SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to S240.14a-11(c) or S240.14a-12
UTAH MEDICAL PRODUCTS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filling Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined).
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
______________
UTAH MEDICAL
PRODUCTS, INC.
______________
[GRAPHIC OMITTED]
March 18, 2005
Dear UTMD Shareholder:
You are cordially invited to attend the 2005 Annual Meeting of Shareholders of
Utah Medical Products, Inc. (UTMD). The meeting will be held promptly at 12:00
noon (local time), on Friday, May 6, 2005, at the corporate offices of UTMD,
7043 South 300 West, Midvale, Utah USA. Please use the North Entrance.
Please note that attendance at the Annual Meeting will be limited to
shareholders as of the record date (or their authorized representatives) and
guests of the Company. Proof of ownership can be a copy of the enclosed proxy
card. You may wish to refer to page one of this Proxy Statement for information
about voting your proxy, including voting at the Annual Meeting.
At the Annual Meeting, we seek the approval of UTMD shareholders to elect two
directors and consider other business. If you think you will be unable to attend
the meeting, please complete your proxy and return it as soon as possible. If
you decide later to attend the meeting, you may revoke the proxy and vote in
person.
In order to receive UTMD's public announcements and other disclosures including
financial information, such as SEC Forms 10-K and 10-Q, you have several options
for obtaining the information. You can be added to the Company mail or fax lists
by contacting Paul Richins with your mailing address or fax number, by sending
an instruction letter to the corporate address, by calling (801-569-4200) with
instructions, or by e-mailing your contact information to info@utahmed.com. As
an alternative, you can view and print Company financial and other information
directly from UTMD's website; http://www.utahmed.com.
Thank you for your ownership in UTMD!
/s/ Kevin L. Cornwell
---------------------
Sincerely
Kevin L. Cornwell
Chairman & CEO
UTAH MEDICAL PRODUCTS, INC.
7043 South 300 West
Midvale, Utah 84047
(801) 566-1200
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 6, 2005
TO THE SHAREHOLDERS OF UTAH MEDICAL PRODUCTS, INC.
The Annual Meeting of Shareholders (the "Annual Meeting") of UTAH
MEDICAL PRODUCTS, INC. (the "Company" or "UTMD"), will be held at the corporate
offices of the Company, 7043 South 300 West, Midvale, Utah, on May 6, 2005, at
12:00 noon, local time, for the following purposes:
(1) To elect two directors to serve for terms expiring at the 2008
Annual Meeting and until successors are elected and qualified;
(2) To transact such other business as may properly come before
the Annual Meeting.
UTMD's Board of Directors recommends a vote "FOR" the nominated
directors, whose backgrounds are described in the accompanying Proxy Statement,
and for the other proposal.
Only shareholders of record at the close of business on March 4, 2005
(the "Record Date"), are entitled to notice of and to vote at the Annual
Meeting.
This Proxy Statement and form of proxy are being first furnished to
shareholders of the Company on approximately April 1, 2005.
THE ATTENDANCE AT AND/OR VOTE OF EACH SHAREHOLDER AT THE ANNUAL MEETING
IS IMPORTANT, AND EACH SHAREHOLDER IS ENCOURAGED TO ATTEND.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kevin L. Cornwell
---------------------
Kevin L. Cornwell, Secretary
Salt Lake City, Utah
Dated: March 18, 2005
--------------------------------------------------------------------------------
PLEASE PROMPTLY FILL IN, SIGN, DATE AND RETURN THE ENCLOSED PROXY,
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING.
If your shares are held in the name of a third party brokerage firm,
nominee, or other institution, only that third party can vote your shares. In
that case, please promptly contact the third party responsible for your account
and give instructions how your shares should be voted.
TABLE OF CONTENTS
-----------------
PAGE
----
PROXY STATEMENT ........................................................... 1
PROPOSAL NO. 1. ELECTION OF DIRECTORS ..................................... 2
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN PERSONS ...................... 4
EXECUTIVE OFFICER COMPENSATION ............................................ 5
BOARD OF DIRECTORS AND BOARD COMMITTEE REPORTS ............................ 7
Stockholder Communications with Directors ............................... 9
Report of the Audit Committee ........................................... 9
Report of the Compensation and Option Committee ......................... 10
Compensation and Option Committee Interlocks and Insider Participation .. 14
Outside Directors' Compensation ......................................... 14
STOCK PERFORMANCE CHART ................................................... 15
INDEPENDENT PUBLIC ACCOUNTANTS ............................................ 16
SHAREHOLDER PROPOSALS ..................................................... 17
MISCELLANEOUS ............................................................. 17
UTAH MEDICAL PRODUCTS, INC.
PROXY STATEMENT
This Proxy Statement is furnished to shareholders of UTAH MEDICAL
PRODUCTS, INC. (the "Company" or "UTMD") in connection with the Annual Meeting
of Shareholders (the "Annual Meeting") to be held at the corporate offices of
the Company, 7043 South 300 West, Midvale, Utah, on May 6, 2005, at 12:00 noon,
local time, and any postponement or adjournment(s) thereof. The enclosed proxy,
when properly executed and returned in a timely manner, will be voted at the
Annual Meeting in accordance with the directions set forth thereon. If the
enclosed proxy is signed and timely returned without specific instructions, it
will be voted at the Annual Meeting:
(1) FOR the election of Stephen W. Bennett, M.D., Dr. P.H. and
Ernst G. Hoyer as directors; and
(2) IN accordance with the best judgment of the persons acting
under the proxies on other matters presented for a vote.
The Board of Directors has approved the foregoing proposals and
recommends that the shareholders vote in favor of each of the proposals. Proxies
solicited by the Company will be voted FOR each of the proposals unless a vote
against, or an abstention from, one or more of the proposals is specifically
indicated on the proxy.
A proxy for the Annual Meeting is enclosed. It is important that each
shareholder complete, sign, date and return the enclosed proxy promptly, whether
or not she/he plans to attend the Annual Meeting. Any shareholder who executes
and delivers a proxy has the right to revoke it at any time prior to its
exercise by providing the Secretary of the Company with an instrument revoking
the proxy or by providing the Secretary of the Company with a duly executed
proxy bearing a later date. In addition, a shareholder may revoke her/his proxy
by attending the Annual Meeting and electing to vote in person.
Proxies are being solicited by the Company. All costs and expenses
incurred in connection with the solicitation will be paid by the Company.
Proxies are being solicited by mail, but in certain circumstances, officers and
directors of the Company may make further solicitation in person, by telephone,
facsimile transmission, telegraph or overnight courier.
Only holders of the 4,090,061 shares of common stock, par value $0.01
per share, of the Company (the "Common Stock") issued and outstanding as of the
close of business on March 4, 2005 (the "Record Date"), will be entitled to vote
at the Annual Meeting. Each share of Common Stock is entitled to one vote.
Holders of at least a majority of the 4,090,061 shares of Common Stock
outstanding on the Record Date must be represented at the Annual Meeting to
constitute a quorum for conducting business.
All properly executed and returned proxies, as well as shares
represented in person at the meeting, will be counted for purposes of
determining if a quorum is present, whether or not the proxies are instructed to
abstain from voting or consist of broker non-votes. Under the Utah Revised
Business Corporation Act, matters other than the election of directors and
certain specified extraordinary matters are approved if the number of votes cast
FOR exceed the number of votes cast AGAINST. Directors are elected by a
plurality of the votes cast. Abstentions and broker non-votes are not counted
for purposes of determining whether a matter has been approved or a director has
been elected.
Executive officers and directors holding an aggregate of 287,543
shares, or approximately 7.0%, of the issued and outstanding stock have
indicated their intent to vote in favor of all proposals.
1
--------------------------------------------------------------------------------
PROPOSAL NO. 1. ELECTION OF DIRECTORS
--------------------------------------------------------------------------------
General
The Company's Articles of Incorporation provide that the Board of
Directors is divided into three classes as nearly equal in size as possible,
with the term of each director being three years and until such director's
successor is elected and qualified. One class of the Board of Directors shall be
elected each year at the annual meeting of the shareholders of the Company. The
Board of Directors has nominated Dr. Stephen W. Bennett and Mr. Ernst G. Hoyer
for election as directors, each for a three-year term expiring at the 2008
Annual Meeting.
It is intended that votes will be cast, pursuant to authority granted
by the enclosed proxy, for the election of the nominee named above as director
of the Company, except as otherwise specified in the proxy. In the event the
nominee shall be unable to serve, votes will be cast, pursuant to authority
granted by the enclosed proxy, for such other person as may be designated by the
Board of Directors. The officers of the Company are elected to serve at the
pleasure of the Board of Directors. The information concerning the nominees and
other directors and their security holdings has been furnished by them to the
Company. (See "PRINCIPAL SHAREHOLDERS" below.)
Directors and Nominees
The Board of Directors' nominees for election as directors of the
Company at the Annual Meeting are Stephen W. Bennett and Ernst G. Hoyer. The
other members of the Board of Directors were elected at the Company's 2003 and
2004 meetings for terms of three years, and therefore, are not standing for
election at the Annual Meeting. The terms of Mr. Cornwell and Mr. Richins expire
at the 2006 Annual Meeting, and the term of Dr. Payne expires at the 2007 Annual
Meeting. The Board of Directors has determined that Dr. Payne, Dr. Bennett and
Mr. Hoyer are independent directors within the meaning of NASD Rule 4200(a)(15).
Background information appears below with respect to the incumbent directors
whose terms have not expired, as well as the director standing for reelection to
the Board.
Year
First Business Experience during Past Five Years
Name Age Elected and Other Information
---- --- ------- --------------------------------------------
Kevin L. Cornwell 58 1993 Chairman of UTMD since 1996. President and
CEO since December 1992; Secretary since
1993. Has served in various senior operating
management positions in several
technology-based companies over a 30-year
time span, including as a director on seven
other company boards. Received B.S. degree
in Chemical Engineering from Stanford
University, M.S. degree in Management
Science from the Stanford Graduate School of
Engineering, and M.B.A. degree specializing
in Finance from the Stanford Graduate School
of Business.
Stephen W. Bennett 72 1994 Retired. Served five years as fund manager,
director and senior analyst for health care
investments for an institutional investment
firm. Received B.A. degree in biology from
Stanford University, M.D. degree from
Stanford School of Medicine, M.P.H. and T.M.
degree and Dr.P.H. degree from Tulane School
of Medicine.
Ernst G. Hoyer 67 1996 Retired. Served fifteen years as General
Manager of Petersen Precision Engineering
Company, Redwood City, CA. Previously served
in engineering and general management
positions for four technology-based
companies over a 30-year time span. Received
B.S. degree in process engineering from the
University of California, Berkeley, and
M.B.A. degree from the University of Santa
Clara.
2
Year
First Business Experience during Past Five Years
Name Age Elected and Other Information
---- --- ------- --------------------------------------------
Barbara A. Payne 58 1997 Consultant. Served over eighteen years as
corporate research scientist for a Fortune
50 firm, environmental scientist for a
national laboratory. Received B.A. degree in
psychology from Stanford University, M.A.
degree from Cornell University, and M.A. and
Ph.D. degrees in sociology from Stanford
University.
Paul O. Richins 44 1998 Chief Administrative Officer of UTMD since
1997. Treasurer and Assistant Secretary
since 1994. Joined UTMD in 1990. Received
B.S. degree in finance from Weber State
University, and M.B.A. degree from
Pepperdine University.
Executive Officer Not a Director
Greg A. LeClaire, age 35, has been Chief Financial Officer of UTMD
since 2001, and Assistant Treasurer since 1998. Mr. LeClaire joined UTMD in
1994. He received a B.S. degree in accounting from the University of Utah, and
an M.S. in Management degree from the Stanford Graduate School of Business.
Code of Ethics
The Company has adopted a Code of Ethics that applies to all of its
employees, including its principal executive officer and principal financial
officer, and to its directors. The Code of Ethics is available on the Company's
website, www.utahmed.com.
3
--------------------------------------------------------------------------------
Security Ownership of Management and Certain Persons
--------------------------------------------------------------------------------
The following table furnishes information concerning the ownership of
the Company's Common Stock as of March 4, 2005, by the directors, the nominees
for director, the executive officer named in the compensation tables on page 5,
all directors and executive officers as a group, and those known by the Company
to own beneficially more than 5% of the Company's outstanding Common Stock as of
December 31, 2004.
Nature of Number of Shares
Name Ownership Owned Percent
---------------------------------- ----------- ----------------- -------
Principal Shareholders
FMR Corp Direct 528,830 12.9%
82 Devonshire Street
Boston, Massachusetts 02109
Ashford Capital Management, Inc. Direct 235,200 5.8%
1 Walkers Mill Road
Wilmington, Delaware 19807
Merrill Lynch & Co., Inc. Direct 206,768 5.1%
World Financial Center,
North Tower
250 Vesey Street
New York, New York 10381
Directors and Executive Officers
Kevin L. Cornwell (1) Direct 205,661 5.0%
Options 314,663 7.1%
-------
Total 520,324 11.8%
Ernst G. Hoyer (1)(2)(3)(4) Direct 30,000 0.7%
Options 42,500 1.0%
------
Total 72,500 1.8%
Stephen W. Bennett (1)(2)(3)(4) Direct 14,500 0.4%
Options 42,500 1.0%
------
Total 57,000 1.4%
Paul O. Richins Direct 14,078 0.3%
Options 25,688 0.6%
------
Total 39,766 1.0%
Barbara A. Payne (2)(3)4) Direct 13,304 0.3%
Options 14,913 0.4%
------
Total 28,217 0.7%
All executive officers and Direct 287,543 7.0%
directors as a group (6 persons) Options 449,452 9.9%
-------
Total 736,995 16.2%
-------------------------------
(1) Executive Committee member.
(2) Audit Committee member.
(3) Nominating Committee member.
(4) Compensation and Option Committee member.
In the previous table, shares owned directly by directors and executive
officers are owned beneficially and of record, and such record
shareholder has sole voting, investment and dispositive power.
Calculations of percentage of shares outstanding assumes the exercise
of options to which the percentage relates. Percentages calculated for
totals assume the exercise of options comprising such totals.
4
Section 16(a) Beneficial Ownership Reporting Requirements
---------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of equity securities of the Company. Officers,
directors and greater than 10% shareholders are required to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company, all Section 16(a) requirements applicable
to persons who were officers, directors and greater than 10% shareholders during
the preceding fiscal year were complied with.
--------------------------------------------------------------------------------
Executive Officer Compensation
--------------------------------------------------------------------------------
The following table sets forth, for each of the last three fiscal
years, cash compensation received by the Company's Chief Executive Officer. No
other executive officer received salary and bonus for services that exceeded
$100,000 for the fiscal year ended December 31, 2004:
Summary Compensation Table
Annual Compensation Long-Term Compensation
--------------------------------------------------------- ------------------------ ---------
Awards Payouts
--------------------------------------------------------- ------------------------ --------- ----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Annual Restricted Underlying Other
Comp- Stock Options/ LTIP Compen-
Name and Principal Salary Bonus ensation Award(s) SARs Payouts sation
Position Year ($) ($) ($)(1) ($) (#) ($) ($)
--------------------------------------------------------- ------------------------ --------- ----------
Kevin L. Cornwell 2004 250,181 508,000 6,850 -- 50,000 -- --
Chairman & Chief 2003 243,207 228,000 6,000 -- -- -- --
Executive Officer 2002 233,769 245,100 5,600 -- -- -- --
--------------------------------------------------------- ------------------------ --------- ----------
(1) Amounts are Company 401(k) matching contributions, Company Section 125 matching contributions,
and in 2002, reimbursement under UTMD's pet insurance plan.
Option/SAR Grants in Last Fiscal Year
Grant Date
Individual Grants Value
------------------------------------------------------------------------------- -------------
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Options/SARs Employees During Base Price Expiration Present
Name Granted (#)(1) Fiscal Year(2) ($/share) Date Value ($)(3)
------------------------------------------------------------------------------- -------------
Kevin L. Cornwell 50,000 30.5% $25.59 Jan 2014 $660,230
------------------------------------------------------------------------------- -------------
(1) All optionees may use Company shares owned for at least six months to pay for the
exercise of options. The Company may accept shares to cover withholding or other employee
taxes. In the event of a change in control, the Company is required to pay the optionee a
cash amount equal to the excess of the market price over the exercise price of all
options granted, whether or not vested.
(2) The Company awarded options to employees representing 164,100 shares in 2004. Percentage
shown is based on this total. As of March 4, 2005, 136,975 of the shares remain
outstanding.
(3) Value was calculated using the Black-Scholes option pricing model with volatility of
39.3%, interest rate of 4.16%, expected holding period of 8 years, and no dividend yield.
5
The following table sets forth information respecting the exercise of
options during the last completed fiscal year by each executive named in the
Summary Compensation Table above, and the December 31, 2004 fiscal year-end
values of unexercised options, based on the closing price of $22.47 for the
Company's Common Stock on the Nasdaq Stock Market on December 31, 2004:
Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at FY-End (#) at FY-End ($)
Shares Acquired Value
Name on Exercise (#) Realized Exercisable/ Exercisable/
($) Unexercisable Unexercisable
-----------------------------------------------------------------------------------------------------
Kevin L. Cornwell 52,661 $869,999 302,163 / 50,000 $3,748,789 / $0
-----------------------------------------------------------------------------------------------------
Disclosure Respecting the Company's Equity Compensation Plans
The following table summarizes, as of the end of the most recent fiscal
year, compensation plans, including individual compensation arrangements, under
which equity securities of the Company are authorized for issuance, aggregated
for all compensation plans previously approved by shareholders and for all plans
not previously approved by shareholders:
Number of Securities
Remaining Available for
Number of Securities Future Issuance under
To Be Issued upon Weighted-Average Equity Compensation
Exercise of Exercise Price of Plans (excluding
Outstanding Options, Outstanding Options, securities reflected in
Warrants and Rights Warrants and Rights column (a))
Plan Category (a) (b) (c) (1)
--------------------- ----------------------- ------------------------
Equity compensation plans
approved by security holders 756,000 $12.81 259,000
Equity compensation plans not
approved by security holders - (Not applicable) -
------------- ---------------- ----------
Total 756,000 $12.81 259,000
============= ================ ==========
(1) Up to an additional 100,000 shares will be added to the available shares on the first day of
each calendar year through 2013.
Employment Agreements, Termination of Employment, and Change in Control
The Company is required to pay Mr. Cornwell additional compensation in
the event his employment is terminated as a result of a change in control at the
election of the Company or by the mutual agreement of Mr. Cornwell and the
Company. Under the agreement, the additional compensation that the Company is
required to pay Mr. Cornwell is equal to his last three years' income inclusive
of salary and bonuses, and the appreciation of stock value for awarded options
above the option exercise price. In the event of a change in control, the
Company will also pay Mr. Cornwell incentive compensation equal to about 1% of
the excess value per share paid by an acquiring company that exceeds $14.00 per
share.
The Company is required to pay all other optionees under employee and
outside director's option plans, the appreciation of stock value for awarded
options above the option exercise price in the event of a change of control of
the Company.
6
Mr. Cornwell's base salary for 2005 was set by the Board of Directors
at $255,385. Mr. Cornwell participates in Company benefit plans on the same
basis as other employees, under which during 2005 to date, he has received $500
in pet health cost reimbursements, and may receive up to $7,200 in 401(k)
matching contributions, $450 in Section 125 matching contributions, and payment
of health care costs under the medical benefit plan. Mr. Cornwell also
participates in the Management Bonus Plan and may receive stock options, as
explained in greater detail below.
The Company presently has no other employment agreements in the United
States. In Ireland, the Company is subject to providing certain advance notice
to its employees in the event of termination. Under the terms of employment
grants awarded as incentives by the Industrial Development Agency (Ireland), the
Company may be obligated to repay grants during a five-year period if employment
declined from levels at which grants were claimed by UTMD.
--------------------------------------------------------------------------------
BOARD OF DIRECTORS AND BOARD COMMITTEE REPORTS
--------------------------------------------------------------------------------
The directors held five meetings during 2004 and one meeting to date in
2005. All of the directors attended all meetings during their respective
incumbencies, with the sole exception that Dr. Payne missed the August 2004
special meeting, wherein no resolutions were considered or passed.
The Company has Executive, Audit, Nominating, and Compensation and
Option Committees. The current members of the Company's committees are
identified in the table on page 4.
The Executive Committee held one formal meeting during 2004, and two
meetings to date in 2005. In addition, the Committee met informally about once
per month. At its formal meetings, the Committee passed resolutions on behalf of
the Board of Directors.
The Audit Committee formally met twice during 2004 and once to date in
2005 to review the results of the 2003 and 2004 audits by Jones Simkins, P.C.,
UTMD's independent auditor. In addition, the Audit Committee met informally
about once per quarter to review and approve the selection of the independent
auditor, and other matters relating to the duties of the Committee. The Audit
Committee selects the Company's independent accountants, approves the scope of
audit and related fees, and reviews financial reports, audit results, internal
accounting procedures and programs to comply with applicable requirements
relating to financial accountability.
The Nominating Committee met informally during 2004. The Nominating
Committee, which is comprised of the three independent members of the Board of
Directors, takes the lead in nominating new directors. The Nominating Committee
will consider nominees recommended by shareholders. In accordance with the
Company's Bylaws, shareholders' nominations for election as directors must be
submitted in writing to the Company at its principal offices not less than 30
days prior to the Annual Meeting at which the election is to be held (or if less
than 40 days' notice of the date of the Annual Meeting is given or made to
shareholders, not later than the tenth day following the date on which the
notice of the Annual Meeting was mailed).
When considering candidates for directors, the Nominating Committee
takes into account a number of factors, including the following:
- judgment, skill, integrity and reputation;
- whether the candidate has relevant business experience;
- whether the candidate has achieved a high level of
professional accomplishment;
- independence from management under both Nasdaq and Securities
and Exchange Commission definitions;
- existing commitments to other businesses;
7
- potential conflicts of interest with other pursuits;
- corporate governance background and experience;
- financial and accounting background that would permit the
candidate to serve effectively on the Audit Committee;
- age, gender, and ethnic background; and
- size, composition, and experience of the existing Board of
Directors.
The committee will also consider candidates for directors suggested by
stockholders using the same considerations. Stockholders wishing to suggest a
candidate for director should write to Nominating Committee, j Utah Medical
Products, Inc., 7043 South 300 West, Midvale, UT 84047 and include:
- a statement that the writer is a stockholder and is proposing
a candidate for consideration by the committee;
- the name of and contact information for the candidate;
- a statement that the candidate is willing to be considered and
would serve as a director if elected;
- a statement of the candidate's business and educational
experience preferably in the form of a resume or curriculum
vitae;
- information regarding each of the factors identified above,
other than facts regarding the existing Board of Directors,
that would enable the committee to evaluate the candidate;
- a statement detailing any relationship between the candidate
and any customer, supplier, or competitor of the Company; and
- detailed information about any relationship or understanding
between the stockholder and the proposed candidate.
Before nominating a sitting director for reelection at an annual
meeting, the committee will consider:
- the director's performance on the Board of Directors and
attendance at Board of Directors' meetings; and
- whether the director's reelection would be consistent with the
Company's governance guidelines and ability to meet all
applicable corporate governance requirements.
When seeking candidates for director, the committee may solicit
suggestions from incumbent directors, management or others. After conducting an
initial evaluation of the candidates, the committee will interview that
candidate if it believes the candidate might be suitable for a position on the
Board of Directors. The committee may also ask the candidate to meet with
management. If the committee believes the candidate would be a valuable addition
to the Board of Directors, it will recommend to the full Board of Directors that
candidate's nomination.
The Nominating Committee operates under a written charter that is
available for review at www.utahmed.com.
The Compensation and Option Committee, comprised of three outside
directors as indicated in the table on page 4, consulted by telephone and met
once formally in early 2005 to review 2004 management performance, recommend
compensation, and develop compensation strategies and alternatives throughout
the Company, including those discussed in the committee's report contained in
this Proxy Statement. The deliberations culminated in recommendations ratified
at the January 2005 Board meeting.
8
In July 2003, the Board of Directors discontinued the Compliance
Committee as a standing committee in favor of ongoing review of compliance by
the full Board of Directors. In each 2004 board meeting, after receiving the
Company's routine compliance reports, the Board reviewed compliance by UTMD and
its personnel, including executive officers and directors, with applicable
regulatory requirements as well as the Company's own compliance policy, and
compared its established policies and procedures for compliance with current
applicable laws and regulations, under the guidance of Corporate Counsel.
The policy of the Company is that each member of the Board of Directors
is encouraged, but not required, to attend the Annual Meeting. All five
directors attended the 2004 Annual Meeting.
Stockholder Communications with Directors
UTMD stockholders who want to communicate with the Board, any of its
committees, or with any individual director can write to the Company at 7043
South 300 West, Midvale, UT 84047. Such letter should indicate that it is from a
UTMD stockholder. Depending upon the subject matter, management will:
- forward the communication to the director, directors, or
committee to whom it is addressed;
- attempt to handle the inquiry directly if it is a request for
information about UTMD or other matter appropriately dealt
with by management; or
- not forward the communication if it is primarily commercial in
nature or if it relates to an improper or irrelevant topic.
At each Board of Directors' meeting, a member of management will
present a summary of communications received since the last meeting that were
not forwarded to the directors and make those communications available to the
directors on request.
Report of the Audit Committee
-----------------------------
The Audit Committee of the Board of Directors is composed of three
directors, all of whom are independent as defined in Nasdaq Stock Market Rule
4200(a)(15) and under Rule 10A-3(b)(1) adopted pursuant to the Securities
Exchange Act of 1934. The members of the Audit Committee are Stephen W. Bennett,
Ernst G. Hoyer and Barbara A. Payne. In July 2003, the Board of Directors
adopted an updated Audit Committee charter, which is attached as an appendix to
this Proxy Statement. Ernst G. Hoyer is the Board of Directors' designated Audit
Committee Financial Expert consistent with The Sarbanes-Oxley Act of 2002.
The Audit Committee oversees the financial reporting process for UTMD
on behalf of the Board of Directors. In fulfilling its oversight
responsibilities, the Audit Committee reviewed the annual financial statements
included in the annual report and filed with the Securities and Exchange
Commission. The Audit Committee confirmed that the independent auditors have
been reviewing the financial information included in the Company's 10-Q reports.
The Audit Committee formally met twice during 2004 and once to date in
2005 to review the results of the 2003 and 2004 audits by Jones Simkins, P.C.,
UTMD's independent auditor. The Committee also met informally from time to time
during the year. In accordance with Statement on Auditing Standards No. 61,
discussions were held with management and the independent auditors regarding the
acceptability and the quality of the accounting principles used in the reports.
These discussions included the clarity of the disclosures made therein, the
underlying estimates and assumptions used in the financial reporting, and the
reasonableness of the significant judgments and management decisions made in
developing the financial statements. In addition, the Audit Committee has
discussed with the independent auditors their independence from the Company and
its management, including the matters in the written disclosures required by
Independence Standards Board Standard No. 1 and The Sarbanes-Oxley Act of 2002.
9
The Audit Committee has also met with Company management and its
independent auditors and discussed issues related to the overall scope and
objectives of the audits conducted, the internal controls used by the Company,
the openness and honesty of management, auditor verification of information
provided by management, quality control procedures used by auditors in
performing the independent audit, and any possible conflicts of interest. The
Committee elicited recommendations for improving UTMD's internal control
procedures. The independent auditors made no such recommendations.
Pursuant to the reviews and discussions described above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2004, for filing with the Securities and Exchange
Commission.
Signed and adopted by the Audit Committee this 2nd day of March, 2005:
Ernst G. Hoyer
Stephen W. Bennett
Barbara A. Payne
Report of the Compensation and Option Committee
-----------------------------------------------
General
Under the supervision of the Compensation and Option Committee, the
Company has developed and implemented compensation policies, plans, and programs
that seek to enhance the long-term profitability and growth of the Company, and
thus shareholder value, by aligning closely the financial interests of the
Company's senior managers and other key employees with those of its
shareholders. The Compensation and Option Committee of the Board of Directors is
responsible for evaluating and recommending specific executive compensation for
formal Board approval on an annual basis.
The Company applies a consistent philosophy to compensation for all
employees, including senior management. The philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individual employees working toward common objectives. The Company strives to
achieve those objectives through teamwork that is focused on meeting the needs
and expectations of customers and shareholders.
There are seven basic objectives for the Company's compensation
program:
(1) Pay for Performance. The basic philosophy is that rewards are
provided for the long-term value of individual contribution and performance to
the Company. Rewards are both recurring (e.g., base salary) and non-recurring
(e.g., bonuses), and both financial and non-financial (e.g., recognition and
time off).
(2) Provide for Fairness and Consistency in the Administration of
Pay. Compensation is based on the value of the job, what each individual brings
to the job, and how well each individual performs on the job, consistently
applied across all functions of the Company.
(3) Pay Competitively. The Company believes it needs to attract
and retain the best people in the industry in order to achieve one of the best
performance records in the industry. In doing so, the Company needs to be
perceived as rewarding well, where competitive compensation includes the total
package of base pay, bonuses, awards, and other benefits.
(4) Conduct an Effective Performance Review Process. The Company
believes it needs to encourage individual employee growth and candidly review
each individual's performance in a timely way. This feedback process is
bilateral, providing management with an evaluation of the Company through the
eyes of its employees.
10
(5) Effectively Plan and Administer the Compensation Program.
Expenditures for employee compensation must be managed to what the Company can
afford and in a way that meets management goals for overall performance and
return on shareholder equity.
(6) Communicate Effectively. The Company believes that an
effective communication process must be employed to assure that its employees
understand how compensation objectives are being administered and met.
(7) Meet All Legal Requirements. The compensation program must
conform to all state and federal employment laws and guidelines.
The Company uses essentially five vehicles in its compensation program.
(1) Salary. UTMD sets base salaries by reviewing the aggregate of
base salary and annual bonus for competitive positions in the market. Executive
base salaries are set at the beginning of each calendar year by the Board of
Directors. For senior management, base salaries are fixed at levels somewhat
below the competitive amounts paid to senior management with comparable
qualifications, experience, and responsibilities at other similarly sized
companies engaged in the same or similar businesses. Then, annual bonuses and
longer term incentive compensation are more highly leveraged and tied closely to
the Company's success in achieving significant financial and non-financial
goals.
(2) Bonuses. UTMD's Management Bonus Plan, which pays sales,
research and development, and management bonuses, is generated out of an annual
pretax profit-sharing pool, calculated after the year-end independent financial
audit has been completed. The Board of Directors has approved 4% of pretax,
prebonus earnings, plus 10% of pretax, prebonus earnings improvements over the
prior year's results, as an allocation for the plan. For example, if the Company
achieves 20% growth in pretax earnings, the sales, research and development, and
management bonus pool will accrue 6% of pretax, prebonus earnings, which will be
paid under recommendation of the Compensation and Option Committee and approved
by the Board.
UTMD's management personnel, beginning with the first level of
supervision and professional management, and including certain non-management
specialists and technical people, together with all direct sales
representatives, are eligible as participants in the Management Bonus Plan. In
2004, eighty-two participants were included in the plan. The Management Bonus
Plan also funded extraordinary performance bonuses paid to eleven employees
during the year, attendance bonuses paid to ninety-four non-exempt employees,
holiday gifts to employees and a special bonus paid to the CEO and outside
directors in recognition of sustaining the patent infringement verdict and
receipt of about $31 million from Tyco International. The CEO was paid $280,000
and the three outside directors received $1,000 each after $30,944,000 was
received from Tyco. Previous to 2004, when the patent infringement judgment was
rendered by the District Court and the Appeals Court upheld the patent
infringement verdict, approximately $180,000 in "Tyco" bonuses were paid to the
Company's employees, exclusive of the CEO and outside directors.
The Company makes occasional cash awards, in amounts determined on an
individual basis, to employees who make extraordinary contributions to the
performance of the Company within a given period. These payments are made as
frequently and contemporaneously as possible to recognize excellent
accomplishments when they occur. The awards are funded from the accrued plan
described above, and therefore do not impact the Company's financial
performance. Senior management is generally not eligible for these awards. The
"Tyco" bonuses, which were accrued from the Tyco patent infringement damages,
were an exception and did not affect the Company's regular financial
performance. The Tyco bonuses included a special bonus paid to the CEO.
For 2004, executive management listed in the table on page 5 received a
total bonus of $508,000, inclusive of the $280,000 "Tyco" bonus. The $228,000
Management Bonus was equivalent to the bonus paid for the previous year of 2003,
which was equal to about 47% of aggregate income (excluding the Tyco bonus) and
about 44% of the pool accrued per the formula above. Actual individual bonuses
11
result from the Compensation and Option Committee's assessment and the Board's
approval of each senior executive's achievement of specific objectives and value
of both short-term and long-term contribution to the Company's overall
performance.
(3) Employee Stock Options. The Compensation and Option Committee
believes that its awards of stock options have successfully focused the
Company's key management personnel on building profitability and shareholder
value. The Board of Directors considers this policy highly contributory to
growth in future shareholder value. The number of options awarded in 2004
reflects the judgment of the Board of the number of options sufficient to
constitute a material, recognizable benefit to recipients. No explicit formula
criteria were utilized, other than minimizing dilution to shareholder interests.
When taken together with the share repurchase program, the net result of the
option program over the last five years has been awarding option shares to key
employees at a higher price, and in substantially smaller amounts, than shares
actually repurchased in the open market during the same time period. In 1994,
shareholders approved the 1994 Employee Stock Option Plan under which up to two
million shares could be granted to employees within a ten-year term. The 1994
Plan expired on January 29, 2004, with about 1.2 million of the two million
authorized option shares expiring because they were not granted. During the same
ten year period, UTMD repurchased about 7.3 million of its shares in the open
market. At the 2003 Annual Meeting, shareholders approved the 2003 Employees'
and Directors' Incentive Plan, under which up to 1.2 million shares may be
granted over the ten-year life of the plan. As of March 4, 2005, options
representing 38,400 shares are outstanding under the 2003 Plan.
The Board of Directors ordinarily awards employee options each year at
its regularly scheduled Board meeting following the audited close of the prior
year's financial performance. During 2004, the Board of Directors approved
awards to 106 employees of options to purchase a total of 164,100 shares at
exercise prices of either $18.00 or $25.59 per share. 121,200 option shares were
granted in January 2004 at $25.59 per share, and 42,900 option shares were
granted in October and November, 2004 at $18.00 per share. In January 2004,
options on 50,000 shares were awarded to executive management listed on page 5
at $25.59 per share.
Of the 164,100 options granted to employees in 2004, options
representing 27,125 shares have been canceled after termination of services.
Employee options vest over a four-year period, with a ten-year exercise period.
Management expects to recommend additional options be awarded on an annual basis
to the Company's key employees based on its belief that sharing the wealth of
the Company with those who help create it is the best way to assure growth in
shareholder value. In January 2005, the Board of Directors delayed any
authorization of new option awards to employees, pending further evaluation of
the impact on UTMD's financial statements of new accounting rules, applicable
for UTMD starting 7/1/05, requiring companies to recognize theoretical
compensation expense for unvested options.
(4) 401(k) Retirement Plan. The Compensation and Option Committee
believes that a continuance of the Company plan instituted in 1985 is consistent
with ensuring a stable employment base by helping to provide Company employees
with a vehicle to build long-term financial security. The Company matched a
portion of employee contributions in 2004 and paid administrative expenses at a
total cost of about $100,000. Of this total amount, executive management
received $6,400. For 2005, the Board of Directors has approved continuing the
matching formula of 40% of employee contributions, up to certain limits, for
employees who meet eligibility requirements.
(5) Group Benefit Plan. The Company provides a group health,
dental, and life insurance plan for its employees consistent with self-funded
group plans offered by other similar companies. A portion of the monthly premium
cost is generally paid by plan participants. Prior to 1998, all employees,
including executive officers and senior managers, paid premiums on the same
basis. Between 1998 and 2002, employees being paid wages at a rate of $9.50 or
less per hour were provided a 25% discount to the standard premium rates. In
2003, employees with a base annual salary over $45,000 began paying 10-20% more
than the standard premium rates, and employees being paid at a rate of $10.50 or
less per hour were provided a 25% discount to standard premiums paid by other
employees.
12
Executive Officer Compensation
Utilizing the compensation objectives and vehicles outlined previously,
the Compensation and Option Committee, comprised of all three outside directors,
established base compensation for the CEO. The Committee used surveys of similar
companies selected from among the companies with which UTMD's stock is compared
in the Stock Performance Chart on page 15, based on variations in industry type,
geographic location, size, and profitability as the Committee deemed
appropriate. Base salary was fixed at a level somewhat below the competitive
amounts paid to executive officers with comparable qualifications, experience
and responsibilities at other similarly sized companies engaged in the same or
similar businesses. The annual bonus and long-term incentive compensation in the
form of stock options were more highly leveraged and tied closely to the
Company's success in achieving significant financial and non-financial goals.
The annual bonus for the CEO was awarded on the same basis as all
employees included in the Management Bonus Plan. At the beginning of the year,
plan participants were awarded participation units in the bonus plan,
proportional to base salary and responsibility, based on the Committee's
determination of the relative contribution expected from each person toward
attaining Company goals. Each individual's performance objectives, derived as
the applicable contribution needed from that executive to achieve the Company's
overall business plan for the year, were reviewed by the Committee. These goals
included financial and non-financial goals. Financial goals included net sales,
gross profit margin, operating margin, after-tax profits, return on equity, and
particularly in the case of the CEO, growth in earnings per share. Non-financial
goals included continuing the development of a talented and motivated team of
employees, conceiving and implementing programs to maintain competitive
advantages and to achieve consistent earnings per share growth, reacting to
competitive challenges, developing business initiatives to further support
critical mass in a consolidating marketplace, promoting the Company's
participation in socially responsible programs, protecting intellectual
property, maintaining compliance with regulatory requirements, achieving a high
regard for the integrity of the Company and its management, and minimizing
issues that represent significant business risk factors.
The amount of 2004 Management Bonus accrued for the CEO was based on
the Committee's evaluation of his success in meeting the respective shorter term
performance objectives, supplemented by the Committee's evaluation of his
performance and contribution in meeting the Company's longer term financial and
non-financial objectives. In 2004, the Company was subjected to an unusual and
unwarranted, in the opinion of the outside directors, lawsuit by the U.S. Food &
Drug Administration (FDA). The FDA's public press release on August 10, 2004
contained a direct quote from the Acting Commissioner that is at odds with the
FDA's admitted position regarding the safety and effectiveness of UTMD's
products, but had the effect of confusing and scaring many of UTMD's customers.
The consistent high quality and reliability of UTMD's devices historically has
been the essence of UTMD's competitive advantage. Although UTMD's financial
performance did not meet its beginning of year operating plan, the Committee
believes that a mere 2% decline in revenues and net income, and a 2% increase in
eps, is an extraordinary accomplishment under the circumstances. Based on the
recommendation of the Compensation and Option Committee in early 2005, the Board
of Directors awarded the CEO a 2004 bonus of $228,000 under the Management Bonus
Plan, which was the same as the prior year's bonus, consistent with other
employees participating in the 2004 Plan. In addition, the Board set the CEO's
calendar 2005 base salary at $255,385. To recognize the CEO's primary role in
achieving the favorable litigation outcome vs. Tyco, the Committee authorized
payment of a special bonus of $280,000 to the CEO upon receipt of the Tyco
payment, which was received on January 20, 2004 in the amount of $30,944,162.
The Committee intends that stock options serve as a significant
component of the CEO's total compensation package in order to retain his efforts
on behalf of the Company and to focus his efforts on enhancing shareholder
value. An option for 50,000 shares was awarded the CEO in January 2004, at an
exercise price of $25.59 per share. No CEO options had been awarded from 1999
through 2003.
The foregoing report has been furnished by: Stephen W. Bennett
Ernst G. Hoyer
Barbara A. Payne
13
Compensation and Option Committee Interlocks and Insider Participation
The members of the Compensation and Option Committee are Stephen W.
Bennett, Ernst G. Hoyer, and Barbara A. Payne. No member of such committee is a
present or former officer of the Company or any subsidiary. There are no other
interlocks. No member of such Committee, his or her family, or his or her
affiliate was a party to any material transactions with the Company or any
subsidiary since the beginning of the last completed fiscal year. No executive
officer of the Company serves as an executive officer, director, or member of a
compensation committee of any other entity, an executive officer or director of
which is a member of the Compensation and Option Committee of UTMD.
Outside Directors' Compensation
In 2004, outside (non-employed) directors received cash compensation of
$20,000 each (plus $4,000 each for executive committee members and $2,000 for
the chairman of the Audit Committee) plus reimbursement of expenses in attending
meetings.
In 1994, shareholders approved the 1993 Directors' Stock Option Plan
under which up to 80,000 shares per year could be granted to outside directors
over a ten-year term. The 1993 Plan expired in September 2003. Of the aggregate
800,000 option share limit, 614,000 shares were not granted. The Board of
Directors did not approve an award of outside director options in the three
years 2000 - 2002. On September 8, 2003, the Board of Directors awarded options
to outside directors in the aggregate amount of 30,000 shares at an exercise
price of $24.02 per share. The options vest over a four year period from the
grant date. Since the prior award of options to outside directors in January
1999, UTMD had reduced its outstanding shares by almost 4 million shares, while
the market price per share has more than tripled. The purpose of the Directors'
Stock Option Plan, as ratified and approved by the shareholders at the 1994
annual meeting, was to aid the Company in retaining outside directors without
interlocking interests, and to provide directors with an incentive to use their
best efforts to promote the success of UTMD's business consistent with all
shareholders' interests.
In 2004, outside directors exercised 20,000 option shares that were
granted between 1993 and 1999. Unexercised outside director options represent
about 16% of total Company options outstanding. The Company is required to pay
optionees under the outside directors' option plan the appreciation of stock
value for issued options above the option exercise price in the event of a
change of control of the Company.
14
--------------------------------------------------------------------------------
Stock Performance Chart
--------------------------------------------------------------------------------
The following chart compares what an investor's five-year cumulative
total return (assuming reinvestment of dividends) would have been assuming
initial $100 investments on December 31, 1999, for the Company's Common Stock
and the two indicated indices. The Company's Common Stock traded on the Nasdaq
National Market from December 1983 until December 26, 1996, when it began
trading on the New York Stock Exchange. On March 8, 2000, the Company's stock
began trading once again on the Nasdaq National Market.
Cumulative shareholder return data respecting the Nasdaq Stock Market
(U.S. and Foreign) are included as the comparable broad market index. The peer
group index is all Nasdaq Stocks with Standard Industrial Classification (SIC)
codes 3840-3849, all of which are in the medical device industry. UTMD's primary
SIC code is 3841.
Five-Year Cumulative Total Returns
[GRAPHIC OMITTED]
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04
------ ------ ------ ------ ------ ------
Utah Medical Products, Inc. 100 114.3 207.4 291.0 398.3 349.2
Nasdaq Stock Market (US & Foreign) 100 60.4 47.6 32.8 49.4 53.8
Nasdaq Stocks (SIC 3840-3849) 100 103.2 113.4 91.7 135.7 158.9
Medical Devices, Instruments
and Supplies
15
--------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
The Board of Directors retained Jones Simkins, P.C. as the Company's
auditor and independent certified public accountants for the two years ended
December 31, 2003 and 2004. For the year ended December 31, 2002, the Board
retained Tanner + Co. as the Company's auditor and independent certified public
accountants. The selection of the Company's auditors for the current fiscal year
is not being submitted to the shareholders for their consideration in the
absence of a requirement to do so. The selection of the independent auditors for
2005 will be made by the Company's Audit Committee of the Board of Directors, at
such time as they may deem it appropriate. There are and have been no
disagreements on accounting policies or practices between the Company and either
its current or past auditors.
Representatives of Jones Simkins, P.C. will be present at the Annual
Meeting and have the opportunity to make a statement, if they desire to do so,
and to be available to respond to shareholder questions.
Audit Fees
During 2004, UTMD paid Jones Simkins $46,034 for professional services
rendered for the audit of its annual financial statements, reviews of the
financials included in UTMD's quarterly reports on Form 10-Q and audit of its
internal controls in accordance with the Sarbanes Oxley Act of 2002.
In 2004 and 2003, UTMD paid Tanner + Co. $1,420 and $43,660,
respectively, for professional services rendered for the audit of its annual
financial statements and for reviews of the financials included in UTMD's
quarterly reports on Form 10-Q. In 2005, Tanner + Co. required UTMD to pay
$9,500 for providing its consent for inclusion of its previously completed 2002
audit into UTMD's 2004 financial statements.
Audit-Related Fees
UTMD did not pay Jones Simkins, P.C. or Tanner + Co. any audit-related
fees during 2004 or 2003.
Tax Fees
During 2004 and 2003, UTMD paid Jones Simkins, P.C. and Tanner + Co.
$24,943 and $26,075, respectively, for tax filing, preparation, and tax advisory
services.
All Other Fees
During 2003, prior to being retained as auditor and independent
certified public accountants for the year ended December 31, 2003, Jones
Simkins, P.C. received $30,458 for accounting services. UTMD paid no other fees
to Jones Simkins, P.C. in 2004 or 2003, and paid no other fees to Tanner + Co.
in either 2004 or 2003.
Audit Committee Policy and Approval
The engagements of UTMD's auditors to perform all of the
above-described services were made by the Audit Committee. The policy of the
Audit Committee is to require that all services performed by the independent
auditor be preapproved by the Audit Committee before services are performed.
Auditor Independence
The Audit Committee has considered whether the provision of the
services rendered for nonaudit matters is compatible with maintaining Jones
Simkins' independence and concluded that its independence was not impaired by
performing such work for the Company.
16
--------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
-------------------------------------------------------------------------------
No proposals have been submitted by shareholders of the Company for
consideration at the 2005 Annual Meeting. It is anticipated that the next Annual
Meeting of Shareholders will be held during May 2006. In accordance with SEC
Rule 14a-8 and the advance notice requirements of Section 2.15 of UTMD's Bylaws,
shareholders may present proposals for inclusion in the Proxy Statement to be
mailed in connection with the 2006 Annual Meeting of Shareholders of the
Company, provided such proposals are received by the Company no later than
December 2, 2005, and are otherwise in compliance with applicable laws and
regulations and the governing provisions of the Articles of Incorporation and
Bylaws of the Company.
-------------------------------------------------------------------------------
MISCELLANEOUS
-------------------------------------------------------------------------------
Other Business
Management does not know of any business other than that referred to in
the Notice that may be considered at the Annual Meeting. If any other matters
should properly come before the Annual Meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the proxies held by them
in accordance with their best judgment.
In order to assure the presence of the necessary quorum and to vote on
the matters to come before the Annual Meeting, please indicate your choices on
the enclosed proxy and date, sign, and return it promptly in the envelope
provided. Whether or not you sign a proxy, we encourage you to attend the
meeting.
By Order of the Board of Directors,
UTAH MEDICAL PRODUCTS, INC.
/s/ Kevin L. Cornwell
---------------------
Salt Lake City, Utah Kevin L. Cornwell
March 18, 2005 Chairman and CEO
17