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, 2010
            Commission
      File No.0-11178








UTAH MEDICAL PRODUCTS, INC.


(Exact
name of Registrant as specified in its charter)








UTAH
            87-0342734(State
      or other jurisdiction of
            (I.R.S.
      Employerincorporation
      or organization)
            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.   YesxNoo





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
            Smaller
      reporting 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 May 7, 2010:
3,631,639.





UTAH MEDICAL PRODUCTS,
INC.


INDEX TO FORM
10-Q











PART
      I - FINANCIAL INFORMATION
            PAGEItem
      1.
            Financial
      StatementsConsolidated
      Condensed Balance Sheets as ofMarch
      31, 2010 and December 31, 2009
            1Consolidated
      Condensed Statements of Income for thethree
      months ended March 31, 2010 and March 31, 2009
            2Consolidated
      Condensed Statements of Cash Flows forthree
      months ended March 31, 2010 and March 31, 2009
            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
      1.
            Legal
      Proceedings
            13Item
      1A.
            Risk
      Factors
            13Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            13Item
      6.
            Exhibits
            13SIGNATURES
            13









PART
      I - FINANCIAL INFORMATIONItem
      1. Financial StatementsUTAH MEDICAL PRODUCTS, INC. AND
      SUBSIDIARIESCONSOLIDATED CONDENSED BALANCE SHEETS AS
      OFMARCH 31, 2010 AND DECEMBER 31,
      2009(in
      thousands)(unaudited)
              
              
              (audited)ASSETS
              
              MARCH 31, 2010
              
              
              DECEMBER 31, 2009Current
      assets:Cash
              
              $
              2,200
              
              
              $
              410Investments,
      available-for-sale
              
              
              19,583
              
              
              
              18,845Accounts
      & other receivables - net
              
              
              3,019
              
              
              
              3,157Inventories
              
              
              3,370
              
              
              
              3,407Other
      current assets
              
              
              487
              
              
              
              414Total
      current assets
              
              
              28,660
              
              
              
              26,233Property
      and equipment - net
              
              
              7,904
              
              
              
              8,133Goodwill
              
              
              7,191
              
              
              
              7,191Other
      intangible assets
              
              
              2,163
              
              
              
              2,660Other
      intangible assets - accumulated amortization
              
              
              (1,978
              )
              
              
              (2,463
              )Other
      intangible assets - net
              
              
              186
              
              
              
              197TOTAL
              
              $
              43,942
              
              
              $
              41,754LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilities:Accounts
      payable
              
              $
              528
              
              
              $
              345Accrued
      expenses
              
              
              2,480
              
              
              
              1,152Current
      portion of note payable
              
              
              256
              
              
              
              264Total
      current liabilities
              
              
              3,264
              
              
              
              1,761Note
      payable
              
              
              1,278
              
              
              
              1,403Deferred
      income taxes
              
              
              592
              
              
              
              608Total
      liabilities
              
              
              5,134
              
              
              
              3,773Stockholders'
      equity:Preferred
      stock - $.01 par value; authorized - 5,000shares; no shares issued or outstandingCommon
      stock - $.01 par value; authorized - 50,000shares; issued - March 31, 2010, 3,631 shares
    andDecember 31, 2009, 3,611 shares
              
              
              36
              
              
              
              36Accumulated
      other comprehensive loss
              
              
              (1,256
              )
              
              
              (994
              )Additional
      paid-in capital
              
              
              415
              
              
              
              -Retained
      earnings
              
              
              39,613
              
              
              
              38,939Total
      stockholders' equity
              
              
              38,808
              
              
              
              37,981TOTAL
              
              $
              43,942
              
              
              $
              41,754see
      notes to consolidated condensed financial statements
  -1-
  UTAH MEDICAL PRODUCTS, INC. AND
      SUBSIDIARIESCONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR
      THETHREE MONTHS ENDED MARCH 31, 2010 AND MARCH 31,
      2009(in
      thousands, except per share amounts)(unaudited)THREE
      MONTHS ENDEDMARCH
      31,2010
              
              
              2009Sales,
      net
              
              $
              6,436
              
              
              $
              6,445Cost
      of goods sold
              
              
              3,113
              
              
              
              2,945Gross
      profit
              
              
              3,323
              
              
              
              3,500Operating
      expenseSelling,
      general and administrative
              
              
              939
              
              
              
              952Research
      & development
              
              
              95
              
              
              
              89Total
              
              
              1,034
              
              
              
              1,041Operating
      income
              
              
              2,289
              
              
              
              2,459Other
      income
              
              
              19
              
              
              
              9Income
      before provision for income taxes
              
              
              2,308
              
              
              
              2,468Provision
      for income taxes
              
              
              781
              
              
              
              876Net
      income
              
              $
              1,527
              
              
              $
              1,592Earnings
      per common share (basic)
              
              $
              0.42
              
              
              $
              0.44Earnings
      per common share (diluted)
              
              $
              0.42
              
              
              $
              0.44Shares
      outstanding - basic
              
              
              3,618
              
              
              
              3,606Shares
      outstanding - diluted
              
              
              3,645
              
              
              
              3,619see
      notes to consolidated condensed financial statements
  -2-
  UTAH MEDICAL PRODUCTS, INC. AND
      SUBSIDIARIESCONSOLIDATED CONDENSED STATEMENTS OF CASH
      FLOWSFOR THE THREE MONTHS ENDED MARCH 31, 2010 AND
      MARCH 31, 2009(in
      thousands - unaudited)MARCH
      31,2010
              
              
              2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
              
              $
              1,527
              
              
              $
              1,592Adjustments
      to reconcile net income to netcash
      provided by operating activities:Depreciation
      and amortization
              
              
              151
              
              
              
              143Gain
      on investments
              
              
              (12
              )
              
              
              (47
              )Provision
      for losses on accounts receivable
              
              
              (1
              )
              
              
              (5
              )Stock-based
      compensation expense
              
              
              25
              
              
              
              31Changes
      in operating assets and liabilities:Accounts
      receivable - trade
              
              
              144
              
              
              
              293Accrued
      interest and other receivables
              
              
              (39
              )
              
              
              3Inventories
              
              
              (24
              )
              
              
              (449
              )Prepaid
      expenses and other current assets
              
              
              (85
              )
              
              
              (113
              )Accounts
      payable
              
              
              184
              
              
              
              182Accrued
      expenses
              
              
              478
              
              
              
              726Total
      adjustments
              
              
              821
              
              
              
              765Net
      cash provided by operating activities
              
              
              2,347
              
              
              
              2,357CASH
      FLOWS FROM INVESTING ACTIVITIES:Capital
      expenditures for:Property
      and equipment
              
              
              (210
              )
              
              
              (83
              )Intangible
      assets
              
              
              -
              
              
              
              (3
              )Purchases
      of investments
              
              
              (700
              )
              
              
              (1,300
              )Net
      cash used in investing activities
              
              
              (910
              )
              
              
              (1,386
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from issuance of common stock - options
              
              
              364
              
              
              
              25Common
      stock purchased and retired
              
              
              -
              
              
              
              -Tax
      benefit attributable to exercise of stock options
              
              
              25
              
              
              
              3Repayments
      of note payable
              
              
              (20
              )
              
              
              (231
              )Payment
      of dividends
              
              
              -
              
              
              
              -Net
      cash provided by (used in) financing activities
              
              
              370
              
              
              
              (202
              )Effect
      of exchange rate changes on cash
              
              
              (17
              )
              
              
              (11
              )NET
      INCREASE IN CASH
              
              
              1,790
              
              
              
              758CASH
      AT BEGINNING OF PERIOD
              
              
              410
              
              
              
              97CASH
      AT END OF PERIOD
              
              $
              2,200
              
              
              $
              855SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      paid during the period for income taxes
              
              $
              -
              
              
              $
              -Cash
      paid during the period for interest
              
              $
              7
              
              
              $
              16see
      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, 2009.  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, 2010 and December 31, 2009 consisted of the following:





March
      31,
            
            
            December
      31,2010
            
            
            2009Finished
      goods
            
            $
            1,049
            
            
            $
            1,391Work-in-process
            
            
            952
            
            
            
            851Raw
      materials
            
            
            1,369
            
            
            
            1,165Total
            
            $
            3,370
            
            
            $
            3,407





(3)      Stock-Based
Compensation.  At March 31, 2010, the Company has stock-based employee
compensation plans which authorize the grant of stock options to eligible
employees and directors.  The Company accounts for stock compensation
under FASB Accounting Standards Codification (“ASC”) 718, Stock
Compensation.  This statement requires the Company to recognize
compensation cost based on the grant date fair value of options granted to
employees and directors.  In first quarter (1Q) 2010, the Company
recognized $25 in compensation cost, compared to $31 in 1Q 2009.




(4)      Comprehensive
Income.  Comprehensive income for the three months ending March 31,
2010 and 2009 was $1,373 and $1,432, net of taxes, respectively.  The
components used to calculate comprehensive income were foreign currency
translation adjustments of ($169) and $(117) in 2010 and 2009, respectively, and
unrealized holding gains and (losses) of $16 and $(43) in 2010 and 2009,
respectively.





(5)      Warranty
Reserve.   The Company’s published warranty is: “UTMD warrants
its products to conform in all material respects to all published product
specifications in effect on the date of shipment, and to be free from defects in
material and workmanship for a period of thirty (30) days for supplies, or
twenty-four (24) months for equipment, from date of shipment.  During
the warranty period UTMD shall, at its option, replace any products shown to
UTMD's reasonable satisfaction to be defective at no expense to the Purchaser or
refund the purchase price.”




UTMD
maintains a warranty reserve to provide for estimated costs which are likely to
occur. The amount of this reserve is adjusted, as required, to reflect its
actual experience. Based on its analysis of historical warranty claims and its
estimate that existing warranty obligations were immaterial, no warranty reserve
was made at March 31, 2010. The following table summarizes changes to UTMD’s
warranty reserve during 1Q 2010:





Beginning
      Balance, January 1, 2010
            
            $
            0Changes in Warranty Reserve during 1Q
      2010: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, 2010
            
            $
            0




-4-


(6)       Investments.  As
of March 31, 2010, the Company’s investments are held in Fidelity Cash Reserves
(FDRXX), Fidelity Institutional Money Market (FMPXX), Citigroup (C), General
Electric (GE), Ishares Barclays TIPS (TIP), Lockheed Martin Corp (LMT) and SPDR
Barclays Capital TIPS (IPE).  Changes in the unrealized holding gain
on investment securities available-for-sale and reported as a separate component
of accumulated other comprehensive income are as follows:


1Q 2010
            
            
            
            1Q 2009Balance,
      beginning of period
            
            $
            (235
            )
            
            $
            (250
            )Realized
      loss from securities included in beginning balance
            
            
            -
            
            
            
            5Gross
      unrealized holding gains (losses), in equity securities
            
            
            26
            
            
            
            (75
            )Deferred
      income taxes on unrealized holding loss
            
            
            (10
            )
            
            
            27Balance,
      end of period
            
            $
            (219
            )
            
            $
            (293
            )





(7)      
Fair Value Measurements.  The Company follows ASC 820, Fair Value Measurements and
Disclosures to determine fair value of its financial
assets.  The following table
provides financial assets carried at fair value measured as of March 31,
2010:




Fair
      Value Measurements UsingDescription
            Total Fair Value at
              3/31/2010
            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
            $
      19,583
            $
      19,583
            $  0
            $  0




(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 management based on information
currently available.  When used in this document, the words
“anticipate,” “believe,” “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.





Risk
Factors:


Legislative healthcare
reform in the United States, as embodied in The Patient Protection and
Affordable Care Act and the Health Care and Education Reconciliation Act of 2010
(the “Acts”) add a substantial excise tax slated to begin in 2013, increase
administrative costs and may lead to decreased revenues.


The voluminous Acts, pending
administrative rules to enforce the Acts and promised efforts to reform the
Acts, make the U.S. medical device marketplace unpredictable, particularly for
the thousands of small medical device manufacturers including UTMD that do not
have the overhead structure that the large companies can afford.  To
the extent that the Acts place additional burdens on small medical device
companies in the form of an excise tax on medical device sales, additional
oversight of marketing and sales activities and new reporting requirements, the
result is likely to be negative for UTMD’s ability to effectively compete and
support continued investments in new product development and marketing of
specialty devices.


-5-




Increasing
regulatory burdens may result in significant loss of revenue, unpredictable
costs and loss of management focus on helping the Company thrive:


The Company’s experience in 2001-2005,
when the FDA sought to shut it down highlights the ongoing risk of being subject
to a regulatory environment which can be arbitrary and
capricious.  The risks associated with such a circumstance relate not
only to the substantial costs of litigation in millions of dollars, but also
loss of business, the diversion of attention of key employees for an extended
period of time, from new product development and routine quality control
management activities, and a tremendous psychological and emotional toll on
employees.





Since the FDA reserves to itself the
interpretation of which vague industry standards comprise law at any point in
time, it is impossible for any medical device manufacturer to ever be confident
that it is operating within the Agency’s version of the law.  The
result is that companies, including UTMD are considered guilty prior to proving
their innocence.  New premarketing submission rules and FDA user fees
will increase development costs and result in delays to revenues from new or
improved products.





The growth of Group
Purchasing Organizations adds non-productive costs, typically weakens the
Company’s marketing and sales efforts and may result in lower
revenues:


GPOs, theoretically acting as
bargaining agents for member hospitals, but actually collecting revenues from
the companies that they are negotiating with, have made a concerted effort to
turn medical devices that convey special patient safety advantages and better
health outcomes, like UTMD’s, into commodities. GPOs have been granted an
antitrust exemption by the U.S. Congress. Otherwise, their business model based
on “kickbacks” would be a violation of law.  These bureaucratic
entities do not recognize the overall cost of care as it relates to safety and
effectiveness of devices, and they create a substantial administrative burden
that is primarily related to collection of their administrative
fees.





As the healthcare industry
becomes increasingly bureaucratic it puts smaller companies like UTMD at a
competitive disadvantage:


An aging population and an extended
economic recession are placing greater burdens on healthcare systems,
particularly hospitals.  The length of time and number of
administrative steps required in adopting new products for use in hospitals has
grown substantially in recent years.  Smaller companies like UTMD
typically do not have the administrative resources to deal with broad new
administrative requirements, resulting in either loss of revenue or increased
costs.  As UTMD introduces new products it believes are safer and more
effective, it may find itself excluded from hospital customers because of the
existence of long term supply agreements for preexisting products, particularly
from competitors which can bundle a broader range of
products.  Restrictions used by hospital administrators to limit
clinician involvement in device purchasing decisions makes communicating UTMD’s
clinical advantages much more difficult.





A product liability lawsuit
could result in significant legal expenses and a large award against the
Company:


UTMD’s devices are frequently used in
inherently risky situations to help physicians achieve a more positive outcome
than what might otherwise be the case.  In any lawsuit where an
individual plaintiff suffers permanent physical injury, the possibility of a
large award for damages exists whether or not a causal relationship
exists.





The Company’s reliance on
third parties to market its products overseas results in less predictable
international revenues:


UTMD’s international distributors have
varying expertise in marketing and selling specialty medical
devices.  They also sell other devices that may result in less focus
on the Company’s products.





The loss of one or more key
employees could negatively affect UTMD performance:


In a small company with limited
resources, the distraction or loss of key personnel at any point in time may be
disruptive to performance.  The Company’s benefits programs are key to
recruiting and retaining talented employees.  The rapid increase in
UTMD’s employee healthcare plan costs, for example, may cause the Company to
have to reduce coverages which in turn represents a risk to retaining key
employees.





(9)Subsequent
Events.UTMD has evaluated subsequent events through the
date the financial statements were issued, and concluded there were no other
events or transactions during this period that required recognition or
disclosure in its financial statements.


-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 specialty medical devices.  The Company’s
Form 10-K Annual Report for the year ended December 31, 2009 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 the first quarter (1Q) 2010, UTMD
achieved revenues and net cash provided by operations virtually the same as 1Q
2009.  Profitability, however, was lower due to two factors: 1)
transition expenses associated with beginning the process of consolidating
Oregon injection molding operations into Utah operations, and 2) a
disproportionate amount of shipments during the quarter to China at low prices.
UTMD achieved the following profitability measures for 1Q 2010 and 1Q
2009:


1Q 10
            1Q 09Gross
      Profit Margin:
            51.6%
            54.3%Operating
      Profit Margin:
            35.6%
            38.1%Net
      (Income) Margin:
            23.7%
            24.7%





Changes in income statement results
compared to the same time period in the prior calendar year were as
follows:


Sales:
            N/CGross
      Profit:
            (5%)Operating
      Income:
            (7%)Net
      Income
            (4%)Earnings
      Per Share
            (5%)





1Q 2010 earnings per share (EPS) were
$.419 compared to $.440 in 1Q 2009.





The Company’s March 31, 2010 balance
sheet gained strength compared to December 31, 2009, although current
liabilities (C/L) were substantially higher due to two timing issues: 1) the
December 31, 2009 C/L balance is unusually low because the $849 cash dividend
normally accrued for 4Q 2009 and paid in early January was paid in late
December, and the March 31, 2010 C/L balance is unusually high because the first
quarter of each year is the only quarter of the year when estimated income taxes
are deposited after the end of the quarter.  Key March 31, 2010
balance sheet changes compared to December 31, 2009 follow:


Cash
      & Investments
            
            $
            2,528Receivables
      & Inventory
            
            
            (174
            )Total
      Assets
            
            
            2,188Total
      Current Liabilities
            
            
            1,503Ireland
      Note Payable
            
            
            (133
            )Shareholders’
      Equity
            
            
            827





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 contractual
agreement.


-7-


Total
sales in 1Q 2010 were down $9 (0.1%) from 1Q 2009.  International
sales increased 14% while domestic sales decreased 6%.  Sales of
devices from UTMD’s Ireland facility to international customers increased from
39% of total international sales in 1Q 2009 to 43% of 1Q 2010 international
sales in U.S. Dollar terms.  The primary reason for the higher
international sales was that sales of blood pressure monitoring devices to
UTMD’s distributor in China were $226 higher in 1Q 2010 than in 1Q
2009.


Domestic sales were comprised of
domestic direct sales (sales of finished devices to users or distributors) down
6%, and domestic OEM sales (sales of components to other companies for use in
their products) down 4%.  Domestic direct sales of obstetric devices,
the product category most affected by restrictive GPO agreements, declined
$185.  Domestic direct sales of Gesco neonatal devices decreased $25
while domestic direct sales of electrosurgery/gynecology devices were down
$38k.  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 transportation and import
costs.





Trade shipments from UTMD’s Ireland
facility were up 21% in EURO terms, and 25% in USD
terms.





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 2010
            
            
            %
            
            
            
            1Q 2009
            
            
            %Obstetrics
            
            $
            1,457
            
            
            
            23
            
            
            $
            1,597
            
            
            
            25Gynecology/
      Electrosurgery/ Urology
            
            
            1,574
            
            
            
            24
            
            
            
            1,586
            
            
            
            25Neonatal
            
            
            1,907
            
            
            
            30
            
            
            
            1,872
            
            
            
            29Blood
      Pressure Monitoring and Accessories*
            
            
            1,498
            
            
            
            23
            
            
            
            1,390
            
            
            
            21Total:
            
            $
            6,436
            
            
            
            100
            
            
            $
            6,445
            
            
            
            100


*includes molded components sold to
OEM customers.





International
revenues by product category:


1Q 2010
            
            
            %
            
            
            
            1Q 2009
            
            
            %Obstetrics
            
            $
            158
            
            
            
            8
            
            
            $
            113
            
            
            
            6Gynecology/
      Electrosurgery/ Urology
            
            
            600
            
            
            
            29
            
            
            
            586
            
            
            
            33Neonatal
            
            
            308
            
            
            
            15
            
            
            
            235
            
            
            
            13Blood
      Pressure Monitoring and Accessories*
            
            
            994
            
            
            
            48
            
            
            
            873
            
            
            
            48Total:
            
            $
            2,060
            
            
            
            100
            
            
            $
            1,807
            
            
            
            100


*includes molded components sold to
OEM customers.





For the rest of 2010, 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,
expanded clinical acceptance of its newer specialty products, release of new
products after FDA concurrence with premarketing submissions and continued
viability of UTMD’s international distribution channels.  The
Company’s beginning of year disclosure that it hoped to achieve 2010 sales
approximately the same as in 2009 was the case in the first
quarter.





c)     Gross
Profit


UTMD’s average gross profit margin
(GPM), gross profits as a percentage of sales, was 51.6% in 1Q 2010, compared to
54.3% 1Q 2009.  The lower GPM was due primarily to an unfavorable
distribution mix which resulted from an increase in international sales and a
decrease in domestic sales. Sales of devices from UTMD’s Ireland facility
increased from 11% of total consolidated sales in 1Q 2009 to 14% of 1Q 2010
sales.   The other factor was costs associated with consolidating
UTMD’s Oregon subsidiary into its Midvale, Utah operations.  UTMD
expects to conclude the transition costs of consolidation by the end of 2Q 2010,
with a similar dilutive impact expected on 2Q 2010 GPM, before gaining a GPM
benefit in the second half of 2010. If the Company achieves the same total sales
in 2010 as in 2009, as a result of the change in distribution mix, pricing
pressures in the U.S. hospital market and the
costs of consolidating Oregon operations into Utah, management expects an
overall GPM in 2010 about one percentage point lower than in
2009.


-8-


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
Income


Operating income, 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 2010 were lower
than 1Q 2009 by $7.  The operating profit margin in 1Q 2010 was 35.6%
compared to 38.1% in 1Q 2009, consistent with the decline in GPM.  For
the remainder of 2010, UTMD expects to control operating expenses, excluding
consideration for litigation expenses which are less predictable, at a level
yielding an operating profit margin consistent with the change in GPM for the
year as a whole.


S&M expenses in 1Q 2010 were $371
or 5.8% of sales compared to $386 or 6.0% of sales in 1Q 2009.  The
lower S&M expenses resulted primarily from fewer U.S. direct sales
representatives.  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.


R&D expenses in 1Q 2010 were $95
or 1.5% of sales compared to $89 or 1.4% of sales in 1Q 2009.  UTMD
will opportunistically invest in R&D as projects are identified that may
help its product development pipeline.


G&A expenses in 1Q 2010 were $568
or 8.8% of sales compared to $566 or 8.8% of 1Q 2009 sales.  In
addition to litigation costs, G&A expenses include the cost of outside
financial auditors and corporate governance activities relating to the
implementation of SEC rules resulting from the Sarbanes-Oxley Act, as well as
estimated stock-based compensation cost. Option compensation expense included in
G&A expenses was $25 in 1Q 2010 compared to $31 in 1Q 2009.





e)    
 Non-operating income


Non-operating income in 1Q 2010 was
$19 compared to $9 in 1Q 2009.  UTMD received less in investment
income in 1Q 2010 than in 1Q 2009, primarily due to lower interest rates, but it
also paid less in bank fees and interest on its Ireland debt.  The two
effectively canceled each other out.  The increase of $10 in 1Q 2010
was due to short term rental of excess facility warehouse space in Ireland. If
interest rates remain about the same for the rest of the year, UTMD expects its
non-operating income will be about $50 for all of 2010.





f)    
  Earnings Before Income Taxes


1Q 2010 earnings before income taxes
(EBT) decreased to $2,308 compared to $2,468 in 1Q 2009.  1Q 2010 EBT
margin was 35.9% of sales compared to 38.3% in 1Q 2009.  The domestic
component of EBT was $2,197 in 1Q 2010 compared to $2,370 in 1Q
2009.  The foreign component of EBT was $111 in 1Q 2010 compared to
$98 in 1Q 2009.





g)     Net
Income and Earnings per Share


UTMD’s net income decreased to $1,527
in 1Q 2010 compared to $1,592 in 1Q 2009.  Net profit margins (NPM),
which are net income (after income tax provision) expressed as a percentage of
sales, were 23.7% in 1Q 2010 compared to 24.7% in 1Q 2009.  The income
tax provision rate in 1Q 2010 was 33.8% compared to 35.5% in 1Q
2009.  The lower tax provision rate in 2010 resulted primarily from a
higher portion of income generated in Ireland taxed at a much lower income tax
rate, and the benefit of a higher manufacturing profit deduction in the
U.S.  Diluted 1Q 2010 Earnings per Share (EPS) decreased to $.419
compared to $.440 in 1Q 2009. UTMD is targeting 2010 net income and EPS about
equal to that achieved in 2009.


1Q 2010 weighted average number of
diluted common shares (the number used to calculate diluted EPS) were 3,644,795
compared to 3,618,937 shares in 1Q 2009.  The Company did not
repurchase any of its shares in the open market in
1Q 2010.   Exercises of employee options in 1Q 2010 added 19,794
shares (net of 1,769 shares swapped by employees as payment for the option
exercise cost).  Employees exercised a total of 21,563 option shares
during 1Q 2010.  Options outstanding at March 31, 2010 were about
226,100 shares at an average exercise price of $24.50 per
share.


-9-


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 26,800 shares to actual weighted average
shares outstanding in 1Q 2010 compared to 12,500 in 1Q 2009.  The
increase in 2010 dilution is due to a higher average market price and more
employee option exercises.  Actual outstanding common shares as of the
end of 1Q 2010 were 3,631,500 compared to 3,607,900 at the end of 1Q
2009.





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 in 1Q 2010 was 16%,
compared to 18% in 1Q 2009.  Both periods did not include a dividend
payment.  The dividends that normally would have been paid in early
January were paid in late December of each prior year. The lower ROE in 1Q 2010
was due to higher average equity and lower net income to date in
2010.  Average shareholders’ equity has been growing primarily because
UTMD has remained very profitable but has not repurchased many shares since the
price decline in late 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.  The Company
believes that repurchasing its shares when they are undervalued ultimately leads
to higher shareholder returns as well as higher ROE. If UTMD achieves net
profits about the same as in 2009, ROE in the absence of share repurchases in
2010 will be lower than in 2009 because average shareholders’ equity will
increase.





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 $2,347 in 1Q 2010
compared to $2,357 in 1Q 2009.  The most significant differences in
the two periods essentially offset each other: a $248 smaller increase in
accrued expenses plus a $149 smaller decrease in accounts receivable compared to
a $425 smaller increase in inventories.


The Company’s use of capital
expenditures for property and equipment more than doubled in 1Q 2010 from $83 in
1Q 2009 to $210 in 1Q 2010 as a result of starting a Utah facility expansion to
consolidate the Oregon molding operations into its Utah facility.  The
largest use of cash for investing activities in each period was a result of
purchases of short-term investments in an effort to maximize returns on excess
cash balances while maintaining safety and liquidity.


In 1Q 2010, UTMD received $364 and
issued 19,794 shares of stock upon the exercise of employee stock
options.  Employees exercised a total of 21,563 option shares in 1Q
2010, with 1,769 shares immediately being retired as a result of the individuals
trading the shares in payment of the exercise price of the
options.  Option exercises in 1Q 2010 were at an average price of
$16.89 per share.  In comparison, the Company received $25 from
issuing 5,112 shares of stock on the exercise of employee stock options in 1Q
2009, net of 544 shares retired upon employees trading those shares in payment
of the stock option exercise price.  UTMD did not repurchase any of
its own shares of stock in the open market during either 1Q 2010 or 1Q
2009.


UTMD Ltd. made payments of $20 on its
note payable during 1Q 2010, compared to $231 during 1Q 2009.  UTMD
did not pay any cash dividends during either 1Q 2010 or 1Q 2009.


Management believes that 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 2010 are expected to be higher than they
were in 2009 due to the facility expansion and possible acquisition of
intangible assets.  The Company will continue to keep facilities,
equipment and tooling in good working order.  In addition, the Company
may use cash for 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, an
acquisition that might strategically fit UTMD’s business and be accretive to
performance.


-10-




j)   
   Assets and Liabilities


March 31, 2010 total assets were
$2,188 higher than at December 31, 2009.  The increase resulted from a
$2,528 increase in cash and investments.  Cash and investments
increased as a result of UTMD’s continued excellent profitability and the
increase in current liabilities (C/L) during the three month
period.


Working capital (current assets minus
current liabilities) was $25,396 at March 31, 2010, a $925 increase from 2009
year-end.  Current assets increased about the same as the increase in
cash and investments.  Inventory and receivables balances were within
management’s productivity targets, and improved from the end of
2009.  C/L increased $1,503 primarily from two causes: 1) in the first
quarter, unlike the prior calendar quarter, estimated income tax payments are
paid after the end of the quarter, and 2) because of the early payment of the 4Q
dividend at the end of 2009. As a result of the increase in C/L, UTMD’s current
ratio decreased to 8.8 on March 31, 2010 from 14.9 at year-end 2009. The current
ratio was 7.4 on March 31, 2009 which reflected the same C/L income tax and
dividend payment timing issues as in 1Q 2010. Working capital continues well in
excess of UTMD’s normal operating needs.


Net property and equipment decreased
$229 in 1Q 2010 even though capital expenditures of $210 exceeded depreciation
by $70.  The difference was due to the dollar-denominated change in
value of Ireland P&E.  Goodwill resulting from prior acquisitions
remained the same. Net intangible assets excluding goodwill decreased $11, the
amount of intellectual property amortization during the period. At March 31,
2010, net intangible assets including goodwill were 17% of total assets compared
to 18% at year-end 2009.


UTMD’s long term liabilities are
comprised of the Ireland note payable ($1,278 on March 31, 2010) and deferred
income taxes ($592 on March 31, 2010).  As of December 31, 2009, the
respective long term liabilities were $1,403 and $608.  The March 31,
2010 Ireland note payable balance, denominated in thousand Euros, declined
15.  This translated to a $133 in USD-denominated decline because the
USD increased in value against the Euro. Because of the change in C/L in 1Q
2010, UTMD’s total debt ratio (total liabilities/ total assets) as of March 31,
2010 increased to 12% from 9% on December 31, 2009.  UTMD’s total debt
ratio on March 31, 2009 was 13%, which reflected the same C/L income tax payment
and dividend payment timing issues as in 1Q 2010.





k)       Management's
Outlook.


As outlined in its December 31, 2009
10-K report, UTMD’s plan for 2010 is to


1)  work to retain its
significant global market shares of established key specialty
products;


2)  try to accelerate revenue
growth of newer products;


3)  develop additional
proprietary products helpful to clinicians through internal new product
development;


4)  continue achieving
excellent overall financial operating performance;


5)  look for accretive
acquisitions to augment sales growth;  and


6)  utilize excess cash
balances in shareholders’ best long-term interest, including continued cash
dividends and open market share repurchases when UTMD’s share price seems
undervalued.





UTMD’s objective for 2010 remains the
same as above.





l)   
    Accounting Policy Changes.


None.








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 0.7452 EURO per USD as of March 31, 2010, and 0.7549 EURO per USD as of
March 31, 2009.    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
March 31, 2010. Based on this evaluation, the Chief Executive Officer and
Principal Financial Officer concluded that, as of March 31, 2010, 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, 2010, 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
1.              Legal
Proceedings





The Company may be a party from time
to time in litigation incidental to its business.  Presently, there is
no litigation for which the Company believes the outcome may be material to its
financial results.








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, 2009, 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





UTMD did not purchase any of its own
securities during 1Q 2010.








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:
      5/10/10
            By:
      /s/
      Kevin L.
      CornwellKevin L. CornwellCEODate:
      5/10/10
            By:
      /s/ Paul
      O.
      RichinsPaul O. RichinsPrincipal Financial
Officer









-13-