Utah Medical Products (UTMD) 10-Q 6 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	9 Months Ended
	Sep. 30, 2015	Nov. 05, 2015	Jun. 30, 2015
Document and Entity Information:
Entity Registrant Name	UTAH MEDICAL PRODUCTS INC
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Entity Central Index Key	706,698
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		3,750,300
Entity Public Float			$ 199,695,980
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3
Trading Symbol	utmd

UTAH MEDICAL PRODUCTS, INC. CON

UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED BALANCE SHEET - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash	$ 21,622	$ 19,274
Investments, available-for-sale	53	58
Accounts & other receivables - net	5,493	4,703
Inventories	4,449	4,872
Other current assets	689	768
Total current assets	32,306	29,675
Property and equipment - net	7,568	8,236
Goodwill	14,904	15,145
Other intangible assets	38,594	39,675
Other intangible assets - accumulated amortization	(13,217)	(11,655)
Other intangible assets - net	25,377	28,020
TOTAL ASSETS	80,155	81,076
Current liabilities:
Accounts payable	922	929
Accrued expenses	4,819	4,148
Current portion of notes payable	0	3,894
Total current liabilities	5,741	8,971
Notes payable	0	973
Deferred tax liability - intangible assets	5,039	5,581
Deferred income taxes	1,022	995
TOTAL LIABILITIES	$ 11,802	$ 16,520
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 - September 30, 2015, 3,750 shares and December 31, 2014, 3,748 shares	$ 37	$ 37
Accumulated other comprehensive income (loss)	(4,948)	(3,234)
Additional paid-in capital	2,639	2,890
Retained earnings	70,625	64,863
Total stockholders' equity	68,353	64,556
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 80,155	$ 81,076

UTAH MEDICAL PRODUCTS, INC. CO3

UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares shares in Thousands	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position
Preferred Stock, Par Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	5,000	5,000
Preferred Stock, Shares Issued
Preferred Stock, Shares Outstanding
Common Stock, Par Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	50,000	50,000
Common Stock, Shares Issued	3,750	3,748
Common Stock, Shares Outstanding	3,750	3,748

UTAH MEDICAL PRODUCTS, INC. CO4

UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement
Sales, net	$ 9,945	$ 10,717	$ 30,575	$ 31,035
Cost of goods sold	3,866	4,521	12,285	12,440
Gross profit	6,079	6,196	18,290	18,595
Operating expense:
Selling, general and administrative	1,969	2,079	6,039	6,336
Research and development	110	115	406	352
Total operating expense	2,079	2,194	6,445	6,688
Operating income	4,000	4,002	11,845	11,907
Other income (expense)	127	(107)	(126)	(300)
Income before provision for income taxes	4,127	3,895	11,719	11,607
Provision for income taxes	1,080	1,073	3,086	3,229
Net income	$ 3,047	$ 2,822	$ 8,633	$ 8,378
Earnings per common share (basic)	$ 0.81	$ 0.75	$ 2.30	$ 2.24
Earnings per common share (diluted)	$ 0.81	$ 0.75	$ 2.29	$ 2.22
Shares outstanding (basic)	3,753	3,741	3,753	3,747
Shares outstanding (diluted)	3,768	3,764	3,772	3,774
Other comprehensive income (loss):
Foreign currency translation net of taxes of $0 in all periods	$ (1,536)	$ (2,569)	$ (1,711)	$ (1,459)
Unrealized gain (loss) on investments net of taxes of ($2), $2, ($2) and $0	(4)	3	(3)	0
Total comprehensive income	$ 1,507	$ 256	$ 6,919	$ 6,919

UTAH MEDICAL PRODUCTS, INC. CO5

UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement
Foreign currency translation tax adjustment	$ 0	$ 0	$ 0	$ 0
Unrealized gain (loss) on investments tax adjustment	$ (2)	$ 2	$ (2)	$ 0

UTAH MEDICAL PRODUCTS, INC. CO6

UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOW - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 8,633	$ 8,378
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	461	474
Amortization	1,898	2,064
(Gain) loss on investments	0	0
Provision for (recovery of) losses on accounts receivable	(9)	(26)
(Gain)/Loss on disposal of assets	1	4
Deferred income taxes	(359)	(414)
Stock-based compensation expense	66	49
Changes in operating assets and liabilities:
Accounts receivable	(791)	(291)
Accrued interest and other receivables	(83)	(50)
Inventories	151	(99)
Prepaid expenses and other current assets	76	22
Accounts payable	31	258
Accrued expenses	(180)	489
Total adjustments	1,262	2,480
Net cash provided by operating activities	9,895	10,858
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment	(151)	(953)
Capital expenditures for intangible assets	(55)	0
Net cash provided by (used in) investing activities	(206)	(953)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - options	298	361
Common stock purchased and retired	(683)	(1,017)
Payment of taxes for exchange of stock options	(42)	0
Tax benefit attributable to exercise of stock options	110	139
Repayment of notes payable	(4,778)	(3,052)
Payment of dividends	(1,914)	(1,874)
Net cash provided by (used in) financing activities	(7,009)	(5,443)
Effect of exchange rate changes on cash	(332)	(609)
Net increase in cash and cash equivalents	2,348	3,853
Cash at beginning of period	19,274	14,395
Cash at end of period	21,622	18,248
Cash paid during the period for income taxes	4,030	2,492
Cash paid during the period for interest	$ 65	$ 239

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2015
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, 2014. 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 a

New Accounting Pronouncements and Changes in Accounting Principles	9 Months Ended
	Sep. 30, 2015
Notes
New Accounting Pronouncements and Changes in Accounting Principles	(2) Recent Accounting Standards. 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, 2016 and early adoption is not permitted. UTMD is currently assessing the impact that this standard will have on its consolidated financial statements when it is adopted in 2017.

Inventories

Inventories	9 Months Ended
	Sep. 30, 2015
Notes
Inventories	(3) Inventories at September 30, 2015 and December 31, 2014 consisted of the following: September 30, 2015 December 31, 2014 Finished goods $ 1,424 $ 1,847 Work-in-process 1,212 1,103 Raw materials 1,813 1,922 Total $ 4,449 $ 4,872

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 2015
Notes
Stock-Based Compensation	(4) Stock-Based Compensation. At September 30, 2015, 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, Stock Compensation

Notes Payable

Notes Payable	9 Months Ended
	Sep. 30, 2015
Notes
Notes Payable	(5) Notes Payable. In March 2011, the Company obtained a $14,000 loan from JPMorgan Chase Bank, N.A. and a $12,934 loan from JP Morgan Chase, London Branch to help finance UTMD’s purchase of Femcare. The notes were fully paid off in February 2015.

Warranty Reserve

Warranty Reserve	9 Months Ended
	Sep. 30, 2015
Notes
Warranty Reserve	(6) 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, 2014 or September 30, 2015.

Investments

Investments	9 Months Ended
	Sep. 30, 2015
Notes
Investments	(7) Investments. Changes in the unrealized holding gain/loss on investment securities available-for-sale and reported as a separate component of accumulated other comprehensive income are as follows: 3Q 2015 3Q 2014 Balance, beginning of period $ 10 $ 5 Realized loss from securities included in beginning balance ~ ~ Gross unrealized holding gains (losses), in equity securities (6) 5 Deferred income taxes on unrealized holding (gain) loss 3 (2) Balance, end of period $ 7 $ 8

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2015
Notes
Fair Value Measurements	(8) Fair Value Measurements. The Company follows ASC 820, Fair Value Measurement Fair Value Measurements Using Description Total Fair Value at 9/30/2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3 ) Equities $ 53 $ 53 $ 0 $ 0

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2015
Notes
Subsequent Events	(9) Subsequent Events.

New Accounting Pronouncements16

New Accounting Pronouncements and Changes in Accounting Principles: New Accounting Pronouncements, Policy (Policies)	9 Months Ended
	Sep. 30, 2015
Policies
New Accounting Pronouncements, Policy	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, 2016 and early adoption is not permitted. UTMD is currently assessing the impact that this standard will have on its consolidated financial statements when it is adopted in 2017.

Inventories_ Schedule of Invent

Inventories: Schedule of Inventory, Current (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Schedule of Inventory, Current	September 30, 2015 December 31, 2014 Finished goods $ 1,424 $ 1,847 Work-in-process 1,212 1,103 Raw materials 1,813 1,922 Total $ 4,449 $ 4,872

Investments_ Available-for-sale

Investments: Available-for-sale Securities (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Available-for-sale Securities	3Q 2015 3Q 2014 Balance, beginning of period $ 10 $ 5 Realized loss from securities included in beginning balance ~ ~ Gross unrealized holding gains (losses), in equity securities (6) 5 Deferred income taxes on unrealized holding (gain) loss 3 (2) Balance, end of period $ 7 $ 8

Fair Value Measurements_ Schedu

Fair Value Measurements: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis	Fair Value Measurements Using Description Total Fair Value at 9/30/2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3 ) Equities $ 53 $ 53 $ 0 $ 0

Inventories_ Schedule of Inve20

Inventories: Schedule of Inventory, Current (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Details
Finished goods	$ 1,424	$ 1,847
Work-in-process	1,212	1,103
Raw materials	1,813	1,922
Total	$ 4,449	$ 4,872

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Details
Allocated Share-based Compensation Expense	$ 22	$ 25	$ 66	$ 49

Notes Payable (Details)

Notes Payable (Details) $ in Thousands	Sep. 30, 2015USD ($)
JP Morgan Chase Bank NA (Chase) Note
Debt Instrument, Face Amount	$ 14,000
JP Morgan Chase London Branch Note
Debt Instrument, Face Amount	$ 12,934

Investments_ Available-for-sa23

Investments: Available-for-sale Securities (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Available For Sale Securities Gross Unrealized Gain Loss Accumulated ln lnvestments	$ 10	$ 5
Realized loss from securities included in beginning balance
Available-for-sale Securities, Gross Unrealized Gain (Loss)	$ (6)	$ 5
Deferred income taxes on unrealized holding (gain) loss	3	(2)
Available For Sale Securities Gross Unrealized Gain Loss Accumulated ln lnvestments	$ 7	$ 8

Fair Value Measurements_ Sche24

Fair Value Measurements: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) $ in Thousands	Sep. 30, 2015USD ($)
Fair Value, Inputs, Level 1
Equities	$ 53
Fair Value, Inputs, Level 2
Equities	0
Fair Value, Inputs, Level 3
Equities	0
Fair Value, Measurements, Recurring
Equities	$ 53