UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 20, 2004
Commission File No. 0-11178
-------
UTAH MEDICAL PRODUCTS, INC.
---------------------------
(Exact name of Registrant as specified in its charter)
UTAH 87-0342734
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7043 South 300 West
Midvale, Utah 84047
-------------------
Address of principal executive offices
Registrant's telephone number: (801) 566-1200
--------------
--------------------------------------------------------------------------------
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
--------------------------------------------------------------------------------
Attached hereto as Exhibit 99.1 and incorporated by reference herein is
financial information for Utah Medical Products, Inc. for the quarter ended
March 31, 2004 and forward-looking statements relating to 2004 and beyond as
presented in a press release dated April 20, 2004. The information in this
report shall be deemed incorporated by reference into any registration statement
heretofore or hereafter filed under the Securities Act of 1933, as amended,
except to the extent that such information is superseded by information as of a
subsequent date that is included in or incorporated by reference into such
registration statement. The information in this report shall not be treated as
filed for purposes of the Securities Exchange Act of 1934, as amended.
--------------------------------------------------------------------------------
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: 4/20/2004 By: /s/ Kevin L. Cornwell
--------------------- -------------------------------------
Kevin L. Cornwell
CEO
--------------------------------------------------------------------------------
EXHIBIT INDEX
--------------------------------------------------------------------------------
Index
Number Description
------ -----------
99.1 Financial information for Utah Medical Products, Inc. for the
quarter ended March 31, 2004 and forward-looking statements
relating to 2004 and beyond as presented in a press release dated
April 20, 2004.
EXHIBIT 99.1
Salt Lake City, Utah - In the first calendar quarter of 2004 (1Q 2004), Utah
Medical Products, Inc. (Nasdaq:UTMD) concluded its twenty-fifth consecutive
quarter of higher eps compared to the same quarter in the prior year. Net income
and earnings per share (eps) increased 2% compared to 1Q 2003, excluding the
extraordinary income received from Tyco International for patent infringement.
For purposes of comparison with the prior year, UTMD has separated the
additional "extraordinary" income and associated expenses from augmented damages
and interest received from Tyco from its "normal" 1Q 2004 operating results
("regular" column in the results table).
Normal 1Q 2004 eps were $.38 compared to $.37 in 1Q 2003. Normal eps for the
most recent four calendar quarters (LTM) were $1.51. Including the extraordinary
income, LTM eps were $4.93. Receipt of Tyco payment for damages and interest of
$30,944,000 occurred on January 20, 2004. The (after-tax) net income
contribution of that payment was $16,775,000, of which 80% was recognized in 4Q
2003 results and 20% in 1Q 2004 results.
In 1Q 2004, UTMD achieved a gross profit margin of 58.2%, operating profit
margin of 39.7% and net profit margin of 27.6%. Profit margins for 1Q 2003 were
57.8%, 39.4% and 26.0%, respectively. UTMD's earnings before interest and income
tax expenses and before non-cash depreciation/ amortization expenses (EBITDA),
were $3,012,000 in 1Q 2004 (45.5% of sales), compared to $3,078,000 in 1Q 2003
(44.8% of sales).
UTMD's continued excellent operating performance was achieved despite sales
which were 4% lower than in 1Q 2003. Weaker than expected sales resulted from 1)
a very competitive U.S. market environment, in part because of continued GPO and
hospital administration restrictions that reduce market opportunities for
smaller companies; 2) limits on international bidding opportunities because of
lack of FDA CFGs (Certificates to Foreign Governments); and 3) continued weak
demand for CMI subcontract molding. The successful management of a prolonged FDA
inspection was due to the efforts of key Company personnel during 1Q 2004, but
the extensive time devoted to these efforts had a negative effect on previously
planned marketing initiatives and product development activities.
Comparing 1Q 2004 sales to 1Q 2003 sales in product categories, neonatal product
sales were up 4%, obstetrics product sales were down 7%, gynecology/
electrosurgery product sales were down 4% and blood pressure monitoring/
components sales were down 2%. Both domestic and international sales were down
4%. Shipments from Ireland were down 10% in US Dollar terms, and 22% in EURO
terms. According to CEO Kevin Cornwell, "We support our President's top three
domestic economic goals - jobs, jobs and jobs - and the primary foreign economic
goal of a level playing field, but we are disappointed by the FDA application of
a policy that is harmful to domestic medical device manufacturers, and simply
makes no sense relative to the stated economic goals. UTMD's devices always have
been and remain available to domestic and foreign users without restriction.
Yet, the FDA Center for Devices and Radiological Health (CDRH) has created an
unusual trade barrier for domestic device manufacturers which we ask the
Administration and Congress to investigate."
Non-operating income in 1Q 2004 was $153,700 compared $80,400 in 1Q 2003. In 1Q
2003, UTMD paid $26,400 in interest because of an average line of credit balance
of $4.0 million. In contrast, in 1Q 2004 UTMD paid no interest because its line
of credit balance was zero, and received $47,700 in interest and dividend income
from investing its cash balances. Cash and investment balances were $23,475,000
on March 31. All other asset categories on March 31, 2004 were about the same as
on March 31, 2003. After paying remaining income taxes due, the cash balances
will be used in three ways: 1) expanding the Company's business through
accretive acquisitions, 2) increasing product development activity, and 3)
continuing UTMD's share repurchase program.
March 31, 2004 accrued liabilities remained high because of about $4.7 million
in unpaid income taxes due. According to Kevin Cornwell, "Despite the recent GAO
(General Accounting Office) report that 63% of U.S. corporations pay no
corporate income taxes at all and 94% pay at a tax rate less than 5%, the
Federal government obviously enjoys a substantial subsidy from UTMD's
performance. We regret that our contribution could not be greater because of the
harmful failure of the FDA's CDRH to confirm our unrestricted distribution of
safe and effective devices through issuance of requested CFGs. Since Congress
authorized the issuance of these CFGs, more than 24 medical device companies
within the jurisdiction of the FDA Denver District office have been advised that
requests for CFGs would be denied even though their devices are otherwise
available to domestic and foreign users without restriction. What is the logic
behind this FDA obstruction of foreign sales, the opportunity of manufacturers
to create U.S. jobs, increased tax payments to the Federal government and a
positive contribution to balance of trade payments?"
Financial ratios which may be of interest to shareholders follow:
1) Current Ratio = 4.2
2) Days in Receivables (based on 1Q sales activity) = 45.9
3) Average Inventory Turns (based on 1Q CGS) = 3.2
4) Year-to-Date ROE (excluding extraordinary income and equity) = 35%
UTMD's dilution from unexercised option shares added to actual weighted average
outstanding shares for purposes of calculating eps was 329,000 in 1Q 2004
compared to 371,000 in 1Q 2003. The actual number of outstanding shares at the
end of 1Q 2004 was 4,454,200 which included 1Q employee option exercises of
21,900 shares and 1Q share repurchases of 110,200. The average price paid by the
Company to repurchase shares in the open market during 1Q 2004 was $24.40
including commissions. Management continues to be mindful of the dilution effect
of its option programs. The total number of outstanding unexercised options at
March 31, 2004 was about 0.9 million shares at an average exercise price of
$12.98/ share, including shares awarded but not vested. This compares to 1.0
million option shares outstanding at the end of 1Q 2003.
Investors are cautioned that this press release contains forward looking
statements and that actual events may differ from those projected. Risk factors
that could cause results to differ materially from those projected include
market acceptance of products, timing of regulatory approval of new products,
UTMD's ability to efficiently manufacture, market, and sell its products, among
other factors that have been outlined in UTMD's public disclosure filings with
the SEC. The 1Q 2004 10-Q will be filed with the SEC by May 15.
Utah Medical Products, Inc., with particular interest in health care for women
and their babies, develops, manufactures, assembles and markets a broad range of
disposable and reusable specialty medical devices designed for better health
outcomes for patients and their care-providers. For more information about Utah
Medical Products, Inc., visit UTMD's website at www.utahmed.com.
Utah Medical Products, Inc.
INCOME STATEMENT (unaudited)
(in thousands except earnings per share)
First Quarter ended March 31
Total Extraordinary Regular Percent
1Q 2004 1Q 2004 1Q 2004 1Q 2003 Change
------- ------- ------- ------- ---------
Net Sales $6,616 -- $ 6,616 $ 6,877 (3.8%)
Gross Profit 3,850 -- 3,850 3,977 (3.2%)
Operating Income 2,280 (350) 2,630 2,712 (3.0%)
Income Before Tax 8,494 5,710 2,783 2,793 (0.3%)
Net Income 5,175 3,349 1,826 1,788 +2.2%
Earnings Per Share $1.068 $ .691 $ .377 $ .371 +1.5%
Shares Outstanding (diluted) 4,845 4,845 4,845 4,816
BALANCE SHEETS
(in thousands) (unaudited) (audited) (unaudited)
MAR 31, 2004 DEC 31, 2003 MAR 31, 2003
------------ ------------ ------------
Assets
Cash & Investments $23,475 $ 1,484 $ 272
Accounts Receivable, net 3,448 3,326 3,349
Tyco Receivable -- 24,884 --
Inventories 3,602 3,268 3,633
Other Current Assets 1,047 940 888
-------------------- ------- ------- -------
Total Current Assets 31,572 33,902 8,142
Property and Equipment - net 8,873 9,005 8,905
Intangible Assets - net 6,780 6,787 6,721
----------------------- ------- ------- -------
Total Assets $47,225 $49,694 $23,768
Liabilities and Stockholders' Equity
Total Current Liabilities $ 7,495 $12,497 $ 2,784
Note Payable -- -- 2,958
Deferred Income Taxes 605 665 395
Stockholders' Equity 39,125 36,532 17,631
------------------------------------------ ------- ------- -------
Total Liabilities and Stockholders' Equity $47,225 $49,694 $23,768