PRESS RELEASE
Utah Medical Products, Inc.
Reports Financial Performance for
Second Quarter
2005
July 19, 2005
Contact: Paul Richins
(801) 566-1200
Salt Lake City, Utah - In the second calendar
quarter (2Q) of 2005, Utah Medical Products, Inc.’s (Nasdaq: UTMD)
consolidated sales were up 3%, gross profits up 2%, operating profits down
6%, net income up 2%, and earnings per share (eps) up 16%, compared to 2Q
2004.
Operating profits were down even though sales and gross profits were up
because the Company increased its litigation reserve at the end of June to
reflect its estimate of the costs that will be required to complete the
litigation process with the FDA through the trial, which was scheduled on
June 30 by the Court to begin on August 30. The litigation expense accrual
increased G&A expenses, which are part of operating expenses, by $300,000.
Net income was up 2% even though operating profits were down as a result of
a significantly lower income tax provision resulting from The American Jobs
Creation Act of 2004 (the Act) enacted in October 2004 which allows a
temporary tax deduction on repatriated foreign earnings, which must be
accomplished in 2005. The disproportionate increase in eps was due to fewer
outstanding shares as a result of open market share repurchases. The Company
has repurchased about 15% of its outstanding shares since August 2004.
Comparing year-to-date financial results for the first half (1H) of 2005
with 1H 2004, sales and operating profits were up 2%, and gross profits were
about the same. In 1Q 2004, UTMD recognized $6,060,000 in non-operating
income from patent infringement damages which did not recur in 1H 2005.
Consequently, comparing 1H 2005 to 1H 2004 during which UTMD received the
patent infringement damages, net profits and eps were down 45% and 38%,
respectively. According to CEO Kevin Cornwell, “1H 2004 performance occurred
before the August 2004 FDA lawsuit which created a cloud over UTMD’s
reputation for high quality products. Considering our challenges this year,
I believe the current results are excellent, due to the dedication and
determination of our employees, and the recognition of many clinicians of
the quality and value to the public health of our products. UTMD’s second
quarter performance was better than the first, and we expect third quarter
to continue the improvement trend. UTMD previously projected eps for
shareholders to be about $1.80 for the year 2005. This first half
performance would seem to increase the certainty of accomplishing that
goal.”
Financial ratios which may be of interest to shareholders follow:
1) Current Ratio = 7.7
2) Days in Receivables (based on 2Q sales activity) = 49.8
3) Average Inventory Turns (based on 2Q CGS) = 4.3
4) Year-to-Date ROE = 22%
UTMD's dilution from unexercised option shares
added to actual weighted average outstanding shares for purposes of
calculating eps was 218,700 in 2Q 2005 compared to 301,700 in 2Q 2004, and
224,300 in 1H 2005 compared to 315,100 in 1H 2004. The actual number of
outstanding shares at the end of 2Q 2005 was 3,928,400 which included 2Q
employee/director option exercises of 49,800 shares and 2Q share repurchases
of 185,600. The average price paid by the Company to repurchase shares in
the open market during 2Q 2005 was $21.72 including commissions. The total
number of outstanding unexercised options at June 30, 2005 was 701,400
shares at an average exercise price of $13.82/ share, including shares
awarded but not vested. This compares to 759,800 option shares outstanding
at the end of 2Q 2004.
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, a negative outcome
in the current FDA lawsuit, the Company’s ability to efficiently
manufacture, market, and sell its products, among other factors that have
been outlined in UTMD's public disclosure filings
with the SEC. The SEC Form 10-Q for 2Q 2005 will be filed with the SEC by
August 9.
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.
|
Net Sales
Gross Profit
Operating Income
Income Before Tax
Net Income
Earnings Per Share (EPS)
Shares Outstanding (diluted) |
2Q
2005
$7,028
4,022
2,471
2,684
1,887
$0.446
4,229
|
2Q
2004
$6,827
3,934
2,628
2,806
1,841
$.384
4,794 |
Percent
Change
+2.9%
+2.2%
(6.0%)
(4.4%)
+2.5%
+16.2% |
|
|
Net Sales
Gross Profit
Operating Income
Income Before Tax
Net Income
Earnings Per Share (EPS)
Shares Outstanding (diluted) |
1H
2005
$13,680
7,756
5,023
5,490
3,856
$0.902
4,277
|
1H
2004
$13,443
7,785
4,908
11,300
7,016
$1.456
4,819 |
Percent
Change
+1.8%
(0.4%)
+2.3%
(51.4%)
(45.0%)
(38.1%) |
|
|
|
(unaudited) |
(audited) |
(unaudited) |
|
JUN
30, 2005 |
DEC 31, 2004 |
JUN 30, 2004 |
Assets |
|
|
|
Cash &
Investments |
$
13,302 |
$
16,928 |
$
22,044 |
Accounts Receivable, net |
3,935 |
3,730 |
3,500 |
Inventories |
2,650 |
2,859 |
3,356 |
Other Current Assets |
956 |
1,013 |
959 |
Total Current Assets |
20,843 |
24,530 |
29,859 |
Property and Equipment - net |
8,423 |
9,058 |
8,737 |
Intangible Assets – net |
7,649 |
7,674 |
7,709 |
Total Assets |
$ 36,915 |
$ 41,262 |
$ 46,305 |
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
Total Current Liabilities |
$
2,693 |
$
4,336 |
$
4,815 |
Deferred Income Taxes |
672 |
769 |
641 |
Stockholders’ Equity |
33,550 |
36,157 |
40,849 |
Total Liabilities and Stockholders’ Equity |
$ 36,915 |
$ 41,262 |
$ 46,305 |
|