SecProbe.io

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

Mail Stop 03-06

April 14, 2005

Via Facsimile and U.S. Mail

Mr. Greg A. LeClaire
Chief Financial Officer
Utah Medical Products, Inc.
7043 South 300 West
Midvale, UT  84047

	Re:	Utah Medical Products, Inc.
		Form 10-K for the fiscal year ended December 31, 2004
      File No. 001-12575

Dear Mr. LeClaire:

      We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents. Where indicated, we think you should revise your
documents
in response to these comments.  If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary.  Please be as detailed as necessary in your
explanation.  In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure.  After reviewing this information, we may or may not
raise additional comments.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.
.

Form 10-K for the Fiscal Year Ended December 31, 2004

Item 6.  Selected Financial Data - Page 15

1. Please revise to include income (loss) from continuing
operations
and income (loss) from continuing operations per common share. See
Instruction 2 of Item 301(b) of Regulation S-K and Item 5-
03(b)(14)
of Regulation S-X.

2. We note that you provide certain non-GAAP measures in your
selected financial data and MD&A. Please respond to the following
comments:

a. We note that you have not changed the titles of your non-GAAP
financial measures reflected in the tables on page 16. Revise to
eliminate titles or descriptions of non-GAAP financial measures
that
are the same as, or confusingly similar to, titles or descriptions
used for GAAP financial measures. See Item 10(e)(1)(ii)(E) of
Regulation S-K.
b. We note that you are eliminating a gain from litigation that
was
reflected in your statements of operations in fiscal 2003 and
2004.
Please note that non-GAAP performance measures should not
eliminate
or smooth items identified as non-recurring, infrequent or
unusual,
when the nature of the charge or gain is such that it is
reasonably
likely to recur within two years or there was a similar charge or
gain within the prior two years. See Item 10(e)(1)(ii)(B) of
Regulation S-K. Please revise to comply.
c. When presenting non-GAAP financial measures, you should include
for each non-GAAP measure a quantitative reconciliation (by
schedule
or other clearly understandable method) of the differences between
the non-GAAP financial measure disclosed with the most directly
comparable financial measure or measures calculated and presented
in
accordance with GAAP identified in paragraph 10(e)(1)(i)(A) of
Regulation S-K. Please revise to comply.
d. When presenting non-GAAP financial measures, you should include
for each non-GAAP measure a statement disclosing the reasons why
you
believe that presentation of the non-GAAP financial measure
provides
useful information to investors regarding your financial condition
and results of operations, and to the extent material, a statement
disclosing the additional purposes, if any, for which you use the
non-GAAP financial measure that are not disclosed pursuant to
paragraph 10(e)(1)(i)(C) of Regulation S-K. See Item 10(e)(1)(i)
of
Regulation S-K. Please revise to comply.
e. When presenting EBITDA, it should be clear whether you are
using
EBITDA as a performance measure, a liquidity measure, or both.
Please
revise to clarify. Also, non-GAAP financial measures that measure
cash or "funds" generated from operations (liquidity) should be
balanced with disclosure of equal or greater prominence of the
amounts from the statement of cash flows (cash flows from
operating,
investing and financing activities). See footnote 26 of Release
No.
33-8176. If you chose to utilize EBITDA as a performance measure,
you
should reconcile EBITDA to net income as presented in the
consolidated statement of operations under GAAP. See Item 10(e) of
Regulation S-K and Questions 14 and 15 of the SEC`s "Frequently
Asked
Questions Regarding the Use of Non-GAAP Financial Measures."

Item 7.  Management`s Discussion and Analysis of Financial
Condition
and Results of Operations - Page 17

3. We note that you present your MD&A excluding the impact of
certain
litigation gains and reserves. Please note that your MD&A should
be
presented on the basis of your actual results of operations,
financial condition, and changes in financial condition as
presented
in your audited financial statements and include a discussion of
any
unusual or infrequent events or transactions or any significant
economic changes that materially affected the amount of reported
income from continuing operations and, in each case, indicate the
extent to which income was so affected. See Item 303 of Regulation
S-
K. Please revise to comply.

4. We note the discussion of the pending legal proceedings with
the
FDA on page 12.  We also note that the existence of those legal
proceedings appears to represent a material trend or uncertainty
that
could materially affect the company`s financial condition and
results
of operations.  Although we further note that you have included a
discussion of the nature of those proceedings, your responses to
the
commencement of those proceedings, and your position with respect
to
the allegations made by the FDA in connection with those
proceedings
elsewhere in the filing, please revise your MD&A disclosures to
include a discussion and analysis of the potential impact of those
proceedings on the company`s financial condition and results of
operations.  Your expanded disclosures should include, among other
things, a discussion of the impact on the company should the FDA
be
successful in obtaining the relief being sought in those
proceedings
that the company be permanently enjoined from manufacturing and
distributing medical devices until it has demonstrated that it has
corrected the alleged deviations from compliance with the FDA
quality
system regulations.  Please also similarly expand your disclosures
that appear on page 12 to include a more complete discussion of
the
nature of the relief being sought.  For guidance, please refer to
"Focus on Material Trends and Uncertainties" at Section III.B.3 of
Release No. 33-8350 (December 19, 2003).

5. We note your disclosure on page 19 that in 2004 your
unfavorable
cost trends were partially offset by lower depreciation expense on
fixed assets and "recoveries of previous years` misappropriated
funds." You state that you "recognized a favorable contribution to
gross profit of $180,830 and $241,670 for 4Q 2004 and 2004,
respectively, as a result of recovery of misappropriated funds
that
had reduced gross profit performance in prior years. You also
state
that your audit committee "was fully involved in the investigation
and resolution of this matter." Please tell us whether or not you
auditors were aware of this matter. With a view towards
disclosure,
tell us the nature of the matter, its investigation and how and
when
it was resolved. Clarify whether or not amounts are presented in
thousands.

6. We note that you disclose two off-balance sheet arrangements
for a
facility operating lease and a parking lot lease. Please tell us
why
you believe these agreements represent off-balance sheet
arrangements
as defined in Item 303(a)(4) of Regulation S-K. In addition, you
should provide all of the disclosures required by that item for
any
off-balance sheet arrangements. Please revise to comply.

7. Please revise to provide your critical accounting policy
disclosures. See FR-72 and SEC Release No. 33-8350.

Item 9A.  Disclosure Controls and Procedures - Page 25

8. Please respond to the following comments:

a. We note your disclosure that your principal executive officer
and
principal financial officer have evaluated your disclosure
controls
and procedures as of a date within 90 days before the filing date
of
your annual report.  Please amend your filing to disclose
management`s conclusion regarding the effectiveness of your
disclosure controls and procedures as of the end of the period
covered by the annual report.  Refer to Item 307 of Regulation S-K
and Part III.F of Management`s Reports on Internal Control Over
Financial Reporting and Certification of Disclosure in Exchange
Act
Periodic Reports, Release No. 33-8238, available on our website at
www.sec.gov/rules/final/33-8238.htm.
b. We note your statement that your chief executive officer and
your
chief financial officer have concluded that your "disclosure
controls
and procedures are effective in alerting them in a timely manner
to
material information relating to UTMD required to be included in
this
annual report on Form 10-K."  It does not appear that your
certifying
officers have reached a conclusion that your disclosure controls
and
procedures are effective.  Please revise to address your officers`
conclusions regarding the effectiveness of your disclosure
controls
and procedures.
c. We note your statement that your system of internal controls
and
procedures is designed "to provide reasonable assurance."  Please
revise to state clearly, if true, that your disclosure controls
and
procedures are designed to provide reasonable assurance of
achieving
their objectives and that your principal executive officer and
principal financial officer concluded that your disclosure
controls
and procedures are effective at that reasonable assurance level.
In
the alternative, remove the reference to the level of assurance of
your disclosure controls and procedures.  Please refer to Section
II.F.4 of Management`s Reports on Internal Control Over Financial
Reporting and Certification of Disclosure in Exchange Act Periodic
Reports, SEC Release No. 33-8238, available on our website at
<http://www.sec.gov/rules/final/33-8238.htm>.
d. We note that you refer to Rule 13a-14 and not 13a-15(e). Please
revise or advise.
e. Please note that the definition of disclosure controls and
procedures is included in Rule 13a-15(e) of the Exchange Act.
However, if you wish to include the definition preceding your
conclusion, please ensure the definition is consistent with the
definition included in Rule 13a-15(e) of the Exchange Act.
f. With respect to your disclosure of changes in internal control
over financial reporting, please revise your disclosure to
indicate
whether there was any change in your internal control over
financial
reporting that occurred during the fourth quarter that has
materially
affected or is reasonably likely to materially affect your
internal
control over financial reporting, as required by Item 308(c) of
Regulation S-K as amended effective August 13, 2003. Further, we
note
that there were no "corrective actions regarding significant
deficiencies or material weaknesses." Please tell us whether or
not
there were any significant deficiencies or material weaknesses.

Consolidated Financial Statements - Page F-1

Report of Independent Registered Public Accounting Firm - Page F-5

9. We note the reference in your auditors` report to auditing
standards established by the Auditing Standards Board (United
States).  This reference does not appear to be appropriate or
necessary under paragraph 5 of PCAOB AS1. Please request your
auditors to revise their report to comply with AS1, or ask them to
explain to us why the reference is appropriate and necessary.

Note 1.  Summary of Significant Accounting Policies

Loans to Related Parties - Page F-14

10. Please tell us where you further disclosed in the notes the
nature and terms of your loans to related parties. We note your
disclosure on page F-14.

Revenue Recognition - Page F-14

11. Tell us supplementally and revise this filing to address the
following related to your revenue recognition policies:
a. Please describe how you apply the criteria in SAB Topic 13.A in
your revenue recognition policy. Please note that SAB 104 amended
SAB
101 on December 17, 2003.
b. Tell us and disclose why you state that revenue from product
sales
is "generally" recognized at the time the product is shipped and
invoiced and collectibility is reasonably assured. Explain when
this
is not the case and why. Quantify the amount of revenue recognized
in
each period under other revenue recognition policies.
c. Please explain how you are able to provide a reserve for
uncollectible accounts that are "unforeseen" and how this policy
complies with U.S. GAAP.
d. We note that you believe that revenue should be recognized at
the
time of shipment as title "generally" passes to the customer at
the
time of shipment. Under U.S. GAAP, you should review each
transaction
to determine the appropriate method and timing of revenue
recognition. It is not appropriate to apply a broad policy based
upon
the terms of contracts or arrangements that represent the majority
of
your sales. Explain to us when title is not transferred to the
customer at the time of shipment. Revise your financial statements
to
comply with U.S. GAAP or tell us why a revision is not required.
e. We note that you provide warranties to your customers. On page
F-
21 you state that you absorb your product warranties in your on-
going
operating expenses.  Tell us and revise to disclose in more detail
your accounting policy for warranties and tell us how that policy
complies with U.S. GAAP. Tell us how you classify the expense
associated with your product warranties in your consolidated
statement of operations and why this classification is
appropriate.
Revise to provide all of the disclosures required by paragraph 14
of
FIN 45.
f. We note the qualitative and quantitative discussion about your
products in MD&A.  Please revise to disclose the amount of
revenues
from external customers for each product and service or each group
of
similar products and services unless it is impracticable to do so.
If
providing the information is impracticable, please disclose that
fact
and tell us why.

Legal Costs - Page F-14

12. We note that you maintain a reserve for legal costs consistent
with your previous experience and anticipated costs. On page 11
you
state that you reserve "funds against [your] current performance
on
an ongoing basis to provide for [your] defense should any lawsuits
be
filed." On page 16 you disclose that you increased your reserve
for
litigation expenses in the fourth quarter of fiscal 2004 "in
anticipation of costs to complete the litigation process with the
FDA
through June 2005." On page F-21 you state that you maintain a
reserve for product liability litigation and damages consistent
with
your previous long-term experience. Please tell us in more detail
about the measurement and timing of your reserve and why your
accounting policy complies with SFAS 5. Explain why your reserve
only
includes costs to complete the litigation process with the FDA
through June 2005. Provide us with a rollforward of your legal
reserve for fiscal 2002, 2003, and 2004, and through the latest
interim period. Tell us where you classify these costs and tell us
why. Please note that we would expect any legal costs related to
your
continuing operations to be classified within income from
operations
and not as non-operating or extraordinary. Please also revise note
6
to disclose the nature of the contingency with respect to the FDA
litigation and give an estimate of the possible loss or range of
loss
or state that such an estimate cannot be made. See paragraph 10 of
SFAS 5. Revise MD&A to describe this contingency and its impact on