RESMED INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 DECEMBER 31, 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 ¨

As of February 3, 2005, 34,244,231 shares of Common Stock ($0.004 par value) were outstanding. This number excludes 1,127,459 shares held by the registrant as treasury shares.

RESMED INC. AND SUBSIDIARIES

INDEX


Part I	Financial Information

Item 1	Financial Statements
	Condensed Consolidated Balance Sheets as of December 31, 2004 (unaudited) and June 30, 2004	3

	Condensed Consolidated Statements of Income (unaudited) for the Three Months Ended December 31, 2004 and 2003 and the Six Months Ended December 31, 2004 and 2003	4

	Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended December 31, 2004 and 2003	5

	Notes to Condensed Consolidated Financial Statements (unaudited)	6

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3	Quantitative and Qualitative Disclosures About Market and Business Risk	29

Item 4	Controls and Procedures	38

Part II	Other Information

Item 1	Legal Proceedings	39

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3	Defaults Upon Senior Securities	39

Item 4	Submission of Matters to a Vote of Security Holders	39

Item 5	Other Information	40

Item 6	Exhibits	40

	Signatures	41


PART I - FINANCIAL INFORMATION		Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(In US$ thousands, except share and per share data)


	December 31, 2004			June 30, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	143,068		$	128,907
Marketable securities available-for-sale (note 3)		21,976			12,021
Accounts receivable, net of allowance for doubtful accounts of $3,371 at December 31, 2004 and $3,197 at June 30, 2004		76,861			67,242
Inventories, net (note 4)		64,854			55,797
Deferred income taxes		9,238			7,041
Prepaid expenses and other current assets		7,249			6,821

Total current assets		323,246			277,829

Property, plant and equipment, net (note 6)		166,399			147,268

Patents, net of accumulated amortization of $6,434 at December 31, 2004 and $4,961 at June 30, 2004		5,856			4,814

Goodwill (note 7)		119,479			106,075
Other assets		9,511			8,173

Total non-current assets		301,245			266,330

Total assets	$	624,491		$	544,159

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	17,820		$	18,574
Accrued expenses		28,134			22,591
Current portion of deferred revenue		11,337			8,759
Income taxes payable		14,895			8,470
Current portion of deferred profit on sale-leaseback		1,116			2,197

Total current liabilities		73,302			60,591

Non-current liabilities:
Deferred revenue		10,540			8,819
Convertible subordinated notes (note 8)		113,250			113,250

Total non-current liabilities		123,790			122,069

Total liabilities		197,092			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 34,124,970 at December 31, 2004 and 33,858,272 at June 30, 2004 (excluding 1,127,459 and 886,369 shares held as Treasury Stock respectively)		136			135

Additional paid-in capital		143,051			132,875
Retained earnings		248,986			217,656
Treasury stock		(41,405	)		(30,440	)
Accumulated other comprehensive income (note 5 )		76,631			41,273

Total stockholders’ equity		427,399			361,499

Total liabilities and stockholders’ equity	$	624,491		$	544,159

See accompanying notes to unaudited condensed consolidated financial statements.


PART I - FINANCIAL INFORMATION		Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)

(In US$ thousands, except per share data)


	Three Months Ended December 31,						Six Months Ended December 31,
	2004			2003			2004			2003
Net revenue	$	103,893		$	82,292		$	191,626		$	155,170
Cost of sales		35,515			29,868			66,837			55,588

Gross profit		68,378			52,424			124,789			99,582

Operating expenses:
Selling, general and administrative		33,469			25,765			60,133			47,952
Research and development		7,842			6,766			14,661			12,783
Donation to research foundation		500			500			500			500
Restructuring expenses (note 9)		958			—			2,926			—

Total operating expenses		42,769			33,031			78,220			61,235

Income from operations		25,609			19,393			46,569			38,347

Other income (expense), net:
Interest income (expense), net		(159	)		(368	)		(480	)		(762	)
Other, net		679			1,883			710			1,231

Total other income (expense), net		520			1,515			230			469

Income before income taxes		26,129			20,908			46,799			38,816
Income taxes		(8,725	)		(6,757	)		(15,469	)		(12,416	)

Net income	$	17,404		$	14,151		$	31,330		$	26,400

Basic earnings per share	$	0.51		$	0.42		$	0.92		$	0.78
Diluted earnings per share (note 2 (j))	$	0.49		$	0.40		$	0.89		$	0.75

Basic shares outstanding (000’s)		34,012			33,663			33,951			33,658
Diluted shares outstanding (000’s)		37,102			35,044			37,115			35,069

See accompanying notes to unaudited condensed consolidated financial statements.


PART I - FINANCIAL INFORMATION		Item 1

RESMED INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(In US$ thousands)


	Six Months Ended December 31,
	2004			2003
Cash flows from operating activities:
Net income	$	31,330		$	26,400

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,245			8,221
Amortization of deferred borrowing costs		411			406
Provision for service warranties		678			103
Foreign currency options revaluation		(1,056	)		(1,895	)
Profit on sale and lease-back of building		(1,264	)		(1,184	)

Changes in operating assets and liabilities; net of effect of acquisitions:
Accounts receivable, net		(3,948	)		(2,804	)
Inventories		(6,440	)		(5,184	)
Prepaid expenses and other current assets		(185	)		73
Accounts payable, accrued expenses and other liabilities		7,159			1,861

Net cash provided by operating activities		38,930			25,997

Cash flows from investing activities:
Purchases of property, plant and equipment		(15,958	)		(27,035	)
Patent registration costs		(1,284	)		(1,324	)
Purchase of non-trading investments		(383	)		(917	)
Cash paid for acquisitions (note 11)		(5,828	)		(184	)
Purchases of marketable securities – available-for-sale		(144,616	)		(37,908	)
Proceeds from sale or maturity of marketable securities – available-for-sale		134,670			34,726

Net cash used in investing activities		(33,399	)		(32,642	)

Cash flows provided by financing activities:
Proceeds from issuance of common stock, net		10,177			11,639
Purchase of treasury stock		(10,965	)		(19,025	)

Net cash used in financing activities		(788	)		(7,386	)

Effect of exchange rate changes on cash		9,418

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