received were $23 in both 1Q 2017 and 1Q 2016.

f) Income Before Income Taxes (EBT)

EBT results from subtracting net NOE or adding NOI from or to, as applicable, OI. Consolidated 1Q 2017 EBT was $4,750 (46.3% of sales) compared to $4,413 (42.8% of sales) in 1Q 2016. The $337 (+7.6%) higher 1Q 2017 EBT compared to 1Q 2016 was due to the higher OI offset by $75 lower NOI. The NOI gain from remeasured EUR cash balances in the UK was $77 lower in 1Q 2017 compared to 1Q 2016.

The EBT of Utah Medical Products, Inc. (U.S.) was $2,251 in 1Q 2017 compared to $2,258 in 1Q 2016. The EBT of Utah Medical Products, Ltd (Ireland) was EUR 637 in 1Q 2017 compared to EUR 669 in 1Q 2016. The EBT of Femcare Group Ltd (Femcare-Nikomed, Ltd., UK and Femcare Australia) was GBP 1,161 in 1Q 2017 compared to GBP 990 in 1Q 2016. The higher EBT for Femcare Group Ltd was essentially due to direct sales to end users in France. The 1Q 2017 EBT of Utah Medical Products Canada, Inc. (dba Femcare Canada), a new operating subsidiary in 2017, was CAD 496.

Excluding the noncash effects of depreciation, amortization of intangible assets and stock option expense, 1Q 2017 consolidated EBT excluding remeasured bank balance currency gains ("adjusted consolidated EBITDA") were $5,458 compared to $5,103 in 1Q 2016. Management believes that the 1Q 2017 operating performance provides an excellent start to achieving its financial objectives for the year 2017, as previously described in its 2016 SEC 10-K Report.

g) Net Income (NI)

NI is EBT minus a provision for income taxes. NI in 1Q 2017 of $3,536 (34.5% of sales) was 9.9% higher than the NI of $3,217 (31.2% of sales) in 1Q 2016. The average consolidated income tax provisions (as a % of EBT) in 1Q 2017 and 1Q 2016 were 25.6% and 27.1%, respectively. The lower provision rate in 1Q 2017 was due to the mix in EBT by tax sovereignty.

h) Earnings Per Share (EPS)

EPS are consolidated NI divided by the number of shares of stock outstanding (diluted to take into consideration stock option awards which are "in the money," i.e., have exercise prices below the applicable period's weighted average market value). Diluted EPS in 1Q 2017 were $0.948, which was 11.1% higher than EPS of $0.853 in 1Q 2016. The confluence of higher GP, OE which did not increase in proportion to the gain from prior distributor GP, which were also helped by the diminishing effect of a stronger USD relative to the GBP and EUR, together with a slightly lower tax provision rate and lower diluted shares outstanding, produced the 11% EPS increase.

EPS for the most recent twelve months were $3.315, but this includes a 4Q 2016 "one-time" increase of $.033 from the adjustment in UTMD's deferred tax liability as a result of lower future income tax rates enacted in the UK in late 2016.

Diluted shares used to calculate EPS decreased to 3,728,000 in 1Q 2017 from 3,769,900 in 1Q 2016 as a result of 50,000 shares repurchased after the end of 1Q 2016. The number of shares added as a dilution factor in 1Q 2017 was 13,700 compared to 17,100 in 1Q 2016. Outstanding UTMD shares at the end of 1Q 2017 were 3,715,000 compared to 3,756,600 at the end of 1Q 2016.

The number of shares used for calculating earnings per share was higher than ending shares because of a time-weighted calculation of average outstanding shares plus dilution from unexercised employee and director options. The total number of outstanding unexercised employee options at March 31, 2017 was 71,600 shares at an average exercise price of $46.91/ share, including shares awarded but not vested. This compares to 55,300 unexercised option shares outstanding at March 31, 2016 at an average exercise price of $39.43/ share.

During both 1Q 2017 and 1Q 2016, UTMD did not repurchase its shares in the open market. The Company retains the financial ability for repurchasing its shares when they seem undervalued. Despite the stronger financial performance, the closing share price at the end of 1Q 2017 was $62.30 compared to $72.75 at the end of calendar year 2016, and $62.54 at the end of 1Q 2016.

i) Return on Equity (ROE)

ROE is the portion of NI retained by UTMD to internally finance its growth, divided by the average accumulated stockholders' equity for the applicable time period. Annualized ROE (before stockholder dividends) in 1Q 2017 was 20% compared to 18% in 1Q 2016. The higher ROE in 1Q 2017 was due to the increase in NI. Targeting a high ROE of 20% remains a key financial objective for UTMD management. ROE can be increased by increasing NI, or by reducing stockholders' equity by paying cash dividends to stockholders or by repurchasing shares.

Liquidity and Capital Resources

j) Cash flows

Net cash provided by operating activities, including adjustments for depreciation and amortization and other non-cash expenses along with changes in working capital, totaled $4,307 in 1Q 2017 compared to $4,152 in 1Q 2016. The most significant differences in the two periods were the $319 increase in net income and a $279 benefit to cash from a larger increase in 1Q 2017 accrued expenses compared to 1Q 2016. The largest difference in use was a $221 smaller increase in accounts payable in 1Q 2017 compared to 1Q 2016.

Capital expenditures for property and equipment (PP&E) were $65 in 1Q 2017 compared to $48 in 1Q 2016. Depreciation of PP&E was $166 in 1Q 2017 compared to $149 in 1Q 2016.

UTMD did not make cash dividend payments during either 1Q 2017 or 1Q 2016, as the dividends which would normally be paid in January were paid at the end of December of the prior applicable year.

In 1Q 2017, UTMD received $53 and issued 1,860 shares of its stock upon the exercise of employee stock options. Option exercises in 1Q 2017 were at an average price of $28.75 per share. In comparison, in 1Q 2016 the Company received $148 from issuing 5,369 shares of stock on the exercise of employee stock options, net of 381 shares retired upon employees trading those shares in payment of the stock option exercise price. Option exercises in 1Q 2016 were at an average price of $29.70 per share.

Management believes that current cash balances, income from operations and effective management of working capital will provide the liquidity needed to finance internal growth plans. The Company may utilize cash not needed to support normal operations in one or a combination of the following: 1) in general, to continue to invest at an opportune time in ways that will enhance future profitability, for example, to fit-out the new UK facility specific to UTMD's needs; 2) to make additional investments in new technology and/or processes; and/or 3) to acquire a product line or company that will augment revenue and EPS growth and better utilize UTMD's existing infrastructure. If there are no better strategic uses for UTMD's cash, the Company will continue to return cash to stockholders in the form of dividends and share repurchases when the stock appears undervalued.

k) Assets and Liabilities

March 31, 2017 total consolidated assets increased $5,584 from December 31, 2016 to $82,168. The increase was due mainly to a $4,383 increase in cash and investments. Other significant changes in assets included a $966 increase in consolidated net trade receivables, a $222 increase in consolidated inventories and a $114 decrease in net intangible assets. UTMD's Ireland subsidiary EUR-denominated assets were translated into USD at an FX rate 1.4% higher (stronger EUR) than the FX rate at the end of 2016. UTMD's UK subsidiary GBP-denominated assets were translated into USD at an FX rate 1.6% higher (stronger GBP) than the FX rate at the end of 2016. UTMD's Australia subsidiary AUD-denominated assets were translated into USD at an FX rate 5.6% higher (stronger AUD) than the FX rate at the end of 2016. Consolidated net property, plant and equipment increased $49 at March 31, 2017 from the end of 2016 due to changing FX rates, $65 in new asset purchases and $166 in depreciation.

Working capital (current assets minus current liabilities) was $35,150 at March 31, 2017, compared to $31,845 at December 31, 2016. Current liabilities increased $2,344, including a $2,224 increase in accrued liabilities. The accrued liabilities increase was due to the 1Q 2017 quarterly dividend payment to stockholders accrued but not paid until after March 31, whereas the 4Q 2016 dividend was paid before the end of December 2016. In addition, the U.S. quarterly income tax payment schedule, which delays the 1Q 2017 estimated payment until 15 April 2017, while the 4Q 2016 payment was due 15 December 2016, helped increase accrued liabilities. UTMD management believes that its working capital remains sufficient to meet normal operating needs, new capital investments and projected cash dividend payments to stockholders.

March 31, 2017 intangible assets (goodwill plus other intangible assets) declined $114 from the end of 2016. The decrease was due to $494 1Q 2017 amortization of identifiable intangible Femcare assets, offset somewhat by the higher FX rate for GBP Femcare intangibles as of March 31, 2017 compared to year-end 2016. At March 31, 2017, net intangible assets including goodwill were 39% of total consolidated assets compared to 41% at year-end 2016, and 45% at March 31, 2016.

The deferred tax liability balance for Femcare identifiable intangible assets ($9,084 on the date of the acquisition), was $3,160 at March 31, 2017 compared to $3,209 at December 31, 2016 and $4,221 at March 31, 2016. Reduction of the deferred tax liability occurs as the book/tax difference of amortization is eliminated over the remaining useful life of the Femcare identifiable intangible assets. UTMD's total debt ratio (total liabilities/total assets) as of March 31, 2017 increased to 12% from 10% as of December 31, 2016 as a result of the timing difference in accrued liabilities described above. UTMD's total debt ratio as of March 31, 2016 was 14%.

l) Management's Outlook

As outlined in its December 31, 2016 SEC 10-K report, UTMD's plan for 2017 is to

1)	continue to exploit distribution and manufacturing synergies by further integrating capabilities and resources in its multinational operations;
2)	introduce additional products helpful to clinicians through internal new product development;
3)	continue achieving excellent overall financial operating performance;
4)	utilize positive cash generation to continue cash dividends to stockholders and make open market share repurchases if/when the UTMD share price seems undervalued; and
5)	be vigilant for accretive acquisition opportunities which may be increasingly brought about by difficult burdens on small, innovative companies.

Management believes it is on track after 1Q 2017 to accomplish its previously stated objectives for the full year of 2017.

m) Accounting Policy Changes

Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting, was adopted by the Company effective January 1, 2017, as required by the ASU. This update to ASC 718, Compensation - Stock Compensation was issued by the Financial Accounting Standards Board as part of their simplification initiative. This adoption had an immaterial impact on UTMD's retained earnings and other components of equity as of the date of adoption. In the statement of cash flows, the effect of the required change related to excess tax benefits, which was immaterial, was retrospectively applied. Stock compensation expense continues to reflect estimated forfeitures.

Forward-Looking Information. This report contains certain forward-looking statements and information relating to the Company that are based on the beliefs of management as well as assumptions made by management based on information currently available. When used in this document, the words "anticipate," "believe," "project," "estimate," "expect," "intend" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Such statements reflect the current view of the Company respecting future events and are subject to certain risks, uncertainties and assumptions, including the risks and uncertainties stated throughout the document. Although the Company has attempted to identify important factors that could cause the actual results to differ materially, there may be other factors that cause the forward statement not to come true as anticipated, believed, projected, expected, or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those described herein as anticipated, believed, projected, estimated, expected or intended. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results, and the Company assumes no obligation to update or disclose revisions to those estimates.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

UTMD has manufacturing and trading operations, including related assets, in the U.S. denominated in the U.S. Dollar (USD), in Ireland denominated in the Euro (EUR), in England denominated in the British Pound (GBP), in Australia denominated in the Australia Dollar (AUD), and, starting in 2017, in Canada denominated in the Canadian Dollar (CAD). The currencies are subject to exchange rate fluctuations that are beyond the control of UTMD. The exchange rates were .9348, .9474 and .8780 EUR per USD as of March 31, 2017, December 31, 2016 and March 31, 2016, respectively. Exchange rates were .7978, .8105 and .6954 GBP per USD as of March 31, 2017, December 31, 2016 and March 31, 2016, respectively. Exchange rates were 1.3093, 1.3829 and 1.3026 AUD per USD on March 31, 2017, December 31, 2016 and March 31, 2016, respectively. Exchange rates were 1.3320 CAD per USD on March 31, 2017. UTMD manages its foreign currency risk without separate hedging transactions by either invoicing customers in the local currency where costs of production were incurred, by converting currencies as transactions occur, and by optimizing global account structures through liquidity management accounts.

Item 4. Controls and Procedures

The Company's management, under the supervision and with the participation of the Chief Executive Officer and the Principal Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of March 31, 2017. Based on this evaluation, the Chief Executive Officer and Principal Financial Officer concluded that, as of March 31, 2017, the Company's disclosure controls and procedures were effective.

There were no changes in the Company's internal controls over financial reporting that occurred during the quarter ended March 31, 2017, that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company may be a party from time to time in litigation incidental to its business. Presently, there is no litigation.

Item 1A. Risk Factors

In addition to the other information set forth in this report, investors should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in UTMD's Annual Report on Form 10-K for the year ended December 31, 2016, which could materially affect its business, financial condition or future results. The risks described in the Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to UTMD or currently deemed to be immaterial also may materially adversely affect the Company's business, financial condition and/or operating results.

Legislative healthcare reform in the United States, as embodied in The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the "Acts") added a substantial excise tax (MDET) in 2013-2015 that increased administrative costs and has led to decreased revenues in the U.S.:

The voluminous Acts, administrative rules to enforce the Acts and promised efforts to reform the Acts, make the U.S. medical device marketplace unpredictable, particularly for the thousands of small medical device manufacturers including UTMD that do not have the overhead structure that the larger medical device companies can afford. Fortunately, the U.S. Congress has suspended the MDET for two years of 2016 and 2017. To the extent that the Acts will in the future continue to place additional burdens on small medical device companies in the form of the excise tax on medical device sales, additional oversight of marketing and sales activities and new reporting requirements, the result is likely to continue to be negative for UTMD's ability to effectively compete and support continued investments in new product development and marketing of specialty devices in the U.S.

Increasing regulatory burdens including premarketing approval delays may result in significant loss of revenue, unpredictable costs and loss of management focus on helping the Company proactively conform with requirements and thrive:

The Company's experience in 2001-2005, when the FDA improperly sought to shut it down, highlights the ongoing risk of being subject to a regulatory environment which can be arbitrary and capricious. The risks associated with such a circumstance relate not only to the substantial costs of litigation in millions of dollars, but also loss of business, the diversion of attention of key employees for an extended period of time, including new product development and routine quality control management activities, and a tremendous psychological and emotional toll on dedicated and diligent employees.

Since the FDA reserves to itself the interpretation of which vague industry standards comprise law at any point in time, it is impossible for any medical device manufacturer to ever be confident that it is operating within the Agency's version of the law. The unconstitutional result is that companies, including UTMD, are considered guilty prior to proving their innocence.

Premarketing submission administrative burdens and substantial increases in "user fees" increase product development costs and result in delays to revenues from new or improved devices. It recently took two and a half years to gain FDA approval of the use of a clearly safer single use Filshie Clip applicator, which had been in use for over seven years OUS, in lieu of a reused applicator approved in the U.S. since 1996, made of substantially equivalent materials for the same intended use applying the same implanted clip.

The growth of Group Purchasing Organizations (GPOs) adds non-productive costs, typically weakens the Company's marketing and sales efforts and may result in lower revenues:

GPOs, theoretically acting as bargaining agents for member hospitals, but actually collecting revenues from the companies that they are negotiating with, have made a concerted effort to turn medical devices that convey special patient safety advantages and better health outcomes, like UTMD's, into undifferentiated commodities. GPOs have been granted an antitrust exemption by the U.S. Congress. Otherwise, their business model based on "kickbacks" would be a violation of law. These bureaucratic entities do not recognize or understand the overall cost of care as it relates to safety and effectiveness of devices, and they create a substantial administrative burden that is primarily related to collection of their administrative fees.

The Company's business strategy may not be successful in the future:

As the level of complexity and uncertainty in the medical device industry increases, evidenced, for example, by the unpredictable regulatory environment, the Company's views of the future and product/ market strategy may not yield financial results consistent with the past.

As the healthcare industry becomes increasingly bureaucratic it puts smaller companies like UTMD at a competitive disadvantage:

An aging population is placing greater burdens on healthcare systems, particularly hospitals. The length of time and number of administrative steps required in adopting new products for use in hospitals has grown substantially in recent years. Smaller companies like UTMD typically do not have the administrative resources to deal with broad new administrative requirements, resulting in either loss of revenue or increased costs. As UTMD introduces new products it believes are safer and more effective, it may find itself excluded from certain clinical users because of the existence of long term supply agreements for preexisting products, particularly from competitors which offer hospitals a broader range of products and services. Restrictions used by hospital administrators to limit clinician involvement in device purchasing decisions makes communicating UTMD's clinical advantages much more difficult.

A product liability lawsuit could result in significant legal expenses and a large award against the Company:

UTMD's devices are frequently used in inherently risky situations to help physicians achieve a more positive outcome than what might otherwise be the case. In any lawsuit where an individual plaintiff suffers permanent physical injury, the possibility of a large award for damages exists whether or not a causal relationship exists.

The Company's reliance on third party distributors in some markets may result in less predictable revenues:

UTMD's distributors have varying expertise in marketing and selling specialty medical devices. They also sell other devices that may result in less focus on the Company's products. In some countries, notably China, Pakistan and India not subject to similarly rigorous standards, by copying, a distributor of UTMD's products may eventually become a competitor with a cheaper but lower quality version of UTMD's devices.

The loss of one or more key employees could negatively affect UTMD performance:

In a small company with limited resources, the distraction or loss of key personnel at any point in time may be disruptive to performance. The Company's benefits programs are key to recruiting and retaining talented employees. An increase in UTMD's employee healthcare plan costs, for example, may cause the Company to have to reduce coverages which in turn represents a risk to retaining key employees.

Fluctuations in foreign currencies relative to the USD can result in significant differences in period to period financial results:

Since a significant portion of UTMD's sales are invoiced in foreign currencies and consolidated financial results are reported in USD terms, a stronger USD can have negative revenue effects. Conversely, a weaker USD would increase foreign subsidiary operating costs in USD terms. For the portion of sales to foreign entities made in fixed USD terms, a stronger USD makes the devices more expensive and weakens demand. For the portion invoiced in a foreign currency, not only USD-denominated sales are reduced, but also gross profits may be reduced because finished distributed products and/or U.S. made raw materials and components are likely being purchased in fixed USD.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

UTMD did not purchase any of its own securities during 1Q 2017.

Item 6. Exhibits

Exhibit #	SEC Reference #	Title of Document

1	31	Certification of CEO pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

2	31	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

3	32	Certification of CEO pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

4	32	Certification of Principal Financial Officer pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

5	101 ins	XBRL Instance

6	101.sch	XBRL Schema

7	101.cal	XBRL Calculation

8	101.def	XBRL Definition

9	101.lab	XBRL Label

10	101.pre	XBRL Presentation

SIGNATURES

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

	UTAH MEDICAL PRODUCTS, INC.
	REGISTRANT

Date: 5/5/17	By: /s/ Kevin L. Cornwell
	Kevin L. Cornwell
	CEO

Date: 5/5/17	By: /s/ Paul O. Richins
	Paul O. Richins
	Principal Financial Office

Document and Entity Information - USD ($)	3 Months Ended
Mar. 31, 2017	May 04, 2017	Jun. 30, 2016
Document and Entity Information:
Entity Registrant Name	UTAH MEDICAL PRODUCTS INC
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Entity Central Index Key	0000706698
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		3,716,134
Entity Public Float			$ 211,926,960
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	utmd

Document and Entity Information - USD ($)

3 Months Ended

Mar. 31, 2017

May 04, 2017

Jun. 30, 2016

Document and Entity Information:

Entity Registrant Name

UTAH MEDICAL PRODUCTS INC

Document Type

10-Q

Document Period End Date

Mar. 31, 2017

Amendment Flag

false

Entity Central Index Key

0000706698

Current Fiscal Year End Date

--12-31

Entity Common Stock, Shares Outstanding

3,716,134

Entity Public Float

$ 211,926,960

Entity Filer Category

Accelerated Filer

Entity Current Reporting Status

Yes

Entity Voluntary Filers

Entity Well-known Seasoned Issuer

Document Fiscal Year Focus

2017

Document Fiscal Period Focus

Trading Symbol

utmd

UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED BALANCE SHEET - USD ($)
$ in Thousands

Mar. 31, 2017

Dec. 31, 2016

Current assets:

Cash

$ 30,679

$ 26,296

Investments, available-for-sale

Accounts & other receivables, net

4,178

3,211

Inventories

4,764

4,542

Other current assets

831

754

Total current assets

40,516

34,867

Property and equipment, net

10,015

9,966

Goodwill

13,587

13,487

Other intangible assets

32,420

31,947

Other intangible assets - accumulated amortization

(14,370)

(13,683)

Other intangible assets, net

18,050

18,264

TOTAL ASSETS

82,168

76,584

Current liabilities:

Accounts payable

1,025

906

Accrued expenses

4,341

2,116

Total current liabilities

5,366

3,022

Deferred tax liability - intangible assets

3,160

3,209

Deferred income taxes

1,103

1,109

TOTAL LIABILITIES

9,629

7,340

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 - March 31, 2017, 3,715 shares and December 31, 2016, 3,713 shares

Accumulated other comprehensive income (loss)

(11,588)

(12,243)

Additional paid-in capital

467

378

Retained earnings

83,623

81,072

Total stockholders' equity

72,539

69,244

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 82,168

$ 76,584

UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares
shares in Thousands

Mar. 31, 2017

Dec. 31, 2016

Statement of Financial Position

Preferred Stock, Par Value Per Share

$ 0.01

Preferred Stock, Shares Authorized

5,000

Preferred Stock, Shares Issued

Preferred Stock, Shares Outstanding

Common Stock, Par Value Per Share

$ 0.01

Common Stock, Shares Authorized

50,000

Common Stock, Shares Issued

3,715

3,713

Common Stock, Shares Outstanding

3,715

3,713

UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME - USD ($)
shares in Thousands, $ in Thousands

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Income Statement

Sales, net

$ 10,259

$ 10,301

Cost of goods sold

3,724

4,078

Gross profit

6,535

6,223

Operating expense:

Selling, general and administrative

1,692

1,801

Research and development

118

110

Total operating expense

1,810

1,911

Operating income

4,725

4,312

Other income (expense)

101

Income before provision for income taxes

4,751

4,413

Provision for income taxes

1,215

1,196

Net income

$ 3,536

$ 3,217

Earnings per common share (basic)

$ 0.95

$ 0.86

Earnings per common share (diluted)

$ 0.95

$ 0.85

Shares outstanding (basic)

3,714

3,753

Shares outstanding (diluted)

3,728

3,770

Other comprehensive income (loss):

Foreign currency translation net of taxes of $0 in all periods

$ 655

$ (410)

Unrealized gain (loss) on investments net of taxes of $0 and ($4)

(7)

Total comprehensive income

$ 4,191

$ 2,800

UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (Parenthetical) - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Income Statement

Foreign currency translation tax adjustment

$ 0

Unrealized gain (loss) on investments tax adjustment

$ 0

$ (4)

UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOW - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$ 3,536

$ 3,217

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

166

149

Amortization

508

592

Provision for (recovery of) losses on accounts receivable

(1)

(13)

Deferred income taxes

(118)

(117)

Stock-based compensation expense

Tax benefit attributable to exercise of stock options

Changes in operating assets and liabilities:

Accounts receivable

(934)

(782)

Accrued interest and other receivables

(5)

(16)

Inventories

(154)

(133)

Prepaid expenses and other current assets

(56)

(45)

Accounts payable

117

337

Accrued expenses

1,202

923

Total adjustments

771

935

Net cash provided by operating activities

4,307

4,152

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures for property and equipment

(65)

(48)

Capital expenditures for intangible assets

(4)

Net cash provided by (used in) investing activities

(65)

(52)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock - options

148

Payment of dividends

Net cash provided by (used in) financing activities

148

Effect of exchange rate changes on cash

(10)

Net increase (decrease) in cash and cash equivalents

4,383

4,238

Cash at beginning of period

26,296

23,278

Cash at end of period

30,679

27,516

Cash paid during the period for income taxes

442

345

Cash paid during the period for interest

$ 0

Basis of Presentation

3 Months Ended

Mar. 31, 2017

Notes

Basis of Presentation

(1) The unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States. These statements should be read in conjunction with the financial statements and notes included in the Utah Medical Products, Inc. ("UTMD" or "the Company") annual report on Form 10 K for the year ended December 31, 2016. In the opinion of management, the accompanying financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. Currency amounts are in thousands except per-share amounts and where noted.

New Accounting Pronouncements and Changes in Accounting Principles

3 Months Ended

Mar. 31, 2017

Notes

New Accounting Pronouncements and Changes in Accounting Principles

(2) Recent Accounting Standards.

In March 2016, new accounting guidance was issued to simplify several aspects of accounting for employee share-based payment (including stock option) transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under the guidance, entities recognize all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. UTMD adopted this standard on January 1, 2017, which had an insignificant impact on its consolidated financial statements. UTMD made a determination to continue to account for forfeitures by estimating the number of awards that are expected to vest. Because UTMD primarily issues incentive stock options, excess tax benefits and tax deficiencies have historically been minimal.

Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

Notes

Stock-Based Compensation

(4) Stock-Based Compensation. At March 31, 2017, the Company has stock-based employee compensation plans which authorize the grant of stock options to eligible employees and directors. The Company accounts for stock compensation under FASB Accounting Standards Codification (“ASC”) 718, Compensation - Stock Compensation. This statement requires the Company to recognize compensation cost based on the grant date fair value of options granted to employees and directors. In the quarters ended March 31, 2017 and 2016, the Company recognized $36 and $21, respectively, in stock-based compensation cost.

Warranty Reserve

3 Months Ended

Mar. 31, 2017

Notes

Warranty Reserve

(5) Warranty Reserve. The Company’s published warranty is: “UTMD warrants its products to conform in all material respects to all published product specifications in effect on the date of shipment, and to be free from defects in material and workmanship for a period of thirty (30) days for supplies, or twenty-four (24) months for equipment, from date of shipment. During the warranty period UTMD shall, at its option, replace any products shown to UTMD's reasonable satisfaction to be defective at no expense to the Purchaser or refund the purchase price.”

Subsequent Events

3 Months Ended

Mar. 31, 2017

Notes

Subsequent Events

New Accounting Pronouncements and Changes in Accounting Principles: New Accounting Pronouncements, Policy (Policies)

3 Months Ended

Mar. 31, 2017

Policies

New Accounting Pronouncements, Policy

Inventories: Schedule of Inventory, Current (Details) - USD ($)
$ in Thousands

Mar. 31, 2017

Dec. 31, 2016

Details

Finished goods

$ 1,148

$ 1,327

Work-in-process

1,172

942

Raw materials

2,444

2,273

Total

$ 4,764

$ 4,542

Stock-Based Compensation (Details) - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Details

Allocated Share-based Compensation Expense

$ 36

$ 21

Fair Value Measurements: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details)
$ in Thousands

Mar. 31, 2017

USD ($)

Fair Value, Inputs, Level 1

Equities

$ 64

Fair Value, Inputs, Level 2

Equities

Fair Value, Inputs, Level 3

Equities

Fair Value, Measurements, Recurring

Equities

$ 64

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

	(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

	(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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

	(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

	(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.