For quarter ended: March 31, 2019
|
Commission File No. 001-12575
|
UTAH
|
87‑0342734
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Registrant's telephone number:
|
(801) 566‑1200
|
Large accelerated filer ☐
|
Accelerated filer ☒
|
Non-accelerated filer ☐
|
Smaller reporting company ☐
|
PART I - FINANCIAL INFORMATION
|
PAGE
|
||
Item 1.
|
Financial Statements
|
||
Consolidated Condensed Balance Sheets as of March 31, 2019 and December 31, 2018
|
1
|
||
Consolidated Condensed Statements of Income for the three months ended March 31, 2019 and March 31, 2018
|
2
|
||
Consolidated Condensed Statements of Cash Flows for three months ended March 31, 2019 and March
31, 2018
|
3 | ||
Consolidated Statement of Stockholders’ Equity three months ended March 31, 2019 and March 31,
2018
|
4 | ||
Notes to Consolidated Condensed Financial Statements
|
5 | ||
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
8 | |
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
16 | |
Item 4.
|
Controls and Procedures
|
16 | |
PART II – OTHER INFORMATION
|
|||
Item 1.
|
Legal Proceedings
|
17 | |
Item 1A.
|
Risk Factors
|
17 | |
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
18 | |
Item 6.
|
Exhibits
|
19 | |
SIGNATURES
|
19 |
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
||||||||
FOR THE THREE MONTHS
ENDED MARCH 31, 2019 AND MARCH 31, 2018
|
||||||||
(in thousands, except per share amounts)
|
||||||||
(unaudited)
|
||||||||
THREE MONTHS ENDED
|
||||||||
MARCH 31,
|
||||||||
2019
|
2018
|
|||||||
Sales, net
|
$
|
10,732
|
$
|
10,887
|
||||
Cost of goods sold
|
3,959
|
3,965
|
||||||
Gross profit
|
6,773
|
6,922
|
||||||
Operating expense
|
||||||||
Selling, general and administrative
|
2,557
|
1,838
|
||||||
Research & development
|
115
|
113
|
||||||
Total operating expenses
|
2,672
|
1,951
|
||||||
Operating income
|
4,101
|
4,971
|
||||||
Other income (expense)
|
36
|
37
|
||||||
Income before provision for income taxes
|
4,137
|
5,008
|
||||||
Provision for income taxes
|
998
|
916
|
||||||
Net income
|
$
|
3,139
|
$
|
4,092
|
||||
Earnings per common share (basic)
|
$
|
0.84
|
$
|
1.10
|
||||
Earnings per common share (diluted)
|
$
|
0.84
|
$
|
1.09
|
||||
Shares outstanding (basic)
|
3,722
|
3,725
|
||||||
Shares outstanding (diluted)
|
3,738
|
3,748
|
||||||
Other comprehensive income (loss):
|
||||||||
Foreign currency translation net of taxes of $0 and $0
|
$
|
948
|
$
|
1,301
|
||||
Total comprehensive income
|
$
|
4,087
|
$
|
5,393
|
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
|
||||||||
FOR THE THREE MONTHS
ENDED MARCH 31, 2019 AND MARCH 31, 2018
|
||||||||
(in thousands - unaudited)
|
||||||||
MARCH 31,
|
||||||||
2019
|
2018
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
3,139
|
$
|
4,092
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation
|
179
|
200
|
||||||
Amortization
|
1,271
|
570
|
||||||
Provision for (recovery of) losses on accounts receivable
|
-
|
1
|
||||||
Amortization of Right of Use Assets
|
10
|
-
|
||||||
Deferred income taxes
|
(142
|
)
|
(76
|
)
|
||||
Stock-based compensation expense
|
28
|
30
|
||||||
Tax benefit attributable to exercise of stock options
|
13
|
16
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable and other receivables
|
(940
|
)
|
(560
|
)
|
||||
Inventories
|
(2,255
|
)
|
(303
|
)
|
||||
Prepaid expenses and other current assets
|
(23
|
)
|
(53
|
)
|
||||
Accounts payable
|
1,868
|
142
|
||||||
Accrued expenses
|
212
|
(293
|
)
|
|||||
Total adjustments
|
221
|
(326
|
)
|
|||||
Net cash provided by operating activities
|
3,360
|
3,766
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital expenditures for:
|
||||||||
Property and equipment
|
(12
|
)
|
(173
|
)
|
||||
Intangible assets
|
(21,000
|
)
|
-
|
|||||
Net cash provided by (used in) investing activities
|
(21,012
|
)
|
(173
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from issuance of common stock - options
|
97
|
147
|
||||||
Payment of dividends
|
(1,027
|
)
|
(1,005
|
)
|
||||
Net cash provided by (used in) financing activities
|
(930
|
)
|
(858
|
)
|
||||
Effect of exchange rate changes on cash
|
135
|
243
|
||||||
Net increase (decrease) in cash and cash equivalents
|
(18,447
|
)
|
2,978
|
|||||
Cash at beginning of period
|
51,112
|
39,875
|
||||||
Cash at end of period
|
$
|
32,665
|
$
|
42,853
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash paid during the period for income taxes
|
$
|
406
|
$
|
788
|
||||
Cash paid during the period for interest
|
-
|
-
|
Accumulated
|
||||||||||||||||||||||||
Additional
|
Other
|
Total
|
||||||||||||||||||||||
Common Stock
|
Paid-in
|
Comprehensive
|
Retained
|
Stockholders'
|
||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Income
|
Earnings
|
Equity
|
|||||||||||||||||||
Balance at December 31, 2018
|
3,720
|
$
|
37
|
$
|
121
|
$
|
(11,290
|
)
|
$
|
100,124
|
$
|
88,992
|
||||||||||||
Shares issued upon exercise of employee stock options for cash
|
3
|
0
|
97
|
-
|
-
|
97
|
||||||||||||||||||
Stock option compensation expense
|
-
|
-
|
28
|
-
|
-
|
28
|
||||||||||||||||||
Foreign currency translation adjustment
|
-
|
-
|
-
|
948
|
-
|
948
|
||||||||||||||||||
Common stock dividends
|
-
|
-
|
-
|
-
|
(1,028
|
)
|
(1,028
|
)
|
||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
3,139
|
3,139
|
||||||||||||||||||
Balance at March 31, 2019
|
3,723
|
$
|
37
|
$
|
246
|
$
|
(10,343
|
)
|
$
|
102,235
|
$
|
92,176
|
||||||||||||
Balance at December 31, 2017
|
3,721
|
$
|
37
|
$
|
809
|
$
|
(8,341
|
)
|
$
|
85,618
|
$
|
78,123
|
||||||||||||
Shares issued upon exercise of employee stock options for cash
|
9
|
0
|
372
|
-
|
-
|
372
|
||||||||||||||||||
Shares received and retired upon exercise of stock options
|
(2
|
)
|
(0
|
)
|
(225
|
)
|
-
|
-
|
(225
|
)
|
||||||||||||||
Stock option compensation expense
|
-
|
-
|
30
|
-
|
-
|
30
|
||||||||||||||||||
Foreign currency translation adjustment
|
-
|
-
|
-
|
1,301
|
-
|
1,301
|
||||||||||||||||||
Common stock dividends
|
-
|
-
|
-
|
-
|
(1,006
|
)
|
(1,006
|
)
|
||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
4,092
|
4,092
|
||||||||||||||||||
Balance at March 31, 2018
|
3,728
|
$
|
37
|
$
|
986
|
$
|
(7,040
|
)
|
$
|
88,704
|
$
|
82,687
|
March 31,
|
December 31,
|
|||||||
2019
|
2018
|
|||||||
Finished goods
|
$
|
3,686
|
$
|
1,615
|
||||
Work‑in‑process
|
1,129
|
1,103
|
||||||
Raw materials
|
2,833
|
2,694
|
||||||
Total
|
$
|
7,648
|
$
|
5,412
|
Domestic
|
Outside US
|
Total
|
||||||||||
Obstetrics
|
$
|
1,027
|
$
|
312
|
$
|
1,339
|
||||||
Gynecology/Electrosurgery/Urology
|
2,078
|
3,504
|
5,582
|
|||||||||
Neonatal
|
1,170
|
340
|
1,510
|
|||||||||
Blood Pressure Monitoring and Accessories
|
1,519
|
782
|
2,301
|
|||||||||
Total
|
$
|
5,794
|
$
|
4,938
|
$
|
10,732
|
The components of lease cost were as follows:
|
Three Months
Ended
March 31,
2019
|
|||
Operating Lease Cost (in thousands)
|
$
|
15
|
||
Right of Use Assets obtained in exchange for new operating lease obligations
|
$
|
42
|
Other Information
|
Three Months
Ended
March 31,
2019
|
|||
Weighted Average Remaining Lease Term - Operating Leases
|
11.5 years
|
|||
Weighted Average Discount Rate – Operating Leases
|
5.4
|
%
|
Operating lease liabilities/ payments (in thousands)
|
||||
Operating lease payments, 2019
|
$
|
60
|
||
Operating lease payments, 2020
|
$
|
60
|
||
Operating lease payments, 2021
|
$
|
60
|
||
Operating lease payments, 2022
|
$
|
45
|
||
Operating lease payments, 2023
|
$
|
45
|
||
Thereafter
|
$
|
344
|
Reconciliation of operating lease liabilities/ payments to operating lease liabilities
|
(in thousands)
|
|||
Total operating lease liabilities/ payments
|
$
|
614
|
||
Operating lease liabilities
|
$
|
442
|
||
Present value adjustment
|
$
|
172
|
Maturities of lease liabilities were as follows:
|
(in thousands)
|
|||
Year ending December 31,
|
||||
2019
|
$
|
37
|
||
2020
|
$
|
38
|
||
2021
|
$
|
40
|
||
2022
|
$
|
27
|
||
2023
|
$
|
29
|
||
Thereafter
|
$
|
280
|
1Q 2019
|
1Q 2018
|
change
|
||||||||||
Net Sales
|
$
|
10,732
|
$
|
10,887
|
( 1.4
|
%)
|
||||||
Gross Profit
|
6,773
|
6,922
|
( 2.2
|
%)
|
||||||||
Operating Income
|
4,102
|
4,971
|
(17.5
|
%)
|
||||||||
Income Before Tax
|
4,137
|
5,008
|
(17.4
|
%)
|
||||||||
Net Income
|
3,139
|
4,092
|
(23.3
|
%)
|
||||||||
Earnings per Share
|
$
|
0.840
|
$
|
1.092
|
(23.1
|
%)
|
1Q 2019
(JAN – MAR)
|
1Q 2018
(JAN – MAR)
|
|||||||
Gross Profit Margin (gross profits/ sales):
|
63.1
|
%
|
63.6
|
%
|
||||
Operating Income Margin (operating income/ sales):
|
38.2
|
%
|
45.7
|
%
|
||||
EBT Margin (profits before income taxes/ sales):
|
38.5
|
%
|
46.0
|
%
|
||||
Net Income Margin (profit after taxes/ sales):
|
29.2
|
%
|
37.6
|
%
|
1Q 2019
|
1Q 2018
|
Change
|
||||||||||
GBP
|
1.304
|
1.391
|
(6.3
|
%)
|
||||||||
EUR
|
1.134
|
1.226
|
(7.5
|
%)
|
||||||||
AUD
|
0.713
|
0.786
|
(9.4
|
%)
|
||||||||
CAD
|
0.753
|
0.791
|
(4.8
|
%)
|
3-31-19
|
3-31-18
|
Change
|
||||||||||
GBP
|
1.303
|
1.402
|
(7.1
|
%)
|
||||||||
EUR
|
1.229
|
1.232
|
(0.2
|
%)
|
||||||||
AUD
|
0.710
|
0.769
|
(7.6
|
%)
|
||||||||
CAD
|
0.749
|
0.775
|
(3.5
|
%)
|
1Q 2019
|
%
|
1Q 2018
|
%
|
|||||||||||||
Obstetrics
|
$
|
1,339
|
12
|
$
|
1,086
|
10
|
||||||||||
Gynecology/ Electrosurgery/ Urology
|
5,582
|
52
|
6,201
|
57
|
||||||||||||
Neonatal
|
1,510
|
14
|
1,710
|
16
|
||||||||||||
Blood Pressure Monitoring and Accessories*
|
2,301
|
22
|
1,890
|
17
|
||||||||||||
Total:
|
$
|
10,732
|
100
|
$
|
10,887
|
100
|
1Q 2019
|
%
|
1Q 2018
|
%
|
|||||||||||||
Obstetrics
|
$
|
312
|
6
|
$
|
209
|
4
|
||||||||||
Gynecology/ Electrosurgery/ Urology
|
3,504
|
71
|
3,908
|
69
|
||||||||||||
Neonatal
|
340
|
7
|
745
|
13
|
||||||||||||
Blood Pressure Monitoring and Accessories*
|
782
|
16
|
771
|
14
|
||||||||||||
Total:
|
$
|
4,938
|
100
|
$
|
5,633
|
100
|
1Q 2019
|
1Q 2018
|
|||||||
S&M Expense
|
$
|
416
|
$
|
409
|
||||
R&D Expense
|
115
|
113
|
||||||
G&A Expense
|
2,140
|
1,429
|
||||||
Total Operating Expenses:
|
$
|
2,671
|
$
|
1,952
|
1)
|
An ongoing GILTI tax on foreign earnings was included by Congress in the December 2017 TCJA, which
purportedly levied a one-time repatriation tax on cumulative foreign earnings that would be followed by no more income taxes on foreign subsidiary earnings. Ironically, because the state of Utah does not allow foreign tax credits, the Utah
State GILTI tax is so large that its deduction from federal taxable income completely negates what GILTI tax the U.S. Treasury receives, i.e. the entire benefit of the GILTI tax enactment by Congress accrues to benefit the State of Utah,
not the Federal government. Because all of the provisions of the TCJA were not understood at the time, there was no GILTI tax accrual by UTMD in 1Q 2018. The GILTI tax accrual in 1Q 2019 was $45.
|
2)
|
In 1Q 2018, lower valued USD cash balances in the UK and Ireland, when expressed in their native
currencies, caused a tax deduction in those sovereignties which did not recur in 1Q 2019 because of the stronger USD. The tax provision combined difference due to USD currency balance translation was about $128.
|
3)
|
The remaining $68 tax provision difference resulted from a shift of U.S. Filshie-related EBT from the UK
to the U.S., taxed at a 6.95% higher tax rate. UK Filshie sales to the U.S. were $691 lower in 1Q 2019 compared to 1Q 2018 because of the CSI inventory, and Filshie sales by UTMD in the U.S. were $925 higher in 1Q 2019 compared to (none in)
1Q 2018.
|
1)
|
exploit distribution and manufacturing synergies by further integrating capabilities and resources in its
multinational operations;
|
2)
|
focus on effectively direct marketing of the benefits of the FILSHIE Clip System in the U.S.;
|
3)
|
introduce additional products helpful to clinicians through internal new product development;
|
4)
|
continue to achieve excellent overall financial operating performance;
|
5)
|
utilize positive cash generation to continue providing cash dividends to stockholders and make open market share
repurchases if/when the UTMD share price seems undervalued; and
|
6)
|
be vigilant for accretive acquisition opportunities which may be brought about by difficult burdens on small,
innovative companies.
|
Exhibit #
|
SEC Reference #
|
Title of Document
|
1
|
31
|
|
2
|
31
|
|
3
|
32
|
|
4
|
32
|
|
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
|
UTAH MEDICAL PRODUCTS, INC.
|
|
REGISTRANT
|
|
Date: 5/8/19
|
By: /s/ Kevin L. Cornwell
|
Kevin L. Cornwell
|
|
CEO
|
|
Date: 5/8/19
|
By: /s/ Brian L. Koopman
|
Brian L. Koopman
|
|
Principal Financial Officer
|
(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.
|
(1) |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and result of
operations of the Company.
|
(1) |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and result of
operations of the Company.
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 08, 2019 |
|
Details | ||
Registrant Name | UTAH MEDICAL PRODUCTS INC | |
Registrant CIK | 0000706698 | |
SEC Form | 10-Q | |
Period End date | Mar. 31, 2019 | |
Fiscal Year End | --12-31 | |
Trading Symbol | utmd | |
Tax Identification Number (TIN) | 870342734 | |
Number of common stock shares outstanding | 3,722,706 | |
Filer Category | Accelerated Filer | |
Current with reporting | Yes | |
Small Business | false | |
Emerging Growth Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Incorporation, State Country Name | UTAH |
UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED BALANCE SHEET - Parenthetical - $ / shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Details | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 5,000 | 5,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 50,000 | 50,000 |
Common Stock, Shares, Issued | 3,723 | 3,720 |
Common Stock, Shares, Outstanding | 3,723 | 3,720 |
UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED STATEMENT OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Details | ||
Sales, net | $ 10,732 | $ 10,887 |
Cost of goods sold | 3,959 | 3,965 |
Gross profit | 6,773 | 6,922 |
Operating expense | ||
Selling, general and administrative | 2,557 | 1,838 |
Research & development | 115 | 113 |
Total operating expenses | 2,672 | 1,951 |
Operating income | 4,101 | 4,971 |
Other income (expense) | 36 | 37 |
Income before provision for income taxes | 4,137 | 5,008 |
Provision for income taxes | 998 | 916 |
Net income | $ 3,139 | $ 4,092 |
Earnings per common share (basic) | $ 0.84 | $ 1.10 |
Earnings per common share (diluted) | $ 0.84 | $ 1.09 |
Shares outstanding - basic | 3,722 | 3,725 |
Shares outstanding - diluted | 3,738 | 3,748 |
Other comprehensive income (loss): | ||
Foreign currency translation net of taxes of $0 in all periods | $ 948 | $ 1,301 |
Total comprehensive income | $ 4,087 | $ 5,393 |
UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED STATEMENT OF INCOME - Parenthetical - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Details | ||
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax | $ 0 | $ 0 |
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
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, 2018. 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, 2019 | |
Notes | |
New Accounting Pronouncements and Changes in Accounting Principles | (2) Recent Accounting Standards.
In May 2014, new accounting guidance (ASU 2014-09) 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. UTMD adopted this new standard on January 1, 2018, using a modified retrospective approach. In accordance with ASU 2014-09, UTMDs revenue recognition is based on standard terms & conditions of sale for like customers in addition to contracts and the performance obligations identified in them. With very insignificant and limited exceptions, the Companys performance obligation is met when it ships a physical product to a customer. The basis on which UTMD recognizes revenue was updated on January 1, 2018, but it did not result in a change to the process and timing of revenue recognition, because the previous revenue recognition method complies with ASU 2014-09. Therefore, the adoption of ASU 2014-09 did not have an impact on UTMDs financial statements. In accordance with this adoption disaggregated revenue is presented in Note 7.
In February 2016, new accounting guidance (ASU 2016-02, Leases (Topic 842)) 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. The new guidance became effective for UTMD on January 1, 2019. UTMD will apply the requirements using the modified retrospective method and so will not restate comparative financial statements. Implementation of the standard resulted in addition of right of use assets and lease liabilities of $452 to the consolidated balance sheet and will require additional disclosures but will have no effect on the income statement. UTMDs only leases are for the parking lot at the Midvale facility and an automobile in Ireland.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments Overall (Topic 825-10), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Subsequently, in February 2018, the FASB issued ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments - Overall (Topic 825-10), which clarifies certain aspects of ASU 2016-01 over certain aspects of recognition, measurement, presentation and disclosure of financial instruments. UTMD adopted ASU 2016-01 and 2018-03 effective January 1, 2018, and this guidance did not have a material impact on the UTMDs financial statements.
The Company has determined that other recently issued accounting standards will either have no material impact on its consolidated financial position, results of operations or cash flows, or will not apply to its operations. |
Inventories |
3 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||
Inventories | (3) Inventories at March 31, 2019 and December 31, 2018 consisted of the following:
|
Stock-Based Compensation |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Notes | |
Stock-Based Compensation | (4) Stock-Based Compensation. At March 31, 2019, 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, 2019 and 2018, the Company recognized $28 and $30, respectively, in stock based compensation cost. |
Warranty Reserve |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Notes | |
Warranty Reserve | (5) Warranty Reserve. The Companys 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, 2018, or March 31, 2019. |
Revenue Recognition |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | (6) Global revenues (USD) by product category:
|
Leases |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | (7) Leases
UTMD has operating leases for a portion of its parking lot at its Midvale facility and an automobile at its Ireland facility. The remaining lease term on the parking lot is 12 years and on the automobile it is 3 years. There are no options to extend or terminate the leases. UTMD has no other leases yet to commence. As neither lease contains implicit rates, UTMDs incremental borrowing rate, based on information available at adoption date, was used to determine the present value of the leases.
Maturities of lease liabilities were as follows: (in thousands)
|
CSI Distribution Agreement Purchase Disclosure |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Notes | |
CSI Distribution Agreement Purchase Disclosure | (8) Distribution Agreement Purchase. UTMD completed the purchase of distribution rights for the FILSHIE Clip System from CooperSurgical, Inc. (CSI) on February 1, 2019, after which CSI will no longer sell the FILSHIE Clip System and UTMD will distribute the FILSHIE Clip System directly to clinical facilities in the U.S. The $21,000 purchase price represents an identifiable intangible asset which will be straight-line amortized and recognized as part of G&A expenses over the 4.75 year remaining life of the prior CSI distribution agreement with Femcare. As part of the agreement, UTMD also purchased the remaining CSI inventory for approximately $2,000. |
Subsequent Events |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Notes | |
Subsequent Events | (9) 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. |
New Accounting Pronouncements and Changes in Accounting Principles: New Accounting Pronouncements, Policy (Policies) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Policies | |
New Accounting Pronouncements, Policy | In May 2014, new accounting guidance (ASU 2014-09) 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. UTMD adopted this new standard on January 1, 2018, using a modified retrospective approach. In accordance with ASU 2014-09, UTMDs revenue recognition is based on standard terms & conditions of sale for like customers in addition to contracts and the performance obligations identified in them. With very insignificant and limited exceptions, the Companys performance obligation is met when it ships a physical product to a customer. The basis on which UTMD recognizes revenue was updated on January 1, 2018, but it did not result in a change to the process and timing of revenue recognition, because the previous revenue recognition method complies with ASU 2014-09. Therefore, the adoption of ASU 2014-09 did not have an impact on UTMDs financial statements. In accordance with this adoption disaggregated revenue is presented in Note 7.
In February 2016, new accounting guidance (ASU 2016-02, Leases (Topic 842)) 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. The new guidance became effective for UTMD on January 1, 2019. UTMD will apply the requirements using the modified retrospective method and so will not restate comparative financial statements. Implementation of the standard resulted in addition of right of use assets and lease liabilities of $452 to the consolidated balance sheet and will require additional disclosures but will have no effect on the income statement. UTMDs only leases are for the parking lot at the Midvale facility and an automobile in Ireland.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments Overall (Topic 825-10), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Subsequently, in February 2018, the FASB issued ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments - Overall (Topic 825-10), which clarifies certain aspects of ASU 2016-01 over certain aspects of recognition, measurement, presentation and disclosure of financial instruments. UTMD adopted ASU 2016-01 and 2018-03 effective January 1, 2018, and this guidance did not have a material impact on the UTMDs financial statements.
The Company has determined that other recently issued accounting standards will either have no material impact on its consolidated financial position, results of operations or cash flows, or will not apply to its operations. |
Inventories: Schedule of Inventory, Current (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||
Schedule of Inventory, Current |
|
Revenue Recognition: Schedule Of Revenues By Product Category (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Revenues By Product Category |
|
Leases: Lease, Cost (Tables) |
3 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||
Tables/Schedules | |||||||||||||||
Lease, Cost |
|
Leases: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) |
3 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||
Tables/Schedules | |||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases |
|
Leases: Reconciliation of operating lease liabilities (Tables) |
3 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||
Tables/Schedules | |||||||||
Reconciliation of operating lease liabilities |
|
Leases: Lessee, Operating Lease, Liability, Maturity (Tables) |
3 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||
Tables/Schedules | |||||||||||||||||
Lessee, Operating Lease, Liability, Maturity |
|
New Accounting Pronouncements and Changes in Accounting Principles: New Accounting Pronouncements, Policy (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Operating Lease - Right of Use Assets, net | $ 442 | $ 0 |
Operating Lease, Liability | $ 442 | |
Accounting Standards Update 2016-02 | ||
Operating Lease - Right of Use Assets, net | 452 | |
Operating Lease, Liability | $ 452 |
Inventories: Schedule of Inventory, Current (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Details | ||
Finished goods | $ 3,686 | $ 1,615 |
Work-in-process | 1,129 | 1,103 |
Raw materials | 2,833 | 2,694 |
Total | $ 7,648 | $ 5,412 |
Stock-Based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Details | ||
Allocated Share-based Compensation Expense | $ 28 | $ 30 |
Warranty Reserve (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Details | ||
Standard and Extended Product Warranty Accrual | $ 0 | $ 0 |
Revenue Recognition: Schedule Of Revenues By Product Category (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Sales, net | $ 10,732 | $ 10,887 |
Obstetrics | ||
Sales, net | 1,339 | |
Gynecology/Electrosurgery/Urology | ||
Sales, net | 5,582 | |
Neonatal | ||
Sales, net | 1,510 | |
Blood Pressure Monitoring and Accessories | ||
Sales, net | 2,301 | |
DomesticUsMember | ||
Sales, net | 5,794 | |
DomesticUsMember | Obstetrics | ||
Sales, net | 1,027 | |
DomesticUsMember | Gynecology/Electrosurgery/Urology | ||
Sales, net | 2,078 | |
DomesticUsMember | Neonatal | ||
Sales, net | 1,170 | |
DomesticUsMember | Blood Pressure Monitoring and Accessories | ||
Sales, net | 1,519 | |
OutsideUsMember | ||
Sales, net | 4,938 | |
OutsideUsMember | Obstetrics | ||
Sales, net | 312 | |
OutsideUsMember | Gynecology/Electrosurgery/Urology | ||
Sales, net | 3,504 | |
OutsideUsMember | Neonatal | ||
Sales, net | 340 | |
OutsideUsMember | Blood Pressure Monitoring and Accessories | ||
Sales, net | $ 782 |
Leases (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Details | |
Lessee Operating Lease for Parking Lot Term of Contract | 12 years |
Lessee Operating Lease for Automobile Term of Contract | 3 years |
Leases: Lease, Cost (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Details | |
Operating Lease, Cost | $ 15 |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 42 |
Operating Lease, Weighted Average Remaining Lease Term | 11 years 6 months |
Operating Lease, Weighted Average Discount Rate, Percent | 5.40% |
Leases: Schedule of Future Minimum Rental Payments for Operating Leases (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Details | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 60 |
Operating Leases, Future Minimum Payments, Due in Two Years | 60 |
Operating Leases, Future Minimum Payments, Due in Three Years | 60 |
Operating Leases, Future Minimum Payments, Due in Four Years | 45 |
Operating Leases, Future Minimum Payments, Due in Five Years | 45 |
Operating Leases, Future Minimum Payments, Due Thereafter | $ 344 |
Leases: Reconciliation of operating lease liabilities (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Details | |
Lessee, Operating Lease, Liability, Payments, Due | $ 614 |
Operating Lease, Liability | 442 |
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | $ 172 |
Leases: Lessee, Operating Lease, Liability, Maturity (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Details | |
Lessee, Operating Lease, Liability, Payments, Due Next Twelve Months | $ 37 |
Lessee, Operating Lease, Liability, Payments, Due Year Two | 38 |
Lessee, Operating Lease, Liability, Payments, Due Year Three | 40 |
Lessee, Operating Lease, Liability, Payments, Due Year Four | 27 |
Lessee, Operating Lease, Liability, Payments, Due Year Five | 29 |
Lessee, Operating Lease, Liability, Payments, Due after Year Five | $ 280 |
CSI Distribution Agreement Purchase Disclosure (Details) - CooperSurgical Inc $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Finite-lived Intangible Assets Acquired | $ 21,000 |
Remaining years of exclusive U.S. distribution rights for Femcare's Filshie Clip System | 4.75 |
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