SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
| ¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
0-26038
(Commission file number)
ResMed Inc
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
98-0152841
(IRS Employer Identification No)
14040 Danielson St
Poway CA 92064-6857
United States Of America
(Address of principal executive offices)
(858) 746 2400
(Registrant’s telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
At November 2, 2004 there were 33,926,043 shares of Common Stock ($0.004 par value) outstanding. This number excludes 1,127,459 shares held by the registrant as treasury shares.
INDEX
| Part I |
||||
| Item 1 |
Financial Statements |
|||
| Condensed Consolidated Balance Sheets as of September 30, 2004 (unaudited) and June 30, 2004 |
3 | |||
| 4 | ||||
| 5 | ||||
| Notes to Condensed Consolidated Financial Statements (unaudited) |
6 | |||
| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
18 | ||
| Item 3 |
Quantitative and Qualitative Disclosures About Market and Business Risk |
25 | ||
| Item 4 |
34 | |||
| Part II |
||||
| Item 1 |
35 | |||
| Item 2 |
35 | |||
| Item 3 |
35 | |||
| Item 4 |
35 | |||
| Item 5 |
35 | |||
| Item 6 |
35 | |||
| 36 | ||||
-2-
| Item 1 |
Condensed Consolidated Balance Sheets (Unaudited)
(in US$ thousands, except share and per share data)
| September 30, 2004 |
June 30, 2004 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 141,620 | 128,907 | |||||
| Marketable securities available-for-sale (note 3) |
2,744 | 12,021 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $3,039 at September 30, 2004 and $3,197 at June 30, 2004 |
68,752 | 67,242 | ||||||
| Inventories, net (note 4) |
61,142 | 55,797 | ||||||
| Deferred income taxes |
8,536 | 7,041 | ||||||
| Prepaid expenses and other current assets |
6,774 | 6,821 | ||||||
| Total current assets |
289,568 | 277,829 | ||||||
| Property, plant and equipment, net (note 6) |
154,130 | 147,268 | ||||||
| Patents, net of accumulated amortization of $5,571 at September 30, 2004 and $4,961 at June 30, 2004 |
5,307 | 4,814 | ||||||
| Goodwill (note 7) |
107,487 | 106,075 | ||||||
| Other assets |
8,612 | 8,173 | ||||||
| Total non-current assets |
275,536 | 266,330 | ||||||
| Total assets |
$ | 565,104 | $ | 544,159 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 17,945 | $ | 18,574 | ||||
| Accrued expenses |
24,982 | 22,591 | ||||||
| Current portion of deferred revenue |
9,325 | 8,759 | ||||||
| Income taxes payable |
10,382 | 8,470 | ||||||
| Current portion of deferred profit on sale-leaseback |
1,663 | 2,197 | ||||||
| Total current liabilities |
64,297 | 60,591 | ||||||
| Non current liabilities: |
||||||||
| Deferred revenue |
9,271 | 8,819 | ||||||
| Convertible subordinated notes (note 8) |
113,250 | 113,250 | ||||||
| Total non current liabilities |
122,521 | 122,069 | ||||||
| Total liabilities |
186,818 | 182,660 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.01 par value, 2,000,000 shares authorized; none issued |
— | — | ||||||
| Series A Junior Participating preferred stock, $0.01 par value, 250,000 shares authorized; none issued |
— | — | ||||||
| Common stock $0.004 par value 100,000,000 shares authorized; issued and outstanding 33,858,518 at September 30, 2004 and 33,858,272 at June 30, 2004 (excluding 1,127,459 and 886,369 shares held as Treasury Stock respectively) |
135 | 135 | ||||||
| Additional paid-in capital |
136,642 | 132,875 | ||||||
| Retained earnings |
231,582 | 217,656 | ||||||
| Treasury stock |
(41,405 | ) | (30,440 | ) | ||||
| Accumulated other comprehensive income (note 5) |
51,332 | 41,273 | ||||||
| Total stockholders’ equity |
378,286 | 361,499 | ||||||
| Total liabilities and stockholders’ equity |
$ | 565,104 | $ | 544,159 | ||||
See the accompanying notes to the condensed consolidated financial statements.
- 3-
| PART I - FINANCIAL INFORMATION |
Item 1 |
Condensed Consolidated Statements of Income (Unaudited)
(in US$ thousands, except share and per share data)
| Three Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Net revenue |
$ | 87,733 | $ | 72,878 | ||||
| Cost of sales |
31,322 | 25,720 | ||||||
| Gross profit |
56,411 | 47,158 | ||||||
| Operating expenses: |
||||||||
| Selling, general and administrative |
26,664 | 22,187 | ||||||
| Research and development |
6,819 | 6,017 | ||||||
| Restructuring expenses (note 9) |
1,968 | — | ||||||
| Total operating expenses |
35,451 | 28,204 | ||||||
| Income from operations |
20,960 | 18,954 | ||||||
| Other income (expense), net: |
||||||||
| Interest income (expense), net |
(321 | ) | (394 | ) | ||||
| Other, net |
31 | (652 | ) | |||||
| Total other income (expense), net |
(290 | ) | (1,046 | ) | ||||
| Income before income taxes |
20,670 | 17,908 | ||||||
| Income taxes |
6,744 | 5,659 | ||||||
| Net income |
$ | 13,926 | $ | 12,249 | ||||
| Basic earnings per share |
$ | 0.41 | $ | 0.36 | ||||
| Diluted earnings per share |
$ | 0.39 | $ | 0.35 | ||||
| Basic shares outstanding (000’s) |
33,888 | 33,649 | ||||||
| Diluted shares outstanding (000’s) |
35,258 | 35,089 | ||||||
See the accompanying notes to the condensed consolidated financial statements.
- 4-
| PART I - FINANCIAL INFORMATION |
Item 1 |
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in US$ thousands)
| Three Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 13,926 | $ | 12,249 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
5,621 | 3,920 | ||||||
| Amortization of deferred borrowing costs |
205 | 202 | ||||||
| Provision for service warranties |
107 | 49 | ||||||
| Foreign currency options revaluation |
(366 | ) | 116 | |||||
| Profit on sale and lease-back of building |
(611 | ) | (566 | ) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, net |
51 | (211 | ) | |||||
| Inventories |
(4,007 | ) | (5,943 | ) | ||||
| Prepaid expenses and other current assets |
371 | (774 | ) | |||||
| Accounts payable, accrued expenses and other liabilities |
1,321 | 3,526 | ||||||
| Net cash provided by operating activities |
16,618 | 12,568 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of property, plant and equipment |
(7,454 | ) | (11,027 | ) | ||||
| Patent registration costs |
(708 | ) | (280 | ) | ||||
| Purchases of non-trading investments |
(186 | ) | (825 | ) | ||||
| Proceeds from sales of non-trading investments |
— | 1,038 | ||||||
| Cash paid for acquisitions, including acquisition costs |
— | (184 | ) | |||||
| Purchases of marketable securities - available-for-sale |
(46,841 | ) | (22,725 | ) | ||||
| Proceeds from sale or maturity of marketable securities-available-for-sale |
56,130 | 2,132 | ||||||
| Net cash provided by (used in) investing activities |
941 | (31,871 | ) | |||||
| Cash flows provided by financing activities: |
||||||||
| Proceeds from issuance of common stock, net |
3,767 | 9,061 | ||||||
| Redemption of borrowings |
— | — | ||||||
| Purchase of treasury stock |
(10,965 | ) | (462 | ) | ||||
| Net cash provided by (used in) financing activities |
(7,198 | ) | 8,599 | |||||
| Effect of exchange rate changes on cash |
2,352 | 890 | ||||||
| Net increase (decrease) in cash and cash equivalents |
12,713 | (9,814 | ) | |||||
| Cash and cash equivalents at beginning of period |
128,907 | 114,491 | ||||||
| Cash and cash equivalents at end of period |
$ | 141,620 | $ | 104,677 | ||||
| Supplemental disclosure of cash flow information: |
||||||||
| Income taxes paid |
$ | 6,689 | $ | 4,584 | ||||
| Interest paid |
— | — | ||||||
| Fair value of assets acquired in acquisition |
$ | — | $ | 95 | ||||
| Liabilities assumed |
— | — | ||||||
| Goodwill on acquisition |
— | 89 | ||||||
| Cash paid for acquisition, including acquisition costs |
$ | — | $ | 184 | ||||
See the accompanying notes to the condensed consolidated financial statements.
- 5-
| PART I - FINANCIAL INFORMATION |
Item 1 |
Notes to Condensed Consolidated Financial Statements
(unaudited)
| (1) |
Organization and Basis of Presentation |
ResMed Inc (the “Company”) is a Delaware corporation formed in March 1994 as a holding compan