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, 2007
              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
                  filerx
              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, 2007: 3,931,000.
 
 
 
 
  
  UTAH
        MEDICAL PRODUCTS, INC.
 INDEX
        TO FORM 10-Q
 
 
 PART
                  I - FINANCIAL INFORMATION
              PAGEItem
                  1.
              Financial
                  StatementsConsolidated
                  Condensed Balance Sheets as of March 31, 2007 and December 31,
                  2006
              1Consolidated
                  Condensed Statements of Income for the three months ended March
                  31, 2007
                  and March 31, 2006
              2Consolidated
                  Condensed Statements of Cash Flows for three months ended March
                  31, 2007
                  and March 31, 2006
              3Notes
                  to Consolidated Condensed Financial Statements
              4Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of Operations
              6Item
                  3.
              Quantitative
                  and Qualitative Disclosures about Market Risk
              11Item
                  4.
              Controls
                  and Procedures
              11PART
                  II - OTHER INFORMATIONItem
                  1A.
              Risk
                  Factors
              12Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              12Item
                  6.
              Exhibits
              13SIGNATURES
              13
 
 
 
 
 
 
  
  PART
        I -
        FINANCIAL INFORMATION
 
 **Item
        1. Financial Statements**
 
 UTAH
        MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
 CONSOLIDATED
        CONDENSED BALANCE SHEETS AS OF
 MARCH
        31, 2007 AND DECEMBER 31, 2006
 (in
        thousands)
 
 (unaudited)
              
              (audited)ASSETS
              
              MARCH
                  31,
                2007
              
              DECEMBER
                  31,
                2006Current
                  assets:Cash
              
              $
              634
              
              $
              610Investments,
                  available-for-sale
              
              
              21,011
              
              
              20,439Accounts
                  & other receivables - net
              
              
              4,279
              
              
              3,746Inventories
              
              
              3,204
              
              
              3,037Other
                  current assets
              
              
              680
              
              
              579Total
                  current assets
              
              
              29,808
              
              
              28,411Property
                  and equipment - net
              
              
              8,346
              
              
              8,331Goodwill
              
              
              7,191
              
              
              7,191Other
                  intangible assets
              
              
              2,596
              
              
              2,588Other
                  intangible assets - accumulated amortization
              
              
              (2,346
              )
              
              (2,334
              )Other
                  intangible assets - net
              
              
              250
              
              
              254TOTAL
              
              $
              45,595
              
              $
              44,187LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilities:Accounts
                  payable
              
              $
              649
              
              $
              599Accrued
                  expenses
              
              
              3,180
              
              
              2,341Current
                  portion of note payable
              
              
              441
              
              
              441Total
                  current liabilities
              
              
              4,270
              
              
              3,381Note
                  payable
              
              
              4,223
              
              
              4,383Deferred
                  income taxes
              
              
              311
              
              
              308Total
                  liabilities
              
              
              8,804
              
              
              8,072Stockholders'
                  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,
                  2007, 3,946 shares and December 31, 2006, 3,944 shares
              
              
              39
              
              
              39Accumulated
                  other comprehensive income
              
              
              (727
              )
              
              (720
              )Retained
                  earnings
              
              
              37,479
              
              
              36,796Total
                  stockholders' equity
              
              
              36,791
              
              
              36,115TOTAL
              
              $
              45,595
              
              $
              44,187
 
 *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, 2007 AND MARCH 31, 2006
 (in
        thousands, except per share amounts)
 (unaudited)
 
 THREE
                  MONTHS ENDEDMARCH
                  31,2007
              
              2006NET
                  SALES
              
              $
              7,118
              
              $
              7,104COST
                  OF SALES
              
              
              3,181
              
              
              3,097Gross
                  Margin
              
              
              3,937
              
              
              4,007EXPENSESSelling,
                  general and administrative
              
              
              1,150
              
              
              1,308Research
                  & development
              
              
              96
              
              
              68Total
              
              
              1,246
              
              
              1,376Income
                  from Operations
              
              
              2,691
              
              
              2,632OTHER
                  INCOME
              
              
              300
              
              
              414Income
                  Before Income Tax Expense
              
              
              2,991
              
              
              3,046Income
                  Tax Expense
              
              
              1,047
              
              
              1,010Net
                  Income
              
              $
              1,944
              
              $
              2,036BASIC
                  EARNINGS PER SHARE
              
              $
              0.49
              
              $
              0.52DILUTED
                  EARNINGS PER SHARE
              
              $
              0.48
              
              $
              0.50SHARES
                  OUTSTANDING - BASIC
              
              
              3,941
              
              
              3,952SHARES
                  OUTSTANDING - DILUTED
              
              
              4,016
              
              
              4,070
 
 *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, 2007 AND MARCH 31, 2006
 (in
        thousands - unaudited)
 
 MARCH
                  31,2007
              
              2006CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  income
              
              $
              1,944
              
              $
              2,036Adjustments
                  to reconcile net income to net cash provided by operating
                  activities:Depreciation
                  and amortization
              
              
              151
              
              
              156Gain
                  on investments
              
              
              (253
              )
              
              (213
              )Provision
                  for losses on accounts receivable
              
              
              0
              
              
              2Deferred
                  income taxes
              
              
              -
              
              
              64Stock-based
                  compensation expense
              
              
              19
              
              
              43Tax
                  benefit attributable to exercise of stock options
              
              
              30
              
              
              2,149Changes
                  in operating assets and liabilities:Accounts
                  receivable - trade
              
              
              (385
              )
              
              21Accrued
                  interest and other receivables
              
              
              (149
              )
              
              (422
              )Inventories
              
              
              (167
              )
              
              (171
              )Prepaid
                  expenses and other current assets
              
              
              (100
              )
              
              (59
              )Accounts
                  payable
              
              
              49
              
              
              25Accrued
                  expenses
              
              
              838
              
              
              (360
              )Total
                  adjustments
              
              
              33
              
              
              1,235Net
                  cash provided by operating activities
              
              
              1,978
              
              
              3,271CASH
                  FLOWS FROM INVESTING ACTIVITIES:Capital
                  expenditures for:Property
                  and equipment
              
              
              (85
              )
              
              (148
              )Intangible
                  assets
              
              
              (8
              )
              
              -Purchases
                  of investments
              
              
              (900
              )
              
              (1,800
              )Proceeds
                  from sale of investments
              
              
              544
              
              
              2,000Net
                  cash (used in) provided by investing activities
              
              
              (449
              )
              
              52CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from issuance of common stock - options
              
              
              102
              
              
              409Common
                  stock purchased and retired
              
              
              (544
              )
              
              (371
              )Common
                  stock purchased and retired - options
              
              
              -
              
              
              (2,488
              )Repayments
                  of note payable
              
              
              (225
              )
              
              (85
              )Payment
                  of dividends
              
              
              (829
              )
              
              (655
              )Net
                  cash used in financing activities
              
              
              (1,495
              )
              
              (3,190
              )Effect
                  of exchange rate changes on cash
              
              
              (10
              )
              
              (3
              )NET
                  INCREASE IN CASH
              
              
              23
              
              
              130CASH
                  AT BEGINNING OF PERIOD
              
              
              610
              
              
              703CASH
                  AT END OF PERIOD
              
              $
              634
              
              $
              832SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Cash
                  paid during the period for income taxes
              
              $
              0
              
              $
              0Cash
                  paid during the period for interest
              
              $
              65
              
              $
              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, 2006.
        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, 2007 and December 31, 2006 consisted of the following:
 
 March
                  31,
              
              December
                  31,2007
              
              2006Finished
                  goods
              
              $
              958
              
              $
              1,002Work-in-process
              
              
              1,049
              
              
              984Raw
                  materials
              
              
              1,197
              
              
              1,051Total
              
              $
              3,204
              
              $
              3,037
 
  (3)  In
        J une 2006,
        the Financial Accounting Standards Board (FASB) issued FASB Interpretation
        No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of
        FASB Statement No. 109.” This statement clarifies the accounting for
        uncertainty in income tax positions. The Company or one of its subsidiaries
        files or has filed income tax returns in the U.S. federal jurisdiction, and
        in
        various states and Ireland. With few exceptions, UTMD is no longer subject
        to
        U.S. federal, state and local, or non-U.S. income tax examinations by tax
        authorities for years before 2002. In 2005, the Internal Revenue Service
        examined the Company’s federal income tax returns for 2002 - 2004 and suggested
        one immaterial adjustment which the Company made.
 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
        along with penalties in operating expenses. During the quarters ended March
        31,
        2007 and 2006, the Company did not recognize any interest and penalties relating
        to income taxes. UTMD did not have any accrual for the payment of interest
        and
        penalties at March 31, 2007 or December 31, 2006.
 
  (4)  Sto ck-Based
        Compensation. At March 31, 2007 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 March 31, 2007
        and
        2006, the Company recognized $19 and $43, respectively, in compensation cost
        related to adoption of the statement.
 
  (5)  Comprehensive
        Income. Comprehensive income for the three months ending March 31, 2007 and
        2006
        was $1,940 and $2,012, net of taxes, respectively. The components used to
        calculate comprehensive income were foreign currency translation adjustments
        of
        ($4) and ($23) in 2007 and 2006, respectively, and unrealized holding losses
        of
        ($1) in 2006.
 
  -4-
   (6)  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 2007 (in
        thousands):
 
 Beginning
                  Balance, January 1, 2007
              
              $
              60Changes
                  in Warranty Reserve during 1Q 2007: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, 2007
              
              $
              60
 
  (7)  Investments.
        As of March 31, 2007, all of the Company’s investments are held in Fidelity Cash
        Reserves.  Ch anges
        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
                  2007
              
              1Q
                  2006Balance,
                  beginning of period
              
              $
              -
              
              $
              109Realized
                  gain from securities included in beginning balance
              
              
              -
              
              
              -Unrealized
                  holding gains (losses), in equity securities
              
              
              -
              
              
              (1
              )Deferred
                  income taxes on unrealized holding gain
              
              
              -
              
              
              -Balance,
                  end of period
              
              $
              -
              
              $
              108
 
  (8)  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 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
        require external funding.
 
  -5-
  **Item
        2.**  **Management's
        Discussion and Analysis of Financial Condition and Results of
        Operations**
 
 General
 UTMD
        manufactures and markets a well-established range of specialty medical devices.
        The Company’s Form 10-K Annual Report for the year ended December 31, 2006
        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
        2007, UTMD’s consolidated global sales were essentially the same as 1Q 2006.
        UTMD achieved the following profitability measures for 1Q 2007, in comparison
        with 1Q 2006:
 
 1Q
                  07
              
              1Q
                  06Gross
                  Profit Margin:
              
              55.3%
              
              56.4%Operating
                  Profit Margin:
              
              37.8%
              
              37.0%Net
                  (Income) Margin:
              
              27.3%
              
              28.7%
 
 1Q
        2007
        earnings per share (EPS) of $.484 decreased 3% compared to 1Q 2006.
 
 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
        sales in 1Q 2007 were about the same as in 1Q 2006. International sales
        increased 20% while domestic sales decreased 6%. Domestic sales were comprised
        of domestic direct sales (sales of finished devices to users or distributors)
        down 4% and domestic OEM sales (sales of components to other companies for
        use
        in their products) down 28%. 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.
 Trade
        shipments from UTMD’s Ireland facility were up 9% in EURO terms, and up 19% in
        USD terms due to a weaker US Dollar.
 The
        following table provides sales dollar amounts divided into general product
        categories for total sales and the subset of international sales:
 
 Global
        revenues by product category: 1Q
                    2007
                
                %
                
                1Q
                    2006
                
                %Obstetrics
                
                $
                2,260
                
                32
                
                $
                2,410
                
                34Gynecology/
                    Electrosurgery/ Urology
                
                
                1,558
                
                22
                
                
                1,429
                
                20Neonatal
                
                
                1,744
                
                24
                
                
                1,769
                
                25Blood
                    Pressure Monitoring and Accessories*
                
                
                1,556
                
                22
                
                
                1,496
                
                21Total:
                
                $
                7,118
                
                100
                
                $
                7,104
                
                100
 *includes
                  molded components sold to OEM customers.
 
  -6-
  International
        revenues by product category: 1Q
                    2007
                
                %
                
                1Q
                    2006
                
                %Obstetrics
                
                $
                292
                
                14
                
                $
                205
                
                12Gynecology/
                    Electrosurgery/ Urology
                
                
                457
                
                22
                
                
                399
                
                23Neonatal
                
                
                182
                
                9
                
                
                169
                
                10Blood
                    Pressure Monitoring and Accessories*
                
                
                1,146
                
                55
                
                
                965
                
                56Total:
                
                $
                2,077
                
                100
                
                $
                1,738
                
                100
 *includes
                  molded components sold to OEM customers.
 
 For
        the
        rest of 2007, UTMD’s sales 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, continued expansion in 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
        55.3% in 1Q 2007, compared to 56.4% 1Q 2006. UTMD’s prices for its products have
        remained generally consistent with the prior year, but 1Q 2007 distribution
        mix
        favored lower margins as a result of higher international sales and lower
        domestic sales compared to 1Q 2006. The Company is also experiencing
        inflationary pressures in its manufacturing costs associated with both labor
        and
        raw materials. Since nearly all of UTMD’s products are made of petroleum-based
        compounds, the worldwide substantial increase in the cost of oil has a
        significant impact on raw materials costs. In addition, the higher cost of
        oil
        has direct impact on transportation cost, both those included in manufacturing
        overhead for shipping and receiving products and raw materials, and those
        in
        operating expenses associated with sales and marketing travel expenses. UTMD
        continues to retain facilities and other manufacturing capabilities in excess
        of
        its needs. As a result, it projects that the dilution of fixed overhead costs
        that will occur with anticipated increased sales during the remainder of
        2007
        will help mitigate a continuing expected increase in incremental direct material
        and labor costs together with increased competitive pressure on prices. The
        Company expects an overall GPM in 2007 slightly lower than in 2006.
 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 maximize 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 activity, allocation of
        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 surplus after operating expenses
        are
        subtracted from gross profits. Operating expenses include sales and marketing
        (S&M) expenses, product development (R&D) expenses and general and
        administrative (G&A) expenses. Combined operating expenses in 1Q 2007 were
        lower than 1Q 2006 by $130 as a result of lower litigation expenses and lower
        sales expenses when selling through international distributors. Also, option
        compensation expense included in G&A expenses in 1Q 2007 was $19 compared to
        $43 in 1Q 2006. Operating profit margin in 1Q 2007 was 37.8% compared to
        37.0%
        of sales in 1Q 2006. For the remainder of 2007, UTMD expects to control
        operating expenses, excluding consideration for litigation expenses which
        are
        less predictable, at a level below 19% of sales, yielding a operating profit
        margin consistent with 2006.
 S&M
        expenses in 1Q 2007 were $485 or 6.8% of sales compared to $590, or 8.3%
        of
        sales in 1Q 2006. 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. During the remainder of 2007,
        UTMD
        intends to continue to manage S&M expenses to less than 9% of total
        sales.
 R&D
        expenses in 1Q 2007 were $96 or 1.4% of sales compared to $68 or 1.0% of
        sales
        in 1Q 2006. UTMD will opportunistically invest in R&D as projects are
        identified that may help its product development pipeline. In the remainder
        of
        2007, UTMD plans to continue to increase R&D spending modestly as a
        percentage of sales. **
 
  -7-
  G&A
        expenses in 1Q 2007 were $664 or 9.3% of sales compared to $718 or 10.1%
        of 1Q
        2006 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 estimated stock-based compensation cost as required by SFAS 123R.
        Excluding any currently unexpected litigation costs, UTMD plans to hold G&A
        expenses in 2007 at a level less than 10% of sales.
 
 e)
              Non-operating
                  income
 Non-operating
        income in 1Q 2007 was $300 compared to $414 in 1Q 2006. UTMD received $254
        in 1Q
        2007 compared to $377 in 1Q 2006 in interest, dividends and capital gains
        income
        from investing cash balances. During 1Q 2006, the Company realized $213 in
        capital gains when liquidating its investments in equities which did not
        recur
        in 1Q 2007. In 1Q 2007, UTMD paid $65 for interest expense compared to $62
        in 1Q
        2006. The interest expense resulted from UTMD’s Ireland facility borrowing €4.5
        million ($5,336) 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. It should take about 4 more
        years to repay the loan. Royalty income, which UTMD receives from licensing
        its
        technology to other companies, was the same for the same periods in both
        years.
        Management currently estimates that total 2007 non-operating income will
        be
        about $370 lower than in 2006. The actual amount of 2007 non-operating income
        may be even lower if UTMD utilizes its excess cash for an acquisition,
        unexpected litigation costs or substantial share repurchases.
 
 f)
              Earnings
                  Before Income Taxes
 1Q
        2007
        earnings before income taxes (EBT) decreased to $2,991 compared to $3,046
        in 1Q
        2006. 1Q 2007 EBT margin was 42.0% of sales compared to 42.9% in 1Q 2006.
 
 g)
              Net
                  Income and Earnings per Share
 UTMD’s
        net income decreased to $1,944 in 1Q 2007 compared to $2,036 in 1Q 2006.
        Net
        profit margins (NPM), which are net income (after tax) expressed as a percentage
        of sales, were 27.3% in 1Q 2007 compared to 28.7% in 1Q 2006. The income
        tax
        provision rate in 1Q 2007 was 35.0% compared to 33.2% in 1Q 2006. The increased
        tax rate resulted primarily from IRS discontinuance of the extraterritorial
        income exclusion in 2007. UTMD expects its consolidated income tax rate for
        2007
        will remain higher than in 2006, which was 34.2% for the year.
 Diluted
        1Q 2007 Earnings per Share (EPS) decreased to $.484 from $.500 in 1Q 2006.
        1Q
        2007 weighted average number of diluted common shares (the number used to
        calculate diluted EPS) were 4,015,955 compared to 4,069,630 shares in 1Q
        2006.
        The Company repurchased 16,900 of its shares in the open market in 1Q 2007.
        Exercises of employee options in 1Q 2007 added 19,723 shares (net of 6,197
        shares swapped by employees as payment for the option exercise cost). Employees
        exercised a total of 25,920 option shares during 1Q 2007. Options outstanding
        at
        March 31, 2007 were about 201,500 shares at an average exercise price of
        $20.33
        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 74,000 shares
        to
        actual weighted average shares outstanding in 1Q 2007 compared to 117,000
        in 1Q
        2006. The decrease in 2006 dilution is primarily due to fewer unexercised
        options outstanding with those options at higher exercise prices. Actual
        outstanding common shares as of the end of 1Q 2007 were 3,946,400 compared
        to
        3,966,400 at the end of 1Q 2006.
 
 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 during the applicable time period. Annualized ROE (after
        payment of dividends) in 1Q 2007 was 12%, compared to 17% in 1Q 2006. The
        lower
        ROE in 1Q 2007 was due mainly to higher average equity to date in 2007. 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 2007, ROE
        may be
        lower than in 2006 as a result of increased dividends to shareholders coupled
        with higher average shareholders’ equity. A lower ROE in 2007 will not affect
        UTMD’s ability to internally finance its revenue growth.
 
  -8-
  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
        and the
        tax benefit attributable to exercise and subsequent sale of employee and
        director stock options, totaled $1,978 in 1Q 2007 compared to $3,271 in 1Q
        2006.
        A $2,119 smaller tax benefit from exercise of employee and outside director
        stock options in 1Q 2007 compared to 1Q 2006 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 maximize returns on
        excess
        cash balances while maintaining safety and liquidity. Capital expenditures
        for
        property and equipment were $85 in 1Q 2007 compared to $148 in 1Q 2006. The
        rate
        of investing in new property and equipment is required to keep facilities,
        equipment and tooling in good working condition.
 In
        1Q
        2007, UTMD received $102 and issued 19,723 shares of stock upon the exercise
        of
        employee stock options. Employees exercised a total of 25,920 option shares
        in
        1Q 2007, with 6,197 shares immediately being retired as a result of the
        individuals trading the shares in payment of the exercise price of the options.
        UTMD repurchased 16,900 shares of stock in the open market at a cost of $544
        during 1Q 2007. Option exercises in 1Q 2007 were at an average price of $12.06
        per share. Share repurchases in the open market were at an average cost of
        $32.18 per share, including commissions and fees. In comparison, the Company
        received $409 from issuing 122,191 shares of stock on the exercise of employee
        stock options in 1Q 2006, net of 144,438 shares retired upon employees trading
        those shares in payment of the stock option exercise price. UTMD repurchased
        12,099 shares of stock in the open market at a cost of $371 during 1Q
        2006.
 UTMD
        Ltd.
        made payments of $225 on its note payable during 1Q 2007, compared to $85
        during
        1Q 2006. UTMD paid $829 in cash dividends during 1Q 2007 compared to $655
        in 1Q
        2006.
 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 2007 are expected to be less
        than
        $500 to keep facilities, equipment and tooling in good working order. In
        addition, UTMD may use cash in 2007 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. 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,
        2007 total assets were $1,408 higher than at December 31, 2006. The increase
        resulted primarily from a $572 increase in investments and a $533 increase
        in
        accounts and other receivables, the largest component of which was a $385
        increase in trade accounts receivable, net of allowance for doubtful accounts.
        Although inventories increased $167, the Company expects 2007-ending inventory
        balances to be about the same as 2006-ending balances. Other current assets
        increased $101. Cash and investment balances increased despite paying $829
        in
        dividends, $544 to repurchase shares and $225 in repayments of the note payable
        in Ireland.
 Working
        capital was $25,538 at March 31, 2007, a $508 increase from 2006 year-end.
        Working capital continues in excess of UTMD’s normal operating needs. Current
        liabilities increased $889 from higher accrued liabilities. That increase
        resulted from the fact that in the first quarter, unlike other calendar
        quarters, estimated income tax payments are due after the end of the quarter,
        and also unlike 1Q 2006 when accrued income taxes were offset by a much larger
        than usual tax benefit resulting from option exercises. As a result of the
        working capital changes, UTMD’s current ratio decreased to 7.0 on March 31, 2007
        from 8.4 at year-end 2006, and 8.0 on March 31, 2006.
 Net
        property and equipment increased $15 in 1Q 2007 after additions of $85 and
        an
        increase in the dollar-denominated value of Ireland P&E, offset by
        depreciation of $139. U.S. dollar-denominated assets in Ireland increased
        about
        $33 (after depreciation) or 1.4% during 1Q 2007. Goodwill resulting from
        prior
        acquisitions remained the same. Net intangible assets excluding goodwill
        decreased $4 as a result of amortization of intellectual property of $12
        offset
        by additions of intangibles of $8. At March 31, 2007, net intangible assets
        including goodwill were 16% of total assets, compared to 17% at year-end
        2006.
 UTMD’s
        long term liabilities are comprised of the Ireland note payable ($4,223 on
        March
        31, 2007) and deferred revenue and income taxes ($311 on March 31, 2007).
        As of
        December 31, 2006, those long term liabilities were $4,383 and $308,
        respectively. As of March 31, 2007, UTMD’s total debt ratio (total liabilities/
        total assets) increased to 19% from 18% on December 31, 2006. In comparison,
        UTMD’s total debt ratio on March 31, 2006 was also 19%.
 
  -9-
  k)
              Management's
                  Outlook.
 As
        outlined in its December 31, 2006 10-K report, UTMD’s plan for 2007 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 loss in domestic market share of its Intran Plus product, UTMD
        accomplished its 1Q 2007 objective for item 1). For the other items, UTMD
        believes it is on track after one quarter in 2007. 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.
 The
        Company adopted FIN 48, Accounting for Uncertainty in Income Taxes during
        1Q
        2007. Please see Note 3, above.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  -10-
  **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 other 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 0.7505
        EURO per USD as of March 31, 2007, and 0.8243 EURO per USD as of March 31,
        2006.
        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, 2007. Based on this evaluation, the Chief Executive Officer and
        Principal Financial Officer concluded that, as of March 31, 2007, 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, 2007, that have materially affected,
        or are reasonably likely to materially affect, the company’s internal controls
        over financial reporting.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  -11-
  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, 2006, 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
        2007.
 
 **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)1/01/07
                  - 1/31/07
              
              16,900
              
              $
                  32.18
              
              16,9002/01/07
                  - 2/28/07
              
              -
              
              -
              
              -3/01/07
                  - 3/31/07
              
              -
              
              -
              
              -Total
              
              16,900
              
              $
                  32.18
              
              16,900
 
 (1)   In
        1Q
        2007 UTMD repurchased the above shares pursuant to a continued open market
        repurchase program initially announced in August 1992. Since 1993 through
        1Q
        2007, the Company has repurchased 6,344,256 shares at an average cost of
        $11.71
        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 2,775,742 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 $11.11 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 $8.94 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 Global Market listing.
 
 
  -12-
  **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:5/9/07
              By:
              /s/ Kevin L. CornwellKevin
                  L. CornwellCEODate:5/9/07
              By:
              /s/ Paul O. RichinsPaul
                  O. RichinsPrincipal
                  Financial Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
   -13-