UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-Q**





Quarterly
      Report Under Section 13 or 15(d) of


The
      Securities Exchange Act of 1934











For
                quarter ended: March 31, 2006
            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 incorporation or organization)
            (I.R.S.
                Employer Identification No.)








7043
      South 300 West


Midvale, Utah 84047


Address
      of principal executive offices








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








Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports) and; (2) has been subject to such filing requirements
      for
      the past 90 days. Yes **x** No o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (check
      one):


Large
                accelerated filero
            Accelerated
                filer**x**
            Non-accelerated
                filero





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





Indicate
      the number of shares outstanding of each of the issuer’s classes of common stock
      as of May 9, 2006: 3,945,000.














UTAH
      MEDICAL PRODUCTS, INC.


INDEX
      TO FORM 10-Q











PART
                I - FINANCIAL INFORMATION
            PAGEItem
                1.
            Financial
                StatementsConsolidated
                Condensed Balance Sheets as of March 31, 2006 and December 31, 2005
            1Consolidated
                Condensed Statements of Income for the three months ended March 31,
                2006
                and March 31, 2005
            2Consolidated
                Condensed Statements of Cash Flows for three months ended March 31,
                2006
                and March 31, 2005
            3Notes
                to Consolidated Condensed Financial Statements
            4Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of Operations
            7Item
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            12Item
                4.
            Controls
                and Procedures
            12PART
                II - OTHER INFORMATIONItem
                1A.
            Risk
                Factors
            13Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            13Item
                6.
            Exhibits
            14SIGNATURES
            14
































PART
      I -
      FINANCIAL INFORMATION





**Item
      1. Financial Statements**





UTAH
      MEDICAL PRODUCTS, INC. AND SUBSIDIARIES


CONSOLIDATED
      CONDENSED BALANCE SHEETS AS OF


MARCH
      31, 2006 AND DECEMBER 31, 2005


(in
      thousands)





(unaudited)
            
            (audited)ASSETS
            
            MARCH
                31,2006
            
            DECEMBER
                31,2005Current
                assets:Cash
            
            $
            832
            
            $
            703Investments,
                available-for-sale
            
            
            16,590
            
            
            16,750Accounts
                & other receivables - net
            
            
            4,825
            
            
            4,418Inventories
            
            
            3,470
            
            
            3,305Other
                current assets
            
            
            655
            
            
            682Total
                current assets
            
            
            26,373
            
            
            25,858Property
                and equipment - net
            
            
            8,258
            
            
            8,160Goodwill
            
            
            7,191
            
            
            7,191Other
                intangible assets
            
            
            2,718
            
            
            2,718Other
                intangible assets - accumulated amortization
            
            
            (2,297
            )
            
            (2,285
            )Other
                intangible assets - net
            
            
            421
            
            
            433TOTAL
            
            $
            42,243
            
            $
            41,642LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilities:Accounts
                payable
            
            $
            785
            
            $
            757Accrued
                expenses
            
            
            2,063
            
            
            2,418Total
                current liabilities
            
            
            2,848
            
            
            3,175Note
                payable
            
            
            5,251
            
            
            5,336Deferred
                income taxes
            
            
            257
            
            
            274Total
                liabilities
            
            
            8,356
            
            
            8,785Stockholders'
                equity:Preferred
                stock - $.01 par value; authorized - 5,000 shares; no shares issued
                or
                outstandingCommon
                stock - $.01 par value; authorized - 50,000 shares; issued - March
                31,
                2006, 3,966 shares December 31, 2005, 3,856 shares
            
            
            40
            
            
            39Accumulated
                other comprehensive income
            
            
            (530
            )
            
            (495
            )Retained
                earnings
            
            
            34,377
            
            
            33,314Total
                stockholders' equity
            
            
            33,887
            
            
            32,857TOTAL
            
            $
            42,243
            
            $
            41,642





*see
      notes to consolidated condensed financial statements*








1








UTAH
      MEDICAL PRODUCTS, INC. AND SUBSIDIARIES


CONSOLIDATED
      CONDENSED STATEMENTS OF INCOME FOR THE


THREE
      MONTHS ENDED MARCH 31, 2006 AND MARCH 31, 2005


(in
      thousands, except per share amounts)


(unaudited)





THREE
                MONTHS ENDED
              MARCH
                31,2006
            
            2005NET
                SALES
            
            $
            7,104
            
            $
            6,652COST
                OF SALES
            
            
            3,097
            
            
            2,918Gross
                Margin
            
            
            4,007
            
            
            3,734EXPENSESSelling,
                general and administrative
            
            
            1,308
            
            
            1,118Research
                & development
            
            
            68
            
            
            64Total
            
            
            1,376
            
            
            1,182Income
                from Operations
            
            
            2,632
            
            
            2,552OTHER
                INCOME
            
            
            414
            
            
            254Income
                Before Income Tax Expense
            
            
            3,046
            
            
            2,806Income
                Tax Expense
            
            
            1,010
            
            
            837Net
                Income
            
            $
            2,036
            
            $
            1,969BASIC
                EARNINGS PER SHARE
            
            $
            0.52
            
            $
            0.48DILUTED
                EARNINGS PER SHARE
            
            $
            0.50
            
            $
            0.46SHARES
                OUTSTANDING - BASIC
            
            
            3,952
            
            
            4,096SHARES
                OUTSTANDING - DILUTED
            
            
            4,070
            
            
            4,326





*see
      notes to consolidated condensed financial statements*








2








UTAH
      MEDICAL PRODUCTS, INC. AND SUBSIDIARIES


CONSOLIDATED
      CONDENSED STATEMENTS OF CASH FLOWS


FOR
      THE THREE MONTHS ENDED MARCH 31, 2006 AND MARCH 31, 2005


(in
      thousands - unaudited)





MARCH
                31,2006
            
            2005CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                income
            
            $
            2,036
            
            $
            1,969Adjustments
                to reconcile net income to net cash provided by operating
                activities:Depreciation
                and amortization
            
            
            156
            
            
            178Gain
                on investments
            
            
            (213
            )
            
            (70
            )Provision
                for losses on accounts receivable
            
            
            2
            
            
            3Deferred
                income taxes
            
            
            64
            
            
            91Stock-based
                compensation expense
            
            
            43
            
            
            -Tax
                benefit attributable to exercise of stock options
            
            
            2,149
            
            
            23Changes
                in operating assets and liabilities:Accounts
                receivable - trade
            
            
            21
            
            
            (116
            )Accrued
                interest and other receivables
            
            
            (422
            )
            
            (93
            )Litigation
                receivable
            
            
            -
            
            
            -Inventories
            
            
            (171
            )
            
            (31
            )Prepaid
                expenses and other current assets
            
            
            (59
            )
            
            (39
            )Accounts
                payable
            
            
            25
            
            
            (90
            )Accrued
                expenses
            
            
            (360
            )
            
            (392
            )Total
                adjustments
            
            
            1,235
            
            
            (537
            )Net
                cash provided by operating activities
            
            
            3,271
            
            
            1,432CASH
                FLOWS FROM INVESTING ACTIVITIES:Capital
                expenditures for:Property
                and equipment
            
            
            (148
            )
            
            (127
            )Intangible
                assets
            
            
            -
            
            
            -Purchases
                of investments
            
            
            (1,800
            )
            
            (2,100
            )Proceeds
                from sale of investments
            
            
            2,000
            
            
            1,168Net
                cash used in investing activities
            
            
            52
            
            
            (1,058
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from issuance of common stock - options
            
            
            409
            
            
            131Common
                stock purchased and retired
            
            
            (371
            )
            
            (1,140
            )Common
                stock purchased and retired - options
            
            
            (2,488
            )Repayments
                of note payable
            
            
            (85
            )
            
            -Payment
                of dividends
            
            
            (655
            )
            
            (616
            )Net
                cash used in financing activities
            
            
            (3,190
            )
            
            (1,625
            )Effect
                of exchange rate changes on cash
            
            
            (3
            )
            
            4NET
                INCREASE (DECREASE) IN CASH
            
            
            130
            
            
            (1,247
            )CASH
                AT BEGINNING OF PERIOD
            
            
            703
            
            
            1,818CASH
                AT END OF PERIOD
            
            $
            832
            
            $
            571SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATIONCash
                paid during the period for income taxes
            
            $
            0
            
            $
            25Cash
                paid during the period for interest
            
            $
            62
            
            $
            -


*see
        notes to consolidated condensed financial statements*





3








UTAH
      MEDICAL PRODUCTS, INC.


NOTES
      TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


(unaudited)





(1) The
      unaudited financial statements have been prepared in accordance with the
      instructions to form 10-Q and do not include all of the information and note
      disclosures required by accounting principles generally accepted in the United
      States. These statements should be read in conjunction with the financial
      statements and notes included in the Utah Medical Products, Inc. ("UTMD" or
      "the
      Company") annual report on form 10-K for the year ended December 31, 2005.
      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.
      Dollar amounts are in thousands except per-share amounts and where
      noted.





(2) Inventories
      at March 31, 2006 and December 31, 2005 consisted of the following:





March
                31,
            
            December
                31,2006
            
            2005Finished
                goods
            
            $
            1,022
            
            $
            1,058Work-in-process
            
            
            892
            
            
            657Raw
                materials
            
            
            1,556
            
            
            1,590Total
            
            $
            3,470
            
            $
            3,305





(3) Stock-Based
      Compensation. At March 31, 2006 the Company had stock-based employee
      compensation plans, which authorized the grant of stock options to eligible
      employees and directors. Effective January 1, 2006, the Company adopted
      Statement of Financial Accounting Standards (SFAS) 123R, *Share-Based
      Payment* ,
      using
      the modified prospective method. 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 first quarter ended March 31, 2006,
      the Company recognized $43 in compensation cost related to adoption of the
      statement. Prior to December 31, 2005, the Company accounted for its stock-based
      employee compensation plans under the recognition and measurement principles
      of
      APB Opinion No. 25, *Accounting
      for Stock Issued to Employees* ,
      and
      related Interpretations, and had adopted the disclosure-only provisions of
      SFAS
      No. 123, *Accounting
      for Stock-Based Compensation* .
      Accordingly, no compensation cost was recognized in the financial statements
      prior to 2006, as all options granted under those plans had exercise prices
      equal to or greater than the market value of the underlying common stock on
      the
      date of grant.





A
      comparison of reported net income for the three months ended March 31, 2006
      and
      2005, and pro-forma net income for the three months ended March 31, 2005,
      including effects of expensing stock options, follows.





Three
                months endedMarch
                31,2006
            
            2005Net
                income, as reported
            
            $
            2,036
            
            $
            1,969Earnings
                per share, as reportedDiluted
            
            
            0.50
            
            
            0.46Basic
            
            
            0.52
            
            
            0.48Stock
                option expense included in net income
            
            
            43
            
            
            -**Pro-forma
                effects**Stock
                option expense not included in net income, net of related tax
                effects
            
            
            
            
            
            98Net
                income on a pro-forma basis
            
            
            
            
            
            1,871Earnings
                per share, on a pro-forma basisDiluted
            
            
            
            
            
            0.43Basic
            
            
            
            
            
            0.46








4








On
      May 6,
      2005, the Compensation and Option Committee of the Board accelerated the vesting
      of certain unvested stock options awarded to employees, officers and directors
      under the Company’s stock option plans, which had exercise prices that were
      under water as of market close on May 5, 2005.


Options
      to purchase 124,800 shares became fully exercisable on December 1, 2005 as
      a
      result of the vesting acceleration. Exercise prices of the options that were
      accelerated are $24.02 and $25.59 per share. These options previously became
      fully vested on October 1, 2007 and January 1, 2008. The Company took this
      action to avoid an accounting charge (as compensation expense) for these options
      starting in the quarter ending March 31, 2006, as required by SFAS
      123R.





(4) Comprehensive
      Income. Comprehensive income for the three months ending March 31, 2006 was
      $2,012, net of taxes. The components used to calculate comprehensive income
      were
      foreign currency translation adjustments of ($23), and unrealized holding losses
      of ($1).





(5) Warranty
      Reserve. The Company accrues provisions for estimated costs that are likely
      to
      be incurred for product warranties and uncollectible accounts. The amount of
      the
      provision is adjusted, as required, to reflect historical experience. The
      following table summarizes changes to UTMD’s warranty reserve during 1Q 2006 (in
      thousands):





Beginning
                Balance, January 1, 2006
            
            $
            60Changes
                in Warranty Reserve during 1Q 2006:Aggregate
                reductions for warranty repairs
            
            
            -Aggregate
                changes for warranties issued during reporting period
            
            
            -Aggregate
                changes in reserve related to preexisting warranties
            
            
            -Ending
                Balance, March 31, 2006
            
            $
            60








(6) Investments.
      Investments, classified as available-for-sale consist of the
      following:





March
                31, 2006
            
            March
                31, 2005Investments,
                at cost
            
            $
            16,413
            
            $
            15,901Equity
                Securities:Unrealized
                holding gains
            
            
            181
            
            
            82Unrealized
                holding (losses)
            
            
            (4
            )
            
            (29
            )Investments,
                at fair value
            
            $
            16,590
            
            $
            15,954





Changes
      in the unrealized holding gain on investment securities available-for-sale
      and
      reported as a separate component of accumulated other comprehensive income
      are
      as follows:





1Q
                2006
            
            1Q
                2005Balance,
                beginning of period
            
            $
            109
            
            $
            176Realized
                gain from securities included in beginning balance
            
            
            -
            
            
            71Unrealized
                holding gains (losses), in equity securities
            
            
            (1
            )
            
            (306
            )Deferred
                income taxes on unrealized holding gain
            
            
            -
            
            
            91Balance,
                end of period
            
            $
            108
            
            $
            32






Available-for-sale
                debt securities
            
            March
                31, 2006
            
            March
                31, 2005Maturity
                less than 1 year
            
            $
            -
            
            $
            10,521Maturity
                greater than 10 years
            
            
            -
            
            
            1,450








5








(7) 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 this 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; administrative practices of group purchasing
      organizations; 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 UTMD’s own new product introductions; changes in clinical practices; UTMD’s
      ability to efficiently and responsively manufacture its products; including
      the
      possible effects of lack of performance of suppliers; success in gaining access
      to important global distribution channels; budgetary constraints; the timing
      of
      regulatory approvals for newly introduced products; regulatory intervention
      in
      current operations; and third party reimbursement of health care costs of
      customers.


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 healthcare, 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





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





General


UTMD
      manufactures and markets a well-established range of specialty medical devices.
      The Company’s Form 10-K Annual Report for the year ended December 31, 2005
      provides a detailed description of products, technologies, markets, regulatory
      issues, business initiatives, resources and business risks, among other details,
      and should be read in conjunction with this report. Because of the relatively
      short span of time, results for any given three month period in comparison
      with
      a previous three month period may not be indicative of comparative results
      for
      the year as a whole. Dollar amounts in the report are in thousands, except
      per-share amounts or where otherwise noted.





Analysis
      of Results of Operations


a)
            Overview


In
      1Q
      2006, UTMD’s consolidated global sales increased 7% compared to 1Q 2005. UTMD
      achieved the following profitability measures for 1Q 2006, in comparison with
      1Q
      2005:




1Q
                06
            
            1Q
                05Gross
                Profit Margin (gross profits/ sales):
            56.4%
            
            56.1%Operating
                Profit Margin (operating profits/ sales):
            37.0%
            
            38.4%Net
                Income:
            28.7%
            
            29.6%





1Q
      2006
      earnings per share (EPS) of $.50 increased 10% compared to 1Q 2005.





b)
            Revenues


The
      Company believes that revenue should be recognized at the time of shipment
      as
      title generally passes to the customer at the time of shipment. Revenue
      recognized by UTMD is based upon documented arrangements and fixed contracts
      in
      which the selling price is fixed prior to completion of an order. Revenue from
      product and service sales is generally recognized at the time the product is
      shipped or service completed and invoiced, and collectibility is reasonably
      assured. There are circumstances under which revenue may be recognized when
      product is not shipped, all of which meet the criteria of SAB 104: the Company
      provides engineering services, for example, design and production of
      manufacturing tooling that may be used in subsequent UTMD manufacturing of
      custom components for other companies. This revenue is recognized when UTMD’s
      service has been completed according to a fixed contractual agreement.


Total
      consolidated sales in 1Q 2006 increased 7% compared to 1Q 2005. Both domestic
      and international sales increased 7%. Domestic direct sales increased 6%.
      Domestic OEM sales (sales of components to other companies where products are
      packaged and resold as part of another company’s finished product offerings)
      increased 13%. The OEM sales pattern is uneven quarter-to-quarter because
      customers tend to purchase several months’ worth of components at a time to
      minimize costs.


International
      sales were $1,738 in 1Q 2006 compared to $1,623 in 1Q 2005. Trade shipments
      from
      UTMD’s Ireland facility were up 4% in EURO terms, but down 5% in US Dollar terms
      due to a stronger US Dollar. The Ireland facility also manufactures components
      and subassemblies that are used in finished devices assembled in Utah, and
      shipped to both domestic and international customers from Utah. Intercompany
      shipments of components from Ireland to Utah were up 353% in EURO terms and
      312%
      in US Dollar terms.


UTMD
      groups sales into four product-line categories: 1) obstetrics, comprised of
      labor and delivery management tools for monitoring fetal and maternal
      well-being, for reducing risk in performing difficult delivery procedures and
      for improving clinician and patient safety; 2) gynecology/ electrosurgery/
      urology, comprised of tools for gynecological procedures associated primarily
      with cervical/ uterine disease including LETZ, endometrial sampling, diagnostic
      laparoscopy, and other MIS procedures; specialty excision and incision tools;
      conservative urinary incontinence therapy devices; and urology tools; 3)
      neonatal care, comprised of devices that provide developmentally-friendly care
      to the most critically ill babies including providing vascular access,
      administering vital fluids, maintaining a neutral thermal environment, providing
      protection and assisting in specialized applications; and 4) blood pressure
      monitoring/ accessories/ other, comprised of specialized components as well
      as
      molded parts sold on an OEM basis to other companies. In these four categories,
      UTMD’s primary revenue contributors often enjoy a dominant market share and
      typically have differentiated product features protected by patents.








7





Global
      revenues by product category:


1Q
                  2006
              
              %
              
              1Q
                  2005
              
              %Obstetrics
              
              $
              2,410
              
              
              34
              
              $
              2,412
              
              
              36Gynecology/
                  Electrosurgery/ Urology
              
              
              1,429
              
              
              20
              
              
              1,307
              
              
              20Neonatal
              
              
              1,769
              
              
              25
              
              
              1,311
              
              
              20Blood
                  Pressure Monitoring and Accessories*
              
              
              1,496
              
              
              21
              
              
              1,622
              
              
              24Total:
              
              $
              7,104
              
              
              100
              
              $
              6,652
              
              
              100*includes
                  molded components sold to OEM customers.




International
      revenues by product category:


1Q
                  2006
              
              %
              
              1Q
                  2005
              
              %Obstetrics
              
              $
              205
              
              
              12
              
              $
              161
              
              
              10Gynecology/
                  Electrosurgery/ Urology
              
              
              399
              
              
              23
              
              
              275
              
              
              17Neonatal
              
              
              169
              
              
              10
              
              
              60
              
              
              4Blood
                  Pressure Monitoring and Accessories*
              
              
              965
              
              
              56
              
              
              1,127
              
              
              69Total:
              
              $
              1,738
              
              
              100
              
              $
              1,623
              
              
              100*includes
                  molded components sold to OEM customers.




c)
            Gross
                Profit


UTMD’s
      average gross profit margin (GPM), gross profits as a percentage of sales,
      was
      56.4% in 1Q 2006, compared to 56.1% 1Q 2005. UTMD’s prices for its products have
      remained consistent with the prior year, but 1Q 2006 product mix slightly
      favored higher margin products compared to 1Q 2005. The Company continues to
      maintain facilities and other manufacturing overheads in excess of its needs.
      As
      a result, it projects that the dilution of fixed overhead costs that will occur
      with increased sales in 2006 will largely offset continuing increases in
      incremental direct material and labor costs, together with some competitive
      pressure on prices, yielding a GPM during 2006 comparable to 2005.


OEM
      sales
      are sales of UTMD components that are marketed by other companies as part of
      their product offerings. UTMD utilizes OEM sales as a means to help maximize
      utilization of its assets and capabilities established to satisfy its direct
      sales business. As a general rule, prices for OEM sales expressed as a multiple
      of direct variable manufacturing expenses are lower than for direct sales
      because, in the OEM and international channels, UTMD’s business partners incur
      significant expenses of sales and marketing. Because of UTMD’s small size and
      period-to-period fluctuations in OEM business activity, nonvariable
      manufacturing overhead expenses cannot be meaningfully allocated between direct
      and OEM sales. Therefore, UTMD does not report GPM by sales
      channels.





d)
            Operating
                Profit


Operating
      Profit, or income from operations, is the profit remaining after subtracting
      operating expenses from gross profits. Operating expenses in 1Q 2006 were higher
      than 1Q 2005 by $194. Factors in the increase were 1) an increase in sales
&
marketing expense due primarily to an expanded sales force ($89), 2) higher
      legal fees and litigation expenses ($58) and the non-cash expense ($43)
      associated with expensing unvested stock options per SFAS 123R. Total operating
      expenses including sales and marketing (S&M), research and development
      (R&D) and general and administrative (G&A) expenses, were 19.4% of sales
      in 1Q 2006, compared to 17.8% in 1Q 2005. Operating profits increased to $2,632
      in 1Q 2006 from $2,552 in 1Q 2005. The 1Q 2006 operating profit margin was
      37.0%
      compared to 38.4% of sales in 1Q 2005.


S&M
      expenses in 1Q 2006 were $590 or 8.3% of sales compared to $501, or 7.5% of
      sales in 1Q 2005. Because UTMD sells internationally through third party
      distributors, its S&M expenses are predominantly for U.S. business activity.
      In the rest of 2006, UTMD expects to continue substantially higher S&M
      expenses compared to 2005 due primarily to its expanded direct sales force,
      but
      intends to manage S&M expenses to a ratio of less than 9% of total
      sales.


R&D
      expenses in 1Q 2006 were $68 or 1.0% of sales compared to $64 or 1.0% of sales
      in 1Q 2005. In the remainder of 2006, UTMD plans to increase R&D spending
      modestly as a percentage of sales. **


G&A
      expenses in 1Q 2006 were $718 or 10.1% of sales compared to $617 or 9.3% of
      1Q
      2005 sales. In addition to litigation costs, G&A expenses include the cost
      of outside auditors and corporate governance activities relating to the
      implementation of SEC rules resulting from the Sarbanes-Oxley Act of 2002,
      as
      well as, starting in 1Q 2006, estimated stock-based compensation cost relating
      to adoption of SFAS 123R. Excluding any new required FDA litigation expenses,
      UTMD plans to hold G&A expenses in 2006 at a level about 9% of sales.





8








e)
            Non-operating
                income


Non-operating
      income in 1Q 2006 was $415 compared to $254 in 1Q 2005. UTMD received $377
      in 1Q
      2006 compared to $148 in 1Q 2005 in interest, dividends and capital gains income
      from investing cash balances. In 1Q 2006, UTMD paid $62 for interest expense
      after it had borrowed €4.5 million ($5,336) in December 2005 to facilitate the
      repatriation of profits generated by its Ireland operations between 1996 and
      2005. UTMD had paid no interest during 1Q 2005. Royalty income, which UTMD
      receives from licensing its technology to other companies, was approximately
      the
      same for the same periods in both years. Management expects 2006 non-operating
      income (after subtracting interest expense for the Ireland loan which did not
      exist during most of 2005) to be consistent with 2005 because of projected
      higher investment balances and higher interest rates in the U.S. during 2006
      relative to the prior year. This assumes the absence of a large investment
      in an
      acquisition, substantial share repurchases or some other large consumption
      of
      cash balances such as new litigation.





f)
            Earnings
                Before Income Taxes


1Q
      2006
      earnings before income taxes (EBT) increased to $3,046 compared to $2,806 in
      1Q
      2005. 1Q 2006 EBT margin was 42.9% of sales compared to 42.2% in 1Q 2005.





g)
            Net
                Income and Earnings per Share


UTMD’s
      net income increased to $2,036 in 1Q 2006 compared to $1,969 in 1Q 2005. Net
      profit margins (NPM), net income (after tax) expressed as a percentage of sales,
      was 28.7% in 1Q 2006 compared to 29.6% in 1Q 2005. The income tax provision
      rate
      in 1Q 2006 was 33.2% compared to 29.8% in 1Q 2005. 1Q 2005 net income relative
      to EBT was aided by a lower income tax provision as a result of The American
      Jobs Creation Act of 2004 (the Act) which allowed a temporary tax deduction
      on
      repatriated foreign earnings during 2005. Prior to 2005, UTMD included a
      deferred tax liability in reported results, anticipating that profits generated
      in Ireland would eventually be repatriated triggering additional U.S. income
      taxes. Because the Act provided a temporary deduction on repatriated foreign
      earnings, the tax provision on 1Q 2005 earnings was reduced by about $125,
      following guidance provided by FASB Staff Position No. FAS 109-2. Tax benefits
      from the Act were limited to the year 2005. As a result, UTMD expects that
      its
      consolidated income tax provision for the year 2006 may be about seven
      percentage points higher than in the previous year, which was 26.1%.


Diluted
      1Q 2006 Earnings per Share (EPS) increased to $.50 from $.46 in 1Q 2005. 1Q
      2006
      weighted average number of diluted common shares (the number used to calculate
      diluted EPS) were 4,070,000 compared to 4,326,000 shares in 1Q 2005. The Company
      repurchased 12,099 of its shares in the open market in 1Q 2006. Exercises of
      employee options in 1Q 2006 added 122,191 shares (net of 144,438 shares swapped
      by employees as payment for the option exercise cost). Employees and outside
      directors exercised a total of 266,629 option shares during 1Q 2006. Options
      outstanding at March 31, 2006 were about 280,000 shares at an average exercise
      price of $17.75 per share.


Increases
      and decreases in UTMD’s stock price impact EPS as a result of the dilution
      calculation for unexercised options with exercise prices below the average
      stock
      market value during each period. The dilution calculation added 117,000 shares
      to actual weighted average shares outstanding in 1Q 2006, compared to 230,000
      in
      1Q 2005. The decrease in 2005 dilution is primarily due to fewer unexercised
      options outstanding. Actual outstanding common shares as of the end of 1Q 2006
      were 3,966,400 compared to 4,070,100 at the end of 1Q 2005.





h)
            Return
                on Equity


Return
      on
      equity (ROE) is the portion of net income retained by UTMD (after payment of
      dividends) to internally finance it growth, divided by the average accumulated
      shareholder equity during the applicable time period. Annualized ROE (after
      payment of dividends) in 1Q 2006 was 17%, compared to 15% in 1Q 2005. The higher
      ROE in 1Q 2006 was due to higher net profits. Share repurchases have a
      beneficial impact on ROE as long as the Company sustains net profit performance
      because shareholder equity is reduced by the cost of the shares repurchased.
      Although UTMD expects higher net profits in 2006, ROE may be lower than in
      2005
      as a result of increased dividends to shareholders coupled with higher average
      shareholders’ equity. A lower ROE in 2006 will not affect UTMD’s ability to
      internally-finance its revenue growth.





9








Liquidity
      and Capital Resources


i)
            Cash
                flows


Cash
      flows from operating activities, including adjustments for depreciation and
      other non-cash operating expenses, along with changes in working capital and
      the
      tax benefit attributable to exercise and subsequent sale of employee and
      director stock options, totaled $3,271 in 1Q 2006 compared to $1,432 in 1Q
      2005.
      A $2,125 larger tax benefit from exercise of employee and outside director
      stock
      options in 1Q 2006 compared to 1Q 2005 was the most significant difference
      in
      the two periods.


The
      Company’s use of cash for investing activities was primarily as a result of
      purchases of short-term investments, in an effort to achieve a prudent return
      for excess cash balances. Capital expenditures for property and equipment were
      $148 in 1Q 2006 compared to 127 in 1Q 2005. This rate of investing in new
      property and equipment is required to keep facilities, equipment and tooling
      in
      good working condition.


In
      1Q
      2006, UTMD received $409 and issued 122,191 shares of stock upon the exercise
      of
      employee and director stock options. Employees and directors exercised a total
      of 266,629 option shares in 1Q 2006, with 144,438 shares immediately being
      retired as a result of the individuals trading the shares in payment of the
      exercise price of the options and related tax withholding. UTMD paid $2,488
      in
      1Q 2006 to meet tax withholding requirements on options exercised. UTMD
      repurchased 12,099 shares of stock in the open market at a cost of $371 during
      1Q 2006. Option exercises in 1Q 2006 were at an average price of $9.79 per
      share. Share repurchases in the open market were at an average cost of $30.67
      per share, including commissions and fees. In comparison, the Company received
      $131 from issuing 17,745 shares of stock on the exercise of employee stock
      options in 1Q 2005, net of 2,385 shares retired upon employees trading those
      shares in payment of the stock option exercise price. UTMD repurchased 53,124
      shares of stock in the open market at a cost of $1,140 during 1Q
      2005.


UTMD
      Ltd.
      made payments of $85 on its note payable during 1Q 2006. UTMD did not utilize
      its bank line of credit with US Bank during 1Q 2005. UTMD paid $655 in cash
      dividends during 1Q 2006 compared to $616 in 1Q 2005.


Management
      believes that future income from operations and effective management of working
      capital will provide the liquidity needed to finance growth plans. Planned
      capital expenditures during the remainder of 2006 are expected to be
      approximately $500 to keep facilities, equipment and tooling in good working
      order. In addition to capital expenditures, UTMD plans to use cash in 2006
      for
      selective infusions of technological, marketing or product manufacturing rights
      to broaden the Company's product offerings; for continued share repurchases
      if
      the price of the stock remains undervalued; and if available for a reasonable
      price, acquisitions that may strategically fit UTMD’s business and are accretive
      to performance. The revolving line of credit will continue to be available
      for
      liquidity when the timing of acquisitions or repurchases of stock require a
      large amount of cash in a short period of time not otherwise available from
      existing cash and investment balances.





j)
            Assets
                and Liabilities


March
      31,
      2005 total assets were $601 higher than at December 31, 2005. The increase
      resulted primarily from a $407 increase in accounts and other receivables,
      the
      largest component of which was a $419 increase in income taxes receivable.
      Although inventories increased $165, the Company expects 2006-ending inventory
      balances to be lower than 2005-ending balances. Other current assets in the
      aggregate changed very little. Trade accounts receivable balances, net of
      allowances for doubtful accounts, were essentially unchanged. Cash and
      investment balances declined only slightly despite paying $655 in dividends,
      $371 to repurchase shares and nearly $2.5 million to meet employee and director
      tax withholding requirements for options exercised.


Working
      capital was $23,525 at March 31, 2006, a $842 increase from 2005 year-end.
      Working capital continues in excess of UTMD’s normal operating needs. $515 of
      the increase in working capital was due to an increase in current assets,
      generally described above. Current liabilities declined $327 from lower accrued
      liabilities, primarily because of payment during 1Q 2006 of accrued 2005 annual
      management bonuses. As a result of the working capital changes, UTMD’s current
      ratio increased to 9.3 on March 31, 2006 from 8.1 at year-end 2005, and in
      comparison, 6.3 on March 31, 2005.


Net
      property and equipment increased $98 in 1Q 2006 despite an increase in
      accumulated depreciation of $178 and capital spending of $148, due to the
      increase in the dollar-denominated value of Ireland P&E. The U.S. dollar
      increased about 2% relative to the EURO during 1Q 2006. Goodwill resulting
      from
      prior acquisitions remained the same. Net intangible assets excluding goodwill
      decreased $12 as a result of amortization of patents and other intellectual
      property. At March 31, 2006, net intangible assets including goodwill were
      18%
      of total assets, the same as at year-end 2005.


UTMD’s
      long term liabilities are comprised almost entirely of the Ireland loan ($5,251
      on March 31, 2006) and deferred revenue and income taxes ($257 on March 31,
      2006). As of December 31, 2005, those long term liabilities were $5,336 and
      $274, respectively. As of March 31, 2006, UTMD’s total debt ratio (total
      liabilities/ total assets) decreased to 20% from 21% on December 31, 2005.
      In
      comparison, UTMD’s total debt ratio on March 31, 2005 was 11%, which was prior
      to UTMD Ltd. borrowing (in December 2005) to repatriate foreign profits.







10







k)
            Management's
                Outlook.


As
      outlined in its December 31, 2005 10-K report, UTMD’s plan for 2006 is to


1) 
       increase sales and marketing efforts to
      regain
      business lost as a result of the FDA’s irresponsible four-year long abuse and
      attempted defamation of UTMD, which was clearly in contradiction to UTMD’s
      record of outstanding quality in producing millions of safe and effective
      devices, which culminated in a frivolous lawsuit filed by the FDA in August
      2004
      in which UTMD prevailed in October 2005 on all counts;


2) 
       reinvigorate internal new product development;


3) 
       continue outstanding operating performance;


4) 
       look for new acquisitions to augment sales growth; and


5) 
       utilize current cash balances in shareholders’ best long-term interest.





Actual
      performance in 1Q 2006 indicated that UTMD is on track after one quarter for
      achieving items 1), 3) and 5) above in the 2006 plan. UTMD does not announce
      its
      new product development initiatives until after it achieves applicable
      premarketing regulatory concurrences. No 510(k) submissions were made to the
      FDA
      in 1Q 2006. In 1Q 2006, the Company did not identify an acquisition which met
      its strategic requirements.





Regarding
      UTMD’s prior dispute with the FDA, UTMD wishes to remind shareholders that a
      U.S. Federal Court determined that UTMD has been and is in compliance with
      the
      provisions of the Quality System Regulation (21 CFR Part 820). The government
      did not appeal the decision. (There were never any FDA allegations that UTMD’s
      finished medical devices did not meet specifications, or were not safe, or
      were
      not effective.) Shareholders may wish to reread UTMD’s press releases and other
      disclosures over the last few years regarding its perspective of the dispute,
      which have now been proven accurate. The Company remains proud of its long
      term
      record of compliance with all government regulations.





Accounting
      Policy Changes.


None






































11





**Item
      3.**  **Quantitative
      and Qualitative Disclosures about Market Risk**





UTMD
      has
      manufacturing operations, including related assets, in Ireland denominated
      in
      the EURO, and sells products under agreements denominated in various Western
      European currencies. The EURO and other currencies are subject to exchange
      rate
      fluctuations that are beyond the control of UTMD. The exchange rate was 0.8243
      EURO per USD as of March 31, 2006, and 0.7732 EURO per USD as of March 31,
      2005.
      UTMD manages its foreign currency risk without separate hedging transactions
      by
      converting currencies to USD as transactions occur.








**Item
      4. Controls and Procedures**





The
      company’s management, under the supervision and with the participation of the
      Chief Executive Officer and the Principal Financial Officer, evaluated the
      effectiveness of the company’s disclosure controls and procedures (as defined in
      Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of
      March 31, 2006. Based on this evaluation, the Chief Executive Officer and
      Principal Financial Officer concluded that, as of March 31, 2006, the company’s
      disclosure controls and procedures were effective.


There
      were no changes in the company’s internal controls over financial reporting that
      occurred during the quarter ended March 31, 2006, that have materially affected,
      or are reasonably likely to materially affect, the company’s internal controls
      over financial reporting.















































12





PART
      II -
      OTHER INFORMATION





**Item
      1A.**   **Risk
      Factors**





In
      addition to the other information set forth in this report, investors should
      carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in
      UTMD’s Annual Report on Form 10-K for the year ended December 31, 2005, which
      could materially affect its business, financial condition or future results.
      The
      risks described in the Annual Report on Form 10-K are not the only risks facing
      the Company. Additional risks and uncertainties not currently known to UTMD
      or
      currently deemed to be immaterial also may materially adversely affect the
      Company’s business, financial condition and/or operating results.








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





The
      following table details purchases by UTMD of its own securities during 1Q
      2006.





**ISSUER
      PURCHASES OF EQUITY SECURITIES**





Period
            Total
                Number
              of
                Shares
              Purchased
                (1)
            Average
              Price
                Paid
              per
                Share
            Total
                Number of
              Shares
                Purchased as
              Part
                of Publicly
              Announced
                Plans or
              Programs
                (1)
            Maximum
                Number (or
              Approximate
                Dollar Value)
              of
                Shares that May be
              Purchased
                Under the Plans
              or
                Programs (1)1/01/06
                - 1/31/06
            3,302
            $
                28.50
            3,3022/01/06
                - 2/28/06
            -
            -
            -3/01/06
                - 3/31/06
            8,797
            31.42
            8,797Total
            12,099
            $30.67
            12,099





(1) In
      1Q
      2006 UTMD repurchased the above shares pursuant to a continued open market
      repurchase program initially announced in August 1992. Since 1992 through 1Q
      2006, the Company has repurchased 6.4 million shares at an average cost of
      $11.47 per share including broker commissions and fees in open market
      transactions. In addition, the Company conducted tender offer transactions
      in
      which it purchased an additional 2.8 million shares at an average cost of $9.76
      per share including fees and administrative costs. In total, UTMD has
      repurchased over 9.1 million of its shares at an average price of $10.95 per
      share since 1992. To complete the picture relating to current shares
      outstanding, since 1992 the Company’s employees and directors have exercised and
      purchased 1.9 million option shares at an average price of $7.36 per share.
      All
      options were awarded at the market value of the stock on the date of the
      award.





The
      frequency of UTMD’s open market share repurchases depends on the availability of
      sellers and the price of the stock. The board of directors has not established
      an expiration date or a maximum dollar or share limit for UTMD’s continuing and
      long term pattern of open market share repurchases.





The
      purpose of UTMD’s ongoing share repurchases is to maximize the value of the
      Company for its continuing shareholders, and maximize its return on shareholder
      equity by employing excess cash generated by effectively managing its business.
      UTMD does not intend to repurchase shares that would result in terminating
      its
      Nasdaq National Market listing.











13





**Item
      6. Exhibits**





Exhibit
                #
            SEC
              Reference
                #
            Title
                of Document1
            31
            Certification
                of CEO pursuant to Rule 13a-14(a) as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 20022
            31
            Certification
                of Principal Financial Officer pursuant to Rule 13a-14(a) as adopted
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                20023
            32
            Certification
                of CEO pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of
                the Sarbanes-Oxley Act of 20024
            32
            Certification
                of Principal Financial Officer pursuant to 18 U.S.C. §1350, as Adopted
                Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002











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.REGISTRANTDate:5/9/06
            By:
            /s/ Kevin L.
                CornwellKevin
                L. CornwellCEODate:5/9/06
            By:
            /s/ Paul O.
                RichinsPaul
                O. RichinsPrincipal
                Financial Officer






































14