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: September 30, 2006
            Commission
                File No.0-11178





UTAH
      MEDICAL PRODUCTS, INC.


(Exact
      name of Registrant as specified in its charter)








UTAH
            87-0342734(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)








7043
      South 300 West


Midvale,
      Utah 84047


Address
      of principal executive offices








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








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





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


Large accelerated filer o
              Accelerated
                  filer x
              Non-accelerated
                  filero





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


Indicate
        the number of shares outstanding of each of the issuer’s classes of common stock
        as of November 2, 2006: 3,950,000 .





UTAH
      MEDICAL PRODUCTS, INC.


INDEX
      TO FORM 10-Q














PART
                I - FINANCIAL INFORMATION
            PAGEItem
                1.
            Financial
                StatementsConsolidated
                Condensed Balance Sheets as of September 30, 2006 and December 31,
                2005
            1Consolidated
                Condensed Statements of Income for the three and nine months ended
                September 30, 2006 and September 30, 2005
            2Consolidated
                Condensed Statements of Cash Flows for the nine months ended September
                30,
                2006 and September 30, 2005
            3Notes
                to Consolidated Condensed Financial Statements
            4Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of Operations
            7Item
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            12Item
                4.
            Controls
                and Procedures
            12PART
                II - OTHER INFORMATIONItem
                1A.
            Risk
                Factors
            13Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            13Item
                6.
            Exhibits
            14SIGNATURES
            14

















PART
      I -
      FINANCIAL INFORMATION


**Item
      1. Financial Statements**








UTAH
      MEDICAL PRODUCTS, INC. AND SUBSIDIARIES


CONSOLIDATED
      CONDENSED BALANCE SHEETS AS OF


SEPTEMBER
      30, 2006 AND DECEMBER 31, 2005


(in
      thousands)


(unaudited)
            
            (audited)ASSETS
            
            SEPTEMBER
                30, 2006
            
            DECEMBER
                31, 2005Current
                assets:Cash
            
            $
            796
            
            $
            703Investments,
                available-for-sale
            
            
            19,058
            
            
            16,750Accounts
                & other receivables - net
            
            
            3,815
            
            
            4,418Inventories
            
            
            3,379
            
            
            3,305Other
                current assets
            
            
            613
            
            
            682Total
                current assets
            
            
            27,661
            
            
            25,858Property
                and equipment - net
            
            
            8,347
            
            
            8,160Goodwill
            
            
            7,191
            
            
            7,191Other
                intangible assets
            
            
            2,718
            
            
            2,718Other
                intangible assets - accumulated amortization
            
            
            (2,451
            )
            
            (2,285
            )Other
                intangible assets - net
            
            
            267
            
            
            433TOTAL
            
            $
            43,466
            
            $
            41,642LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilities:Accounts
                payable
            
            $
            693
            
            $
            757Accrued
                expenses
            
            
            2,538
            
            
            2,418Total
                current liabilities
            
            
            3,231
            
            
            3,175Note
                payable
            
            
            4,989
            
            
            5,336Deferred
                income taxes
            
            
            190
            
            
            274Total
                liabilities
            
            
            8,410
            
            
            8,785Stockholders'
                equity:Preferred
                stock - $.01 par value; authorized - 5,000 shares; no shares issued
                or
                outstandingCommon
                stock - $.01 par value; authorized - 50,000 shares; issued - September
                30,
                2006, 3,934 shares - December 31, 2005, 3,856 shares
            
            
            39
            
            
            39Accumulated
                other comprehensive income
            
            
            (683
            )
            
            (495
            )Retained
                earnings
            
            
            35,699
            
            
            33,314Total
                stockholders' equity
            
            
            35,056
            
            
            32,857TOTAL
            
            $
            43,466
            
            $
            41,642*see
                notes to consolidated condensed financial statements*








1





UTAH
      MEDICAL PRODUCTS, INC. AND SUBSIDIARIES


CONSOLIDATED
      CONDENSED STATEMENTS OF INCOME FOR THE


THREE
      AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND SEPTEMBER 30, 2005


(in
      thousands - unaudited)




THREE
                MONTHS ENDED
            
            NINE
                MONTHS ENDEDSEPTEMBER
                30,
            
            SEPTEMBER
                302006
            
            2005
            
            2006
            
            2005NET
                SALES
            
            $
            7,001
            
            $
            7,001
            
            $
            21,398
            
            $
            20,681COST
                OF SALES
            
            
            3,030
            
            
            2,987
            
            
            9,343
            
            
            8,911Gross
                Margin
            
            
            3,971
            
            
            4,014
            
            
            12,055
            
            
            11,770OPERATING
                EXPENSES:Selling,
                general and administrative
            
            
            1,154
            
            
            1,894
            
            
            3,728
            
            
            4,484Research
                & development
            
            
            81
            
            
            82
            
            
            363
            
            
            225Total
            
            
            1,235
            
            
            1,976
            
            
            4,092
            
            
            4,709Income
                from Operations
            
            
            2,736
            
            
            2,038
            
            
            7,963
            
            
            7,061OTHER
                INCOME, NET
            
            
            268
            
            
            203
            
            
            1,253
            
            
            670Income
                Before Income Tax Expense
            
            
            3,004
            
            
            2,241
            
            
            9,216
            
            
            7,731INCOME
                TAX EXPENSE
            
            
            1,000
            
            
            452
            
            
            3,118
            
            
            2,086Net
                Income
            
            $
            2,003
            
            $
            1,789
            
            $
            6,098
            
            $
            5,645BASIC
                EARNINGS PER SHARE
            
            $
            0.51
            
            $
            0.46
            
            $
            1.55
            
            $
            1.41DILUTED
                EARNINGS PER SHARE
            
            $
            0.50
            
            $
            0.44
            
            $
            1.51
            
            $
            1.34SHARES
                OUTSTANDING - BASIC
            
            
            3,929
            
            
            3,882
            
            
            3,943
            
            
            3,995SHARES
                OUTSTANDING - DILUTED
            
            
            4,021
            
            
            4,104
            
            
            4,045
            
            
            4,219*see
                notes to consolidated condensed financial statements*








2





UTAH
      MEDICAL PRODUCTS, INC. AND SUBSIDIARIES


CONSOLIDATED
      CONDENSED STATEMENTS OF CASH FLOWS


FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND SEPTEMBER 30, 2005


(in
      thousands - unaudited)


SEPTEMBER
                30,2006
            
            2005CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                income
            
            $
            6,098
            
            $
            5,645Adjustments
                to reconcile net income to net cash provided by operating activities:Depreciation
                and amortization
            
            
            606
            
            
            514Gain
                on investments
            
            
            (1,120
            )
            
            (70
            )Provision
                for (recovery of) losses on accounts receivable
            
            
            8
            
            
            (6
            )Deferred
                income taxes
            
            
            (11
            )
            
            (330
            )Stock-based
                compensation expense
            
            
            108
            
            
            -Tax
                benefit attributable to exercise of stock options
            
            
            2,186
            
            
            255Changes
                in operating assets and liabilities:Accounts
                receivable - trade
            
            
            (132
            )
            
            49Accrued
                interest and other receivables
            
            
            756
            
            
            88Inventories
            
            
            (307
            )
            
            (414
            )Prepaid
                expenses and other current assets
            
            
            (21
            )
            
            (13
            )Accounts
                payable
            
            
            168
            
            
            138Accrued
                expenses
            
            
            105
            
            
            (1,243
            )Total
                adjustments
            
            
            2,345
            
            
            (1,032
            )Net
                cash provided by operating activities
            
            
            8,443
            
            
            4,613CASH
                FLOWS FROM INVESTING ACTIVITIES:Capital
                expenditures for:Property
                and equipment
            
            
            (361
            )
            
            (286
            )Purchases
                of investments
            
            
            (5,200
            )
            
            (4,100
            )Proceeds
                from the sale of investments
            
            
            3,804
            
            
            7,202Net
                cash provided by (used in) investing activities
            
            
            (1,757
            )
            
            2,816CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from issuance of common stock - options
            
            
            533
            
            
            646Common
                stock purchased and retired
            
            
            (1,804
            )
            
            (6,503
            )Common
                stock purchased and retired - options
            
            
            (2,488
            )
            
            (48
            )Repayments
                of note payable
            
            
            (711
            )
            
            -Payment
                of dividends
            
            
            (2,116
            )
            
            (1,842
            )Net
                cash used in financing activities
            
            
            (6,586
            )
            
            (7,746
            )Effect
                of exchange rate changes on cash
            
            
            (8
            )
            
            10NET
                INCREASE (DECREASE) IN CASH
            
            
            93
            
            
            (307
            )CASH
                AT BEGINNING OF PERIOD
            
            
            703
            
            
            1,818CASH
                AT END OF PERIOD
            
            $
            796
            
            $
            1,511SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Cash
                paid during the period for income taxes
            
            $
            924
            
            $
            2,317Cash
                paid during the period for interest
            
            
            196
            
            
            -*see
                notes to consolidated condensed financial statements*








3


UTAH
      MEDICAL PRODUCTS, INC.


NOTES
      TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


(unaudited)





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





(2) Inventories
      at September 30, 2006 and December 31, 2005 consisted of the
      following:





September
                30,
            
            December
                31,2006
            
            2005Finished
                goods
            
            $
            974
            
            $
            1,058Work-in-process
            
            
            890
            
            
            657Raw
                materials
            
            
            1,515
            
            
            1,590Total
            
            $
            3,379
            
            $
            3,305





(3) Stock-Based
      Compensation. At September 30, 2006 the Company had stock-based employee
      compensation plans, which authorized the grant of stock options to eligible
      employees and directors. Effective January 1, 2006, the Company adopted
      Statement of Financial Accounting Standards (SFAS) 123R, *Share-Based
      Payment* ,
      using
      the modified prospective method. This statement requires the Company to
      recognize compensation cost based on the grant date fair value of options
      granted to employees and directors. In the third quarter and nine months ended
      September 30, 2006, the Company recognized $33 and $108, respectively, in
      compensation cost related to adoption of the statement. Prior to December 31,
      2005, the Company accounted for its stock-based employee compensation plans
      under the recognition and measurement principles of APB Opinion No. 25, *Accounting
      for Stock Issued to Employees* ,
      and
      related Interpretations, and had adopted the disclosure-only provisions of
      SFAS
      No. 123, *Accounting
      for Stock-Based Compensation* .
      Accordingly, no compensation cost was recognized in the financial statements
      prior to 2006, as all options granted under those plans had exercise prices
      equal to or greater than the market value of the underlying common stock on
      the
      date of grant.





A
      comparison of reported net income for the three and nine months ended September
      30, 2006 and 2005, and pro-forma net income for the three and nine months ended
      September 30, 2005, including effects of expensing stock options, follows.





Three
                months ended
            
            Nine
                months endedSeptember
                30,
            
            September
                30,2006
            
            2005
            
            2006
            
            2005Net
                income, as reported
            
            $
            2,003
            
            $
            1,789
            
            $
            6,098
            
            $
            5,645Earnings
                per share, as reportedBasic
            
            
            0.51
            
            
            0.46
            
            
            1.55
            
            
            1.41Diluted
            
            
            0.50
            
            
            0.44
            
            
            1.51
            
            
            1.34Stock
                option expense included in calculation of net income
            
            
            33
            
            
            -
            
            
            108
            
            
            -**Pro-forma
                effects**Stock
                option expense not included in net income, net of related tax
                effects
            
            
            156
            
            
            
            
            
            768Net
                income on a pro-forma basis
            
            
            
            
            
            1,633
            
            
            
            
            
            4,877Earnings
                per share, on a pro-forma basisBasic
            
            
            
            
            
            0.42
            
            
            
            
            
            1.22Diluted
            
            
            
            
            
            0.40
            
            
            
            
            
            1.16





4





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


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





(4) Comprehensive
      Income. Comprehensive income for the three and nine months ending September
      30,
      2006 was $2,011 and $5,933, net of taxes, respectively. The components used
      to
      adjust net income in order to obtain comprehensive income were foreign currency
      translation adjustments of $1 and ($46), and unrealized holding losses of $6
      and
      ($119), respectively.





(5) Warranty
      Reserve. The Company accrues provisions for estimated costs that are likely
      to
      be incurred for product warranties and uncollectible accounts. The amount of
      the
      provision is adjusted, as required, to reflect historical experience. The
      following table summarizes changes to UTMD’s warranty reserve during 3Q
      2006:





Beginning
                Balance, July 1, 2006
            
            $
            60Changes
                in Warranty Reserve during 3Q 2006:Aggregate
                reductions for warranty repairs
            
            
            -Aggregate
                changes for warranties issued during reporting period
            
            
            -Aggregate
                changes in reserve related to preexisting warranties
            
            
            -Ending
                Balance, September 30, 2006
            
            $
            60








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





September
                30, 2006
            
            September
                30, 2005Investments,
                at cost
            
            $
            19,075
            
            $
            12,007Equity
                Securities:Unrealized
                holding gains
            
            
            -
            
            
            135Unrealized
                holding (losses)
            
            
            (17
            )
            
            (73
            )Investments,
                at fair value
            
            $
            19,058
            
            $
            12,069





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





3Q
                2006
            
            3Q
                2005Balance,
                beginning of period
            
            $
            (17
            )
            $
            53Reversal
                of unrealized gain from securities included in beginning balance,
                realized
                in the period
            
            
            -
            
            
            -Unrealized
                holding gains (losses), in equity securities
            
            
            10
            
            
            (24
            )Deferred
                income taxes on unrealized holding gain (loss)
            
            
            (3
            )
            
            9Balance,
                end of period
            
            $
            (10
            )
            $
            38





Available-for-sale
                debt securities
            
            September
                30, 2006
            
            September
                30, 2005Maturity
                less than 1 year
            
            $
            -
            
            $
            2,052Maturity
                greater than 10 years
            
            
            -
            
            
            1,425





5





(7) Forward-Looking
      Information. This report contains certain forward-looking statements and
      information relating to the Company that are based on the beliefs of management
      as well as assumptions made by, and information currently available to,
      management. When used in this document, the words “anticipate,” “believe,”
“should,” “project,” “estimate,” “expect,” “intend” and similar expressions, as
      they relate to the Company or its management, are intended to identify
      forward-looking statements. Such statements reflect the current view of the
      Company respecting future events and are subject to certain risks,
      uncertainties, and assumptions, including the risks and uncertainties noted
      throughout this document. Although the Company has attempted to identify
      important factors that could cause the actual results to differ materially,
      there may be other factors that cause the forward statement not to come true
      as
      anticipated, believed, projected, expected, or intended. Should one or more
      of
      these risks or uncertainties materialize, or should underlying assumptions
      prove
      incorrect, actual results may differ materially from those described herein
      as
      anticipated, believed, projected, estimated, expected, or intended.


General
      risk factors that may impact the Company’s revenues include the market
      acceptance of competitive products; administrative practices of group purchasing
      organizations; obsolescence caused by new technologies; the possible
      introduction by competitors of new products that claim to have many of the
      advantages of UTMD’s products at lower prices; the timing and market acceptance
      of UTMD’s own new product introductions; changes in clinical practices; UTMD’s
      ability to efficiently and responsively manufacture its products, including
      the
      possible effects of lack of performance of suppliers; access to important global
      distribution channels; budgetary constraints; the timing of regulatory approvals
      for newly introduced products; regulatory intervention in current operations;
      and third party reimbursement of health care costs of patients.


Risk
      factors, in addition to the risks outlined in the previous paragraph that may
      impact the Company’s assets and liabilities, as well as cash flows, include:
      risks inherent to companies manufacturing products used in healthcare, including
      claims resulting from the improper use of devices and other product liability
      claims; defense of the Company’s intellectual property; productive use of assets
      in generating revenues; management of working capital, including inventory
      levels required to meet delivery commitments at a minimum cost; and timely
      collection of accounts receivable.


Additional
      risk factors that may affect non-operating income include: the continuing
      viability of the Company’s technology license agreements; actual cash and
      investment balances; asset dispositions; and acquisition activities that may
      require external funding.

































6


**Item
      2.**  **Management's
      Discussion and Analysis of Financial Condition 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, 2005
      provides a detailed description of products, technologies, markets, regulatory
      issues, business initiatives, resources and business risks, among other details,
      and should be read in conjunction with this report. Because of the relatively
      short span of time, results for any given three month period in comparison
      with
      a previous three month period may not be indicative of comparative results
      for
      the year as a whole. Dollar amounts in the report are in thousands, except
      per-share amounts or where otherwise noted.





Analysis
      of Results of Operations


a)
            Overview


In
      third
      quarter (3Q) 2006, UTMD’s consolidated global sales were the same as 3Q 2005. 3Q
      2006 earnings per share (EPS) were $.50, an increase of 14% compared to $.44
      EPS
      in 3Q 2005. UTMD achieved the following profitability as a ratio of sales in
      3Q
      2006 and 3Q 2005:


3Q
                06
            3Q
                05Gross
                Profit Margin:
            56.7%
            57.3%Operating
                Profit Margin:
            39.1%
            29.1%Net
                (Income) Margin:
            28.6%
            25.6%








For
      the
      first nine months (9M) of 2006, UTMD’s total sales increased 3% relative to 9M
      2005. 9M 2006 diluted EPS were $1.51, an increase of 13% compared to $1.34
      diluted EPS in 9M 2005. UTMD achieved the following profitability as a ratio
      of
      sales in 9M 2006 and 9M 2005:


9M
                06
            9M
                05Gross
                Profit Margin:
            56.3%
            56.9%Operating
                Profit Margin:
            37.2%
            34.1%Net
                (Income) Margin:
            28.5%
            27.3%





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. For example,
      the Company provides engineering services, and/or design and production of
      manufacturing tooling, which 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, which were the same in 3Q 2006 as in 3Q 2005, were comprised of
      international sales up 12% and domestic sales down 3%. Domestic sales were
      comprised of domestic direct sales (sales of finished devices to users or
      distributors) down 3% and domestic OEM sales (sales of components to other
      companies for use in their products) down 10%. 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.


Total
      9M
      2006 sales increased 3% compared to 9M 2005. International sales increased
      14%
      and domestic sales increased less than 1%. International sales were 25% of
      total
      sales in 9M 2006, up from 23% in 9M 2005. 9M 2006 shipments from UTMD’s Ireland
      facility including intercompany sales of subassemblies to Utah were 10% higher
      in US Dollar terms, and 12% in EURO terms, compared to 9M 2005.


The
      following table provides the actual sales dollar amounts divided into general
      product categories for total sales and the subset of international
      sales:





7


Global
      revenues by product category:


3Q
                2006
            
            3Q
                2005
            
            9M
                2006
            
            9M
                2005Obstetrics
            
            $
            2,355
            
            $
            2,528
            
            $
            7,124
            
            $
            7,332Gynecology/
                Electrosurgery/ Urology
            
            
            1,507
            
            
            1,298
            
            
            4,501
            
            
            3,929Neonatal
            
            
            1,827
            
            
            1,861
            
            
            5,312
            
            
            4,819Blood
                Pressure Monitoring and Accessories*
            
            
            1,312
            
            
            1,314
            
            
            4,461
            
            
            4,601Total:
            
            $
            7,001
            
            $
            7,001
            
            $
            21,398
            
            $
            20,681*includes
                molded components sold to OEM
                customers.





International
      revenues by product category:


3Q
                2006
            
            3Q
                2005
            
            9M
                2006
            
            9M
                2005Obstetrics
            
            $
            149
            
            $
            126
            
            $
            613
            
            $
            407Gynecology/
                Electrosurgery/ Urology
            
            
            428
            
            
            264
            
            
            1,379
            
            
            807Neonatal
            
            
            125
            
            
            175
            
            
            414
            
            
            315Blood
                Pressure Monitoring and Accessories*
            
            
            905
            
            
            865
            
            
            3,000
            
            
            3,228Total:
            
            $
            1,607
            
            $
            1,430
            
            $
            5,406
            
            $
            4,757*includes
                molded components sold to OEM
                customers.





c)
            Gross
                Profit


UTMD’s
      average gross profit margin (GPM), gross profits as a percentage of sales,
      was
      56.7% and 56.3% in 3Q and 9M 2006, respectively, compared to 57.3% and 56.9%
      in
      3Q and 9M 2005, respectively. UTMD’s prices for its products remained generally
      consistent with the prior year, but in 9M 2006 the sales mix favored lower
      margin products as a result of higher international sales compared to 9M 2005.
      The Company is also experiencing inflationary pressures in its manufacturing
      costs associated both with labor and with raw materials. Within the last twelve
      months, UTMD has made several cost of living pay adjustments for its employees.
      Since nearly all of UTMD’s products are made of petroleum-based compounds, the
      worldwide substantial increase in cost of oil has a significant impact on raw
      materials costs. In addition, the higher cost of oil has direct impact on
      transportation costs, both those included in manufacturing overhead for shipping
      and receiving products and raw materials, and those in operating expenses
      associated with sales and marketing traveling expenses. Because UTMD owns and
      has maintained facilities and other manufacturing overheads in excess of its
      needs, some dilution of overhead costs as a result of higher sales is helping
      to
      offset the increases in incremental direct material and labor costs. Management
      projects that it can achieve a GPM for the year of 2006 about the same as 9M
      2006, which would be about a half percentage point lower as a percentage of
      sales than the GPM achieved in 2005.


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





d)
            Operating
                Profit


Operating
      Profit, or income from operations, is the profit remaining after subtracting
      operating expenses from gross profits. Operating expenses include sales and
      marketing (S&M), research and development (R&D) and general and
      administrative (G&A) expenses. Operating expenses in 3Q 2006 were $741 lower
      than 3Q 2005, and $617 lower in 9M 2006 than 9M 2005. Please see the table
      below. Operating expenses decreased in 3Q 2006 primarily as a result of lower
      litigation expenses included in G&A, which were $710 lower than in 3Q 2005.
      The lower litigation expenses were offset by $33 higher G&A expenses for
      estimated option expense per SFAS 123R, which didn’t occur in 3Q 2005. For 9M
      2006 compared to 9M 2005, lower litigation expenses were again the primary
      difference, with the new option expense of $108 and a $130 2Q 2006 write-off
      of
      intellectual property included in R&D expenses partially offsetting those
      decreases.


Operating
      expenses were 17.6% of sales in 3Q 2006 compared to 28.2% in 3Q 2005, and 19.1%
      of sales in 9M 2006 compared to 22.8% in 9M 2005. For the year of 2006,
      management expects to hold operating expenses to less than 19% of sales. This
      compares to an actual operating expense ratio of 23.5% of sales in 2005.
      Operating profit margins were 39.1% of sales in 3Q 2006 compared to 29.1% in
      3Q
      2005, and 37.2% in 9M 2006 compared to 34.1% in 9M 2005.





8





Because
      UTMD sells internationally through third party distributors, its S&M
      expenses are predominantly for U.S. business activity. S&M expenses in 3Q
      2006 were 7.1% of sales compared to 8.5% of sales in 3Q 2005. S&M expenses
      in 9M 2006 were 8.0% of sales compared to 8.1% of sales in 9M 2005. For the
      year, UTMD expects S&M expenses as a ratio of total sales to be about 8.0%,
      which is consistent with 9M 2006 and the prior year 2005.


R&D
      expenses were 1.2% of sales in both 3Q 2006 and 3Q 2005. In 2Q 2006, R&D
      expenses included a $130 write-off of intellectual property for which the
      Company expects to receive repayment in 4Q 2006. Excluding the $130, R&D
      expenses in 9M 2006 and 9M 2005 were both 1.1% of sales. UTMD expects R&D
      expenses during 2006 as a whole to be about the same as in 2005.


G&A
      expenses in 3Q 2006 were 9.4% of sales compared to 18.6% of 3Q 2005 sales.
      G&A expenses in 9M 2006 were 9.5% of sales compared to 13.6% of 9M 2005
      sales. Litigation expenses in 3Q 2006 were $710 lower than in 3Q 2005 due to
      the
      3Q 2005 cost of the frivolous FDA lawsuit filed in August 2004. 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. Starting in 2006, G&A
      expenses also include the estimated stock-based compensation expense related
      to
      adoption of SFAS 123R, which were $33 in 3Q 2006 and $108 in 9M 2006. Barring
      expenses resulting from unexpected new litigation, G&A expenses as a
      percentage of sales for the year 2006 should be about the same as 9M
      2006.




3Q
                2006
            
            3Q
                2005
            
            9M
                2006
            
            9M
                2005S&M
                Expense
            
            $
            496
            
            $
            592
            
            $
            1,702
            
            $
            1,673R&D
                Expense
            
            
            81
            
            
            82
            
            
            363
            
            
            225G&A
                Expense
            
            
            658
            
            
            1,302
            
            
            2,026
            
            
            2,811Total
                Operating Expenses:
            
            $
            1,235
            
            $
            1,976
            
            $
            4,091
            
            $
            4,709




e)
            Non-operating
                income


Non-operating
      income in 3Q 2006 was $268 compared to $203 in 3Q 2005, and $1,253 in 9M 2006
      compared to $670 in 9M 2005. UTMD received interest, dividends and capital
      gains
      of $234 in 3Q 2006 and $1,120 in 9M 2006, compared to $65 in 3Q 2005 and $298
      in
      9M 2005, from investing its cash balances. In 3Q and 9M 2006, UTMD paid $71
      and
      $196, respectively, for interest expense because its Ireland subsidiary borrowed
      €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 will have
      to
      be repaid by the Ireland subsidiary from its profits generated in the future,
      which should take about four years. UTMD had no interest expense during 9M
      2005.
      Royalty income, which UTMD receives from licensing its technology to other
      companies, was approximately the same for the applicable periods in both years.
      Management expects non-operating income for 2006 as a whole (after subtracting
      interest expense for the Ireland loan) to be about $600 higher than in 2005.
      This projection is based on the Company continuing to receive substantial
      investment income for the remainder of the year.





f)
            Earnings
                Before Income Taxes


3Q
      2006
      earnings before income taxes (EBT) were $3,004 compared to $2,241 in 3Q 2005.
      9M
      2006 EBT were $9,216 compared to $7,731 in 9M 2005. 3Q and 9M 2006 EBT margin
      was 42.9% and 43.1% of sales, respectively, compared to 32.0% and 37.4% in
      3Q
      and 9M 2005, respectively. The higher margins were due primarily to higher
      non-operating income and lower litigation expenses compared to the previous
      year.





g)
            Net
                Income and Earnings per Share


UTMD’s
      net income increased to $2,003 in 3Q 2006 compared to $1,789 in 3Q 2005, and
      to
      $6,098 in 9M 2006 compared to $5,645 in 9M 2005. Net profit margins (NPM),
      which
      are net income (after tax) expressed as a percentage of sales, were 28.6% in
      3Q
      2006 compared to 25.6% in 3Q 2005, and 28.5% in 9M 2006 compared to 27.3% in
      9M
      2005. The 2006 income tax provision, which is the percentage of EBT estimated
      to
      be owed in combined federal and state income taxes, has been and will continue
      to be substantially higher than in the previous year because of the one-time
      tax
      benefit that UTMD received in 2005 from The American Jobs Creation Act of 2004
      (the Act). The Act allowed a temporary tax deduction on prior accumulated
      foreign earnings, limited to 2005. In 3Q and 9M 2006, the income tax provision
      was 33.3% and 33.8% of EBT, respectively, compared to 20.2% and 27.0% in 3Q
      and
      9M 2005. Tax provisions on 2005 earnings were reduced following guidance
      provided by FASB Staff Position No. FAS 109-2. UTMD estimates that its
      consolidated income tax provision for the year 2006 will be almost eight
      percentage points higher than in the previous year, which was 26.1%.





9





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




3Q
                2006
            
            3Q
                2005
            
            9M
                2006
            
            9M
                2005Earnings
                Per Share (EPS)
            
            $
            .498
            
            $
            .436
            
            $
            1.508
            
            $
            1.338Shares
                (000), Diluted
            
            
            4,021
            
            
            4,104
            
            
            4,045
            
            
            4,219





Diluted
      3Q 2006 Earnings per Share (EPS) increased 14% compared to 3Q 2005. Diluted
      9M
      2006 EPS increased 13% compared to 9M 2005. The changes in diluted shares
      resulted from share repurchases and from exercises of options. UTMD repurchased
      7,132 shares in 3Q 2006 and 58,764 shares in 9M 2006. Exercises of employee
      options in 3Q 2006 added 11,393 shares and 136,279 shares in 9M 2006 (net of
      4,563 and 149,962 shares swapped or traded in 3Q and 9M, respectively, by
      individuals in payment of the exercise price of the options and related tax
      withholding). Market increases and decreases in UTMD’s stock price affect 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 92,000 and 102,000 shares to actual weighted average shares
      outstanding in 3Q and 9M 2006 respectively, compared to 222,000 and 224,000
      in
      3Q and 9M 2005. The decrease in dilution is primarily due to fewer unexercised
      options outstanding. Actual outstanding common shares as of the end of 3Q 2006
      were 3,933,900 compared to 3,881,900 at the end of 3Q 2005.





h)
            Return
                on Equity


Return
      on
      equity (ROE) is the portion of net income retained by UTMD (after payment of
      dividends) to internally finance its growth, divided by the average accumulated
      shareholder equity for the applicable time period. Annualized ROE (after payment
      of dividends) for 9M 2006 was 16% compared to 15% for 9M 2005. The higher ROE
      in
      9M 2006 was due to higher net profits. Share repurchases have a beneficial
      impact on ROE as long as the Company sustains net profit performance, because
      shareholder equity is reduced by the cost of the shares repurchased. Although
      UTMD expects higher net profits in 2006, ROE for the year may be about the
      same
      as in 2005 as a result of increased dividends to shareholders coupled with
      higher average shareholders’ equity. The ROE in 2006 will be sufficient to
      internally-finance UTMD’s revenue growth.





Liquidity
      and Capital Resources


i)
            Cash
                flows


Cash
      flows from operating activities, including adjustments for depreciation and
      other non-cash operating expenses, along with changes in working capital and
      the
      tax benefit attributable to exercise and subsequent sale of employee and
      director stock options, totaled $8,443 in 9M 2006 compared to $4,613 in 9M
      2005.
      A $1,931 larger tax benefit from exercise of employee and outside director
      stock
      options in 9M 2006 compared to 9M 2005 was the most significant difference
      in
      the two periods. Accrued expenses contributed $105 in 9M 2006 after using $1,243
      in 9M 2005, a $1,348 larger contribution in 9M 2006. The 9M 2005 decrease in
      accrued expenses resulted primarily from a $901 decrease in litigation payable
      as accrued expenses associated with the FDA litigation were paid.


Cash
      flows from investing activities primarily result from purchases and sales of
      short-term investments, in an effort to achieve a prudent return for excess
      cash
      balances. Capital expenditures for property and equipment were $361 in 9M 2006
      compared to 286 in 9M 2005. This rate of investing in new property and equipment
      is required to keep facilities, equipment and tooling in good working
      condition.


In
      9M
      2006, UTMD received $533 and issued 136,279 shares of stock upon the exercise
      of
      employee and director stock options. Option exercises in 9M 2006 were at an
      average price of $10.14 per share. Employees and directors exercised a total
      of
      286,241 option shares in 9M 2006, with 149,962 shares immediately being retired
      as a result of the individuals trading the shares in payment of the exercise
      price of the options and related tax withholding. UTMD used $2,488 in cash
      during 9M 2006 to meet tax withholding requirements on options exercised. For
      comparison, the Company received $646 from issuing 75,488 shares of stock on
      the
      exercise of employee stock options in 9M 2005, net of 8,264 shares retired
      upon
      employees trading those shares in payment of the stock option exercise price.
      UTMD repurchased 58,764 shares of its stock in the open market at a cost of
      $1,804 during 9M 2006, an average cost of $30.69 per share including commissions
      and fees. For comparison, UTMD repurchased 299,099 shares of stock in the open
      market at a cost of $6,503 during 9M 2005.


10





UTMD
      Ltd.
      (Ireland subsidiary) made payments of $711 on its note payable during 9M 2006.
      UTMD Ltd. did not have any bank debt in 9M 2005. UTMD (U.S.) did not utilize
      its
      bank line of credit with US Bank during 9M 2005. UTMD (U.S.) did use its US
      bank
      credit line in 2006 to provide a loan guarantee on the Ireland debt. UTMD paid
      $2,116 in cash dividends to shareholders in 9M 2006 compared to $1,842 in 9M
      2005.


Management
      believes that future income from operations and effective management of working
      capital will provide the liquidity needed to finance growth plans. Planned
      capital expenditures during the remainder of 2006 are expected to be
      approximately $150 to keep facilities, equipment and tooling in good working
      order. In addition to capital expenditures, UTMD plans to use cash in 2006
      for
      selective infusions of technological, marketing or product manufacturing rights
      to broaden the Company's product offerings; for continued share repurchases
      if
      the price of the stock is undervalued; and if available for a reasonable price,
      acquisitions that may strategically fit UTMD’s business and are accretive to
      performance. The US Bank 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
      UTMD’s existing cash and investment balances.





j)
            Assets
                and Liabilities


September
      30, 2006 total assets were $1,824 higher than at December 31, 2005. Current
      assets increased $1,803. The increases resulted from a $2,401 increase in cash
      and investments despite significant uses of cash including payment of $2,116
      in
      dividends and $1,804 to repurchase shares. Receivables declined $603 primarily
      due to a $498 decrease in income taxes receivable. One important subset of
      receivables, trade accounts receivable, net of allowance for doubtful accounts,
      increased $153, yielding approximately 47 days in customer receivables using
      3Q
      2006 shipments as the denominator. Other receivables declined $258. Inventories
      increased $74 and other current assets decreased $69.


Working
      capital was $24,430 at September 30, 2006, a $1,747 increase from 2005 year-end.
      Working capital remains in excess of UTMD’s normal operating needs. The increase
      in working capital was essentially due to an increase in cash & equivalents
      generated by operating profits. Current liabilities increased $56 primarily
      because of increases in income taxes payable. As a result of the working capital
      change, UTMD’s current ratio increased to 8.6 on September 30, 2006 from 8.1 on
      December 31, 2005 and 6.7 on September 30, 2005.


Net
      property and equipment increased $187 in 9M 2006 despite an increase in
      accumulated depreciation of $439 because of capital spending of $361and an
      increase in the dollar-denominated value of Ireland P&E. The U.S. dollar
      increased about 6% relative to the EURO during 9M 2006. Goodwill resulting
      from
      prior acquisitions remained the same. Net intangible assets excluding goodwill
      decreased $166 as a result of amortization of patents and other intellectual
      property, including the 2Q 2006 $130 write-off of intellectual property. At
      September 30, 2006, net intangible assets including goodwill were 17.2% of
      total
      assets compared to 18.3% at year-end 2005.


UTMD’s
      long term liabilities are comprised of the Ireland loan ($4,989 on September
      30,
      2006) and deferred income taxes ($190 on September 30, 2006). As of December
      31,
      2005, those long term liabilities were $5,336 and $274, respectively. As of
      September 30, 2006, UTMD’s total debt ratio (total liabilities/ total assets)
      decreased to 19% from 21% on December 31, 2005. On September 30, 2005, UTMD’s
      total debt ratio, prior to the Ireland loan required to repatriate foreign
      profits in 2005, was 9%.





k)
            Management's
                Outlook


As
      expressed at the beginning of the year, management’s operating plan for 2006 is
      to


1) 
      increase sales and marketing efforts after finally resolving a four-year long
      dispute with the FDA in late 2005;


2) 
      reinvigorate internal new product development;


3) 
      continue outstanding operating performance;


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


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


The
      actual financial performance in 9M 2006 indicates good progress in achieving
      the
      2006 plan. In the first nine months of 2006, the Company realized increases
      in
      labor and raw materials costs, which will provide a profit margin challenge
      going forward because prices for UTMD’s finished products are relatively
      inelastic due to established long term fixed U.S. hospital pricing agreements
      and a very competitive marketplace worldwide for medical devices.





11





l)
            Accounting
                Policy Changes


In
      June 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 provisions of FIN 48
      will be effective for UTMD starting in First Quarter 2007, with the cumulative
      effect of the change in accounting principle recorded as an adjustment to
      opening retained earnings. The impact of adopting FIN 48 on the consolidated
      financial statements is currently unknown.








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





UTMD
      has
      manufacturing operations, including related assets, in Ireland denominated
      in
      the EURO, and sells products under agreements denominated in various Western
      European currencies. The EURO and other currencies are subject to exchange
      rate
      fluctuations that are beyond the control of UTMD. The exchange rate was 0.7896
      EURO per USD as of September 30, 2006, and 0.8328 EURO per USD as of September
      30, 2005. UTMD manages its foreign currency risk without separate hedging
      transactions by converting currencies to USD as transactions occur.








**Item
      4. Controls and Procedures**





The
      company’s management, under the supervision and with the participation of the
      Chief Executive Officer and the Principal Financial Officer, evaluated the
      effectiveness of the company’s disclosure controls and procedures (as defined in
      Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of
      September 30, 2006. Based on this evaluation, the Chief Executive Officer and
      Principal Financial Officer concluded that, as of September 30, 2006, the
      company’s disclosure controls and procedures were effective.


There
      were no changes in the company’s internal controls over financial reporting that
      occurred during the quarter ended September 30, 2006, that have materially
      affected, or are reasonably likely to materially affect, the company’s internal
      controls over financial reporting.





























12





PART
      II -
      OTHER INFORMATION





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





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








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





The
      following table details purchases by UTMD of its own securities during 3Q
      2006.





**ISSUER
      PURCHASES OF EQUITY SECURITIES**





Period
            
            Total
                Number
              of
                Shares
              Purchased
                (1)
            
            Average
              PricePaid
              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)7/01/06
                - 7/31/06
            
            7,132
            
            $
                29.93
            
            7,1328/01/06
                - 8/31/06
            
            -
            
            -
            
            -9/01/06
                - 9/30/06
            
            -
            
            -
            
            -Total
            
            7,132
            
            $
                29.93
            
            7,132





(1) In
      3Q
      2006 UTMD repurchased the above shares pursuant to a continued open market
      repurchase program initially announced in August 1992. Since 1993 through 3Q
      2006, the Company has repurchased 6.3 million shares at an average cost of
      $11.62 per share including broker commissions and fees in open market
      transactions. In addition, the Company conducted tender offer transactions
      in
      which it purchased an additional 2.8 million shares at an average cost of $9.76
      per share including fees and administrative costs. In total, UTMD has
      repurchased 9.1 million of its shares at an average price of $11.05 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
      1.5 million option shares at an average price of $8.78 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.








13


**Item
      6. Exhibits**





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








SIGNATURES





Pursuant
      to the requirements of the Securities Exchanges Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.








UTAH
                MEDICAL PRODUCTS, INC.REGISTRANTDate:11/3/06
            By:
            /s/ Kevin L. CornwellKevin
                L. CornwellCEODate: 11/3/06
            By:
            /s/ Paul O. RichinsPaul
                O. RichinsPrincipal
                Financial Officer

















14