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Utah Medical Products, Inc. Reports Financial Performance for First Quarter 2015
Marketwired
Utah Medical Products, Inc.
April 23, 2015 9:00 AM

SALT LAKE CITY, UT--(Marketwired - Apr 23, 2015) - In the first calendar quarter (1Q) of 2015, Utah Medical Products, Inc. (NASDAQ: UTMD) achieved results representing a solid start to meeting its previously announced goals for 2015, despite significant foreign currency exchange (FX) rate headwinds. The headwinds in U.S. Dollar terms reduced consolidated sales and had a leveraged negative effect on profits.

The following is a summary comparison of 1Q 2015 with 1Q 2014 income statement measures:

Sales: +4%
Gross Profit: +1%
Operating Income: +1%
Net Income: (2%)
Earnings Per Share: (2%)

As UTMD states in its quarterly SEC Form 10-Q disclosures, 'Because of the relatively short span of time, results for any given three month period in comparison with any previous three month period may not be indicative of comparative results for the year as a whole.'

Currencies in this release are denoted as $ or USD = U.S. Dollars; AUD = Australia Dollars; GBP = UK Pound Sterling; and Euro = Euros. Currency amounts throughout this report are in thousands, except per share amounts and where noted.

UTMD's FX rates for income statement purposes are transaction-weighted averages. The average rates from the applicable foreign currency to USD during 1Q 2015 and 1Q 2014 follow:

1Q 2015 1Q 2014 Change
GBP 1.514 1.655 (8.5%)
Euro 1.119 1.372 (18.5%)
AUD 0.784 0.899 (12.8%)

UTMD's FX rates for balance sheet purposes are the applicable rates at the end of each reporting period. The FX rates from the applicable foreign currency to USD for assets and liabilities at the end of 1Q 2015 and the end of 1Q 2014 follow:

1Q 2015 1Q 2014 Change
GBP 1.485 1.667 (11.0%)
Euro 1.074 1.377 (22.0%)
AUD 0.763 0.927 (17.8%)

UTMD's profit margins remained strong despite the negative FX on about one-third of sales:

1Q 2015
(JAN - MAR) 1Q 2014
(JAN - MAR)
Gross Profit Margin (gross profits/ sales): 59.7% 61.6%
Operating Profit Margin (operating profits/ sales): 37.9% 39.1%
EBT Margin (profits before income taxes/ sales): 35.8% 38.5%
Net Profit Margin (profit after taxes/ sales): 26.1% 27.7%

Sales.
Total consolidated 1Q 2015 UTMD sales were $406 higher than in 1Q 2014 (up 4%). In brief, comparing 1Q 2015 to 1Q 2014, U.S. domestic sales were much stronger and UK domestic GBP sales were much weaker, further leveraged down in USD terms by a stronger USD. Approximately one-third of UTMD's sales are invoiced in foreign currencies. If 1Q 2015 foreign currency sales were converted to USD at the same FX rates as in 1Q 2014, 1Q 2015 total consolidated sales would have been an additional $397 higher, or up 8% overall compared to 1Q 2014.

Total international sales in 1Q 2015 were $130 lower (3%) than in 1Q 2014 because of the weaker foreign currencies. Using 1Q 2014 FX rates, 1Q 2015 international sales would have been $267 higher (+5%) rather than $130 lower. As a result of the FX rate changes, international sales were only 47% of total consolidated sales compared to 51% in 1Q 2014. International sales exported from the U.S. in fixed USD terms were up 16%, while international sales by UTMD's foreign subsidiaries converted to USD terms were down 9%. International sales by UTMD foreign subsidiaries in USD terms using the same FX rates as in 2014 would have been up 2% rather than down 9%.

Trade sales are sales to third parties, excluding sales from one UTMD entity to another. Ireland subsidiary 1Q 2015 trade sales were up $547 (+91%). The large increase resulted from $342 sales of blood pressure monitoring (BPM) kits to UTMD's China distributor, and $387 in shipments of Filshie Sterishot kits, now manufactured by UTMD Ireland, directly to international customers located outside the UK, neither of which occurred in 1Q 2014 Ireland trade sales. Although Ireland domestic sales were up 9% in Euro terms, they were down 11% in USD terms because of the weaker Euro.

Trade sales by UTMD's UK subsidiary, Femcare-Nikomed Ltd, were down overall by $493 (14% lower). Sales of Sterishot kits to international customers outside the UK which were included in UK sales in 1Q 2014 were shipped directly from Ireland in 1Q 2015. UK domestic sales were down $236 (22% lower) in part due to the 9% weaker GBP, and sales to Femcare's U.S. distributor of the Filshie Clip System (which are included in the U.S. domestic sales category) were up $270 (22% higher).

Sales by UTMD's Australia subsidiary, Femcare Australia Pty Ltd, in 1Q 2015 were 5% lower in AUD terms than in 1Q 2014, but because of the weaker AUD, were down $121 (17% lower) in USD.

U.S. domestic sales were up $536 (11% higher) in 1Q 2015 compared to 1Q 2014. Direct sales of devices to U.S. user facilities were up $115 (4% higher). In addition to Filshie Clip System sales to its U.S. distributor up $270 (22% higher), UTMD's sales of components and finished devices to other U.S. companies for use in their products (OEM customers) were up $150 (31% higher).

Gross Profit.
UTMD's gross profit margin (GPM), gross profits divided by consolidated sales, at 61.6% in 1Q 2014 was higher than for the full year of 2014 at 60.5%. With a stronger USD, the consolidated GPM is squeezed, assuming that unit prices invoiced in foreign currencies are kept constant, because raw materials and finished devices sold to UTMD's foreign subsidiaries in fixed USD increase the cost of goods sold by the foreign subsidiary. In addition, 1Q 2015 product mix was less favorable than 1Q 2014. BPM kits sales to UTMD's China distributor, at a low GPM, were 3.3% of total consolidated sales in 1Q 2015 compared to none in 1Q 2014. Given the substantially lower FX rates and less favorable product mix, the 1Q 2015 GPM of 59.7% was better than expected.

Operating Income.
Operating expenses, comprised of general and administrative (G&A), sales and marketing (S&M) and product development (R&D) expenses, were $2,235 in 1Q 2015 (21.8% of sales) compared to $2,207 in 1Q 2014 (22.5% of sales). The lower ratio of operating expenses to sales was due to about the same consolidated USD expenses with higher consolidated sales. In this case, the lower FX rates were helpful, as 1Q 2015 operating expenses of UTMD's foreign subsidiaries in the aggregate would have been $115 higher using 1Q 2014 FX rates.

Consolidated G&A expenses were $1,507 (14.7% of sales) in 1Q 2015 compared to $1,542 (15.7% of sales) in 1Q 2014. The G&A expenses in 1Q 2015 included $611 (6.0% of sales) of non-cash expense from the amortization of identifiable intangible assets resulting from the Femcare acquisition, which were $668 (6.8% of sales) in 1Q 2014. The lower USD amortization expense was the result of a stronger USD, as the amortization expense was GBP 404 in both periods.

S&M expenses were $573 (5.6% of sales) in 1Q 2015 compared to $542 (5.5% of sales) in 1Q 2014. S&M expenses in 1Q 2015 included $68 MDET, $2 higher than in 1Q 2014 due to higher U.S. domestic sales of medical devices. The U.S. Medical Device Excise Tax (MDET), imposed as a component of the Patient Protection and Affordable Care Act (Obamacare), is levied as 2.3% of domestic sales of medical devices.

R&D expenses were $156 (1.5% of sales) compared to $123 (1.2% of sales) in 1Q 2014.

Operating income in 1Q 2015 was $3,877 compared to $3,843 in 1Q 2014 (0.9% higher), despite a GPM that was 1.8 percentage points lower than in the previous year's 1Q period. UTMD's 1Q 2015 operating profit margin (OPM), operating income divided by sales, was 37.9% compared to 39.1% in 1Q 2014.

Income Before Tax.
Income before taxes (EBT) results from subtracting net non-operating expense (NOE) from operating income. Consolidated 1Q 2015 EBT was $3,668 compared to $3,782 in 1Q 2014. The $114 lower EBT can be attributed to a $177 loss on the remeasured value of Euro cash balances in the UK, which dropped by more than 11% in value relative to the USD at the end of 1Q 2015 from the end of 4Q 2014. Consolidated UTMD EBT margins (EBT divided by sales) were 35.8% in 1Q 2015 compared to 38.5% in 1Q 2014. The lower EBT margin is due to the lower GPM and the remeasured currency loss.

NOE includes 1) loan interest, 2) bank fees and 3) losses from remeasuring the value of Euro cash bank balances in the UK, and GBP cash balances in Ireland, in USD terms, minus non-operating income from 1) rent of underutilized property, 2) investment income and 3) royalties received from licensing the Company's technology. Net NOE in 1Q 2015 was $209 compared to $61 in 1Q 2014. The total loss on remeasured foreign currency balances in 1Q 2015 was $168 compared to none in 1Q 2014. The loans obtained to help finance the acquisition of Femcare in 1Q 2011 were fully repaid in 1Q 2015 at an expense of $65 including accrued interest and bank fees. Looking forward to the remainder of 2015, this portion of NOE will be zero. In 1Q 2014, the interest expense on bank debt was $87.

The EBT of Utah Medical Products, Ltd (Ireland) was Euro 751 in 1Q 2015 compared to Euro 88 in 1Q 2014. The EBT of Femcare Group Ltd (Femcare-Nikomed, Ltd., UK and Femcare Australia) was GBP 945 in 1Q 2015 compared to GBP 1,159 in 1Q 2014. The respective EBT margins of UTMD Ltd. (Ireland) were 43.5% in 1Q 2015 and 18.6% in 1Q 2014, and of Femcare Group were 37.6% in 1Q 2015 and 41.2% in 1Q 2014.

Excluding the noncash effects of depreciation, amortization of intangible assets and stock option expense, 1Q 2015 consolidated EBT excluding the remeasured bank balance currency loss and interest expense ("adjusted consolidated EBITDA") were $4,698, about the same as the $4,713 consolidated EBITDA in 1Q 2014 despite the significant FX headwinds. Management believes that this operating performance provides a good start to achieving its financial objectives for the year 2015, as previously provided in its 2014 SEC 10-K Report.

Net Income.
Net Income in 1Q 2015 of $2,667 was also close to the net income of $2,722 in 1Q 2014, despite the impact of FX rates on sales and GPM, and the remeasured foreign currency loss. UTMD's net profit margin (NPM), net income divided by consolidated sales, was 26.1% in 1Q 2015 and 27.7% in 1Q 2014. The average consolidated income tax provisions (as a % of EBT) in 1Q 2015 and 1Q 2014 were 27.3% and 28.0%, respectively.

UTMD's combined state and federal income tax provision rate in the U.S. after all allowable deductions was 34.2% in 1Q 2015 compared to 33.9% in 1Q 2014. The corporate income tax rate in the UK was 21% in 1Q 2015 compared to 23% in 1Q 2014. As of April 1, 2015, the UK corporate tax rate will be reduced again, from 21% to 20%, which will further benefit UTMD's NPM during the remainder of 2015. The income tax rate in Australia remained 30% in both periods. The UTMD Ltd (Ireland) tax rate on export profits remains 12.5%.

Earnings per share (EPS).
EPS in 1Q 2015 were about one cent lower than in 1Q 2014. Earnings per share for the most recent twelve months were $3.00. Diluted shares used to calculate EPS decreased to 3,776,400 in 1Q 2015 from 3,786,700 in 1Q 2014 despite a higher average share price and employee option exercises which are factors that increase dilution, as a result of 22,200 shares repurchased after the end of 1Q 2014. The number of shares added as a dilution factor in 1Q 2015 was 26,100 compared to 37,000 in 1Q 2014.

Outstanding shares at the end of 1Q 2015 were 3,752,600. The number of shares used for calculating earnings per share was higher than ending shares because of a time-weighted calculation of average outstanding shares plus dilution from unexercised employee and director options. The total number of outstanding unexercised employee and outside director options at March 31, 2015 was 83,900 shares at an average exercise price of $37.29/ share, including shares awarded but not vested. This compares to 74,900 unexercised option shares outstanding at March 31, 2014 at an average exercise price of $27.94/ share.

During both 1Q 2015 and 1Q 2014, UTMD did not repurchase its shares in the open market. The Company retains the financial ability for repurchasing its shares when they seem undervalued. The closing share price at the end of 1Q 2015 was $59.86 compared to $60.05 at the end of calendar year 2014, and $57.83 at the end of 1Q 2014.

Balance Sheet.
As of March 31, 2015, UTMD is debt free, four years after borrowing $26.9 million to help finance the acquisition of Femcare Group, Ltd. Compared to a year earlier, in addition to paying off $8.1 million of debt, cash and investments increased $1.1 million to $16.2 million, and Stockholders' Equity increased $0.9 million after cash payments of dividends to shareholders of $3.8 million (which reduce Stockholders' Equity). At March 31, 2015, net Intangible Assets were 54.2% of total consolidated assets compared to 57.5% a year earlier.

Foreign subsidiary assets and liabilities, when consolidated in USD terms, were reduced 11%-22% compared to a year ago, according to the table above.

Financial ratios as of March 31, 2015 which may be of interest to shareholders follow:
1) Current Ratio = 5.0
2) Days in Trade Receivables (based on 1Q 2015 sales activity) = 37
3) Average Inventory Turns (based on 1Q 2015 CGS) = 3.4
4) 2015 YTD ROE (before dividends) = 17%

Investors are cautioned that this press release contains forward looking statements and that actual events may differ from those projected. Risk factors that could cause results to differ materially from those projected include market acceptance of products, timing of regulatory approval of new products, regulatory intervention in current operations, government healthcare "reforms", the Company's ability to efficiently manufacture, market, and sell its products, and foreign currency exchange rates, among other factors that have been and will be outlined in UTMD's public disclosure filings with the SEC.

Utah Medical Products, Inc., with particular interest in health care for women and their babies, develops, manufactures and markets a broad range of disposable and reusable specialty medical devices recognized by clinicians in hundreds of countries around the world as the standard for obtaining optimal long term outcomes for their patients. For more information about Utah Medical Products, Inc., visit UTMD's website at www.utahmed.com.

Utah Medical Products, Inc.

INCOME STATEMENT, First Quarter ended March 31 (in thousands except earnings per share):

1Q 2015 1Q 2014 Percent Change
Net Sales $ 10,233 $ 9,827 +4.1 %
Gross Profit 6,112 6,050 +1.0 %
Operating Income 3,877 3,843 +0.9 %
Income Before Tax 3,668 3,782 (3.0 %)
Net Income 2,667 2,722 (2.0 %)
Earnings Per Share $ 0.706 $ 0.719 (1.8 %)
Shares Outstanding (diluted) 3,776 3,787

BALANCE SHEET

(in thousands) (unaudited)
MAR 31, 2015 (audited)
DEC 31, 2014 (unaudited)
MAR 31, 2014
Assets
Cash & Investments $ 16,157 $ 19,332 $ 15,089
Accounts & Other Receivables, Net 5,013 4,703 5,075
Inventories 4,850 4,872 5,292
Other Current Assets 769 768 876
Total Current Assets 26,789 29,675 26,332
Property & Equipment, Net 7,728 8,236 8,904
Intangible Assets, Net 40,858 43,165 47,658
Total Assets $ 75,375 $ 81,076 $ 82,894
Liabilities & Stockholders' Equity
A/P & Accrued Liabilities $ 5,359 $ 5,077 $ 4,478
Current Portion of Notes Payable -0- 3,894 4,068
Total Current Liabilities 5,359 8,971 8,546
Notes Payable (excluding current portion) -0- 973 4,067
Deferred Tax Liability - Intangibles 5,190 5,581 6,394
Deferred Revenue and Income Taxes 985 995 949
Stockholders' Equity 63,841 64,556 62,938
Total Liabilities & Stockholders' Equity $ 75,375 $ 81,076 $ 82,894

Contact:

Paul Richins
(801) 566-1200

Utah Medical Products, Inc. Reports Financial Performance for Fourth Quarter and Year 2013
GlobeNewswire Utah Medical Products, Inc.
14 hours ago
SALT LAKE CITY, Jan. 30, 2014 (GLOBE NEWSWIRE) -- Utah Medical Products, Inc. (UTMD) concluded another excellent financial year in 2013 under difficult conditions. The results according to Generally Accepted Accounting Principles in the U.S. (US GAAP) are clouded somewhat by a favorable adjustment to UTMD's tax provision, as explained below.

In the fourth calendar quarter (4Q) 2013 and year of 2013, UTMD's changes in U.S. GAAP financial results compared to the same time period in the prior calendar year were as follows:

4Q Year

(October -- December) (January -- December)
Sales: +3% (3%)
Gross Profit: -- (4%)
Operating Income: -- (2%)
Net Income: +54% +12%
Earnings Per Share: +51% +10%
US GAAP earnings per share (EPS) for the 2013 calendar year were $3.02. Year 2012 EPS were $2.74.

Excluding the noncash effects of depreciation, amortization of intangible assets and non-cash stock option expense and asset impairment expense, 2013 consolidated earnings before taxes plus interest expense were $18,136 compared to $18,703 in 2012. Currency amounts in this report are in thousands, except per share amounts and where noted.

As shareholders likely remember, in March 2011 UTMD acquired 100% of the stock of Femcare Holdings Limited in the UK, and its subsidiaries. Included in the purchase price were identifiable intangible assets (IIA) of $38.8 million, almost all of which are being amortized over a fifteen year useful life in operating expenses. This approximately $2.5 million per year amortization expense reduces the income statement tax provision, but is not deductible on the tax return. As a consequence, on the acquisition date, UTMD created a deferred tax liability (DTL) on its balance sheet, using UK tax rates then in effect, which represented the tax impact of the amortization of IIA over the fifteen year life.

In 2013, the government of Great Britain enacted law that substantially reduces corporate income tax rates looking forward. According to U.S. GAAP, the total effect of the tax rate changes on deferred tax balances is recorded as a component of the income tax provision related to continuing operations for the period in which the law is enacted. In other words, the total reduction in the DTL that results from lower future tax rates over the remaining almost 12 years of Femcare IIA amortization, which amounts to $976, reduced UTMD's reported 2013 tax provision and increased reported net profit by the same amount, per U.S. GAAP.

The adjustment only affected UTMD's income tax provision, net income and EPS; not sales, gross profits, operating income or earnings before taxes. Without including the effect of reducing the income tax provision, UTMD's changes in net income and EPS (on a non-GAAP basis) compared to the same time periods in the prior calendar year were as follows:

4Q Year

(October -- December) (January -- December)
Net Income: +10% +3%
Earnings Per Share: +9% +1%
Profitability measures compared to the same time periods in the prior calendar year were as follows:

4Q13 4Q12 2013 2012
Gross Profit Margin (GPM): 59.4% 61.2% 59.9% 60.9%
Operating Profit Margin (OPM): 35.3% 36.3% 36.6% 36.6%
Net Profit Margin (NPM): 34.4% 23.0% 28.2% 24.5%

Without the tax provision adjustment,

Net Profit Margin (Non-GAAP): 24.7% 23.0% 25.8% 24.5%
According to CEO Kevin Cornwell,

"Non-U.S. GAAP earnings per share (EPS) in 2013 without the $976 tax provision adjustment were $2.76, up 1% compared to management's beginning of year projection in its SEC Form 10-K of down 3%. We are pleased that UTMD achieved its financial plan for 2013, with sales slightly lower than projected, but with net income and EPS higher.

Certainly, UTMD shareholders have benefited substantially by the reductions in UK corporate income taxes. We applaud the UK government for its sensible pro-growth, pro-employment tax policy.

We invite shareholders to read UTMD's SEC Form 10-K which will be published by March 17 to obtain more details regarding 2013 performance and management projections for 2014. UTMD's focus remains on creating excellent long term shareholder value through providing highly reliable devices that help clinicians improve care and lower overall health care costs. We appreciate the continued confidence that our shareholders have demonstrated in the Company's prospects for future success."

Sales.

Total consolidated sales were down 2.5% in 2013 compared to 2012. A decline of 2% was projected at the beginning of 2013 due to known distributor overstocking in 2012. The marginal difference can be explained by the strength of the U.S. Dollar (USD) relative to the Great Britain Pound (GBP) and Euro in the first three quarters of 2013, and the significant weakness of the Australian Dollar (AUD) in the last three quarters of the year.

Domestic U.S. sales in 2013 were $18,965 (47% of total sales) compared to $19,961 (48% of total sales) in 2012. In 4Q 2013, domestic U.S. sales were $4,542 (45% of total sales) compared to $4,436 (45% of total sales) in 4Q 2012. International sales in 2013 were $21,528 compared to $21,591 in 2012. In 4Q 2013, international sales were $5,543 compared to $5,397 in 4Q 2012.

The two primary causes of $996 net lower domestic sales were $570 lower sales to Cooper Surgical, Femcare's US distributor of Filshie Clips, as previously anticipated in UTMD's 2012 SEC Form 10-K, and $832 lower sales of neonatal products to domestic users. The decline in sales of domestic neonatal products was due to lower NICU utilization of specialty devices and tightening of compliance under GPO contracts by U.S. hospitals. (In contrast, sales of neonatal products to international customers increased $212 (16%)). Other domestic end user product sales were up $209. Also helping offset the lower domestic Cooper and neonatal product sales were sales of UTMD's components and finished devices for use by other companies (OEM customers) in their products, which were up $178 (11%).

U.S. dollar (USD) denominated sales of devices to international customers by UTMD's Ireland facility (excluding intercompany sales) were up 16% in 2013 compared to 2012, and were down 2% for 4Q 2013 compared to 4Q 2012. In Euro terms, UTMD Ltd (Ireland) 2013 sales were up 13% for the year and down 7% for 4Q. The average currency exchange rate in 2013 was 1.323 USD/Euro compared to 1.289 USD/Euro in 2012. The average currency exchange rate was 1.355 USD/Euro in 4Q 2013 compared to 1.282 USD/Euro in 4Q 2012. Intercompany sales of products manufactured in Ireland increased 33% in 2013 (in Euro terms).

USD denominated sales of devices to domestic and international customers by Femcare Group, Ltd (Femcare-Nikomed Ltd. and Femcare-Australia Ltd.), excluding intercompany sales, were down 7% in 2013 compared to 2012, and were up 8% for 4Q 2013 compared to 4Q 2012. In GBP terms, 2013 Femcare UK subsidiary sales were down 5% for the year and up 14% for 4Q. Sales to Femcare's US distributor, Cooper Surgical Inc., by the Femcare UK subsidiary, as previously described in UTMD's 2012 SEC Form 10-K, were down $570 in 2013. In AUD terms, 2013 Femcare Australia subsidiary sales were down only 1% for the year and for 4Q. Because of the very weak AUD, however, USD denominated Australia sales were down 8% for the year and 12% for 4Q. The average currency exchange rate in 2013 was 0.966 USD/AUD compared to 1.036 USD/AUD in 2012. The average currency exchange rate was 0.930 USD/AUD in 4Q 2013 compared to 1.039 USD/AUD in 4Q 2012. Obviously, because over half of UTMD's consolidated sales are to customers outside of the U.S., fluctuations in currency exchange rates relative to the USD can have a significant effect on consolidated sales reported in USD terms in any particular reporting period.

Gross Profit.

UTMD's 2013 average gross profit margin (GPM) declined more than expected, from 60.9% in 2012 to 59.9% in 2013. About half the decline was anticipated from a less favorable product mix, as growth in sales came from lower profit margin sales in international and domestic OEM sales channels, and revenue declines largely came from domestic direct sales channels with typically higher gross margins. Although raw material costs did experience about 3% inflation, a little more than expected, and fixed labor and overhead costs had to be absorbed on less revenue, also as expected, the difference between management's beginning of year projection of a 60.2% GPM can be explained by a 25% increase in health plan expenses in the U.S. and a 17% increase in Ireland. In USD terms, health plan expenses increased more than $200, representing a half percentage point dilution in the GPM.

Operating Profit.

Operating Profit results from subtracting operating expenses from gross profit. Operating expenses in 2013 were 23.3% of sales compared to 24.3% of sales in 2012. Operating expenses in 4Q 2013 were 24.1% of sales compared to 24.9% of sales in 4Q 2012. By tightly controlling operating expenses, UTMD was able to make up for the decline in GPM and achieve a 2013 operating profit margin (OPM) the same as in 2012. Operating profit in 2013 was $14,828 (36.6% of sales) compared to $15,196 in 2012 (36.6% of sales). In 4Q 2013, UTMD's operating profit was $3,559 (35.3% of sales) compared to 4Q 2012 operating profit of $3,570 (36.3% of sales).

Operating expenses are comprised of general and administrative (G&A) expenses, sales and marketing (S&M) expenses and product development (R&D) expenses. In USD terms, 2013 operating expenses were $9,445 compared to $10,111 in 2012. G&A expenses were $6,164 (15.2% of 2013 sales) compared to $6,836 (16.5% of 2012 sales). G&A expenses in 2012 included U.S. litigation expenses of $170 which did not repeat in 2013. UTMD was also able to substantially reduce G&A expenses in Australia, helped in part by a much weaker AUD, and continued to reduce G&A expenses in the UK. Amortization of the acquired Femcare identifiable intangible assets (IIA) is part of G&A expenses. Amortization of Femcare IIA were 6.2% of sales in both 2013 and 2012. The IIA amortization expense, a noncash expense, of about $2.5 million per year, depending on the USD/GBP exchange rate, will continue until March 2026 (or until the value of remaining IIA becomes impaired). S&M expenses were $2,790 (6.9% of 2013 sales) compared to $2,711 (6.5% of 2012 sales). S&M expenses were up as a result of UTMD being fully staffed in its direct sales force in the UK and Ireland. R&D expenses were $491 (1.2% of 2013 sales) compared to $563 (1.4% of 2012 sales).

EBT.

Earnings Before Tax (EBT) results from subtracting non-operating expenses from operating profit. Non-operating expenses in 2013 were $352 compared to $659 in 2012. The largest component of non-operating expense was interest on UTMD's loans required to finance the 2011 acquisition of Femcare. Interest expense in 2013 was just $438 compared to $652 in 2012 because of UTMD's rate of reduction of its debt balance. 2013 EBT was $14,476 (35.7% of sales) compared to 2012 EBT of $14,537 (35.0% of sales). 2013 EBT and all other income statement measures above the EBT line were unaffected by the reduction in the DTL and income tax provision triggered as a result of the change in UK corporate income tax rates.

Net Profit.

Net profit results from subtracting estimated income taxes from EBT. The consolidated income tax provision rate for 2013 was 21.2% compared to 30.0% in 2012. The lower rate was due to a lower income tax provision rate on UK subsidiary EBT during the year plus the $976 reduction in the provision due to the adjustment in the DTL for future tax periods. The non-U.S. GAAP 2013 provision rate, excluding the $976 reduction, was 28.0%.

UTMD's U.S. GAAP net profit in 2013 was $11,406 (28.2% of consolidated sales) compared to $10,169 in 2012 (24.5% of sales). The non-U.S. GAAP net profit (before applying the $976 tax reduction to the provision due to the reduction in the DTL) was $10,430 (25.8% of sales) compared to $10,169 in 2012.

Despite the headwinds including lower revenues and GPM, UTMD was able to achieve higher net profits in 2013. The higher net profit margin drove UTMD's Return on Shareholder Equity for the year of 2013. Because of a 10% increase in the denominator ($10 million year to prior year increase in Shareholders' Equity), UTMD achieved an ROE (prior to the payment of cash dividends) of 20% compared to 22% in 2012.

Earnings Per Share (EPS).

Outstanding shares at the end of 2013 were 3,743,000 compared to 3,703,000 at the end of 2012. The number of shares used for calculating earnings per share was higher than ending shares because of a time-weighted calculation of average outstanding shares plus dilution from unexercised employee and director options. The total number of outstanding unexercised employee and outside director options at December 31, 2013 was 91,000 shares at an average exercise price of $27.39/ share, including shares awarded but not vested. This compares to 149,500 unexercised option shares outstanding at the end of 2012. The decrease was again due to options exercised by employees after a substantial increase in share price during the year. UTMD's dilution from unexercised option shares added to actual weighted average outstanding shares for purposes of calculating EPS was 43,500 in 4Q 2013 compared to 33,900 in 4Q 2012, and 46,600 for the year 2013 compared to 34,000 in 2012. The increase in dilution was due to a higher average share price in 2013 compared to 2012. No new options were awarded in 2013. In 2012, 13,000 option shares were awarded on October 24, 2012 to 11 employees at an exercise price of $33.30 per share.

UTMD paid $3,675 in cash dividends ($.985/share) to its shareholders in 2013 compared to $3,555 ($.965/share) in 2012. Dividends paid to shareholders during 2013 were 35% of non-GAAP net profits and 36% of non-GAAP EPS (excluding the $976 lower tax provision from the DTL adjustment), and 32% of reported net profits and 33% of reported EPS.

UTMD did not repurchase any of its shares in the open market during 2013. In 2012, the Company repurchased 15,000 shares at $33.57/ share. The Company retains the financial ability for repurchasing its shares when they seem undervalued. The closing share price at the end of 2013 was $57.16, up 59% from the $36.05 closing price at the end of 2012.

Changes in UTMD's Balance Sheet at the end of 2013 from the end of 2012 again represented significant improvement and deleveraging. At the end of 2013, UTMD owned $81 million in total assets including $14 million in cash, offset by about $9 million in bank debt. Intangible assets represented 60% of total assets. Stockholders' Equity was $61 million. In comparison, at the end of 2012, UTMD had $9 million in cash and equivalents as part of $77 million in total assets, and $13 million in bank debt. Intangible assets were 65% of total assets, and Stockholders' Equity was $51 million. The $10 million increase in Shareholders' Equity was achieved in spite of $3.7 million in cash dividends paid to shareholders, which reduces Shareholders' Equity.

Some other highlights regarding changes in UTMD's Balance Sheet during 2013 include:

1) Cash and investments balances increased $5.5 million even though the Company distributed $3.7 million in cash payments to shareholders and reduced loan principal balances in USD terms by $3.9 million.

2) The Deferred Tax Liability resulting from the amortization of Identifiable Intangible Assets from the Femcare acquisition plus other long term liabilities declined $1.7 million.

3) Accounts Receivable over 90 days from date of invoice remained less than 1% of trade receivables.

Financial ratios as of December 31, 2013 which may be of interest to shareholders follow:

1) Current Ratio = 3.2

2) Days in Trade Receivables (based on 4Q sales activity) = 32

3) Average Inventory Turns (based on 4Q CGS) = 3.5

4) 2013 ROE = 20% (prior to payment of dividends)

Investors are cautioned that this press release may contain forward looking statements and that actual events may differ from those projected. Risk factors that could cause results to differ materially from those projected include market acceptance of products, timing of regulatory approval of new products, regulatory intervention in current operations, government health care "reforms", fluctuation in foreign currency exchange rates, the Company's ability to efficiently manufacture, market, and sell its products, among other factors that have been and will be outlined in UTMD's public disclosure filings with the SEC.

Utah Medical Products, Inc., with particular interest in health care for women and their babies, develops, manufactures, assembles and markets a broad range of disposable and reusable specialty medical devices designed for better health outcomes for patients and their care-providers. For more information about Utah Medical Products, Inc., visit UTMD's website at www.utahmed.com.

Utah Medical Products, Inc.

INCOME STATEMENT, Fourth Quarter (3 months ended December 31)
(in thousands except earnings per share):

4Q 2013 4Q 2012 Percent Change
Net Sales $10,085 $9,832 +2.6%
Gross Profit 5,994 6,021 (0.4%)
Operating Income 3,559 3,570 (0.3%)
Income Before Tax 3,485 3,322 +4.9%
Net Income 3,468 2,259 +53.5%
Earnings Per Share $0.917 $0.606 +51.2%
Shares Outstanding (diluted) 3,784 3,727

INCOME STATEMENT, Year (12 months ended December 31)
(in thousands except earnings per share):

2013 2012 Percent Change
Net Sales $40,493 $41,552 (2.5%)
Gross Profit 24,273 25,307 (4.1%)
Operating Income 14,828 15,196 (2.4%)
Income Before Tax 14,476 14,537 (0.4%)
Net Income 11,406 10,169 +12.2%
Earnings Per Share $3.022 $2.740 +10.3%
Shares Outstanding (diluted) 3,775 3,711

BALANCE SHEET
(in thousands) (audited) (unaudited) (audited)

DEC 31, 2013 SEP 30, 2013 DEC 31, 2012
Assets

Cash & Investments $14,451 $13,922 $8,913
Accounts & Other Receivables, Net 4,388 4,963 4,341
Inventories 4,704 4,660 4,353
Other Current Assets 743 986 928
Total Current Assets 24,286 24,531 18,535
Property & Equipment, Net 8,330 8,279 8,428
Intangible Assets, Net 48,095 47,789 49,972
Total Assets $80,711 $80,599 $76,935

Liabilities & Shareholders' Equity

A/P & Accrued Liabilities $3,559 $5,240 $3,821
Current Portion of Notes Payable 4,052 3,989 4,002
Total Current Liabilities 7,611 9,229 7,823
Notes Payable (excluding current portion) 5,065 5,983 9,003
Other LT Liabilities -- -- 363
Deferred Tax Liability -- Intangibles 6,510 7,433 7,890
Deferred Income Taxes 944 878 884
Stockholders' Equity 60,581 57,076 50,972
Total Liabilities & Shareholders' Equity $80,711 $80,599 $76,935

Contact:
Paul Richins
(801) 566-1200

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