ResMed Inc. Announces Record Financial Results for the Quarter Ended September 30, 2010

SAN DIEGO, Oct. 28 /PRNewswire-FirstCall/ -- ResMed Inc. (NYSE: RMD) today announced record revenue and income for the quarter ended September 30, 2010.  Revenue for the quarter ended September 30, 2010 was $282.0 million, a 14% increase (a 17% increase on a constant currency basis) over the quarter ended September 30, 2009.  For the quarter ended September 30, 2010, income from operations was $66.4 million and net income was $56.7 million, an increase of 26% and 35%, respectively, compared to the quarter ended September 30, 2009.  Diluted earnings per share for the quarter ended September 30, 2010 were $0.36, an increase of 33% compared to the quarter ended September 30, 2009.  



SG&A expenses were $84.8 million for the quarter ended September 30, 2010, an increase of $8.0 million, or 10% (a 12% increase on a constant currency basis) over the quarter ended September 30, 2009.  The increase in SG&A was primarily due to expenses necessary to support sales growth.  SG&A costs were 30% of revenue in the quarter ended September 30, 2010, compared to 31% in the quarter ended September 30, 2009.    

R&D expenses were $19.7 million for the quarter ended September 30, 2010, or 7% of revenue.  R&D expenses increased by 10% (a 6% increase on a constant currency basis) compared to the quarter ended September 30, 2009.  R&D expenses were negatively impacted by the depreciation of the U.S. dollar against the Australian dollar.

The company amortized acquired intangibles of $2.0 million ($1.4 million, net of tax) during the quarter ended September 30, 2010. Stock-based compensation costs incurred during the quarter ended September 30, 2010 of $8.4 million ($6.1 million, net of tax) consisted of expenses associated with stock options, restricted stock units, and our employee stock purchase plan.  

Inventory, at $214.2 million, increased by $28.6 million compared to June 30, 2010.  Accounts receivable days sales outstanding, at 70 days, decreased by 1 day compared to June 30, 2010.

Kieran T. Gallahue, President and Chief Executive Officer, commented, "In the first quarter of fiscal 2011 we continued to show strong growth year-over-year across the globe.  Our favorable mix of product sales and market share gains led to a 16% revenue increase in the Americas over the prior year's quarter, resulting in $155.6 million in sales. Revenue outside the Americas increased by 13% to $126.4 million over the prior year's quarter, or a 19% increase on a constant currency basis.  Globally, our growth in flow generators was driven by strong sales of the new S9™ AutoSet and Elite products and the late quarter release of the S9 Escape series. Mask sales were strong this quarter across all markets.  Operating profit for the September quarter was $66.4 million and cash flow from operations was $59.1 million, demonstrating excellent operating performance.

"The findings from recent clinical studies continue to demonstrate the importance of diagnosing and treating sleep-disordered breathing (SDB). There is abundant evidence supporting the correlation of SDB with heart failure, stroke, atrial fibrillation, diabetes, hypertension and even the dementia associated with Alzheimer's disease.  Increasingly, there is evidence coming to light that early intervention in the treatment of SDB may slow or prevent the progression of these co-morbidities. In addition, studies have been conducted at institutions such as Harvard Medical School showing that a lack of sleep negatively affects perception and judgment in the workplace, including the transportation industry, which can result in reduced efficiency, productivity and increased errors and accidents. The increase in awareness of the role that SDB plays in these costly and debilitating co-morbidities and in the reduction in workplace safety and productivity, should continue to be a major driver of market expansion."

About ResMed

ResMed is a leading developer, manufacturer and distributor of medical equipment for treating, diagnosing, and managing sleep-disordered breathing and other respiratory disorders. The company is dedicated to developing innovative products to improve the lives of those who suffer from these conditions and to increasing awareness among patients and healthcare professionals of the potentially serious health consequences of untreated sleep-disordered breathing. For more information on ResMed, visit

ResMed will host a conference call at 1:30 p.m. US Pacific Time today to discuss these quarterly results.  Individuals wishing to access the conference call may do so via ResMed's Website at or by dialing (866) 783-2144 (domestic) or +1 (857) 350-1603 (international) and entering conference pass code no. 64219936. Please allow extra time prior to the call to visit the Web site and download the streaming media player (Windows Media Player) required to listen to the Internet broadcast.  The online archive of the broadcast will be available approximately 90 minutes after the live call and will be available for two weeks.  A telephone replay of the conference call is available by dialing (888) 286-8010 (domestic) and +1 (617) 801-6888 (international) and entering conference I.D. No. 90239322.

Further information can be obtained by contacting Constance Bienfait at ResMed Inc., San Diego, at (858) 836-5971; Brett Sandercock at ResMed Limited, Sydney, on (+612) 8884-2090; or by visiting the Company's multilingual Web site at  

Statements contained in this release that are not historical facts are "forward-looking" statements as contemplated by the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including statements regarding the Company's future revenue, earnings or expenses, new product development and new markets for the Company's products, are subject to risks and uncertainties, which could cause actual results to materially differ from those projected or implied in the forward-looking statements. Those risks and uncertainties are discussed in the Company's Annual Report on Form 10-K for its most recent fiscal year and in other reports the Company files with the U.S. Securities & Exchange Commission.  Those reports are available on the Company's Web site.

ResMed Inc and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In US$ thousands, except per share data)

                                           Three Months Ended

                                           September 30,

                                           2010     2009

Net revenue                                $282,012 $246,992

Cost of sales                              108,058  96,814

Gross profit                               173,954  150,178

Operating expenses

Selling, general and administrative        84,791   76,756

Research and development                   19,739   17,914

Amortization of acquired intangible assets 2,030    1,845

Donation to Foundation                     1,000    1,000

Total operating expenses                   107,560  97,515

Income from operations                     66,394   52,663

Other income, net:

Interest income, net                       5,097    2,125

Other, net                                 5,063    3,118

Total other income, net                    10,160   5,243

Income before income taxes                 76,554   57,906

Income taxes                               19,846   15,804

Net income                                 $56,708  $42,102

Basic earnings per share                   $0.37    $0.28

Diluted earnings per share                 $0.36    $0.27

Basic shares outstanding                   151,474  150,788

Diluted shares outstanding                 156,752  153,524

All share and per share information has been adjusted to reflect the two-for-one stock split effected in the form of a 100% stock dividend that was declared on August 5, 2010 and distributed on August 30, 2010.

ResMed Inc And Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

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

                                           September 30, June 30,

                                           2010          2010


Current assets:

Cash and cash equivalents                  $540,004      $488,776

Accounts receivable, net                   225,836       226,911

Inventories                                214,208       185,642

Deferred income taxes                      14,525        14,112

Income taxes receivable                    12,165        5,317

Prepaid expenses and other current assets  61,773        64,583

Total current assets                       1,068,511     985,341

Property, plant and equipment, net         423,940       387,148

Goodwill                                   222,327       198,625

Other intangibles                          49,985        30,925

Deferred income taxes                      20,170        19,042

Other assets                               7,297         5,316

Total non-current assets                   723,719       641,056

Total assets                               $1,792,230    $1,626,397


Current liabilities:

Accounts payable                           43,071        57,535

Accrued expenses                           84,770        80,883

Deferred revenue                           35,455        29,507

Income taxes payable                       28,779        22,656

Deferred income taxes                      440           402

Current portion of long-term debt          93,800        121,689

Total current liabilities                  286,315       312,672

Non-current liabilities:

Deferred income taxes                      11,344        10,793

Deferred revenue                           14,741        12,755

Income taxes payable                       2,985         2,641

Total non-current liabilities              29,070        26,189

Total liabilities                          315,385       338,861

Stockholders' Equity:

Common stock                               606           605

Additional paid-in capital                 684,696       660,185

Retained earnings                          941,584       884,876

Treasury stock                             (362,377)     (344,505)

Accumulated other comprehensive income     212,336       86,375

Total stockholders' equity                 1,476,845     1,287,536

Total liabilities and stockholders' equity $1,792,230    $1,626,397

SOURCE ResMed Inc.