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: June 30, 2000 Commission File No. 0-11178
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UTAH MEDICAL PRODUCTS, INC.
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(Exact name of Registrant as specified in its charter)
UTAH 87-0342734
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7043 South 300 West
Midvale, Utah 84047
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Address of principal executive offices
Registrant's telephone number: (801) 566-1200
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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 X No
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The number of shares outstanding of the registrant's common stock as of
August 10, 2000: 6,131,223
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UTAH MEDICAL PRODUCTS, INC.
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INDEX TO FORM 10-Q
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PART I - FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
June 30, 2000 and December 31, 1999 .............................. 1
Consolidated Condensed Statements of Income for the three
and six months ended June 30, 2000 and June 30, 1999 ............. 2
Consolidated Statements of Cash Flows for the
six months ended June 30, 2000 and June 30, 1999 ................. 3
Notes to Consolidated Condensed Financial Statements ............. 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............... 6
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................. 10
SIGNATURES ............................................................. 10
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
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CONSOLIDATED CONDENSED BALANCE SHEETS AS OF
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JUNE 30, 2000 AND DECEMBER 31, 1999
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(in thousands)
(unaudited) (audited)
JUNE 30, 2000 DECEMBER 31, 1999
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ASSETS
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CURRENT ASSETS:
Cash $ 858 $ 647
Accounts receivable - net 3,994 4,077
Inventories 3,474 3,190
Other current assets 703 624
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Total current assets 9,029 8,538
PROPERTY AND EQUIPMENT - NET 10,309 11,013
INTANGIBLE ASSETS - NET 7,868 8,205
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TOTAL $ 27,206 $ 27,756
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts payable $ 701 $ 544
Accrued expenses 1,802 2,117
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Total current liabilities 2,503 2,661
NOTES PAYABLE 4,199 5,934
DEFERRED INCOME TAXES 355 372
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Total liabilities 7,057 8,967
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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 - June 30, 2000, 6,311 shares
December 31, 1999, 6,453 shares 63 64
Cumulative foreign currency translation adjustment (1,502) (1,250)
Retained earnings 21,588 19,975
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Total stockholders' equity 20,149 18,789
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TOTAL $ 27,206 $ 27,756
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see notes to consolidated condensed financial statements
</TABLE>
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<TABLE>
<CAPTION>
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR THE
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THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
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(in thousands - unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
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2000 1999 2000 1999
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NET SALES $ 6,956 $ 7,320 $ 13,621 $ 14,338
COST OF SALES 3,083 3,450 6,077 6,781
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GROSS MARGIN 3,873 3,870 7,544 7,557
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EXPENSES:
Selling, general and administrative 1,593 1,722 3,237 3,434
Research & development 152 141 300 362
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Total 1,745 1,863 3,537 3,796
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INCOME FROM OPERATIONS 2,128 2,008 4,007 3,761
OTHER INCOME 34 106 71 221
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INCOME BEFORE INCOME TAX EXPENSE 2,162 2,114 4,078 3,982
INCOME TAX EXPENSE 779 765 1,470 1,434
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NET INCOME $ 1,383 $ 1,349 $ 2,608 $ 2,548
============== ============== ============== ==============
BASIC EARNINGS PER SHARE $ 0.22 $ 0.18 $ 0.41 $ 0.33
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DILUTED EARNINGS PER SHARE $ 0.22 $ 0.18 $ 0.41 $ 0.33
============== ============== ============== ==============
SHARES OUTSTANDING - BASIC 6,383 7,651 6,416 7,794
============== ============== ============== ==============
SHARES OUTSTANDING - DILUTED 6,402 7,662 6,436 7,796
============== ============== ============== ==============
see notes to consolidated condensed financial statements
</TABLE>
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<TABLE>
<CAPTION>
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
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(in thousands - unaudited)
JUNE 30,
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2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,608 $ 2,548
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Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,125 1,042
Provision for (recovery of) losses on accounts receivable 11 (31)
(Gain ) loss on disposal of assets (1) 1
Deferred income taxes (40) (60)
Tax benefit attributable to exercise and disposition
of incentive stock options and stock purchase rights 1
Changes in operating assets and liabilities:
Accounts receivable - trade 160 90
Accrued interest and other receivables (123) 285
Inventories (281) 743
Prepaid expenses (57) (48)
Accounts payable 165 (64)
Accrued expenses (307) (389)
Deferred revenue 0 (2)
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Total adjustments 652 1,568
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Net cash provided by operating activities 3,260 4,116
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for:
Property and equipment (215) (281)
Intangible assets (100) (3)
Proceeds from sale of property and equipment 10 0
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Net cash used in investing activities (305) (284)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 22
Common stock purchased and retired (996) (2,784)
Decrease in note payable (1,735) (1,343)
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Net cash used in financing activities (2,731) (4,105)
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Effect of exchange rate changes on cash (14) (17)
NET INCREASE (DECREASE) IN CASH 211 (290)
CASH AT BEGINNING OF PERIOD 647 1,367
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CASH AT END OF PERIOD $ 858 $ 1,077
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes $ 1,785 $ 1,683
Interest $ 193 $ 76
see notes to consolidated condensed financial statements
</TABLE>
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UTAH MEDICAL PRODUCTS, INC.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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(unaudited)
(1) The unaudited financial statements presented herein 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 generally accepted accounting
principles. 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, 1999.
Although the accompanying financial statements have not been examined by
independent accountants in accordance with generally accepted auditing
standards, in the opinion of management, such financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary to
summarize fairly the Company's financial position and results of operations.
(2) Inventories at June 30, 2000 and December 31, 1999 (in thousands) consisted
of the following:
June 30, December 31,
2000 1999
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Finished goods $ 1,189 $ 846
Work-in-process 949 962
Raw materials 1,336 1,382
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Total $ 3,474 $ 3,190
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(3) The Company has adopted SFAS No. 130, "Reporting Comprehensive Income." This
standard requires companies to disclose certain changes in equity not
represented in net income such as foreign currency translation adjustments and
unrealized gains/losses on available-for-sale securities. These items are
components of other comprehensive income which, when added to net income,
represent total comprehensive income. The Company translates the currency of its
Ireland subsidiary which comprises the only element of other comprehensive
income. Total comprehensive income for the quarter and six months ending June
30, 2000 was (in thousands) $1,393 and 2,355, respectively.
(4) In June 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 137, "Accounting for
Derivative Instruments and Hedging Activities- Deferral of the Effective Date of
FASB Statement No. 133." SFAS 133 establishes accounting and reporting standards
for derivative instruments and requires recognition of all derivatives as assets
or liabilities in the statement of financial position and measurement of those
instruments at fair value. SFAS 133 is now effective for fiscal years beginning
after June 15, 2000. UTMD believes that the adoption of SFAS 133 will not have a
material effect on the financial statements of the Company.
(5) 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, and information currently available to, management. When
used in this document, the words "anticipate," "believe," "should," "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 noted 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.
General risk factors that may impact the Company's revenues include the
market acceptance of competitive products, obsolescence caused by new
technologies, the possible introduction by competitors of new products that
claim to have many of the advantages of UTMD's products at lower prices, the
timing and market acceptance of
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UTMD's own new product introductions, UTMD's ability to efficiently manufacture
its products, including the reliability of suppliers, success in gaining access
to important global distribution channels, marketing success of UTMD's
distribution and sales partners, budgetary constraints, the timing of regulatory
approvals for newly introduced products, third party reimbursement, and access
to U.S. hospital customers, as that access is increasingly constrained by group
purchasing decisions.
Risk factors, in addition to the risks outlined in the previous paragraph
that may impact the Company's assets and liabilities, as well as cash flows,
include risks inherent to companies manufacturing products used in health care
including claims resulting from the improper use of devices and other product
liability claims, defense of the Company's intellectual property, productive use
of assets in generating revenues, management of working capital including
inventory levels required to meet delivery commitments at a minimum cost, and
timely collection of accounts receivable.
Additional risk factors that may affect non-operating income include the
continuing viability of the Company's technology license agreements, actual cash
and investment balances, asset dispositions, and acquisition activities that may
require external funding.
(6) Events subsequent to June 30, 2000
On August 10, 2000, UTMD announced a self-tender through which it intends
to repurchase at a price of $8.20 per share up to 1,000,000 of its shares. The
tender offer is scheduled to commence on August 17, and expire on September 15,
2000.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
UTMD manufactures and markets a well-established range of specialty
medical devices. The general characteristics of UTMD's business have not
materially changed over the last several reporting periods. The Company's Form
10-K Annual Report for the year ended December 31, 1999 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 or six month period in comparison with a
previous three or six month period may not be indicative of comparative results
for the year as a whole. Dollar amounts in the report are expressed in
thousands, except per- share amounts and where otherwise noted.
Analysis of Results of Operations
a) Overview
Sales in second quarter (2Q) 2000 declined 5% from 2Q 1999, due to lower
sales of obstetrics products in the U.S., and lower sales of OEM products
worldwide. Despite the lower sales, operating profits improved 6% due to record
gross profit margins and tightly controlled operating expenses. Earnings per
share (EPS) were up 23% compared to 2Q 1999 due to share repurchases. With its
strong cash flow, UTMD was able to reduce its long term debt balance by $0.6
million at the same time it repurchased 131,000 shares of its stock for $0.9
million in 2Q 2000. Results for the first half (1H) of 2000 compared to 1H 1999
in a similar way with the quarterly results comparisons detailed above. During
1H 2000 UTMD reduced its long term debt balance by $1.7 million while it
repurchased 142,300 shares of its stock for $1.0 million.
b) Revenues
In 2Q 2000, sales to customers outside the U.S. grew 4% while domestic
sales, excluding component sales to Baxter, declined 6%. Sales of components to
Baxter declined 55% to $75 in 2Q 2000 from $167 in 2Q 1999. Sales to Baxter in
1H 2000 were $107 compared to $315 in 1H 1999. First half 2000 international
sales increased 13%, while domestic sales, again excluding sales to Baxter,
declined 7%.
In the U.S., 2Q and 1H 2000 obstetrics product sales decreased 10% and 11%
respectively, due to increased competition, while electrosurgery/ gynecology/
urology product sales and neonatal product sales remained about the same in both
periods. Blood pressure monitoring components excluding sales to Baxter/ OEM
molding products were the same in 2Q 2000 compared to 2Q 1999.
Foreign sales of obstetrics products, electrosurgery/ gynecology products
and neonatal products increased 17%, 23% and 57%, respectively, in 2Q 2000 while
blood pressure monitoring (BPM) components and accessories declined 2%. First
half 2000 foreign sales increased 17%, 54%, 94% and 5%, respectively, in these
same product groups.
Global obstetrics product sales, which decreased 9% in 2Q 2000,
represented 45% of total sales. Obstetrics sales were $3,130 in 2Q 2000,
compared to $3,426 in 2Q 1999. First half 2000 Obstetrics sales were $6,171
compared to $6,828 in 1H 1999. Global gynecology/ electrosurgery/ urology
product sales which grew 3% in 2Q 2000 represented 16% of total revenues.
Gyn/ES/Uro sales were $1,109 in 2Q 2000, compared to $1,081 in 2Q 1999. First
half 2000 Gyn/ES/Uro sales were $2,234 compared to $2,118 in 1H 1999. Neonatal
product sales which grew 2% represented 14% of total sales. Neonatal product
sales were $957 in 2Q 2000, compared to $940 in 2Q 1999. First half 2000
Neonatal sales were $1,829 compared to $1,766 in 1H 1999. BPM and accessories
sales including sales to Baxter which declined 6% represented 25% of total 2Q
2000 sales. Sales of BPM and accessories products in 2Q 2000 were $1,759,
compared to $1,873 in 2Q 1999. First half 2000 BPM sales were $3,388 compared to
$3,626 in 1H 1999.
c) Gross Profit
UTMD's gross profit margin (GPM) in 2Q 2000 was 55.7% compared to 52.9% in
2Q 1999. First half 2000 GPM was 55.4% compared to 52.7% in 1H 1999. Gross
margin improvements were led by control of manufacturing overhead costs and
lower direct materials costs. During the rest of 2000, offsetting influences are
expected to result in GPM of about 55%. Expected favorable influences include
growth in sales activity without a similar increase in overhead expenses and a
continued emphasis on reengineering products to reduce costs.
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Unfavorable influences are expected to be continued competitive pressure on
pricing and higher wage rates and other benefits costs for production employees.
UTMD management believes that consistently achieving an average GPM above 50% is
crucial to successfully support the significant sales and marketing, research
and development, and administrative expenses associated with an innovative
medical device company in a highly complex and competitive marketplace.
d) Operating Profit
Second quarter 2000 operating profits increased 6% to $2,128 from $2,008
in 2Q 1999. Operating profit increased 7% in 1H 2000 compared to 1H 1999. Total
operating expenses, including sales and marketing (S&M) expenses, research and
development (R&D) expenses and general and administrative (G&A) expenses, were
$1,745 or 25.1% of sales in 2Q 2000 compared to $1,863 or 25.5% of sales in 2Q
1999. Total operating expenses were 26.0% of sales in 1H 2000 compared to 26.5%
of 1H 1999 sales. Reducing operating expenses as a percentage of sales with
lower sales is a significant achievement for the quarter.
S&M expenses in 2Q 2000 were $840 or 12.1% of sales compared to $964 or
13.2% of sales in 2Q 1999. First half 2000 S&M expenses were $1,717 or 12.6% of
sales compared to $1,937 or 13.5% of sales in 1H 1999. S&M expenses are
dominated by the costs of promoting, selling and providing customer support of
UTMD's direct sales of products in the U.S. Although total 2Q and 1H 2000 sales
decreased 5%, including OEM and overseas sales where third parties underwrite
significant S&M costs of selling UTMD's products, the U.S. direct sales portion
decreased 6% and 7% in 2Q and 1H 2000, respectively. Total S&M expenses were
reduced 10% in conjunction with managing expenses relative to the actual
performance of UTMD's domestic direct S&M resources.
R&D expenses in 2Q 2000 were $152 or 2.2% of sales compared to $141 or
1.9% of sales in 2Q 1999. First half 2000 R&D expenses were $300 or 2.2% of
sales compared to $362 or 2.5% of sales in 1H 1999. The second quarter 1999
termination of internal efforts committed to UTMD's fetal pH monitoring project,
which represented about half of R&D spending in 1Q 1999, was responsible for the
1999 change. Current R&D projects include continuing development of the Fowler
Endocurette, enhancements to the Gesco neonatal product line, and improvements
to UTMD's other established products. R&D improvements in materials and
configuration of components was evident in UTMD's improved GPMs. At UTMD, R&D
resources are kept involved in the direct support of manufacturing, as UTMD
finds it makes long-term sense to keep its most technical people involved with
products and the processes for making them throughout their life cycles.
G&A expenses in 2Q 2000 were $753 or 10.8% of sales compared to $758 or
10.4% of 2Q 1999 sales. First half 2000 G&A expenses were $1,519 or 11.2% of
sales compared to $1,497 or 10.4% of sales in 1H 1999. Year 2000 G&A expenses
are expected to be consistent with 1999, and in 1H 2000 were within expected
limits of normal fluctuation.
e) Non-operating income
Royalty income from licensing UTMD's technology to other companies was
partially offset by interest expenses and bank fees on the revolving
line-of-credit in 2Q and 1H 2000. Non-operating income in 2Q 2000 was $34,
compared to $106 in 2Q 1999. For first half 2000, non-operating income was $71
compared to $221 in 1H 1999. Royalty income in 2Q and 1H 2000 was $33 and $77
less, respectively, than in the prior year's periods. Interest expenses and bank
fees associated with the line-of-credit were $98 and $197 in 2Q and 1H 2000
compared to $40 and $83 in 2Q and 1H 1999. Assuming the tender offer announced
August 10, 2000 is fully subscribed, only minimal changes in current interest
rates and no new borrowing to finance an extraordinary capital requirement, net
non-operating income is expected to be about $35 in third quarter 2000, and
-$115 in fourth quarter 2000.
f) Earnings Before Income Taxes
Second quarter and 1H 2000 earnings before income taxes (EBT) were 31.1%
and 29.9% of sales, respectively, compared to 28.9% and 27.8% of sales in 2Q and
1H 1999, respectively. UTMD was able to increase 2000 EBT over 2% relative to
1999 even though sales were down 5% because of improvement accomplished in gross
margin combined with tight control of operating expenses. If sales activity
increases, UTMD expects it can increase EBT at a faster rate.
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g) Net Income and EPS
UTMD's after tax net income expressed as a percentage of sales was 19.9%
for 2Q 2000 compared to 18.4% for 2Q 1999. Net income expressed in dollars was
up 2.5% at $1,383 in 2Q 2000, compared to $1,349 in 2Q 1999. The effective
income tax rate in 2Q and 1H 2000 was 36.0% compared to 36.2% in 2Q 1999 and
36.0% in 1H 1999. First half 2000 net income was 19.1% of sales compared to
17.8% of sales in 1H 1999.
Diluted 2Q 2000 earnings per share (EPS) were up 23% to $.22 compared to
$.18 in 2Q 1999. First half 2000 EPS increased 24% to $.41 from $.33 in 1H 1999.
2Q 2000 weighted average number of diluted common shares (the number used to
calculate diluted EPS) were 6,402 compared to 7,662 shares in 2Q 1999. First
half 2000 diluted shares declined 17% from the same period of 1999. Actual
outstanding common shares as of the end of 2Q 2000 were 6,311. UTMD's trailing
twelve months' EPS were $.85, up 31% from the prior twelve month period of time.
h) Return on Shareholders' Equity (ROE)
ROE in 2Q and 1H 2000 was 28% and 27%, respectively, compared to 21% and
20% in 2Q and 1H 1999, respectively.
i) Cash flows
EBITDA is a measure of UTMD's ability to generate cash. First half 2000
EBITDA was $5,398, up from $5,108 in 1H 1999, or as a ratio of sales, 40% in 1H
2000 compared to 36% in 1H 1999. UTMD used EBITDA to allow purchase of $215
worth of assets to sustain facilities, equipment and tooling in good working
order, investment of $100 in new intangible assets, repurchase $996 worth of it
shares, as well as a decrease in its bank revolving line- of-credit balance by
$1,735 during 1H 2000.
Net cash provided by operating activities, including adjustments for
depreciation and other non-cash operating expenses, along with changes in
working capital, totaled $3,260 in 1H 2000, compared to $4,116 in 1H 1999. Net
changes in operating assets and liabilities used $443 in 1H 2000 cash compared
to providing $615 in 1H 1999, with the largest 2000 changes (adjusted for
exchange rate changes) coming from higher finished goods inventories, which UTMD
increased in lieu of cutting production rates in order to maintain production
efficiencies during a period of temporary soft demand, along with a $307
decrease in accrued expenses.
Financing activities in 1H 2000 used cash of $1,735 to reduce the bank
line-of-credit. In addition, 142,300 shares of stock were repurchased at a total
cost of $996. No stock was issued in the first half of 2000, compared to 3,188
shares issued in 1H 1999. On April 14, 2000, UTMD entered into a new unsecured
revolving line-of-credit agreement with Key Bank N.A. which replaces its prior
line-of-credit. Under the agreement, the Company may borrow up to $14,500,000 at
a floating interest rate tied to Prime Rate or LIBOR, at UTMD's election.
Covenants under the line include maintaining minimum Current and Total Funded
Debt to EBITDA ratios.
Management believes that capital spending in 1H 2000 was at a sufficient
rate to sustain current operations. In addition to sustaining capital
expenditures, UTMD expects to use cash during the rest of 2000 for selective
infusions of technological, marketing or product manufacturing rights to broaden
the Company's product offerings, for continued share repurchases when the price
of the stock remains undervalued, and, if available for a reasonable price,
acquisitions that strategically fit UTMD's business and are accretive to
performance. The revolving credit line will continue to be used for liquidity
when the timing of acquisitions or repurchases of stock require a large amount
of cash in a short period of time, such as the tender offer announced August 10,
2000, which is expected to use $8.25 million in cash.
j) Assets and Liabilities
First half 2000 ending total assets were $550 less than at December 31,
1999. Current assets increased as a result of higher inventory and cash balances
while net fixed assets declined because depreciation exceeded replacement
purchases. Net intangible assets declined because amortization of goodwill and
intellectual property exceeded new acquisitions. 1H 2000 ending net intangible
assets represent 29% of total assets.
Average inventory turns decreased in 1Q 2000 to 3.6 times, compared to 3.8
times in 1999, due to lower sales and higher finished goods inventories.
Inventories declined $92 in 2Q 2000, following a $376 increase in 1Q 2000.
Inventories were allowed to increase in 1Q 2000 based on UTMD's belief that the
sales decrease was temporary. If sales increase during the remainder of 2000,
management expects to be able to achieve its target of 4.0 inventory turns. June
30, 2000 accounts receivable (A/R) balances declined 2%, less than half the rate
of the sales decline.
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Calculated days in receivables at 50 for 2Q 2000 increased slightly from 49 at
year-end 1999. The working capital increase of $650 was largely due to the
increase in finished goods inventory.
At the end of 2Q 2000, UTMD's total debt ratio decreased to 26% of total
assets from 32% at the end of 1999, due mainly to the reduction in the
line-of-credit balance.
k) Management's Outlook.
UTMD has built and continues to successfully defend a dominant medical
device market franchise in the most special areas of hospitals caring for
mothers and their babies, with innovative and highly effective products.
UTMD's small but effective direct U.S. sales team continues to evolve as a
key resource for achieving UTMD's objectives to help identify clinician needs,
responsively provide excellent solutions for those needs, and assure timely
support for customers' use of UTMD's solutions. In the remaining part of 2000,
UTMD will investigate ways to expand its U.S. sales coverage through improving
its relationships with national distributors who can access customers in ways
not available to UTMD's direct sales force, through partnering with other
manufacturers where a broader product offering can leverage marketing efforts
and through initiatives to effectively employ Internet technology.
Internationally, UTMD will continue to build on the success of its effective
distribution partners.
Consistent with its view of the nature of the medical device industry as a
whole, UTMD believes it can achieve top line growth through selective
acquisitions, and plans to do so without diluting shareholder interest. In
UTMD's case, management does not intend to achieve top line growth at the
expense of bottom line growth. Internal R&D will continue to be used primarily
to improve and augment existing or acquired product lines.
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 12, 2000 at the annual meeting, shareholders of the Company
approved the following matter submitted to them for consideration:
Elected Kevin L. Cornwell and Paul O. Richins as directors of the Company.
Kevin L. Cornwell: For 5,584,292
Paul O. Richins: For 5,586,355
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
SEC
Exhibit # Reference # Title of Document
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1 27 Financial data schedule
b) Reports on Form 8-K:
During the quarter ended June 30, 2000, the Company filed no reports
on Form 8-K.
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: 8/11/00 By: /s/ Kevin L. Cornwell
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Kevin L. Cornwell
CEO and CFO
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