UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10‑Q

Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934



For quarter ended: June 30, 2017
2018
Commission File No. 001-12575


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:
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 ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ☐
Accelerated filer ☒
Non-accelerated filer ☐
Smaller reporting company ☐

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ☒    No ☐

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of August 2, 2017: 3,719,000.
7, 2018: 3,733,000.
 

UTAH MEDICAL PRODUCTS, INC.
INDEX TO FORM 10‑Q




PART I - FINANCIAL INFORMATION  PAGE
   
Item 1.Financial Statements 
   
 Consolidated Condensed Balance Sheets as of June 30, 20172018 and December 31, 201620171
   
 Consolidated Condensed Statements of Income for the three and six months ended June 30, 20172018 and June 30, 201620172
   
 Consolidated Condensed Statements of Cash Flows for six months ended June 30, 20172018 and June 30, 201620173
   
 Notes to Consolidated Condensed Financial Statements4
   
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations6
   
Item 3.Quantitative and Qualitative Disclosures About Market Risk1314
   
Item 4.Controls and Procedures1314
   
PART II – OTHER INFORMATION   
   
Item 1.Legal Proceedings1415
   
Item 1A.Risk Factors1415
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds1516
   
Item 6.Exhibits1617
   
SIGNATURES 1718

PART I - FINANCIAL INFORMATION 
Item 1.  Financial Statements      
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES 
CONSOLIDATED CONDENSED BALANCE SHEETS AS OF 
JUNE 30, 2018 AND DECEMBER 31, 2017 
(in thousands) 
  
    (unaudited)  (audited) 
ASSETS
 
JUNE 30,
2018
  
DECEMBER 31,
2017
 
Current assets:      
 Cash $45,873  $39,875 
Investments, available-for-sale  0   80 
Accounts & other receivables, net  4,532   3,623 
Inventories  5,228   5,244 
Other current assets  363   366 
Total current assets  55,996   49,188 
Property and equipment, net  10,769   11,621 
Goodwill  13,925   14,092 
Other intangible assets  34,018   34,805 
Other intangible assets - accumulated amortization  (17,664)  (16,961)
Other intangible assets, net  16,354   17,844 
Total assets $97,044  $92,745 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable $979  $934 
Accrued expenses  4,269   4,346 
Total current liabilities  5,248   5,280 
Deferred tax liability - intangible assets  2,827   3,102 
Other long term liabilities  5,168   5,785 
Deferred income taxes  439   456 
Total liabilities  13,682   14,623 
         
Stockholders' equity:        
Preferred stock - $.01 par value; authorized - 5,000shares; no shares issued or outstanding  -   - 
Common stock - $.01 par value; authorized - 50,000 shares; issued - June 30, 2018, 3,732 shares and December 31, 2017, 3,721 shares  37   37 
Accumulated other comprehensive income (loss)  (9,876)  (8,341)
Additional paid-in capital  1,197   809 
Retained earnings  92,004   85,617 
Total stockholders' equity  83,362   78,122 
         
Total liabilities and stockholders' equity $97,044  $92,745 


PART I - FINANCIAL INFORMATION
 
Item 1.  Financial Statements      
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES 
CONSOLIDATED CONDENSED BALANCE SHEETS AS OF 
JUNE 30, 2017 AND DECEMBER 31, 2016 
(in thousands) 
  
    (unaudited)  (audited) 
ASSETS
 
JUNE 30,
2017
  
DECEMBER 31,
2016
 
       
Current assets:      
 Cash $33,737  $26,296 
Investments, available-for-sale  72   64 
Accounts & other receivables, net  4,473   3,211 
Inventories  4,798   4,542 
Other current assets  709   754 
Total current assets  43,789   34,867 
Property and equipment, net  10,145   9,966 
Goodwill  13,822   13,487 
Other intangible assets  33,529   31,947 
Other intangible assets - accumulated amortization  (15,340)  (13,683)
Other intangible assets, net  18,189   18,264 
Total assets $85,945  $76,584 
         
LIABILITIES AND STOCKHOLDERS' EQUITY
        
Current liabilities:        
Accounts payable $984  $906 
Accrued expenses  3,410   2,116 
Total current liabilities  4,394   3,022 
Deferred tax liability - intangible assets  3,178   3,209 
Deferred income taxes  1,120   1,109 
Total liabilities  8,692   7,340 
         
Stockholders' equity:        
Preferred stock - $.01 par value; authorized - 5,000 shares; no shares issued or outstanding        
Common stock - $.01 par value; authorized - 50,000 shares; issued - June 30, 2017, 3,718 shares and December 31, 2016, 3,713 shares  37   37 
Accumulated other comprehensive income (loss)  (9,908)  (12,243)
Additional paid-in capital  615   378 
Retained earnings  86,509   81,072 
Total stockholders' equity  77,253   69,244 
         
Total liabilities and stockholders' equity $85,945  $76,584 
 
see notes to consolidated condensed financial statements

1
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES 
CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE 
THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND JUNE 30, 2017 
(in thousands, except per share amounts - unaudited) 
  
  Three Months Ended     Six Months Ended    
  June 30,  June 30, 
  2018  2017  2018  2017 
Sales, net $10,965  $10,829  $21,852  $21,088 
                 
Cost of goods sold  3,981   3,936   7,946   7,660 
Gross profit  6,984   6,893   13,906   13,428 
                 
Operating expense                
Selling, general and administrative  1,811   1,740   3,649   3,432 
Research & development  117   119   230   238 
Total operating expenses  1,928   1,859   3,879   3,670 
Operating income  5,056   5,034   10,027   9,758 
                 
Other income (expense)  500   23   538   49 
Income before provision for income taxes  5,556   5,057   10,565   9,807 
                 
Provision for income taxes  1,248   1,187   2,165   2,402 
Net income $4,308  $3,870  $8,400  $7,405 
                 
Earnings per common share (basic) $1.15  $1.04  $2.25  $1.99 
                 
Earnings per common share (diluted) $1.15  $1.04  $2.24  $1.98 
                 
Shares outstanding - basic  3,731   3,716   3,728   3,715 
                 
Shares outstanding - diluted  3,754   3,732   3,751   3,732 
                 
Other comprehensive income (loss):                
Foreign currency translation net of taxes of $0 in all periods $(2,836) $1,680  $(1,535) $2,336 
Total comprehensive income $1,472  $5,550  $6,865  $9,741 
 
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES 
CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE 
THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND JUNE 30, 2016 
(in thousands, except per share amounts - unaudited) 
             
  Three Months Ended  Six Months Ended 
  June 30,     June 30, 
  2017  2016  2017  2016 
Sales, net $10,829  $10,490  $21,088  $20,791 
                 
Cost of goods sold  3,936   4,238   7,660   8,316 
Gross profit  6,893   6,252   13,428   12,475 
                 
Operating expense                
Selling, general and administrative  1,740   1,818   3,432   3,619 
Research & development  119   119   238   229 
Total operating expenses  1,859   1,937   3,670   3,848 
Operating income  5,034   4,315   9,758   8,627 
                 
Other income (expense)  23   64   49   165 
Income before provision for income taxes  5,057   4,379   9,807   8,792 
                 
Provision for income taxes  1,187   1,120   2,402   2,316 
Net income $3,870  $3,259  $7,405  $6,476 
                 
Earnings per common share (basic) $1.04  $0.87  $1.99  $1.72 
                 
Earnings per common share (diluted) $1.04  $0.86  $1.98  $1.72 
                 
Shares outstanding - basic  3,716   3,758   3,715   3,756 
                 
Shares outstanding - diluted  3,732   3,776   3,732   3,773 
                 
Other comprehensive income (loss):                
Foreign currency translation net of taxes of $0 in all periods $1,675  $(3,016) $2,331  $(3,426)
Unrealized gain (loss) on investments net of taxes of $3, $0, $3 and ($4)  5   0   5   (6)
Total comprehensive income $5,550  $243  $9,741  $3,044 
see notes to consolidated condensed financial statements
2
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWSCONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 
FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND JUNE 30, 2016 
FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND JUNE 30, 2017FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND JUNE 30, 2017 
(in thousands - unaudited)(in thousands - unaudited) (in thousands - unaudited) 
   
 
Six Months Ended
June 30,
  
Six Months Ended
June 30,
 
 2017  2016  2018  2017 
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net income $7,405  $6,476  $8,400  $7,405 
Adjustments to reconcile net income to net cash provided by operating activities        Adjustments to reconcile net income to net cash provided by operating activities     
Depreciation  330   298   395   330 
Amortization  1,031   1,179   1,128   1,031 
Gain on Investments  (32)  0 
Provision for (recovery of) losses on accounts receivable  (1)  (7)  1   (1)
(Gain) loss on disposal of assets  -   -   (418)  - 
Deferred income taxes  (182)  (237)  (225)  (182)
Stock-based compensation expense  69   42   42   69 
Tax benefit attributable to exercise of stock options  21   35   39   21 
Changes in operating assets and liabilities:                
Accounts receivable  (1,157)  (450)  (992)  (1,157)
Accrued interest and other receivables  (5)  (34)  0   (5)
Inventories  (100)  196   (45)  (100)
Prepaid expenses and other current assets  60   61   (3)  60 
Accounts payable  68   427   51   68 
Accrued expenses  203   (222)  (594)  203 
Total adjustments  337   1,288   (653)  337 
Net cash provided by operating activities  7,742   7,764   7,747   7,742 
                
CASH FLOWS FROM INVESTING ACTIVITIES:                
Capital expenditures for:                
Property and equipment  (114)  (90)  (201)  (114)
Intangible assets  -   (9)  -   - 
Purchases of investments  -   - 
Proceeds from sale of investments  74     
Proceeds from sale of property and equipment  862   - 
Net cash provided by (used in) investing activities  (114)  (99)  735   (114)
                
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from issuance of common stock - options  168   257   347   168 
Payment of dividends  (984)  (976)  (2,011)  (984)
Net cash provided by (used in) financing activities  (816)  (719)  (1,664)  (816)
                
Effect of exchange rate changes on cash  629   (829)  (820)  629 
Net increase (decrease) in cash and cash equivalents  7,441   6,117   5,998   7,441 
Cash at beginning of period  26,296   23,278   39,875   26,296 
Cash at end of period $33,737  $29,395  $45,873  $33,737 
                
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                
Cash paid during the period for income taxes $2,676  $2,422  $3,016  $2,676 
Cash paid during the period for interest  0   0   0   0 
 
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, 2016.2017.  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.  Currency amounts are in thousands except per-share amounts and where noted.

(2)   Recent Accounting Standards. In March 2016, new accounting guidance was issued to simplify several aspects of accounting for employee share-based payment (including stock option) transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under the guidance, entities recognize all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. UTMD adopted this standard on January 1, 2017, which had an insignificant impact on its consolidated financial statements. UTMD made a determination to continue to account for forfeitures by estimating the number of awards that are expected to vest.  Because UTMD primarily issues incentive stock options, excess tax benefits and tax deficiencies have historically been minimal.

In May 2014, new accounting guidance (ASU 2014-09) was issued that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract.  Entities have the option ofUTMD adopted this new standard on January 1, 2018, using either a full retrospective or a modified retrospective approachapproach. In accordance with ASU 2014-09, UTMD's revenue recognition is based on standard terms & conditions of sale for like customers in addition to contracts and the performance obligations identified in them. With very insignificant and limited exceptions, the Company's performance obligation is met when it ships a physical product to a customer. The basis on which UTMD recognizes revenue was updated on January 1, 2018, but it did not result in a change to the process and timing of revenue recognition, because the previous revenue recognition method complies with ASU 2014-09.  Therefore, the adoption of the new standard.  This guidance becomes effective for annual reporting periods beginning after December 15, 2017 and earlyASU 2014-09 did not have an impact on UTMD's financial statements.  In accordance with this adoption is permitted for periods beginning after December 15, 2016. Because the vast majority of itsdisaggregated revenue is recognized when a physical product is shipped, UTMD expects that the 2018 adoption of this standard will have an insignificant impact on its consolidated financial statements.presented in Note 7.

In February 2016, new accounting guidance was issued which requires recording most leases on the balance sheet. The new lease standard requires disclosure of key information about lease arrangements and aligns many of the underlying principles of this new model with those in the new revenue recognition standard noted above. This guidance becomes effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. UTMD has yet to assess the impact that this standard will have on its consolidated financial statements when it is adopted. The only significant lease the Company anticipates it will have at that time is for the parking lot at its Utah facility.

(3)   Inventories at June 30, 20172018 and December 31, 20162017 consisted of the following:
  June 30,  December 31, 
  2017  2016 
Finished goods $1,153  $1,327 
Work‑in‑process  1,260   942 
Raw materials  2,385   2,273 
Total 
$
4,798  
$
4,542 
  June 30,  December 31, 
  2018  2017 
Finished goods $1,307  $1,313 
Work‑in‑process  1,342   1,270 
Raw materials  2,579   2,661 
Total $5,228  $5,244 

(4)   Stock-Based Compensation. At June 30, 2017,2018, the Company has stock-based employee compensation plans which authorize the grant of stock options to eligible employees and directors.  The Company accounts for stock compensation under FASB Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation.  This statement requires the Company to recognize compensation cost based on the grant date fair value of options granted to employees and directors.  In the quarters ended June 30, 20172018 and 2016,2017, the Company recognized $33$11 and $21,$33, respectively, in stock based compensation cost.  In the six months ended June 30, 20172018 and 2016,2017, the Company recognized $69$42 and $42,$69, respectively, in stock based compensation cost.
4
(5)   Warranty Reserve.  The Company's published warranty is: "UTMD warrants its products to conform in all material respects to all published product specifications in effect on the date of shipment, and to be free from defects in material and workmanship for a period of thirty (30) days for supplies, or twenty-four (24) months for equipment, from date of shipment.  During the warranty period UTMD shall, at its option, replace any products shown to UTMD's reasonable satisfaction to be defective at no expense to the Purchaser or refund the purchase price."
UTMD maintains a warranty reserve to provide for estimated costs which are likely to occur. The amount of this reserve is adjusted, as required, to reflect its actual experience. Based on its analysis of historical warranty claims and its estimate that existing warranty obligations were immaterial, no warranty reserve was made at December 31, 20162017 or June 30, 2017.2018.

(6)  Fair Value Measurements.  The Company follows ASC 820, Fair Value Measurement to determine fair value of its financial assets.  The following table provides financial assets carried at fair value measured as of June 30, 2017:2018:

  Fair Value Measurements Using   Fair Value Measurements Using 
Description
Total Fair Value
at 6/30/2017
 
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level 3 )
 
Total Fair Value
at 6/30/2018
 
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level 3 )
 
Equities $72  $72  $0  $0  $0  $0  $0  $0 


(7)   Global revenues (USD) by product category:

  Domestic  Outside US  Total 
Obstetrics $891  $204  $1,095 
Gynecology/Electrosurgery/Urology  2,378   3,695   6,073 
Neonatal  1,031   704   1,735 
Blood Pressure Monitoring and Accessories  1,181   881   2,062 
Total $5,481  $5,484  $10,965 

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

5

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

General

Utah Medical Products, Inc. (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, 20162017 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 or six month period in comparison with a previous three or six month period may not be indicative of comparative results for the year as a whole.  Currency amounts in the report are in thousands, except per share amounts or where otherwise noted.  Currencies in this report are denoted as $ or USD = U.S. Dollars; A$ or AUD = Australia Dollars; £ or GBP = UK Pound Sterling; C$ or CAD = Canadian Dollars; and € or EUR = Euros.

Analysis of Results of Operations

a) Overview

In the second calendar quarter (2Q) and first half (1H) of 2017,2018, UTMD achieved results which suggestreflect that the Company may significantly exceed previously announcedremains on target to achieve beginning of year goals for 2017.2018.

Income statement results in 2Q and 1H 20172018 compared to the same periods of 20162017 were as follows:

 2Q 2017  2Q 2016   change   1H 2017  1H 2016  change  2Q 2018  2Q 2017  change   1H 2018   1H 2017  change 
Net Sales $10,829  $10,490   +3.2% $21,088  $20,791   +1.4% $10,965  $10,829   +1.3% $21,852  $21,088   +3.6%
Gross Profit  6,893   6,252   +10.3%  13,428   12,475   +7.6%  6,984   6,893   +1.3%  13,906   13,428   +3.6%
Operating Income  5,034   4,315   +16.7%  9,758   8,627   +13.1%  5,056   5,034   +0.4%  10,027   9,758   +2.7%
Income Before Tax  5,057   4,379   +15.5%  9,807   8,792   +11.5%  5,556   5,057   +9.9%  10,565   9,807   +7.7%
Net Income  3,870   3,259   +18.7%  7,405   6,476   +14.4%  4,308   3,870   +11.3%  8,400   7,405   +13.4%
Earnings per Diluted Share  1.037   0.863   +20.2%  1.985   1.716   +15.7%  1.148   1.037   +10.7%  2.239   1.985   +12.8%

The changeBecause 32% of 1H 2018 consolidated sales and 53% of 1H 2018 consolidated operating expenses are in valueforeign currencies, the volatility of the USD had a somewhat greater negative impact on 2Q and 1H 2017 Net Sales (revenues or sales) results as it did in the same periods in 2016 due primarily to the impact of BREXIT on the value of the GBP starting in late 2Q 2016. Revenues in 2Q 2017 and 1H 2017 would each have been about another 2% higher using the same foreign currency exchange (FX) rates as infor sales and expenses outside the prior year (constant currency). UTMD'sU.S. (OUS) continued to have an impact on period-to-period relative financial results. FX rates for income statement purposes are transaction-weighted averages. The average rates from the applicable foreign currency to USD during 2Q 20172018 and 1H 20172018 compared to the same periods in 20162017 follow:

 2Q 2017  2Q 2016  change   1H 2017   1H 2016  change   2Q 18   2Q 17  Change   1H 18   1H 17  Change 
GBP  1.279   1.430   (10.6%)  1.259   1.431   (12.0%)  1.359   1.279   +6.3%  1.375   1.259   + 9.2%
EUR  1.108   1.123   (1.3%)  1.085   1.115   (2.7%)  1.192   1.108   +7.5%  1.209   1.085   +11.4%
AUD  0.750   0.746   +0.6%  0.755   0.736   +2.6%  0.756   0.750   +0.8%  0.771   0.755   + 2.1%
CAD  0.743   n/a       0.749   n/a       0.775   0.743   +4.2%  0.783   0.749   + 4.5%

UTMD's revenues invoiced in the above foreign currencies represented 30.9%31.3% of total consolidated USD sales in 2Q 20172018 and 31.0%32.2% in 1H 2017.2018.

The weighted average negativepositive impact on GBP, EUR, AUD and AUDCAD currency revenues in 2Q 20172018 compared to 2Q 20162017 was 5.0%5.4%, reducingincreasing reported USD sales by $132.$177.  The weighted average negativepositive impact on GBP, EUR, AUD and AUDCAD currency sales in 1H 20172018 compared to 1H 20162017 was 5.7%7.9%, reducingincreasing reported USD sales by $301.  In constant$518. With the same FX rates as in 2017 (constant currency terms,terms), total consolidated 2Q 20172018 sales were down 0.4%, and 1H 2018 sales were up 4.5%, and 1H 2017 sales were up 2.9%1.2%.

UTMD's consolidated Gross Profit Margin (GPM), Gross Profit (GP) divided by sales, improved to 63.7% primarily due towas consistent with the conversion from distributor sales to direct end-user sales of the Filshie Clip System in France and Canada.prior year's periods. Consolidated Operating Expenses (OE) were $78 lower$69 higher in 2Q 20172018 compared to 2Q 2016,2017, and $177 lower$210 higher in 1H 20172018 compared to 1H 2016.  Included in G&A OE,2017.  Eighty-three percent of the UK amortization of Identifiable Intangible Assets (IIA) was $62 lowerincrease in 2Q 2017 and $138 lower in 1H 20172018 OE was due to the weaker GBP, accounting for mostchange in FX rates.  Seventy-eight percent of the change.increase in 1H 2018 OE was due to the change in FX rates.  The combination of lower3.6% higher revenues, the same GPM but higher OE and higher GPM spurredresulted in a 13%2.7% increase in 1H 20172018 Operating Income (OI) with just a 1% increase in revenues.. The 14%13.4% higher UTMD Net Income (NI) in 1H 20172018 was primarily a result of the 13% higher OI plus 1) non-operating income from the sale of a changeno longer needed storage facility in the income tax rate in the UK during 2Q 2017,Utah, and 2) a lower U.S. income tax provision in the UK and Ireland based on translation of USD cash balances in those sovereignties when converted to their respective native currencies.rate.
6

Earnings Per Diluted Share (EPS) in 1H 20172018 were up 16% as a result ofonly 12.8% compared to the 14%13.4% higher NI, together with the benefitbecause of 50,000 shares repurchased in 4Q 2016.  employee option exercises and a higher dilution calculation resulting from a higher share market price.

EPS for the most recent twelve months (TTM) were $3.49.$2.53 per U.S. GAAP.  This includes the 4Q 2017 recognition of a $6,288 one-time U.S. and Utah repatriation tax (REPAT) on foreign subsidiary cash and cumulative earnings (E&P) resulting from the "Tax Cuts and Jobs Act" enacted in December 2017.  Excluding the REPAT tax, TTM EPS were $4.15.

UTMD profit margins in 2Q 2018 and 1H 2018 compared to 2Q 2017 and 1H 2017 compared to 2Q 2016 and 1H 2016 follow:
 
 
2Q 2017
(Apr-Jun)
  
2Q 2016
(Apr-Jun)
  
1H 2017
(Jan-Jun)
  
1H 2016
(Jan-Jun)
  
2Q 2018
(Apr-Jun)
  
2Q 2017
(Apr-Jun)
  
1H 2018
(Jan-Jun)
  
1H 2017
(Jan-Jun)
 
Gross Profit Margin (gross profit/ sales):  63.7%  59.6%  63.7%  60.0%  63.7%  63.7%  63.6%  63.7%
Operating Income Margin (operating income/ sales):  46.5%  41.1%  46.3%  41.5%  46.1%  46.5%  45.9%  46.3%
EBT Margin (profit before income taxes/ sales):  46.7%  41.7%  46.5%  42.3%  50.7%  46.7%  48.3%  46.5%
Net Income Margin (profit after taxes/ sales):  35.7%  31.1%  35.1%  31.1%  39.3%  35.7%  38.4%  35.1%

In summary, comparing the profit margins in 2018 time periods with 2017 periods, GPM were about the same, OIM were squeezed by higher FX rates on foreign OE, the EBTM benefited from the gain from one-time sale of unneeded assets, and the NIM  benefited from the higher EBTM combined with lower U.S. income tax rates.

UTMD's Balance Sheet continued to strengthen. June 30, 20172018 ending Cash and Investments were up $7.4$5.9 million and Stockholders' Equity was up $8.0$5.2 million from December 31, 2016.2017.  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 June 20172018 and the end of December 20162017 follow:

 
June 30,
2017
  
June 30,
2016
  change  
June 30,
2018
  
December 31,
2017
  
 
change
 
GBP  1.299   1.325   (2.0%)  1.320   1.352   (2.4%)
EUR  1.141   1.108   +3.0%  1.168   1.202   (2.9%)
AUD  0.768   0.744   +3.1%  0.740   0.781   (5.3%)
CAD  0.770   n/a       0.761   0.799   (4.7%)

b) Revenues

TheBeginning on January 1, 2018, the Company believesadopted ASU 2014-09, the new revenue recognition accounting standard.  Management completed an extensive assessment and implementation of the standard, including UTMD's various contracts with customers and associated performance obligations and the Company's conclusions regarding its revenue recognition practices and procedures. Other items like commissions and rights of return were also evaluated by the Company. Management is confident that the Company has properly evaluated the standard's requirements and has arrived at appropriate conclusions in recognizing revenue should bein accordance with the new standard.  Those practices and procedures the Company will use to recognize revenue under the new standard are not significantly different than the methods used previously since UTMD has traditionally recognized at the time of shipment as title generally passes to the customer at the time of shipment, or completion of services performed under contract.  Revenue recognized by UTMD is basedrevenue upon documented arrangements and fixed contracts in which the selling price is fixed prior to acceptance and completion of an order.  Revenue from product or service sales is generally recognized at the time the product is shipped or service completed and invoiced, and collectibility is reasonably assured.  Over 99% of UTMD's revenue is recognized at the time UTMD shipsshipping a physical medical deviceproduct to a customer, orwhich is also when the Company has met its performance obligations under contracts it has with its customers that represent over 99% of its revenue. While the Company's revenue not associated with shipping a customer's designated inventory location, where the selling price for the item shipped was agreed prior to UTMD's acceptance and completion of the customer order. There are no post-shipment obligations which have been or are expected to be material to financial results.

There are circumstances under which revenue may be recognized whenphysical product is not shipped, which meetimmaterial, management believes the criteria of SAB 104:  the Company provides engineering services, for example, design and production of manufacturing toolingCompany's practices in recognizing that may be used in subsequent UTMD manufacturing of custom components for other companies.  This revenue is recognized when UTMD's service has been completed according to a fixed contractual agreement.also in accordance with ASU 2014-09.

Terms of sale are established in advance of UTMD's acceptance of customer orders.  In the U.S., Canada, Ireland, UK France and Australia prior to 2017, UTMD generally acceptsaccepted orders directly from and shipsshipped directly to end user clinical facilities, as well as third party med/surgmedical/surgical distributors, under UTMD's Standard Terms and Conditions (T&C) of Sale. The same was true in 2017 with the addition of direct shipments to end user facilities in Canada and France. About 14% of UTMD's U.S. domestic end user sales, excluding Femcare's Filshie Clip System sales to its exclusive U.S. distributor, CooperSurgical Inc. (CSI), go through third party med/surg distributors which contract separately with clinical facilities to provide purchasing, storage and scheduled delivery functions for the applicable facility.  UTMD's T&C ofof Sale to end user facilities are substantially the same in the U.S., Canada, Ireland, UK, France and Australia.  In other geographic regions, UTMD sells its devices to third party distributors which then distribute the devices to medical facilities within their designated territories. UTMD's T&C of Sale for its international distributors are substantially the same.

UTMD may have separate discounted pricing agreements with a specific clinical facility or group of affiliated facilities based on volume of purchases.  Pricing agreements which are documented arrangements with clinical facilities, or groups of affiliated facilities, if applicable, are established in advance of orders accepted or shipments made. For existing customers, past actual shipment volumes typically determine the fixed price by part number for the next agreement period of one year. For new customers, the customer's best estimate of volume is usually accepted by UTMD for determining the ensuing fixed prices for the agreement period. Except on rare occasions such as when customers do not meet prepayment agreements, pricesPrices are not adjusted after an order is accepted. For the sake of clarity, the separate pricing agreements with clinical facilities based on volume of purchases disclosure is not inconsistent with UTMD's disclosure above that the selling price is fixed prior to the acceptance of a specific customer order.
7

Total 2Q 20172018 consolidated sales were $339 (3.2%$136 (1.3%) higher than in 2Q 2016,2017, and in 1H 20172018 were $297 (1.4%$764 (3.6%) higher than in 1H 2016.2017.  Comparing 2Q 20172018 to 2Q 2016,2017, total U.S. domestic sales were 11%4% higher and USD sales outside the U.S. (OUS sales) were 3%1% lower. Comparing 1H 20172018 to 1H 2016,2017, total U.S. domestic sales were 4%2% higher and OUS sales were 1% lower.5% higher.

U.S. domestic sales, including direct sales to U.S. clinical facilities, OEM sales of components and finished devices to other companies, and sales of the Filshie Clip System to UTMD's exclusive U.S. distributor, CSI, were overall 11% ($511)4% (+$186) and 4% ($435)2% (+$221) higher in 2Q 2018 and 1H 2018, respectively, compared to 2Q 2017 and 1H 2017, respectively, compared to 2Q 2016 and 1H 2016.2017.  U.S. domestic sales are obviously not affected by FX rate fluctuations.   U.S. domestic sales were 49%50% of total consolidated sales in 2Q 20172018 compared to 46%49% in 2Q 2016,2017, and 49% in 1H 2018 compared to 50% in 1H 2017 compared to 48% in 1H 2016.2017. Sales of Femcare's Filshie Clip System to CooperSurgical Inc. (CSI) for distribution in the U.S. were $366$14 higher in 2Q 20172018 compared to 2Q 2016,2017, and $330 higher$38 lower in 1H 20172018 compared to 1H 2016.2017.  Femcare's sales to CSI were 23%22% of total domestic sales in 2Q 20172018 compared to 17%23% in 2Q 2016,2017, and 22% in 1H 2018 compared to 23% in 1H 2017 compared to 20% in 1H 2016.2017. Domestic OEM sales were $5926% (+8%)$193) higher in 2Q 20172018 compared to 2Q 2016,2017, and $6321% (+4%)$324) higher in 1H 20172018 compared to 1H 2016.2017. Direct sales to U.S. user facilities were $85 (+3%)1% ($22) lower in 2Q 2018 compared to 2Q 2017, and also 1% ($64) lower in 1H 2018 compared to 1H 2017.

The 1% lower 2Q 2018 OUS sales was due to variation in order pattern by UTMD's China distributor of BPM kits.  Shipments to the China distributor were $337 lower in 2Q 2018 compared to 2Q 2017. Excluding shipments to the China distributor in both 2Q periods, OUS sales were 6% higher in 2Q 2017 compared to 2Q 2016, and $41 (+1%) higher in 1H 2017 compared to 1H 2016.2018.

In 2Q 2017 and 1H 2017, OUS sales were lower due to the weaker GBP and fluctuation in international distributor purchases, despite the increased sales direct to end user facilities in Canada and France.
Trade sales are sales to third parties, excluding sales from one UTMD entity to another (intercompany sales).  Ireland subsidiary trade sales were 22% of OUS sales in 2Q 2018 compared to 26% of OUS sales in 2Q 2017 compared to 36%2017.  Ireland subsidiary trade sales were 22% of OUS sales in 2Q 2016.  Ireland subsidiary trade sales were1H 2018 compared to 25% of OUS sales in 1H 2017 compared to 35% of OUS sales in 1H 2016.2017.  The lower portion of OUS sales by Ireland was due primarily to the conversion from Ireland selling Filshie Sterishotfact that BPM kits to Canada and France distributors in 2016 (trade sales) to selling to other UTMD subsidiaries for direct distribution into Canada and France (intercompany sales) in 2017.UTMD's China distributor are shipped from Ireland.

Trade sales by UTMD's UK subsidiary, Femcare-Nikomed Ltd. (Femcare UK), were 27% of OUS sales in both 2Q and 1H 2018 compared to 24% of OUS sales in both 2Q and 1H 2017 compared to 23% of OUS sales in 2Q 2016 and 25% in 1H 2016.2017.  Included in the Femcare UK sales were the direct sales to end users in France which comprised 6%8% of OUS sales in 2Q 20172018 and 5%9% of OUS sales in 1H 2017.  In other words, the increased direct sales from the UK to France offset the impact2018.
Sales of the weaker GBP on all otherFilshie Clip System in Europe (by UK trade sales.and Ireland subsidiaries) were up about 15%.

Sales by UTMD's Australia subsidiary to Australia end user facilities were 11%9% of OUS sales in 2Q 2018 compared to 11% in 2Q 2017, and 2Q 2016 as well as9% in 1H 20172018 compared to 11% in 1H 2017.  Filshie Clip System sales were weak, down 20% in 2Q 2018 and 13% in 1H 2016.2018, compared to the same periods in 2017.

Sales by UTMD's Canada subsidiary direct to Canada end user facilities were 13% of OUS sales in both 2Q 2018 and 1H 2018 compared to 15% of OUS sales in both 2Q 2017 and 1H 2017.  Canada Filshie Clip System sales were also weak, down 14% in 2Q 2018 and 9% in 1H 2018, compared to the same periods in 2017.

The following table provides USD sales amounts divided into general product categories for total sales and the subset of OUS sales:

Global revenues by product category:
 
 2Q 2017  2Q 2016   1H 2017   1H 2016  2Q 2018  2Q 2017   1H 2018   1H 2017 
Obstetrics $1,116  $1,092  $2,155  $2,200  $1,095  $1,116  $2,181  $2,155 
Gynecology/ Electrosurgery/ Urology  6,106   5,465   11,944   11,192   6,073   6,106   12,275   11,944 
Neonatal  1,493   1,518   3,063   3,172   1,735   1,493   3,445   3,063 
Blood Pressure Monitoring and Accessories*  2,114   2,415   3,926   4,227   2,062   2,114   3,951   3,926 
Total: $10,829  $10,490  $21,088  $20,791  $10,965  $10,829  $21,852  $21,088 

8
OUS revenues by product category:
 
 2Q 2017  2Q 2016   1H 2017   1H 2016  2Q 2018  2Q 2017   1H 2018   1H 2017 
Obstetrics $216  $132  $360  $313  $204  $216  $413  $360 
Gynecology/ Electrosurgery/ Urology  3,717   3,474   7,276   6,827   3,695   3,717   7,602   7,276 
Neonatal  479   576   997   1,189   704   479   1,449   997 
Blood Pressure Monitoring and Accessories*  1,121   1,522   1,941   2,382   881   1,121   1,652   1,941 
Total: $5,533  $5,704  $10,574  $10,711  $5,484  $5,533  $11,116  $10,574 
*includes assemblies and molded components sold to OEM customers.

8Additional comments on the above tables:
1)Year-to-date global sales were up in all product categories.
2)Filshie Clip System sales represented 67% of both 2Q and 1H 2018 Gyn/ES/Uro product category sales. With 2Q 2018 U.S. sales of the Filshie Clip System (to UTMD's exclusive distributor, CSI) about the same as in 2Q 2017, the higher Filshie Clip System 2Q 2018 sales in Europe offset the lower sales in Australia and Canada. For 1H 2018, global Filshie Clip System sales were up 4% despite CSI sales, representing 28% of total Filshie Clip System sales, being 2% lower.
3)The uneven order patterns of OUS distributors is especially evident in neonatal and BPM product categories. For example, UTMD's China distributor for BPM devices ordered $337 less in 2Q 2018 than in 2Q 2017.  UTMD's OUS distributors for neonatal devices ordered $199 more in 2Q 2018 than in 2Q 2017.

Looking forward, to 2H 2017, sales are expected to grow faster than they did in 1H 2017 from 1) CSI current forecasts indicate 50% higher Filshie$424 lower 2H 2018 purchases than in 2H 2016, 2) a weaker USD having a favorable USD conversion impact2017, and UTMD's China distributor for BPM devices, which placed an annual fixed order, has no shipments scheduled in 4Q 2018, resulting in 2H 2018 sales another $402 lower than in 2H 2017.  Trump administration trade policies may have negative consequences as direct exports from Utah represent about 14% of total sales, which could be lost if receiving countries increase tariffs on foreign currency sales, and 3) Bayer has announced that as of September 2017, the Filshie Clip System's chief competing surgical contraceptive device, the Essure, will no longer be soldU.S. goods.  Further, possible increased tariffs in Ireland, the UK, NetherlandsAustralia and Finland, places where UTMD hasCanada on components and finished devices manufactured in Utah and sold on an establishedintercompany basis could substantially increase subsidiary costs and reduce OUS sales and marketing position.made by UTMD's subsidiaries. While the USD was weaker in 1H 2018 than in 1H 2017, which benefited 1H 2018 sales in USD terms on a comparative basis, it presently is stronger than the average foreign FX rates in 2H 2017, which, if it persists, would have a negative effect on 2H 2018 USD sales on a comparative basis.

c) Gross Profit (GP)

GP results from subtracting the cost of manufacturing and shipping products to customers (direct materials, direct labor, manufacturing overhead and shipping costs), or the purchase price of distributed finished products manufactured by other companies, from revenues.  At UTMD, manufacturing overhead costs fully absorb indirect costs including depreciation of manufacturing equipment and facilities, quality assurance, materials requirements planning and purchasing, manufacturing engineering, production supervision, shipping, royalties paid to other entities and health plan benefits for both direct and indirect manufacturing personnel. UTMD's consolidated GPGPM remained consistent in 2Q 2017 was $6412018 despite noticeable increases in variable manufacturing costs – direct labor and materials. Just the expectation of tariffs on metals, for example, caused aluminum and stainless steel component vendors to substantially increase prices for parts used in UTMD's electrosurgical generators and specialty electrodes.  The higher variable costs were offset by better absorption of overheads and improved productivity.  Higher variable costs in combination with projected lower sales in 2H 2018, leading to lower absorption of manufacturing overheads, leads management to expect GPMs in 2H 2018 will be lower than in 2Q 2016 while sales were only $339 higher.  UTMD's 1H 2017 GP was $954 higher than in 1H 2016 while sales were only $297 higher.   Manufacturing productivity was consistent with the prior year while direct sales in Canada and France at retail prices replaced distributor sales at wholesale prices in the prior year.2H 2017.

d) Operating Income (OI)

OI is GP minus OE comprised of general and administrative (G&A), sales and marketing (S&M) and product development (R&D) expenses. Consolidated USD-denominated OE were $1,928 in 2Q 2018 (17.6% of consolidated revenues) compared to $1,859 in 2Q 2017 (17.2% of consolidated revenues) compared to $1,937 in 2Q 2016 (18.5% of consolidated revenues). Consolidated OE were $3,880 in 1H 2018 (17.8% of revenues) compared to $3,670 in 1H 2017 (17.4% of revenues) compared to $3,847 in 1H 2016 (18.5% of revenues).  In contrast to revenues, in the case of OE, lowerhigher FX rates were accretive to financial results.(weaker USD) for OUS OE reduce OI. The OE of UTMD's foreign subsidiaries in the aggregate in 2Q 20172018 and 1H 20172018 would have been $90$57 and $200 higher,$163 lower, respectively, in constant currency. In other words, the FX rate impact on OE represented 83% of the total increase in 2Q 2018 OE and 78% of the total increase in 1H 2018 OE.

DueOI in 2Q 2018 and 1H 2018 was $5,056 and $10,027 respectively, compared to higher GP$5,034 and lower OE, OI$9,758 in 2Q 2017 and 1H 2017 was $5,034respectively. Because of consistent GPMs and $9,758 respectively, compared to $4,315 and $8,627 in 2Q 2016 and 1H 2016 respectively.continuing tightly controlled OE, UTMD's 2Q and 1H 2017 continued2018 excellent but slightly FX rate diluted OIM was 46.5%46.1% and 46.3%45.9% respectively, compared to 41.1%46.5% and 41.5%46.3% in the same periods of 2016.2017.
9

Consolidated S&M expenses in 2Q 20172018 were $430 (3.9% of sales) compared to $409 (3.8% of sales) compared to $457 (4.4%in 2Q 2017, and were $839 (3.8% of sales) in 2Q 2016, and were1H 2018 compared to $790 (3.8% of sales) in 1H 2017 compared to $862 (4.1% of sales) in 1H 2016.2017.  S&M expenses include all customer support costs including training. In general, training is not required for UTMD's products since they are well-established and have been clinically widely used. Written "Instructions For Use" are packaged with all finished devices. Although UTMD does not have any explicit contracts with customers to provide training, it does have agreements in the U.S. and UK under which it agrees to provide hospital members inservice and clinical training as required and reasonably requested.

UTMD promises prospective customers that it will provide, at no charge in reasonable quantities, copies of instruction materials developed for the use of its products. UTMD provides customer support from offices in the U.S., Canada, the UK, Ireland and Australia by telephone, and employed representatives on a geographically dispersed basis, to answer user questions and help troubleshoot any user issues. Occasionally, on a case-by-case basis, UTMD may utilize the services of an independent practitioner to provide educational assistance to clinicians.  All inservice and training expenses are routinely expensed as they occur.  All of these services are allocated from S&M overhead costs included in OE.  Historically, marginal consulting costs have been immaterial to financial results.

R&D expenses in both2Q 2018 were $117 compared to $119 in 2Q 2017 and 2Q 2016 were $119 (1.1% of sales in both periods), and were $230 in 1H 2018 compared to $238 (1.1% of sales) in 1H 2017 compared to $229 (1.1% of sales)sales in 1H 2016.both periods).

Consolidated G&A expenses were $1,382 (12.6% of sales) in 2Q 2018 compared to $1,330 (12.3% of sales) in 2Q 2017, compared to $1,361 (13.0%and were $2,810 (12.9% of sales) in 2Q 2016, and were1H 2018 compared to $2,643 (12.5% of sales) in 1H 2017 compared to $2,757 (13.3% of sales) in 1H 2016.2017. Consolidated G&A expenses included non-cash expense from the amortization of IIA resulting from the Femcare acquisition of $542 (4.9% of consolidated revenues) in 2Q 2018 and $1,097 (5.0% of consolidated revenues) in 1H 2018, compared to $510 (4.7% of consolidated revenues) in 2Q 2017 and $1,004 (4.8% of consolidated revenues) in 1H 2017, compared to $572 (5.4% of consolidated revenues) in 2Q 2016 and $1,148 (5.5% of consolidated revenues) in 1H 2016.2017. The period to period differences in USD-denominated IIA amortization expense increases were predominantly FX-relatedonly due to FX rate changes, since the IIA amortization expense was GBP 798£399 in both 2Q 2018 and 2Q 2017, and £798 in both 1H 2017 compared to GBP 802 in2018 and 1H 2016.
9
2017.

G&A expenses include the cost of outside financial auditors and corporate governance activities related to the implementation of SEC rules resulting from the Sarbanes-Oxley Act of 2002, as well as estimated stock-based compensation cost, a noncash expense. Option compensation expense included in G&A expenses was $11 in 2Q 2018 compared to $33 in 2Q 2017, and $42 in 1H 2018 compared to $21 in 2Q 2016, and $69 in 1H 2017 compared to $42 in 1H 2016.2017.

Summary comparison of (USD) consolidated operating expenses:
 
 2Q 2017  2Q 2016   1H 2017   1H 2016  2Q 2018  2Q 2017   1H 2018   1H 2017 
S&M Expense $410  $457  $790  $862  $430  $410  $839  $790 
R&D Expense  119   119   238   229   117   119   230   238 
G&A Expense  1,330   1,361   2,642   2,757   1,382   1,330   2,810   2,642 
Total Operating Expenses: $1,859  $1,937  $3,670  $3,848  $1,928  $1,859  $3,880  $3,670 

e) Non-operating expense (NOE)/ Non-operating income (NOI)

NOE/NOI includes the combination of 1) expenses from loan interest and bank fees; 2) expenses or income from losses or gains from remeasuring the value of EUR cash bank balances in the UK, and GBP cash balances in Ireland, in USD terms; and 3) income from rent of underutilized property, investment income and royalties received from licensing the Company's technology. Negative NOE is NOI.  Net NOI in 2Q 20172018 was $23$501 compared to $64$23 NOI in 2Q 2016.2017. Net NOI in 1H 20172018 was $49$538 compared to $165$49 NOI in 1H 2016.2017. Included in the 2Q 2018 NOI was a one-time $418 gain on the sale of a storage facility in Utah that is no longer needed, and a $32 gain on the sale of other investments.  The loss/gain on remeasured foreign currency balances in 2Q 20172018 was $0$10 compared to a loss/gain of $38$0 in 2Q 2016.2017.  In 1H 2017,2018, the gain on remeasured foreign currency balances was $1$8 compared to a gain of $111$1 in 1H 2016.2017.  Royalties received were $19 in 2Q 20172018 compared to $22$19 in 2Q 2016,2017, and $41 in 1H 2018 compared to $42 in 1H 2017 compared to $45 in 1H 2016.2017.
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f) Income Before Income Taxes (EBT)

Consolidated EBT results from subtracting net NOE or adding NOI from or to, as applicable, Consolidatedconsolidated OI.  Consolidated 2Q 20172018 EBT was $5,556 (50.7% of sales) compared to $5,057 (46.7% of sales) compared to $4,379 (41.7%in 2Q 2017. Consolidated 1H 2018 EBT was $10,565 (48.3% of sales) in 2Q 2016. Consolidated 1H 2017 EBT wascompared to $9,807 (46.5% of sales) compared to $8,792 (42.3% of sales) in 1H 2016.2017.   Although not directly related to sales, 2018 EBTMs were enhanced by the one-time NOI gain from sale of assets.

The EBT of Utah Medical Products, Inc. (U.S.) was $2,885 in 2Q 2018 compared to $2,233 in 2Q 2017, and $5,136 in 1H 2018 compared to $2,144 in 2Q 2016, and $4,484 in 1H 2017 compared to $4,403 in 1H 2016.2017. The EBT of Utah Medical Products, Ltd (Ireland) was EUR 943 in 2Q 2018 compared to EUR 875 in 2Q 2017, and EUR 1,740 in 1H 2018 compared to EUR 931 in 2Q 2016, and EUR 1,512 in 1H 2017 compared to EUR 1,600 in 1H 2016 . The EBT of Femcare Group Ltd (Femcare-Nikomed, Ltd., UK and Femcare Australia) was GBP 1,117 in 2Q 2018 compared to GBP 1,146 in 2Q 2017, and GBP 2,180 in 1H 2018 compared to GBP 817 in 2Q 2016, and GBP 2,306 in 1H 2017 compared to GBP 1,808 in 1H 2016.2017.  The 2Q 2017 and 1H 20172018 EBT of Utah Medical Products Canada, Inc. was CAD 446 compared to CAD 567 in 2Q 2017, and CAD 917 in 1H 2018 compared to CAD 1,062 respectively.in 1H 2017.

Excluding the noncash effects of depreciation, amortization of intangible assets and stock option expense, 2Q 20172018 consolidated EBT excluding the remeasured bank balance currency gain or loss and interest expense (adjusted consolidated EBITDA) were $6,312 (57.6% of sales) compared to $5,779 (53.4% of sales) compared to $5,098 (48.6% of sales) in 2Q 2016.2017. Adjusted consolidated EBITDA in 1H 20172018 were $12,122 (55.5% of sales) compared to $11,236 (53.3% of sales) compared to $10,200 (49.1% of sales) in 1H 2016. Based on this performance, management now expects more than a $2 million increase2017.  The increases in adjusted EBITDA forwere largely due to the 2017 year.one-time 2Q 2018 asset sales. TTM adjusted EBITDA were $20,254.$22,864.

g) Net Income (NI)

NI is EBT minus a provision for income taxes.  In addition to the growthincrease in EBT, NI in 20172018 was further leveraged by lower tax provisions.provisions in the U.S. (both federal and state). NI in 2Q 20172018 of $3,870$4,308 was $611$438 (+19%11.3%) higher than the NI of $3,259$3,870 in 2Q 2016.2017.  The consolidated income tax provision rate in 2Q 20172018 was 23.5%22.5% compared to 25.6%23.5% for 2Q 2016.2017.  NI in 1H 20172018 of $7,405$8,400 was $930$995 (+14%13.4%) higher than the NI of $6,476$7,405 in 1H 2016.2017. The consolidated income tax provision rates were 20.5% in 1H 2018 and 24.5% in 1H 20172017.  The combined U.S. federal and 26.3%Utah state income tax rates were 25.95% in 1H 2016.   On April 1, 2017, the corporate income tax rate2018 compared to 39% in the UK was lowered from 20% to 19%.1H 2017.  For foreign subsidiaries, the tax provision booked in consolidated results is based on taxable income in the applicable sovereignty, not based on U.S. GAAP EBT. AsIn 1H 2017, UTMD held about $16 million in cash in USD currency in Ireland and UK subsidiary bank accounts, as of June 30, 2017, and the USD weakened relative to the applicable native currency, the resulting in a translation loss for each subsidiary that created a significant 2017 tax credit for those subsidiaries in their applicable native currencies. In summary, although there wasThis did not a corresponding translation loss for consolidated UTMD results,recur in 1H 2018, which are obviously expressedoffset the benefit of the reduction in USD, there was athe U.S. tax provision benefit.rates.
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h) Earnings Per Share (EPS)

EPS are consolidated NI divided by the number of shares of stock outstanding (diluted to take into consideration stock option awards which are "in the money," i.e., have exercise prices below the applicable period's weighted average market value). Diluted EPS in 2Q 20172018 were $1.037$1.148 compared to $0.863$1.037 in 2Q 2016.2017.  In 1H 2017,2018, EPS were $1.985$2.239 compared to $1.716$1.985 in 1H 2016.2017.  With some helphindrance from lowerhigher diluted shares outstanding, 2Q 20172018 EPS increased 20% (17.410.7% (11.1 cents) compared to 2Q 2016,2017, and 1H 20172018 EPS increased 16% (26.912.8% (25.4 cents) compared to 1H 2016.2017. Looking forward, management is now projecting 20172018 EPS greater than $3.60.$4.00.

EPS for the most recent twelve months were $3.489, but this$2.53, which includes the 4Q 2017 recognition of a 4Q 2016 "one-time" increase of $.033$6,288 one-time U.S. and Utah repatriation tax (REPAT) on foreign subsidiary cash and cumulative earnings (E&P) resulting from the adjustment in UTMD's deferred tax liability as a result of lower future income tax rates"Tax Cuts and Jobs Act" enacted in December 2017.  Excluding the UK in late 2016.REPAT tax, TTM EPS were $4.15.

Diluted shares outstanding used to calculate 2Q 20172018 EPS were 3,731,8593,753,608 compared to 3,776,3043,731,859 in 2Q 2016.2017.  The number of shares added as a dilution factor in 2Q 20172018 was 15,68623,084 compared to 17,90615,686 in 2Q 2016.2017. Diluted shares outstanding used to calculate 1H 20172018 EPS were 3,730,4783,751,072 compared to 3,773,4533,730,478 in 1H 2016.2017.  The number of shares added as a dilution factor in 1H 20172018 was 15,25323,326 compared to 17,89915,253 in 1H 2016. UTMD has not to date in 2017 repurchased any of its shares in the open market.  In 4Q 2016, UTMD repurchased 50,000 shares which accounts for the lower outstanding shares in 2Q 2017 and 1H 2017 compared to 2Q 2016 and 1H 2016.2017.

Outstanding shares at the end of 2Q 20172018 were 3,717,9903,731,920 which included 1H 20172018 employee and outside director option exercises of 4,86012,927 shares.  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 June 30, 20172018 was 62,32441,413 shares at an average exercise price of $46.15/$45.89/ share, including shares awarded but not vested. This compares to 51,86162,324 unexercised option shares outstanding at June 30, 20162017 at an average exercise price of $39.59/$46.15/ share. No option shares have been awarded to date in 2017.2018.  Despite the lower number of outstanding option shares, the dilution factor in 2018 was higher primarily because of a higher share market price.

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During both 1H 20172018 and 1H 2016,2017, UTMD did not repurchase its shares in the open market. The Company retains the financial ability for repurchasing its shares when they seem undervalued. Based on the strong 1H 2017 financial performance, management must increase its beginning of year projection outlined in the 2016 SEC Form 10-K to an expectation of double-digit growth in NI and EPS for the 2017 year as a whole.

i) Return on Equity (ROE)

ROE is the portion of NI retained by UTMD to internally finance its growth, divided by the average accumulated stockholders' equity for the applicable time period.  Annualized ROE (before stockholder dividends) in 1H 20172018 was 20%21% compared to 18% in 1H 2016.2017.  The higher ROE in 1H 20172018 was due to the increase in NI.  Targeting a high ROE of 20% remains a key financial objective for UTMD management.  ROE can be increased by increasing NI, or by reducing stockholders' equity by paying cash dividends to stockholders or by repurchasing shares.

Liquidity and Capital Resources

j) Cash flows

Net cash provided by operating activities, including adjustments for depreciation and amortization and other non-cash expenses along with changes in working capital, totaled $7,742$7,747 in 1H 20172018 compared to $7,764$7,743 in 1H 2016.2017.  The most significant differences in the two periods were the $930$995 increase in net income, a $707 use of$165 benefit to cash from a largersmaller increase in 1H 20172018 trade accounts receivable compared to 1H 2016,2017, a $426$798 benefit to cash from an increase in accrued expenses in 1H 20172018 resulting from the REPAT tax following a decrease in 1H 2016,2017, and a $360$449 use of cash from a smaller increasegain on investments and disposal of assets 1H 2018 that did not occur in accounts payable in 1H 2017 compared to the same period in 2016.2017.

Capital expenditures for property and equipment (PP&E) were $201 in 1H 2018 compared to $114 in 1H 2017 compared to $90 in 1H 2016.2017.  Depreciation of PP&E was $395 in 1H 2018 compared to $330 in 1H 2017 compared2017.  The difference in depreciation was due primarily to $298the new facility in 1H 2016.
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the UK put in service in 4Q 2017.

UTMD made cash dividend payments of $2,011 in 1H 2018 compared to $984 in 1H 2017.  The difference was due to the fact that the 2017 compared to $976year-end dividend was paid in 1HJanuary 2018, whereas the 2016 year-end dividend was paid in December 2016. The Company did not use cash to repurchase any of its own shares during either 1H 20172018 or 1H 2016.2017.

In 1H 2018, UTMD received $347 and issued 10,488 shares of its stock upon the exercise of employee and director stock options, net of 2,439 shares retired upon employees trading those shares in payment of the stock option exercise price. Option exercises in 1H 2018 were at an average price of $44.23 per share. In comparison, in 1H 2017 UTMDthe Company received $168 and issued 4,860 shares of its stock uponon the exercise of employee and director stock options. Option exercises in 1H 2017 were at an average price of $34.67 per share.  In comparison, in 1H 2016 the Company received $257 and issued 8,485 shares of stock on the exercise of employee and director stock options, net of 500 shares retired upon employees trading those shares in payment of the stock option exercise price. Option exercises in 1Q 2016 were at an average price of $32.06 per share.

Management believes that current cash balances, income from operations and effective management of working capital will provide the liquidity needed to finance internal growth plans. The Company may utilize cash not needed to support normal operations in one or a combination of the following:  1) in general, to continue to invest at an opportune time in ways that will enhance future profitability, for example, to fit-out a UK facility and property purchased in late 2016 specific to UTMD's needs;profitability; 2) to make additional investments in new technology and/or processes; and/or 3) to acquire a product line or company that will augment revenue and EPS growth and better utilize UTMD's existing infrastructure.  If there are no better strategic uses for UTMD's cash, the Company will continue to return cash to stockholders in the form of dividends and share repurchases when the stock appears undervalued.

k) Assets and Liabilities

June 30, 20172018 total consolidated assets were $85,945,$97,045, an increase of $9,361$4,300 from December 31, 2016.2017. The increase was due mainly to a $7,450$5,918 increase in cash and investments. Other significant changes in assets included a $1,259$909 increase in consolidated net trade receivables, a $257 increase in consolidated inventories and a $260 increase$1,656 decrease in net intangible assets.assets, a $852 decrease in the current USD value of net property and equipment, a $617 decrease in L/T taxes payable due to payment of the first installment of the REPAT tax, and a $275 decrease in the current USD value of the deferred tax liability associated with the amortization of acquired Femcare identifiable intangible assets (IIA). UTMD's Ireland subsidiary EUR-denominated assets and liabilities were translated into USD at an FX rate 8.1% higher (stronger2.9% lower (weaker EUR) than the FX rate at the end of 2016.2017. UTMD's UK subsidiary GBP-denominated assets were translated into USD at an FX rate 5.3% higher (stronger2.4% lower (weaker GBP) than the FX rate at the end of 2016.2017.  UTMD's Australia subsidiary AUD-denominated assets were translated into USD at an FX rate 6.2% higher (stronger5.3% lower (weaker AUD) than the FX rate at the end of 2016.2017.  UTMD's Canada subsidiary CAD-denominated assets were translated into USD at an FX rate 4.7% lower (weaker CAD) than the FX rate at the end of 2017.  The net book value of consolidated property, plant and equipment increased $179decreased $852 at June 30, 20172018 from the end of 20162017 due to period-ending changed FX rates, $114$201 in new asset purchases and $330$395 in depreciation.

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Working capital (current assets minus current liabilities) was $39,395$50,748 at June 30, 20172018 compared to $31,845$43,909 at December 31, 2016.2017. Cash balances were $45,873 of the working capital. A current asset increase of $8,922$6,808 was led by the $7,450$5,918 increase in cash and investments. Current liabilities increased $1,372, includingwere about the same, with a $1,294 increase in accrued liabilities. The accrued liabilities increase was mainly due to the $985 2Q 2017 quarterly dividend payment to stockholders accrued but not paid until July 6, whereas the $984 4Q 2016 dividend was paid beforeslight $31 decrease from the end of December 2016.2017. UTMD management believes that its working capital remains sufficient to meet normal operating needs, new capital expenditures and projected cash dividend payments to stockholders.

June 30, 20172018 intangible assets (goodwill plus other intangible assets) increased $260decreased $1,656 from the end of 2016.2017. The increasedecrease was due to the higherlower FX rate (stronger USD) for GBP Femcare intangibles as of June 30, 20172018 compared to year-end 2016, offset somewhat by2017, plus the $1,004$1,097 1H 20172018 amortization of Femcare IIA.  At June 30, 2017,2018, net intangible assets including goodwill declined to 37%31% of total consolidated assets compared to 41%34% at year-end 2016,2017, and 43%37% at June 30, 2016.2017.

The deferred tax liability balance for Femcare IIA ($9,084 on the date of the acquisition), was $2,827 at June 30, 2018 compared to $3,102 at December 31, 2017 and $3,178 at June 30, 2017 compared to $3,209 at December 31, 2016 and $3,784 at June 30, 2016.2017. Reduction of the deferred tax liability occurs as the book/tax difference of amortization is eliminated over the remaining useful life of the Femcare IIA. IIA, i.e. as Femcare pays its taxes in the UK without the benefit of a deduction for IIA amortization expense.

UTMD's total debt ratio (total liabilities/ total assets) as of June 30, 20172018 was 10%,14% compared to 16% at the same as at December 31, 2016.end of 2017. UTMD's total debt ratio as of June 30, 20162017 was 12%only 10% because it did not include a REPAT tax liability enacted in December 2017.  Excluding the REPAT liability for comparison purposes, the June 30, 2018 debt ratio was 8% and the December 31, 2017 debt ratio was 9%.

l) Management's Outlook

As outlined in its December 31, 20162017 SEC 10-K report, UTMD's plan for 20172018 is to
 
1)continue to exploit distribution and manufacturing synergies by further integrating capabilities and resources in its multinational operations;
2)introduce additional products helpful to clinicians through internal new product development;
3)continue achieving excellent overall financial operating performance;
4)utilize positive cash generation to  continue cash dividends to stockholders and make open market share repurchases if/when the UTMD share price seems undervalued; and
5)be vigilant for accretive acquisition opportunities which may be increasingly brought about by difficult burdens on small, innovative companies.

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Generally, the Company continues to effectively execute its plan as outlined above.  Based on results of 1H 2017,2018, management expects to exceed the financial objectives for the full year of 20172018 as stated in the Form SEC 10-K at the beginning of the year.

m) Accounting Policy Changes

Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting, was adopted by the Company effectiveOn January 1, 2017, as required by the ASU. This update2018 UTMD adopted ASU 2014-09, Revenue from Contracts with Customers. Refer to ASC 718, Compensation - Stock Compensation was issued by the Financial Accounting Standards Board as part of their simplification initiative.  This adoption had an immaterial impact on UTMD's retained earnings and other components of equity as of the date of adoption. In the statement of cash flows, the effect of the required change related to excess tax benefits, which was immaterial, was retrospectively applied. Stock compensation expense continues to reflect estimated forfeitures.Note 2 for further information.

Forward-Looking Information.  This report contains certain forward-looking statements and information relating to the Company that are based on the beliefs of management as well as assumptions made by management based on information currently available.  When used in this document, the words "anticipate," "believe," "project," "estimate," "expect," "intend" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements.  Such statements reflect the current view of the Company respecting future events and are subject to certain risks, uncertainties and assumptions, including the risks and uncertainties stated throughout the document.  Although the Company has attempted to identify important factors that could cause the actual results to differ materially, there may be other factors that cause the forward statement not to come true as anticipated, believed, projected, expected, or intended.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those described herein as anticipated, believed, projected, estimated, expected or intended.  Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results, and the Company assumes no obligation to update or disclose revisions to those estimates.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

UTMD has manufacturing and trading operations, including related assets, in the U.S. denominated in the U.S. Dollar (USD), in Ireland denominated in the Euro (EUR), in England denominated in the British Pound (GBP), in Australia denominated in the Australia Dollar (AUD), and, starting in 2017, in Canada denominated in the Canadian Dollar (CAD).  The currencies are subject to exchange rate fluctuations that are beyond the control of UTMD.  The exchange rates were .8763, .9474.8564, .8319 and .9028.8763 EUR per USD as of June 30, 2017,2018, December 31, 20162017 and June 30, 2016,2017, respectively.  Exchange rates were .7696, .8105.7578, .7395 and .7545.7696 GBP per USD as of June 30, 2017,2018, December 31, 20162017 and June 30, 2016,2017, respectively.  Exchange rates were 1.3028, 1.38291.3515, 1.2796 and 1.34331.3028 AUD per USD on June 30, 2017,2018, December 31, 20162017 and June 30, 2016,2017, respectively.  Exchange rates were 1.3141, 1.2519, and 1.2982 CAD per USD on June 30, 2017.2018, December 31, 2017 and June 30, 2017, respectively. UTMD manages its foreign currency risk without separate hedging transactions by either invoicing customers in the local currency where costs of production were incurred, by converting currencies as transactions occur, and by optimizing global account structures through liquidity management accounts.

Item 4. Controls and Procedures

The Company's management, under the supervision and with the participation of the Chief Executive Officer and the Principal Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2017.2018. Based on this evaluation, the Chief Executive Officer and Principal Financial Officer concluded that, as of June 30, 2017,2018, 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 six months ended June 30, 2017,2018, that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.
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PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

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

Item 1A.    Risk Factors

In addition to the other information set forth in this report, investors should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in UTMD's Annual Report on Form 10-K for the year ended December 31, 2016,2017, 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.

Legislative healthcare reform in the United States, as embodied in The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the "Acts") added a substantial excise tax (MDET)  in 2013-2015 that  increased administrative costs and has led to decreased revenues in the U.S.:
The voluminous Acts, administrative rules to enforce the Acts and promised efforts to reform the Acts, make the U.S. medical device marketplace unpredictable, particularly for the thousands of small medical device manufacturers including UTMD that do not have the overhead structure that the larger medical device companies can afford.  Fortunately, the U.S. Congress has suspended the MDET for two years of 2016 and 2017.through 2019.  To the extent that the Acts will in the future continue to place additional burdens on small medical device companies in the form of the excise tax on medical device sales, additional oversight of marketing and sales activities and new reporting requirements, the result is likely to continue to be negative for UTMD's ability to effectively compete and support continued investments in new product development and marketing of specialty devices in the U.S.

Increasing regulatory burdens including premarketing approval delays may result in significant loss of revenue, unpredictable costs and loss of management focus on helping the Company proactively conform with  requirements and thrive:
The Company's experience in 2001-2005, when the FDA improperly sought to shut it down, highlights the ongoing risk of being subject to a regulatory environment which can be arbitrary and capricious. The risks associated with such a circumstance relate not only to the substantial costs of litigation in millions of dollars, but also loss of business, the diversion of attention of key employees for an extended period of time, including new product development and routine quality control management activities, and a tremendous psychological and emotional toll on dedicated and diligent employees.

Since the FDA reserves to itself the interpretation of which vague industry standards comprise law at any point in time, it is impossible for any medical device manufacturer to ever be confident that it is operating within the Agency's version of the law.  The unconstitutional result is that companies, including UTMD, are considered guilty prior to proving their innocence.

Premarketing submission administrative burdens and substantial increases in "user fees" increase product development costs and result in delays to revenues from new or improved devices.  It recently took two and a half years to gain FDA approval of the use of a clearly safer single use Filshie Clip applicator, which had been in use for over seven years OUS, in lieu of a reused applicator approved in the U.S. since 1996, made of substantially equivalent materials for the same intended use applying the same implanted clip.

The growth of Group Purchasing Organizations (GPOs) adds non-productive costs, typically weakens the Company's marketing and sales efforts and may result in lower revenues:
GPOs, theoretically acting as bargaining agents for member hospitals, but actually collecting revenues from the companies that they are negotiating with, have made a concerted effort to turn medical devices that convey special patient safety advantages and better health outcomes, like UTMD's, into undifferentiated commodities. GPOs have been granted an antitrust exemption by the U.S. Congress. Otherwise, their business model based on "kickbacks" would be a violation of law.  These bureaucratic entities do not recognize or understand the overall cost of care as it relates to safety and effectiveness of devices, and they create a substantial administrative burden that is primarily related to collection of their administrative fees.

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The Company's business strategy may not be successful in the future:
As the level of complexity and uncertainty in the medical device industry increases, evidenced, for example, by the unpredictable regulatory environment, the Company's views of the future and product/ market strategy may not yield financial results consistent with the past.

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

A product liability lawsuit could result in significant legal expenses and a large award against the Company:
UTMD's devices are frequently used in inherently risky situations to help physicians achieve a more positive outcome than what might otherwise be the case.  In any lawsuit where an individual plaintiff suffers permanent physical injury, the possibility of a large award for damages exists whether or not a causal relationship exists.

The Company's reliance on third party distributors in some markets may result in less predictable revenues:
UTMD's distributors have varying expertise in marketing and selling specialty medical devices.  They also sell other devices that may result in less focus on the Company's products.  In some countries, notably China, Pakistan and India not subject to similarly rigorous standards, by copying, a distributor of UTMD's products may eventually become a competitor with a cheaper but lower quality version of UTMD's devices.

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

Fluctuations in foreign currencies relative to the USD can result in significant differences in period to period financial results:
Since a significant portion of UTMD's sales are invoiced in foreign currencies and consolidated financial results are reported in USD terms, a stronger USD can have negative revenue effects. Conversely, a weaker USD would increase foreign subsidiary operating costs in USD terms. For the portion of sales to foreign entities made in fixed USD terms, a stronger USD makes the devices more expensive and weakens demand.  For the portion invoiced in a foreign currency, not only USD-denominated sales are reduced, but also gross profits may be reduced because finished distributed products and/or U.S. made raw materials and components are likely being purchased in fixed USD.

Future increases in sales of the Filshie Clip System due to Bayer stopping sales of the Essure device are uncertain, and may not materialize.

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

UTMD did not purchase any of its own securities during 1H 2017.2018.

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Item 6.   Exhibits

Exhibit #
SEC Reference #
Title of Document
   
131Certification of CEO pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
231Certification of Principal Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
332Certification of CEO pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
432Certification of Principal Financial Officer pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
5101 insXBRL Instance
   
6101.schXBRL Schema
   
7101.calXBRL Calculation
   
8101.defXBRL Definition
   
9101.labXBRL Label
   
10101.preXBRL Presentation


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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.
 REGISTRANT
  
Date: 8/3/177/18
By: /s/ Kevin L. Cornwell
 Kevin L. Cornwell
 CEO
  
Date: 8/3/177/18
By: /s/ Paul O. RichinsBrian L. Koopman
 Paul O. RichinsBrian L. Koopman
 Principal Financial Officer
 

 
 
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