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, 2008
            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, a non-accelerated
filer, or a smaller reporting company.  See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act.


Large
      accelerated filer o
            Accelerated filer x
            Non-accelerated filer o
            Smallerreporting company o





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 August 6,
2008: 3,866,000.











UTAH MEDICAL PRODUCTS,
INC.


INDEX TO FORM
10-Q














PART
      I - FINANCIAL INFORMATION
            PAGEItem
      1.
            Financial
      StatementsConsolidated
      Condensed Balance Sheets as ofJune
      30, 2008 and December 31, 2007
            1Consolidated
      Condensed Statements of Income for thethree
      and six months ended June 30, 2008 and June 30, 2007
            2Consolidated
      Condensed Statements of Cash Flows forthe
      six months ended June 30, 2008 and June 30, 2007
            3Notes
      to Consolidated Condensed Financial Statements
            4Item
      2.
            Management’s
      Discussion and Analysis ofFinancial
      Condition and Results of Operations
            7Item
      3.
            Quantitative
      and Qualitative Disclosures about Market Risk
            11Item
      4.
            Controls
      and Procedures
            12PART
      II – OTHER INFORMATIONItem
      1A.
            Risk
      Factors
            13Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            13Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            14Item
      6.
            Exhibits
            14SIGNATURES
            14











PART I -
FINANCIAL INFORMATION




Item
1.      Financial
Statements




UTAH MEDICAL PRODUCTS, INC. AND
      SUBSIDIARIESCONSOLIDATED CONDENSED
      BALANCE SHEETS AS OFJUNE 30, 2008 AND
      DECEMBER 31, 2007(in
      thousands)(unaudited)
            
            
            (audited)ASSETS
            
            JUNE 30,
    2008
            
            
            DECEMBER 31,
      2007Current
      assets:Cash
            
            $
            518
            
            
            $
            1,251Investments,
      available-for-sale
            
            
            20,754
            
            
            
            21,121Accounts
      & other receivables - net
            
            
            4,000
            
            
            
            3,905Inventories
            
            
            3,758
            
            
            
            3,153Other
      current assets
            
            
            732
            
            
            
            502Total
      current assets
            
            
            29,762
            
            
            
            29,931Property
      and equipment - net
            
            
            8,793
            
            
            
            8,606Goodwill
            
            
            7,191
            
            
            
            7,191Other
      intangible assets
            
            
            2,646
            
            
            
            2,640Other
      intangible assets - accumulated amortization
            
            
            (2,408
            )
            
            
            (2,382
            )Other
      intangible assets - net
            
            
            238
            
            
            
            258TOTAL
            
            $
            45,984
            
            
            $
            45,986LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilities:Accounts
      payable
            
            $
            430
            
            
            $
            393Accrued
      expenses
            
            
            2,212
            
            
            
            2,349Current
      portion of note payable
            
            
            378
            
            
            
            423Total
      current liabilities
            
            
            3,020
            
            
            
            3,165Note
      payable
            
            
            2,991
            
            
            
            3,689Deferred
      income taxes
            
            
            403
            
            
            
            343Total
      liabilities
            
            
            6,414
            
            
            
            7,197Stockholders'
      equity:Preferred
      stock - $.01 par value; authorized - 5,000shares;
      no shares issued or outstandingCommon
      stock - $.01 par value; authorized - 50,000shares;
      issued - June 30, 2008, 3,871 shares andDecember
      31, 2007, 3,905 shares
            
            
            39
            
            
            
            39Accumulated
      other comprehensive income
            
            
            (971
            )
            
            
            (789
            )Retained
      earnings
            
            
            40,502
            
            
            
            39,539Total
      stockholders' equity
            
            
            39,570
            
            
            
            38,789TOTAL
            
            $
            45,984
            
            
            $
            45,986see
      notes to consolidated condensed financial
  statements





1




UTAH MEDICAL PRODUCTS, INC. AND
      SUBSIDIARIESCONSOLIDATED CONDENSED
      STATEMENTS OF INCOME FOR
      THETHREE AND SIX MONTHS
      ENDED JUNE 30, 2008 AND JUNE 30, 2007(in
      thousands, except per share amounts - unaudited)Three
      Months Ended
            
            
            Six
      Months EndedJune
      30,
            
            
            June
      30,2008
            
            
            2007
            
            
            2008
            
            
            2007Sales,
      net
            
            $
            7,115
            
            
            $
            7,211
            
            
            $
            14,005
            
            
            $
            14,329Cost
      of goods sold
            
            
            3,194
            
            
            
            3,205
            
            
            
            6,334
            
            
            
            6,387Gross
      profit
            
            
            3,921
            
            
            
            4,005
            
            
            
            7,671
            
            
            
            7,942Operating
      expenseSelling,
      general and administrative
            
            
            1,133
            
            
            
            1,179
            
            
            
            2,251
            
            
            
            2,329Research
      & development
            
            
            90
            
            
            
            109
            
            
            
            182
            
            
            
            205Total
            
            
            1,223
            
            
            
            1,288
            
            
            
            2,433
            
            
            
            2,534Operating
      income
            
            
            2,698
            
            
            
            2,717
            
            
            
            5,238
            
            
            
            5,408Other
      income
            
            
            188
            
            
            
            314
            
            
            
            392
            
            
            
            615Income
      before provision for income taxes
            
            
            2,886
            
            
            
            3,031
            
            
            
            5,630
            
            
            
            6,022Provision
      for income taxes
            
            
            969
            
            
            
            1,046
            
            
            
            1,822
            
            
            
            2,093Net
      income
            
            $
            1,917
            
            
            $
            1,985
            
            
            $
            3,808
            
            
            $
            3,929Earnings
      per common shares (basic)
            
            $
            0.49
            
            
            $
            0.50
            
            
            $
            0.98
            
            
            $
            1.00Earnings
      per common share (diluted)
            
            $
            0.49
            
            
            $
            0.50
            
            
            $
            0.97
            
            
            $
            0.98Shares
      outstanding - basic
            
            
            3,876
            
            
            
            3,935
            
            
            
            3,881
            
            
            
            3,938Shares
      outstanding - diluted
            
            
            3,913
            
            
            
            3,995
            
            
            
            3,921
            
            
            
            4,004see
      notes to consolidated condensed financial
  statements





2




UTAH MEDICAL PRODUCTS, INC. AND
      SUBSIDIARIESCONSOLIDATED CONDENSED
      STATEMENTS OF CASH FLOWSFOR THE SIX MONTHS
      ENDED JUNE 30, 2008 AND JUNE 30, 2007(in
      thousands - unaudited)June
      30,2008
              
              
              2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
              
              $
              3,808
              
              
              $
              3,929Adjustments
      to reconcile net income to netcash
      provided by operating activities:Depreciation
      and amortization
              
              
              297
              
              
              
              301Gain
      on investments
              
              
              (248
              )
              
              
              (511
              )Provision
      for (recovery of) losses on accounts receivable
              
              
              (24
              )
              
              
              0Deferred
      income taxes
              
              
              (165
              )
              
              
              -Stock-based
      compensation expense
              
              
              64
              
              
              
              44Changes
      in operating assets and liabilities:Accounts
      receivable - trade
              
              
              (145
              )
              
              
              (442
              )Accrued
      interest and other receivables
              
              
              131
              
              
              
              77Inventories
              
              
              (498
              )
              
              
              (235
              )Prepaid
      expenses and other current assets
              
              
              (26
              )
              
              
              (79
              )Accounts
      payable
              
              
              34
              
              
              
              (43
              )Accrued
      expenses
              
              
              (147
              )
              
              
              (87
              )Total
      adjustments
              
              
              (727
              )
              
              
              (975
              )Net
      cash provided by operating activities
              
              
              3,081
              
              
              
              2,955CASH
      FLOWS FROM INVESTING ACTIVITIES:Capital
      expenditures for:Property
      and equipment
              
              
              (123
              )
              
              
              (152
              )Intangible
      assets
              
              
              (6
              )
              
              
              (10
              )Purchases
      of investments
              
              
              (1,150
              )
              
              
              (800
              )Proceeds
      from sale of investments
              
              
              1,351
              
              
              
              1,240Net
      cash (used in) provided by investing activities
              
              
              72
              
              
              
              278CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from issuance of common stock - options
              
              
              147
              
              
              
              125Common
      stock purchased and retired
              
              
              (1,351
              )
              
              
              (1,240
              )Tax
      benefit attributable to exercise of stock options
              
              
              40
              
              
              
              34Common
      stock purchased and retired - options
              
              
              -
              
              
              
              -Repayments
      of note payable
              
              
              (1,012
              )
              
              
              (452
              )Payment
      of dividends
              
              
              (1,754
              )
              
              
              (1,697
              )Net
      cash used in financing activities
              
              
              (3,930
              )
              
              
              (3,230
              )Effect
      of exchange rate changes on cash
              
              
              44
              
              
              
              (4
              )NET
      DECREASE IN CASH
              
              
              (733
              )
              
              
              (2
              )CASH
      AT BEGINNING OF PERIOD
              
              
              1,251
              
              
              
              610CASH
      AT END OF PERIOD
              
              $
              518
              
              
              $
              608SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      paid during the period for income taxes
              
              $
              1,750
              
              
              $
              1,852Cash
      paid during the period for interest
              
              
              126
              
              
              
              135see
      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, 2007.  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 June 30, 2008 and December 31, 2007 consisted of the following:





June
      30,
            
            
            December
      31,2008
            
            
            2007Finished
      goods
            
            $
            1,245
            
            
            $
            1,245Work-in-process
            
            
            972
            
            
            
            694Raw
      materials
            
            
            1,541
            
            
            
            1,214Total
            
            $
            3,758
            
            
            $
            3,153







(3)          
  The Company adopted the provisions of FIN 48 on January 1,
2007.  UTMD did not make any adjustment to opening retained earnings
as a result of the implementation.  The Company recognizes interest
accrued related to unrecognized tax benefits in interest expense.  The
Company recognizes any applicable penalties in its income tax
provision.  During the three and six month periods ended June 30, 2008
and 2007, the Company did not recognize any interest or penalties related to
income taxes.  UTMD did not have any accrual for the payment of
interest and penalties at June 30, 2008 or December 31, 2007.





(4)          
  Stock-Based Compensation.  At June 30, 2008 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 quarters
ended June 30, 2008 and 2007, the Company recognized $33 and $25, respectively,
in compensation cost related to adoption of the statement.   In
the six months ended June 30, 2008 and 2007, the Company recognized $64 and $44,
respectively, in compensation cost related to adoption of the
statement.





(5)       
     Comprehensive Income.  Comprehensive
income for the second quarter (2Q) and first half (1H) of 2008 was $1,779 and
$3,596, net of taxes, respectively.  The components used to calculate
comprehensive income were foreign currency translation adjustments of $0 and $46
in 2Q and 1H 2008, respectively, and unrealized holding losses of ($138) and
($258) in 2Q and 1H 2008.





(6)       
     Warranty Reserve.   The Company
accrues provisions for estimated costs that may 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 2Q
2008:





Beginning
      Balance, April 1, 2008
            
            $
            40Changes in Warranty Reserve
      during 2Q 2008:Aggregate
      reductions for warranty repairs
            
            
            -Aggregate
      changes for warranties issued during reporting period
            
            
            -Aggregate
      changes in reserve related to preexisting warranties
            
            
            40Ending
      Balance, June 30, 2008
            
            $
            80








4




(7)      
      Investments.  As of June 30, 2008,
the Company’s investments were held in Spartan S/T Treas Bd Fid Advantage Class
(FSBAX), Fidelity Instl Treas Port Cl I (FISXX), Fidelity US Gov’t Reserves
(FGRXX), Fidelity Cash Reserves (FDRXX), Citigroup (C) and Washington Mutual
(WM).  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:





2Q 2008
            
            
            
            2Q 2007Balance,
      beginning of period
            
            $
            (276
            )
            
            $
            -Realized
      gain from securities included in beginning balance
            
            
            -
            
            
            
            -Gross
      unrealized holding gains (losses), in equity securities
            
            
            (227
            )
            
            
            -Deferred
      income taxes on unrealized holding loss
            
            
            88
            
            
            
            -Balance,
      end of period
            
            $
            (415
            )
            
            $
            -





(8)            
Fair Value Measurements.  In September 2006, the Financial Accounting
Standards Board (“FASB”) issued Statement of Financial Accounting Standards
(“SFAS”) No. 157 “Fair Value  Measurements.”   This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles and expands disclosures about fair
value measurements.  SFAS 157 is effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal
years.  UTMD adopted the requirements of SFAS 157 on January 1,
2008.




The
following table provides financial assets carried at fair value measured as of
June 30, 2008:




Fair
      Value Measurements UsingDescription
            
            Total Fair Value at
    6/30/2008
            
            
            Quoted
      Prices in Active Markets for Identical Assets
              (Level 1)
            
            
            Significant
      Other Observable Inputs
              (Level 2)
            
            
            Significant
      Unobservable Inputs
              (Level 3 )Available-for-sale
      securities
            
            $
            20,754
            
            
            $
            20,754
            
            
            $
            0
            
            
            $
            0







(9)             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.  Financial estimates are
subject to change and are not intended to be relied upon as predictions of
future operating results, and the Company assumes no obligation to update or
disclose revisions to those estimates.




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; opportunities 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 patients.




Negative factors that may adversely
impact future performance include managed care reforms or hospital group buying
agreements that may limit physicians’ ability to choose certain products or
procedures, new products introduced by other companies that displace UTMD’s
products, new product regulatory approval delays, changes in the Company’s
relationships with distribution partners, and loss of key
personnel.





5





The length of time and number of
administrative steps required in adopting new products for use in hospitals has
grown substantially in recent years.  As a potential negative factor
to future performance, as UTMD introduces new products it believes are safer and
more effective, it may find itself excluded from certain customers because of
the existence of long term supply agreements for preexisting
products.  UTMD may also be unable to establish viable relationships
with other medical device companies that do have access to users but lack an
interest in the Company’s approach or present unreasonable burdens.




Risk factors, in addition to the risks
outlined in the previous paragraphs and elsewhere in this report 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 or claims of patent
infringement by others; 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 or may not require external
funding.




6





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





General


UTMD
manufactures and markets a well-established range of primarily single-use
specialty medical devices.  The Company’s Form 10-K Annual Report for
the year ended December 31, 2007 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 second
quarter (2Q) 2008, UTMD’s consolidated global sales were 1% lower than in 2Q
2007.  2Q 2008 earnings per share (EPS) were $.490 compared to $.497
EPS in 2Q 2007.  UTMD achieved the following profitability measures
for 2Q 2008 and 2Q 2007:




2Q 08
            
            
            
            2Q 07Gross
      Profit Margin:
            
            
            55.1
            %
            
            
            55.5
            %Operating
      Profit Margin:
            
            
            37.9
            %
            
            
            37.7
            %Net
      Income Margin:
            
            
            26.9
            %
            
            
            27.5
            %





For first
half (1H) 2008, UTMD’s total sales were down 2% compared to 1H 2007. 1H 2008 EPS
were $0.971 compared to $0.981 EPS in 1H 2007.  UTMD achieved the
following profitability as a ratio of sales in 1H 2008 and 1H 2007:




1H 08
            
            
            
            1H 07Gross
      Profit Margin:
            
            
            54.8
            %
            
            
            55.4
            %Operating
      Profit Margin:
            
            
            37.4
            %
            
            
            37.7
            %Net
      Income Margin:
            
            
            27.2
            %
            
            
            27.4
            %





b)
            Revenues




The
Company recognizes revenue at the time of shipment as title generally passes to
the customer at that time.  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, 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
sales were 1% lower in 2Q 2008 compared to 2Q 2007.  International
sales were 4% higher while domestic sales were 4% lower.  Domestic
sales were comprised of domestic OEM sales (sales of components to other
companies for use in their products) up 13% and domestic direct sales (sales of
finished devices to users or distributors) down 5%.  Domestic OEM
sales and international sales have an uneven quarter-to-quarter sales pattern
because customers tend to purchase several months’ supply of products at a time
to minimize costs.




Domestic
direct sales excluding obstetrics products were down 2% in 2Q 2008 from 2Q
2007.  Domestic obstetrics product sales, which products are sold to
hospitals, were down 9% as a result of loss of market share due to significant
price reductions offered by competitors in 2008, and the continued trend of
administrative arrangements limiting physician choice of devices used in
L&D.  UTMD’s objective is to replace sales lost due to increased
competition by continued development of unique products that provide significant
improvements in patient safety and effectiveness of care.




Total 1H
2008 sales were 2% lower than in 1H 2007.  1H 2008 international sales
increased 5% while domestic sales decreased 5%.  International sales
were 32% of total sales in 1H 2008 compared to 30% in 1H 2007.  1H
2008 trade shipments from UTMD’s Ireland facility were down 7% in US Dollar
terms and 21% in EURO terms compared to 1H 2007, as UTMD shifted some of its
international work to lower cost centers in the U.S.




7





The
following table provides the actual sales dollar amounts by general product
category for total sales and the subset of international sales:





Global
revenues by product category:





2Q 2008
            
            
            
            2Q 2007
            
            
            
            1H 2008
            
            
            
            1H 2007Obstetrics
            
            $
            1,894
            
            
            $
            2,044
            
            
            $
            3,623
            
            
            $
            4,304Gynecology/
      Electrosurgery/ Urology
            
            
            1,595
            
            
            
            1,563
            
            
            
            3,156
            
            
            
            3,125Neonatal
            
            
            1,757
            
            
            
            1,748
            
            
            
            3,518
            
            
            
            3,491Blood
      Pressure Monitoring and Accessories*
            
            
            1,869
            
            
            
            1,856
            
            
            
            3,708
            
            
            
            3,409Total:
            
            $
            7,115
            
            
            $
            7,211
            
            
            $
            14,005
            
            
            $
            14,329*includes
      molded components sold to OEM
customers.





International
revenues by product category:




2Q 2008
            
            
            
            2Q 2007
            
            
            
            1H 2008
            
            
            
            1H 2007Obstetrics
            
            $
            192
            
            
            $
            175
            
            
            $
            286
            
            
            $
            467Gynecology/
      Electrosurgery/ Urology
            
            
            602
            
            
            
            545
            
            
            
            1,169
            
            
            
            1,002Neonatal
            
            
            215
            
            
            
            142
            
            
            
            417
            
            
            
            325Blood
      Pressure Monitoring and Accessories*
            
            
            1,321
            
            
            
            1,374
            
            
            
            2,643
            
            
            
            2,520Total:
            
            $
            2,330
            
            
            $
            2,236
            
            
            $
            4,515
            
            
            $
            4,314*includes
      molded components sold to OEM
customers.





For the
rest of 2008, UTMD’s sales will depend on its continued ability to retain
medical staff involvement in purchasing decisions for UTMD’s
“physician-preference” products used in U.S. hospitals where administrators are
increasingly making the product decisions, expanded clinical acceptance of its
newer specialty products, release of new products after FDA concurrence with
premarketing submissions and continued development of UTMD’s international
distribution channels.





c)
            Gross
      Profit




UTMD’s
average gross profit margin (GPM), gross profits as a percentage of sales, was
55.1% and 54.8% in 2Q and 1H 2008, respectively, compared to 55.5% and 55.4% in
2Q and 1H 2007, respectively.  As a result of the combination of lower
sales and lower GPM, gross profits declined 2% in 2Q 2008 and 3% in 1H 2008,
compared to the same periods in 2007. This was due to higher direct materials
and labor costs in addition to the mix shift in distribution channels. The
substantially higher cost of crude oil impacts costs of raw materials for
plastic devices, as well as substantially higher freight costs.  UTMD
continues to retain facilities and other manufacturing resources in excess of
its needs.  As a result, it projects that the dilution of fixed
overhead costs that will occur with any increased sales during the remainder of
2008 will help mitigate a continuing expected increase in incremental direct
material and labor costs.  The Company expects an overall GPM in 2008
slightly lower than in 2007.




OEM sales
are sales of UTMD components and subassemblies that are marketed by other
companies as part of their product offerings.  UTMD utilizes OEM sales
as a means to help optimize utilization of its 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, fixed 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 include
sales and marketing (S&M), research and development (R&D) and general
and administrative (G&A) expenses.  Operating expenses in 2Q 2008
were $65 lower than in 2Q 2007, and $101 lower in 1H 2008 than in 1H
2007.  The lower operating expenses were a result of lower sales
expenses when selling through international distributors.  Please see
the table below.  Option compensation expense included in G&A
expenses in 2Q 2008 was $33 compared to $25 in 2Q 2007, and $64 in 1H 2008
compared to $44 in 1H 2007.  UTMD’s operating profit margin in 2Q 2008
was 37.9% compared to 37.7% of sales in 2Q 2007, and 37.4% in 1H 2008 compared
to 37.7% of sales in 1H 2007.  For the remainder of 2008, UTMD expects
to control operating expenses, excluding consideration for litigation expenses
which are less predictable, at a level slightly below operating expenses as a
ratio of sales in 2007.  As a result, the lower 2008 operating expense
ratio is expected to offset the lower 2008 GPM, yielding an operating profit
margin about the same as in 2007.





8





Because
UTMD sells internationally through third party distributors, its S&M
expenses are predominantly for U.S. business activity where it sells directly to
clinical users.  S&M expenses in 2Q 2008 were $82 lower than in 2Q
2007, and $118 lower in 1H 2008 than in 1H 2007.  During the remainder
of 2008, UTMD intends to continue to manage S&M expenses to less than 7% of
total sales.




R&D
expenses in 2Q 2008 were $19 lower than in 2Q 2007, and $23 lower in 1H 2008
than in 1H 2007.  UTMD expects 2008 R&D expenses will be about the
same as in 2007 as a percentage of sales.  UTMD will opportunistically
invest in R&D as projects are identified that may help its product
development pipeline.  During the remainder of 2008, UTMD plans to
continue R&D spending approximately the same as a percentage of
sales.




G&A
expenses in 2Q 2008 were $35 higher than in 2Q 2007, and $40 higher in 1H 2008
than in 1H 2007.  The G&A expense increases were largely due to
higher G&A expenses in Ireland, which were $20 higher in 2Q 2008 and $35
higher in 1H 2008 compared to the same periods in 2007.  Roughly half
the Ireland increases were real and the other half due to a weaker U.S. Dollar.
UTMD expects 2008 G&A expenses will be slightly higher than in 2007 as a
percentage of sales.   The increases for the year are projected
to be the noted higher Ireland G&A expenses, primarily from independent
auditing and legal fees, and higher U.S. independent auditing fees and stock
option expense.




2Q 2008
            
            
            
            2Q 2007
            
            
            
            1H 2008
            
            
            
            1H 2007S&M
      Expense
            
            $
            459
            
            
            $
            540
            
            
            $
            908
            
            
            $
            1,026R&D
      Expense
            
            
            90
            
            
            
            109
            
            
            
            182
            
            
            
            205G&A
      Expense
            
            
            674
            
            
            
            639
            
            
            
            1,343
            
            
            
            1,303Total
      Operating Expenses:
            
            $
            1,223
            
            
            $
            1,288
            
            
            $
            2,433
            
            
            $
            2,534




e)
            Non-operating
      income




Non-operating
income in 2Q 2008 was $189 compared to $314 in 2Q 2007, and $392 in 1H 2008
compared to $615 in 1H 2007.  As a result of investing its cash
balances, UTMD received interest, dividends and capital gains of $124 in 2Q 2008
compared to $266 in 2Q 2007, and $265 in 1H 2008 compared to $520 in 1H
2007.




In 2Q and
1H 2008, UTMD had interest expenses of $60 and $126, respectively, compared to
$70 and $135 in 2Q and 1H 2007.  The interest expense resulted from
UTMD’s Ireland facility borrowing 4,500 EURO (€) in December 2005 to allow the
repatriation of profits generated by its Ireland operations between 1996 and
2005.  The loan is being paid by the Ireland subsidiary from profits
generated there.  The loan balance as of June 30, 2008
is  €2,132 EURO, so about 53% of the loan has been repaid in 2.5
years.  Royalty income, which UTMD receives from licensing its
technology to other companies, was approximately the same in both
years.  Management currently estimates that total 2008 non-operating
income will be about $500 lower than in 2007.  The actual amount of
2008 non-operating income may be even lower if UTMD utilizes current cash and
investment balances for an acquisition, unexpected litigation costs or
substantial share repurchases.




f)
            Earnings
      Before Income Taxes




Earnings
before income taxes (EBT) in 2Q 2008 were $2,886 compared to $3,031 in 2Q
2007.  EBT in 1H 2008 were $5,630 compared to $6,022 in 1H
2007.  EBT margins (EBT divided by sales) were 40.6% and 40.2% in 2Q
and 1H 2008, respectively, compared to 42.0% in both 2Q and 1H
2007.   UTMD expects its 2008 EBT margin will be about 2% lower
in 2008 compared to 2007 as a result of lower non-operating income.




g)
            Net
      Income and Earnings per Share




UTMD’s
net income was $1,917 in 2Q 2008 compared to $1,985 in 2Q 2007, and $3,808 in 1H
2008 compared to $3,929 in 1H 2007.  Net profit margins (NPM), which
are net income (after tax) expressed as a percentage of sales, were 26.9% in 2Q
2008 compared to 27.5% in 2Q 2007, and 27.2% in 1H 2008 compared to 27.4% in 1H
2007.  The income tax provision rates in 2Q and 1H 2008 were 33.6% and
32.3% of EBT, respectively, compared to 34.5% and 34.8% in 2Q and 1H
2007.  The lower tax provision rate resulted primarily from refunds on
amended 2004-2006 income tax returns in Ireland.  UTMD expects its
consolidated income tax rate for the year of 2008 may be about one percentage
point lower than for 2007, which was 34.3% for the year.




UTMD’s
net income divided by weighted average outstanding shares for the applicable
reporting period, diluted for unexercised employee and director options,
provides earnings per share (EPS) as follows:




2Q 2008
            2Q 2007
            1H 2008
            1H 2007Earnings
      Per Share (EPS)
            $
      .490
            $
      .497
            $  .971
            $
      .981Shares
      (000), Diluted
            3,913
            3,995
            3,921
            4,004




9





The
Company repurchased 15,243 and 46,586 of its shares in the open market in 2Q
2008 and in 1H 2008 respectively.   Exercises of employee options
added 806 and 12,257 shares in 2Q and 1H 2008 (net of 1,800 shares swapped in 1H
by individuals in payment of the exercise price of the options)
respectively.  Options outstanding at June 30, 2008 were about 218,800
shares at an average exercise price of $22.87 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
36,700 and 39,600 shares to actual weighted average shares outstanding in 2Q and
1H 2008 respectively, compared to 59,600 and 66,100 in 2Q and 1H
2007.  The decrease in dilution is due to a lower average market price
of UTMD shares in addition to fewer unexercised options
outstanding.  Actual outstanding common shares as of the end of 2Q
2008 were 3,871,000 compared to 3,924,000 at the end of 2Q 2007.




h)
            Return
      on Equity




Return on
equity (ROE) is the portion of net income retained by UTMD (after payment of
dividends) to internally finance its growth, divided by the average accumulated
shareholder equity for the applicable time period.  Annualized ROE
(after payment of dividends) for 1H 2008 was 10% compared to 12% for 1H
2007.  The lower ROE in 1H 2008 was due to 3% lower net profits, 3%
higher dividends and 7% higher average equity to date in 2008.  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.  UTMD expects ROE in 2008 will remain lower than
in 2007 as a result of lower net profits, higher dividends and higher average
shareholder equity.





Liquidity
and Capital Resources




i)
            Cash
      flows




Net cash
provided by operating activities, including adjustments for depreciation and
other non-cash operating expenses along with changes in working capital totaled
$3,081 in 1H 2008 compared to $2,955 in 1H 2007.  A $297 smaller
increase in accounts receivable and a $263 smaller gain on investments were the
most significant differences 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 maximize returns on excess
cash balances while maintaining safety and liquidity.  Capital
expenditures for property and equipment were $123 in 1H 2008 compared to $152 in
1H 2007.  This rate of investing in new property and equipment is
required to keep facilities, equipment and tooling in good working
condition.




In 1H
2008, UTMD received $147 and issued 12,257 shares of stock upon the exercise of
employee stock options.  Option exercises in 1H 2008 were at an
average price of $14.28 per share.  Employees exercised a total of
14,057 option shares in 1H 2008, with 1,800 shares immediately being retired as
a result of the individuals trading the shares in payment of the exercise price
of the options.  For comparison, the Company received $125 from
issuing 21,159 shares of stock on the exercise of employee stock options in 1H
2007, net of 6,418 shares retired upon employees trading those shares in payment
of the stock option exercise price.  The Company repurchased 46,586
shares of its stock in the open market at a cost of $1,351 during 1H 2008, an
average cost of $28.99 per share including commissions and fees.  For
comparison, UTMD repurchased 40,719 shares of stock in the open market at a cost
of $1,240 during 1H 2007.




UTMD Ltd.
(Ireland subsidiary) made payments of $1,012 on its note payable during 1H 2008
but only reduced the loan balance by $743 because of continued weakening of the
U.S. Dollar.  In 1H 2007, UTMD made loan repayments of
$452.  UTMD paid $1,754 in cash dividends in 1H 2008 compared to
$1,697 in 1H 2007, a 3% increase in cash dividends paid, although shares in 1H
2008 which received the dividends were about 1% fewer than in 1H
2007.




Management
believes that future income from operations and effective management of working
capital will provide the liquidity needed to finance internal growth
plans.  Planned capital expenditures during the remainder of 2008 are
expected to be less than $250 to keep facilities, equipment and tooling in good
working order.  In addition, UTMD may use cash in 2008 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 is undervalued; and if available for a reasonable price,
acquisitions that may strategically fit UTMD’s business and are accretive to
performance.




10




j)
            Assets
      and Liabilities




June 30,
2008 total assets were $2 lower than at December 31, 2007.  Changes
include a $1,100 decrease in cash and investments, a $605 increase in
inventories, a $230 increase in other current assets, and a $187 increase in US
Dollar-valued net property and equipment.  Inventories increased as a
result of bulk purchases to offset incremental rising direct materials costs and
a large acquisition of components to meet a rapid delivery commitment for a
China distributor that did not honor its contractual purchase
commitment.  The Company’s current 2008 ending inventory balances
objective is now about $3,300, which would result in expected inventory turns of
3.9. Since the end of 2007, cash and investment balances have decreased $1,100
despite using cash for $1,754 in cash dividends to shareholders, $1,351
repurchasing UTMD shares in the open market and $1,012 in principal payments on
the Ireland loan.




Working
capital was $26,742 at June 30, 2008, just $25 lower than at 2007
year-end.  Working capital continues substantially in excess of UTMD’s
normal operating needs.  Current liabilities decreased $145 primarily
as a result of the timing of estimated income tax payments.  As a
result of the working capital changes, UTMD’s current ratio increased to 9.9 on
June 30, 2008 from 9.5 at year-end 2007, and 8.9 on June 30, 2007.




Net
property and equipment increased $187 in 1H 2008 after additions of $123 and an
increase in the dollar-denominated value of Ireland P&E, offset by
depreciation of $271.  Goodwill resulting from prior acquisitions
remained the same. Net intangible assets excluding goodwill decreased $20 as a
result of amortization of intellectual property of $26 offset by additions of
intangibles of $6.  At June 30, 2008, net intangible assets including
goodwill were 16% of total assets, the same as at year-end 2007.




UTMD’s
long term liabilities are comprised of the Ireland note payable ($2,991 on June
30, 2008) and deferred income taxes ($403 on June 30, 2008).  As of
December 31, 2007, the respective long term liabilities were $3,689 and
$343.  In EURO, the Ireland loan balance (including the short term
portion) declined 21% from €2,791 to €2,132 (both in thousands) during 1H
2008.   As of June 30, 2008, UTMD’s total debt ratio (total
liabilities/ total assets) decreased to 14% from 16% on December 31, 2007, and
17% on June 30, 2007.




UTMD does
not have any off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on its financial condition, changes in
financial condition, revenues or expenses.




k)
            Management's
      Outlook.




As
outlined in its December 31, 2007 10-K report, UTMD’s plan for 2008 is
to


1)   retain the significant
U.S. market shares of key products, and continue growth of newer
products;


2)   add proprietary products
helpful to clinicians through internal new product development;


3)   continue to
disproportionately increase international sales;


4) 
 make effective adjustments to intracompany manufacturing operations to
minimize consolidated manufacturing costs;


5)   continue outstanding
overall financial operating performance;


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


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





Other
than a substantial loss in domestic market share of Intran Plus, UTMD
accomplished its 1H 2008 objective for item 1).  For the other items,
UTMD believes its performance is on track after half of 2008. UTMD does not
announce its new product development initiatives until after it achieves
applicable premarketing regulatory concurrences, or acquisition initiatives
until after a transaction agreement is done.




l)
            Accounting
      Policy Changes.




UTMD
adopted SFAS No. 157 “Fair Value Measurements” on January 1,
2008.  Please see note 8, above.




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 0.6328 EURO per USD as of June 30, 2008, and 0.7433 EURO per
USD as of June 30, 2007.  UTMD manages its foreign currency risk
without separate hedging transactions by converting currencies to USD as
transactions occur.




11





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 June
30, 2008. Based on this evaluation, the Chief Executive Officer and Principal
Financial Officer concluded that, as of June 30, 2008, 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 June 30, 2008, 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, 2007, 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 2Q
2008.





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)4/01/08
      - 4/30/08
            
            5,272
            
            $  28.97
            
            5,2725/01/08
      - 5/31/08
            
            9,971
            
            27.77
            
            9,9716/01/08
      - 6/30/08
            
            -
            
            -
            
            -Total
            
            15,243
            
            $  28.18
            
            15,243





(1)         
    In 2Q 2008 UTMD repurchased the above shares pursuant to
a continued open market repurchase program initially announced in August
1992.  Since 1993 through 2Q 2008, the Company has repurchased 6.4
million shares at an average cost of $11.97 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 9.2 million of
its shares at an average price of $11.31 per share since 1993.  To
complete the picture relating to current shares outstanding, since 1993 the
Company’s employees and directors have exercised and purchased 1.6 million
option shares at an average price of $9.01 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 consistent 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 Global Market listing.






13




Item
4.      Submission of Matters to a Vote of Security
Holders





On May
11, 2008 at the annual meeting, shareholders of the Company approved the
following matters submitted to them for consideration:


Elected
Ernst G. Hoyer and James H. Beeson as directors of the Company:


Ernst
      G. Hoyer
            For
            3,189,117James
      H. Beeson
            For
            3,190,036




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:
      8/7/08
              By:
              /s/
      Kevin L. CornwellKevin
      L. CornwellCEODate: 8/7/08
              By:
              /s/
      Paul O. RichinsPaul
      O. RichinsPrincipal
      Financial Officer







14