Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

May 15, 2001

10-Q: Quarterly report pursuant to Section 13 or 15(d)

Published on May 15, 2001




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 MARCH 31, 2001

[ ] 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 [ ]

As of March 31, 2001, there were 31,308,291 shares of Common Stock ($0.004 par
value) outstanding.



RESMED INC AND SUBSIDIARIES
INDEX




PART I FINANCIAL INFORMATION


Page
Item 1 Financial Statements
Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 3
2001 and June 30, 2000

Unaudited Condensed Consolidated Statements of Income for 4
the Three Months Ended March 31, 2001 and 2000 and the
Nine Months ended March 31, 2001 and 2000

Unaudited Condensed Consolidated Statements of Cash Flows 5
for the Nine Months Ended March 31, 2001 and 2000

Notes to Unaudited Condensed Consolidated Financial 6
Statements

Item 2 Management's Discussion and Analysis of Financial Condition 14
and Results of Operations

Item 3 Quantitative and Qualitative Disclosures About Market Risk 18








PART II OTHER INFORMATION


Item 1 Legal Proceedings 20

Item 2 Changes in Securities 20

Item 3 Defaults Upon Senior Securities 20

Item 4 Submission of Matters to a Vote of Security Holders 20

Item 5 Other Information 20

Item 6 Exhibits and Reports on Form 8-K 20

SIGNATURES 21


- -2-




PART I - FINANCIAL INFORMATION Item 1
- -------------------------------------------------------------------------------



RESMED INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)

March 31, June 30,
2001 2000
--------- ---------

ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,570 $ 18,250
Marketable securities - available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3,713
Accounts receivable, net of allowance for doubtful accounts of $1,176 at March 31, 2001 and
833 at June 30, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,076 24,688
Inventories (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,674 15,802
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,778 2,361
Prepaid expenses and other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,205 4,358
--------- ---------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,303 69,172
--------- ---------

Property, plant and equipment, net of accumulated depreciation of $18,034 at March 31, 2001 and. . . . . 52,962 36,576
13,552 at June 30, 2000
Patents, net of accumulated amortization of $887 at March 31, 2001 and $789 at June 30, 2000. . . . . . 1,302 1,342
Goodwill, net of accumulated amortization of $2,513 at March 31, 2001 and $2,003 at June 30, 2000. . . . 49,647 5,626
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,747 2,878
--------- ---------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,961 $115,594
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,537 $ 5,929
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,378 9,224
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,371 6,469
Short term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,369 -
Payable to former MAP Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,058 -
--------- ---------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,713 21,622
--------- ---------
Non current liabilities:
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,978 -
--------- ---------
Total non current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,978 -
--------- ---------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,691 21,622
--------- ---------

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
31,308,291 at March 31, 2001 and 30,593,921 at June 30, 2000. . . . . . . . . . . . . . . . . . . . . . 125 122
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,463 41,495
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,791 65,507
Accumulated other comprehensive loss (note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,109) (13,152)
---------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,270 93,972
--------- ---------
Commitments and contingencies (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,961 $115,594
========= =========

See accompanying notes to unaudited condensed consolidated financial statements.

- -3-



PART I - FINANCIAL INFORMATION Item 1
- -------------------------------------------------------------------------------



RESMED INC AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)




Three Months Ended Nine Months Ended
March 31, March 31,
2001 2000 2001 2000
---------- -------- --------- --------

Net revenue. . . . . . . . . . . . . . . . . . $ 42,680 $29,971 $108,128 $84,051
Cost of sales. . . . . . . . . . . . . . . . . 13,757 10,152 35,097 26,980
Gross profit . . . . . . . . . . . . . . . . . 28,923 19,819 73,031 57,071
---------- -------- --------- --------

Operating expenses:
Selling, general and administrative expenses . 13,727 9,459 34,042 26,864
Provision for restructure (note 6) . . . . . . 550 - 550 -
Research and development expenses. . . . . . . 3,017 2,103 7,911 5,964
In process research and development write off. 17,677 - 17,677 -
---------- -------- --------- --------
Total operating expenses . . . . . . . . . . . 34,971 11,562 60,180 32,828
---------- -------- --------- --------

Income from operations . . . . . . . . . . . . (6,048) 8,257 12,851 24,243
---------- -------- --------- --------

Other income (expenses), net:
Interest income (expense), net . . . . . . . . (256) 205 (153) 542
Government grants. . . . . . . . . . . . . . . - - 72 279
Other income, net. . . . . . . . . . . . . . . 448 533 1,829 (380)
---------- -------- --------- --------

Total other income, net. . . . . . . . . . . . 192 738 1,748 441
---------- -------- --------- --------

Income before income taxes . . . . . . . . . . (5,856) 8,995 14,599 24,684
Income taxes . . . . . . . . . . . . . . . . . (4,338) (3,157) (11,315) (8,649)
---------- -------- --------- --------

Net income (loss) after income taxes . . . . . ($10,194) $ 5,838 $ 3,284 $16,035
========== ======== ========= ========

Basic earnings (loss) per share. . . . . . . . ($0.33) $ 0.19 $ 0.11 $ 0.53
Diluted earnings (loss) per share. . . . . . . ($0.30) $ 0.18 $ 0.10 $ 0.50

Basic shares outstanding . . . . . . . . . . . 31,246 30,294 31,030 29,975
Diluted shares outstanding . . . . . . . . . . 33,691 32,553 33,330 31,869


See accompanying notes to unaudited condensed consolidated financial statements.
- -4-


PART I - FINANCIAL INFORMATION Item 1
- -------------------------------------------------------------------------------


RESMED INC AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in US$ thousands)

Nine Months Ended
March 31,
2001 2000
--------- ---------

Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,284 $ 16,035
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . 5,708 4,860
Provision for service warranties . . . . . . . . . . . . . . . . . . . . . . . . 99 157
Foreign currency options revaluations. . . . . . . . . . . . . . . . . . . . . . 2,588 1,928
Restructuring provision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550 -
Purchased in process research and development write off. . . . . . . . . . . . . 17,677 -
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,501) (6,021)
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,569) (7,481)
Prepaid expenses and other current assets. . . . . . . . . . . . . . . . . . . . (2,674) (919)
Accounts payable, accrued expenses and other liabilities . . . . . . . . . . . . 5,471 4,578
--------- ---------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . 19,633 13,137
--------- ---------

Cash flows from investing activities:
Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . (24,435) (8,194)
Patents costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (386) (623)
Purchase of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,216) (1,489)
Business acquisitions, net of cash acquired of $367. . . . . . . . . . . . . . . (14,899) (576)
Purchases of marketable securities - available-for-sale. . . . . . . . . . . . . (17,263) (27,128)
Proceeds from sale of marketable securities - available-for-sale . . . . . . . . 20,976 24,828
--------- ---------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . . . (38,223) (13,182)
--------- ---------

Cash flows from financing activities:
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . 5,971 6,081
Repayment of short term debt . . . . . . . . . . . . . . . . . . . . . . . . . . (6,213) -
Proceeds from short term debt. . . . . . . . . . . . . . . . . . . . . . . . . . 27,500 -
--------- ---------
Net cash provided by financing activities. . . . . . . . . . . . . . . . . . . . 27,258 6,081
--------- ---------

Effect of exchange rate changes on cash. . . . . . . . . . . . . . . . . . . . . (2,348) (788)
--------- ---------

Net (decrease)/increase in cash and cash equivalents . . . . . . . . . . . . . . 6,320 5,248
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . 18,250 11,108
--------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . $ 24,570 $ 16,356
========= =========
Supplemental disclosure of cash flow information:
Income taxes paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,601 $ 7,930
Interest paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565 -
========= =========
Fair value of assets acquired on acquisition . . . . . . . . . . . . . . . . . . 30,194 -
Liabilities assumed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,876) -
Goodwill on acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,119 -
Consideration for acquisition, including acquisition costs . . . . . . . . . . . 55,437 -
--------- ---------
Cash paid for acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,266 -
Accrued acquisition costs and balance payable to former shareholders . . . . . . 40,171 -


See accompanying notes to condensed consolidated financial statements.

- -5-


PART I - FINANCIAL INFORMATION Item 1
- -------------------------------------------------------------------------------

RESMED INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(1) Organization and Basis of Presentation
------------------------------------------

ResMed Inc (the Company), is a Delaware Corporation formed in March 1994 as a
holding company for the ResMed Group. The Company designs, manufactures and
markets devices for the evaluation and treatment of sleep disordered breathing,
primarily obstructive sleep apnea. The Company's principal manufacturing
operations are located in Australia. Other principal distribution and sales
sites are located in the United States, the United Kingdom, Singapore and
Europe.

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by such accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three months
ended March 31, 2001 and the nine months ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the year ending
June 30, 2001.

(2) Summary of Significant Accounting Policies
----------------------------------------------

(a) Basis of Consolidation
------------------------

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.

(b) Revenue Recognition
--------------------

Revenue on product sales is recorded at the time of shipment. Royalty revenue
from license agreements is recorded when earned. Service revenue received in
advance from service contracts is initially deferred and recognized as revenue
over the life of the service contract. Revenue from sale of marketing and
distribution rights is initially deferred and progressively recognized as
revenue over the life of the contract.

(c) Cash and Cash Equivalents
----------------------------

Cash equivalents include certificates of deposit, commercial paper, and other
highly liquid investments stated at cost, which approximates market. Investments
with original maturities of 90 days or less are considered to be cash
equivalents for purposes of the condensed consolidated statements of cash flows.

(d) Inventories
-----------

Inventories are stated at the lower of cost, determined principally by the
first-in, first-out method, or net realizable value.

- -6-

(2) Summary of Significant Accounting Policies, Continued
----------------------------------------------------------

(e) Property, Plant and Equipment
--------------------------------

Property, plant and equipment is recorded at cost. Depreciation expense is
computed using the straight-line method over the estimated useful lives of the
assets, generally two to ten years. Straight-line and accelerated methods of
depreciation are used for tax purposes. Maintenance and repairs are charged to
expense as incurred.

(f) Patents
-------

The registration costs for new patents are capitalized and amortized over the
estimated useful life of the patent, generally five years. In the event of a
patent being superseded, the unamortized costs are written off immediately.

(g) Goodwill
--------

Goodwill arising from business acquisitions is amortized on a straight-line
basis over periods ranging from three to 20 years. The Company carries goodwill
at cost net of amortization. The Company reviews its goodwill carrying value
when events indicate that an impairment may have occurred in goodwill. If,
based on the undiscounted cash flows, management determines goodwill is not
recoverable, goodwill is written down to its discounted cash flow value and the
amortization period is re-assessed.

(h) Government Grants
------------------

Government grants revenue is recognized when earned. Grants have been obtained
by the Company from the Australian Federal Government to support continued
development and export of the Company's proprietary positive airway pressure
technology and to assist development of export markets. Grants of $72,000 and
$279,000 have been recognized for the nine-month periods ended March 31, 2001
and 2000, respectively.

(i) Foreign Currency
-----------------
The consolidated financial statements of the Company's non-US subsidiaries are
translated into US dollars for financial reporting purposes. Assets and
liabilities of non-US subsidiaries whose functional currencies are other than
the US dollar are translated at period end exchange rates, and revenue and
expense transactions are translated at average exchange rates for the period.
Cumulative translation adjustments are recognized as part of "Other
comprehensive income (loss)", as described in Note 4, and are included in
"Accumulated other comprehensive income (loss)" on the Condensed Consolidated
Balance Sheets until such time as the subsidiary is sold or substantially or
completely liquidated. Gains and losses on transactions, denominated in other
than the functional currency of the entity, are reflected in operations.

- -7-

(2) Summary of Significant Accounting Policies, Continued
----------------------------------------------------------

(j) Research and Development
--------------------------

All research and development costs are expensed in the period incurred.

(k) Earnings per Share
--------------------

The weighted average shares used to calculate basic earnings per share was
31,246,000 and 30,294,000 for the quarters ended March 31, 2001 and 2000,
respectively, and 31,030,000 and 29,975,000 for the nine-month periods ended
March 31, 2001 and 2000, respectively. The difference between basic earnings per
share and diluted earnings per share is attributable to the impact of
outstanding stock options during the periods presented. Stock options had the
effect of increasing the number of shares used in the calculation (by
application of the treasury stock method) by 2,445,000 and 2,259,000 for the
quarters ended March 31, 2001 and 2000, respectively, and by 2,300,000 and
1,894,000 for the nine-month periods ended March 31, 2001 and 2000,
respectively.

(l) Financial Instruments
----------------------

The carrying value of financial instruments, such as cash and cash equivalents,
marketable securities - available-for-sale, accounts receivable, government
grants, foreign currency option contracts and accounts payable approximate their
fair value. The Company does not hold or issue financial instruments for trading
purposes.

The fair value of financial instruments is defined as the amount at which the
instrument could be exchanged in a current transaction between willing parties.

(m) Foreign Exchange Risk Management
-----------------------------------

The Company enters into call foreign currency options in managing its foreign
exchange risk.

The purpose of the Company's foreign currency hedging activities is to protect
the Company from adverse exchange rate fluctuations with respect to net cash
movements resulting from the sales of products to foreign customers and
Australian manufacturing activities. The Company enters into foreign currency
option contracts to hedge anticipated sales and manufacturing costs denominated
principally in Australian dollars and Euros. The terms of such foreign currency
option contracts generally do not exceed three years.

Unrealized gains or losses are recognized as incurred on the condensed
consolidated balance sheets as either other assets or other liabilities and are
recorded within other income, net on the Company's condensed consolidated
statements of income. Unrealized gains and losses on currency derivatives are
determined based on dealer quoted prices.

- -8-

(2) Summary of Significant Accounting Policies, Continued
----------------------------------------------------------

(m) Foreign Exchange Risk Management, Continued
-----------------------------------------------

As of July 1, 2000 the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133), as amended, which standardizes the accounting for
derivative instruments. Under the restrictive definition of hedge effectiveness
contained in SFAS 133, the Company's hedging contracts do not have hedge
effectiveness and are therefore marked to market with resulting gains or losses
being recognized in earnings in the period of change.

The Company is exposed to credit-related losses in the event of non-performance
by counterparties to financial instruments. The credit exposure of foreign
exchange options at March 31, 2001 was $372,000 which represents the fair value
of options held by the Company.

The Company held foreign currency option contracts with notional amounts
totaling $238,889,000 and $171,530,000 at March 31, 2001 and June 30, 2000,
respectively to hedge foreign currency items. These contracts mature at various
dates prior to July 31, 2002.

The Company has a forward exchange contract for EUR 40.9 million to hedge the
balance of money payable on the acquisition of MAP.

(n) Income Taxes
-------------

The Company accounts for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

(o) Marketable Securities
----------------------

Management determines the appropriate classification of its investments in debt
and equity securities at the time of purchase and re-evaluates such
determination at each balance sheet date. Debt securities for which the Company
does not have the intent or ability to hold to maturity are classified as
available-for-sale. Securities available for sale are carried at fair value,
with the unrealized gains and losses, net of tax, reported in Accumulated other
comprehensive income (loss).

At March 31, 2001 and June 30, 2000, the Company's investments in debt
securities were classified on the Condensed consolidated balance sheets as
marketable securities-available-for-sale. These investments are diversified
among high credit quality securities in accordance with the Company's investment
policy.

- -9-

(2) Summary of Significant Accounting Policies, Continued
----------------------------------------------------------

(o) Marketable Securities, Continued
----------------------------------

The amortized cost of debt securities classified as available-for-sale is
adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization and interest are included in interest income. Realized gains
and losses are included in other income or expense. The cost of securities sold
is based on the specific identification method.

(p) Warranty
--------
Estimated future warranty costs related to products are accrued to operations in
the period in which the related revenue is recognized.

(q) Impairment of Long-Lived Assets
----------------------------------
The Company periodically evaluates the carrying value of long-lived assets to be
held and used, including certain identifiable intangible assets, when events and
circumstances indicate that the carrying amount of an asset may not be
recovered. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net undiscounted cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceed the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.

(3) Inventories
-----------



Inventories were comprised of the following at March 31, 2001 and June 30, 2000
(in thousands):

March 31, June 30,
2001 2000
---------- --------

Raw materials. . $ 6,723 4,826
Work in progress 984 297
Finished goods . 20,967 10,679
---------- --------
$ 28,674 15,802
========== ========


(4) Comprehensive Income
---------------------

As of July 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income", which established standards
for the reporting and display of comprehensive income and its components in the
financial statements. The only component of comprehensive income that impacts
the Company is foreign currency translation adjustments.

- -10-


(4) Comprehensive Income, Continued
---------------------------------

The net loss associated with the foreign currency translation adjustments for
the three months ended March 31, 2001 was $11.8 million compared to a net loss
of $5.7 million for the three months ended March 31, 2000. The net loss
associated with the foreign currency translation adjustments for the nine months
ended March 31, 2001 was $16.0 million compared to a net loss of $6.6 million
for the nine months ended March 31, 2000.


The Company does not provide for US income taxes on foreign currency translation
adjustments since it does not provide for such taxes on undistributed earnings
of foreign subsidiaries. Accumulated other comprehensive loss at March 31, 2001
and June 30, 2000 consisted of foreign currency translation adjustments with
debit balances of $29,109,000 and $13,152,000 respectively.

(5) Commitments and Contingencies
-------------------------------

The Company is currently engaged in litigation relating to the enforcement and
defense of certain of its patents.

In January 1995, the Company filed a complaint in the United States District
Court for the Southern District of California seeking monetary damages from and
injunctive relief against Respironics for alleged infringement of three ResMed
patents. In February 1995, Respironics filed a complaint in the United States
District Court for the Western District of Pennsylvania against the Company
seeking a declaratory judgment that Respironics does not infringe claims of
these patents and that the Company's patents are invalid and unenforceable. The
two actions were combined and are proceeding in the United States District Court
for the Western District of Pennsylvania. In June 1996, the Company filed an
additional complaint against Respironics for infringement of a fourth ResMed
patent, and that complaint was consolidated with the earlier action. As of this
date, Respironics has brought three partial summary judgment motions for
non-infringement of the ResMed patents; the Court has granted each of the
motions. In December 1999, in response to the Court's ruling on Respironics'
third summary judgment motion, the parties jointly stipulated to a dismissal of
charges of infringement under the fourth ResMed patent, with ResMed reserving
the right to reassert the charges in the event of a favorable ruling on appeal.
It is ResMed's intention to appeal the summary judgment rulings after a final
judgment in the consolidated litigation has been entered in the District Court
proceedings.

In January 2001, MAP Medizin-Technologie GmbH filed a lawsuit in the Civil
Chamber of Munich Court against Hofrichter GmbH seeking actual and exemplary
monetary damages for the unauthorized and infringing use of the Company's
trademarks and patents.

While the Company is prosecuting the above actions, there can be no assurance
that the Company will be successful.

- -11-

(5) Commitments and Contingencies (Continued)
--------------------------------------------

On March 31, 2000, the Company filed a lawsuit in the United States District
Court for the Southern District of California against MPV Truma and Tiara
Medical Systems, Inc., seeking actual and exemplary monetary damages and
injunctive relief for the unauthorized and infringing use of the Company's
trademarks, trade dress, and patents related to its Mirage mask. The parties
reached a confidential out of court settlement on April 9, 2001.

In May 1995, Respironics and its Australian distributor filed a Statement of
Claim against the Company and Dr. Farrell in the Federal Court of Australia,
alleging that the Company engaged in unfair trade practices. The Statement of
Claim asserted damage claims for lost profits on sales in the aggregate amount
of approximately $1,000,000. The Parties reached a confidential out of court
settlement of this Action on April 16, 2001.

In September 2000, the Company was named as a defendant in a qui tam proceeding
filed in the United States District Court for the Northern District of Georgia,
brought by a private citizen, alleging that the Company violated federal
healthcare laws. The Federal Government declined to intervene in the action. On
March 22, 2001, the District Court dismissed the Complaint without prejudice.

(6) Provision for Restructure
---------------------------

Subsequent to the purchase of MAP Medizin - Technologie GmbH, "MAP", the Company
has begun limited restructuring of MAP's activities and for the three months
ended March 31, 2001, has taken a charge of $550,000 associated with the closure
and/or sale of MAP's unprofitable French operations.

(7) Business Acquisition
---------------------


On February 16, 2001 the Company's fully owned German subsidiary ResMed
Beteiligungs GmbH, acquired all the common stock of MAP Medizin-Technologie GmbH
"MAP" for total consideration, including acquisition costs, of $55.4 million.

The acquisition has been accounted for as a purchase and accordingly, the
results of operations of MAP have been included in the company's consolidated
financial statements from February 16, 2001. The excess of the purchase price
over the fair value of the net identifiable assets acquired of $47.1 million has
been recorded as goodwill and is being amortized on a straight line basis over
20 years.

The following unaudited pro-forma financial information presents the combined
results of operations of the Company and MAP as if the acquisition had occurred
as of the beginning of the nine-month periods ended March 31, 2001 and March 31,
2000, after giving effect to certain adjustments, including amortization of
goodwill and increased interest expense associated with debt funding the
acquisition. The pro-forma financial information does not necessarily reflect
the results of operations that would have occurred had the Company and MAP
constituted a single entity during such periods.

- -12-





The Pro-forma net income for the nine-month period ended March 31, 2001 excludes
non-recurring acquisition charges of $17,677,000 for purchased in process
research and development and $550,000 for restructuring of MAP's French
operations.

Nine Months Ended
(In thousands except per share data) March 31,

2001 2000
-------- --------

Net revenue. . . . . . . . $124,551 $102,832

Net income . . . . . . . . $ 20,323 $ 13,532

Basic earnings per share . $ 0.65 $ 0.45
Diluted earnings per share $ 0.61 $ 0.42

Basic shares outstanding . 31,030 29,975
Diluted shares outstanding 33,330 31,869



- -13-

PART I - FINANCIAL INFORMATION Item 2
- -------------------------------------------------------------------------------

RESMED INC AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION

Net Revenue
- ------------

Net revenue increased for the three months ended March 31, 2001 to $42.7 million
from $30.0 million for the three months ended March 31, 2000, an increase of
$12.7 million or 42%. For the nine month period ended March 31, 2001 net
revenue increased to $108.1 million from $84.1 million for the nine month period
ended March 31, 2000, an increase of $24.0 million or 29%. Both the three month
and nine month increases in net revenue were attributable to an increase in unit
sales of the Company's flow generators and accessories in both domestic and
international markets and also to the acquisition on February 16, 2001 of MAP
Medizin-Technologie GmbH "MAP", which contributed net revenue of $2.9 million
for the quarter. Net revenue in North and Latin America increased to $21.3
million from $15.4 million for the quarter, and to $57.6 million from $45.1
million for the nine month periods ended March 31, 2001 and 2000 respectively.
Net revenue in international markets increased to $21.4 million from $14.5
million for the quarter, and to $50.6 million from $38.9 million for the nine
month periods ended March 31, 2001 and 2000, respectively.


Gross Profit
- -------------

Gross profit increased for the three months ended March 31, 2001 to $28.9
million from $19.8 million for the three months ended March 31, 2000, an
increase of $9.1 million or 46%. Gross profit as a percentage of net revenue
increased for the quarter ended March 31, 2001 to 68% from 66% for the quarter
ended March 31, 2000 reflecting a favorable AUD/USD exchange rate as well as
improved manufacturing efficiencies through increased volumes.

For the nine-month period ended March 31, 2001 gross profit increased to $73.0
million from $57.1 million in the same period of fiscal 2000, an increase of
$15.9 million or 28%. Gross profit as a percentage of net revenue was 68% for
the nine-month periods ended March 31, 2001 and 2000.

Selling, General and Administrative Expenses
- ------------------------------------------------

Selling, general and administrative expenses increased for the three months
ended March 31, 2001 to $13.7 million from $9.5 million for the three months
ended December 31, 2000, an increase of $4.2 million or 44%. As a percentage of
net revenue, selling, general and administrative expenses for the three months
ended March 31, 2001 increased to 32.2% from 31.6% for the three months ended
March 31, 2000. The increase in selling, general and administrative expenses
was primarily due to an expansion of selling and administration personnel
associated with the growth of company operations, including $1.4 million of SG&A
expenses from MAP.

Selling, general and administrative expenses for the nine months ended March 31,
2001 increased to $34.0 million from $26.9 million for the nine months ended
March 31, 2000, an increase of $7.1 million or 26%. As a percentage of net
revenue selling, general and administration expenses declined to 31.5% for the
nine months ended March 31, 2001 from 32.0% in the nine months ended March 31,
2000.

- -14-

Research and Development Expenses
- ------------------------------------

Research and development expenses increased for the three months ended March 31,
2001 to $3.0 million from $2.1 million for the three months ended March 31,
2000, an increase of $0.9 million or 43%. As a percentage of net revenue,
research and development expenses increased to 7.1% for the three months ended
March 31, 2001 compared to 7.0% for the three months ended March 31, 2000. The
increase in gross research and development expenses was due to increased
salaries associated with an increase in personnel and increased charges for
consulting fees, clinical trials and technical assessments incurred to
facilitate development of new products.

For the nine month period ended March 31, 2001 research and development expenses
increased to $7.9 million from $6.0 million for the same period in fiscal 2000,
an increase of $1.9 million. As a percentage of net revenue, research and
development expenses was 7.3% for the nine months ended March 31, 2001 compared
to 7.1% for the nine months ended March 31, 2000. The increase in gross
research and development expenses was due to increased salaries associated with
an increase in personnel and increased charges for consulting fees, clinical
trials and technical assessments incurred to facilitate development of new
products.


In Process Research and Development Write Off
- ---------------------------------------------------

Purchased in process research and development of $17,677,000 was expensed upon
acquisition of MAP because technological feasibility of the products under
development had not been established and no further alternative uses existed.
The value of in process technology was calculated by identifying research
projects in areas for which technological feasibility had not been established,
estimating the costs to develop the purchased in process technology into
commercially viable products, estimating the resulting net cash flows from such
products, discounting the net cash flows to present value, and applying the
reduced percentage completion of the projects thereto. The discount rates used
in the analysis were between 27% and 33% and were based on the risk profile of
the acquired assets.

The Company believes that the assumptions used to value the acquired intangible
assets were reasonable at the time of acquisition. No assurance can be given,
however, that the underlying assumptions used to estimate expected project
revenues, development costs or profitability, or events associated with such
projects, will transpire as estimated. For these reasons, among others, actual
results may vary from the projected results.

- -15

Other Income (Expense), Net
- ------------------------------

Other income, net, decreased for the three months ended March 31, 2001 to
$192,000 from $738,000 for the three months ended March 31, 2000. The decrease
in other income was due primarily to an increase in interest expense associated
with debt funding the MAP acquisition.

Other income, net increased for the nine months ended March 31, 2001 to
$1,748,000 from $441,000 for the nine months ended March 31, 2000. The increase
in other income was attributable to higher net foreign currency exchange gains,
partially offset by an increase in interest expense.



Income Taxes
- -------------

Excluding a non-recurring in process research and development write-down of
$17.7 million and restructuring charge of $0.6 million, the Company's effective
income tax rate was unchanged at approximately 35.1% for the three months ended
March 31, 2001 and 2000. For the nine month period ended March 31, 2001 the
Company's effective income tax rate declined to 34.5% from 35.0% for the nine
month period ended March 31, 2000. The lower tax rate was primarily due to the
lowering of the corporate tax rate in Australia from 36% to 34% effective from
July 1, 2000, partially offset in the current quarter by an increase in
non-deductible goodwill expense.


Liquidity and Capital Resources
- ----------------------------------

As of March 31, 2001 and June 30, 2000, the Company had cash and cash
equivalents and marketable securities available-for-sale of approximately $24.6
million and $22.0 million, respectively. The Company also had short term debt
of $35.4 million and an amount payable to the former MAP shareholders of $40.1
million as of March 31, 2001.

During the nine months ended March 31, 2001, the Company generated cash of $19.6
million from operations, primarily as a result of increased profit from
operations offset by increases in inventory and accounts receivable balances.
During the nine months ended March 31, 2000 approximately $13.1 million of cash
was generated by operations.

The Company's capital expenditures for the nine month periods ended March 31,
2001 and 2000 aggregated $24.4 million and $8.2 million respectively. The
majority of the expenditures in the nine month period ended March 31, 2001
related to the purchase of land and buildings and, to a lesser extent, computer
equipment, furniture and fixtures and production tooling and equipment. The
increase in expenditures in the nine month period ended March 31, 2001 compared
to the nine months ended March 31, 2000 reflects the capital expenditure of
$17.2 million on the company's US headquarters in Poway, California in July
2000. As a result of these capital expenditures, the Company's March 31, 2001
balance sheet reflects net property plant and equipment of approximately $53.0
million at March 31, 2001 compared to $36.6 million at June 30, 2000.

- -16-

On February 16, 2001 the Company's fully owned German subsidiary, ResMed
Beteiligungs GmbH, acquired all the common stock of MAP Medizin-Technologie GmbH
"MAP" for total consideration, including acquisition costs, of $55.4 million.

The acquisition will be funded by bank debt currently being negotiated with
Deutsche Bank AG and Union Bank of California. As at March 31, 2001, $15.3
million has been paid in relation to the acquisition of MAP with the balance of
$40.1 million payable on May 16, 2001, in accordance with the Sale and
Assignment Agreement. The Company has obtained an AUD 80.0 million 90-day
bridging loan from Deutsche Bank to facilitate settlement of the outstanding
payable to the former MAP shareholders. The Company is currently negotiating
term and revolving loan facilities with Deutsche Bank AG and Union Bank of
California.


The results of the Company's international operations are affected by changes in
exchange rates between currencies. Changes in exchange rates may negatively
affect the Company's consolidated net revenue and gross profit margins from
international operations. The Company is exposed to the risk that the dollar
value equivalent of anticipated cash flows will be adversely affected by changes
in foreign currency exchange rates. The Company manages this risk through
foreign currency option contracts.

The Company expects to satisfy all of its short-term liquidity requirements
through a combination of cash on hand, cash generated from operations and its
existing revolving loan facility with the Union Bank of California, of which
$2.5 million is available at March 31, 2001.

- -17-


PART I - FINANCIAL INFORMATION Item 3
- -------------------------------------------------------------------------------

RESMED INC AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Foreign Currency Market Risk
- -------------------------------

The Company's functional currency is the US dollar although the Company
transacts business in various foreign currencies including a number of major
European currencies as well as the Australian dollar. The Company has
significant foreign currency exposure through both its Australian manufacturing
activities and international sales operations.

The Company has established a foreign currency hedging program using purchased
currency options to hedge foreign-currency-denominated financial assets,
liabilities and manufacturing expenditure. The goal of this hedging program is
to economically guarantee or lock in the exchange rates on the Company's foreign
currency exposures denominated in the Euros and Australian dollar. Under this
program, increases or decreases in the Company's foreign-currency-denominated
financial assets, liabilities, and firm commitments are partially offset by
gains and losses on the hedging instruments.

The table below provides information about the Company's foreign currency
derivative financial instruments, by functional currency and presents such
information in US dollar equivalents. The table summarizes information on
instruments and transactions that are sensitive to foreign currency exchange
rates, including foreign currency call options held at March 31, 2001. The
table presents the notional amounts and weighted average exchange rates by
expected (contractual) maturity dates for the Company's foreign currency
derivative financial instruments. These notional amounts generally are used to
calculate payments to be exchanged under contracts.




Fiscal Year Fair Value
(In US$ thousands) 2001 2002 2003 Total Assets/
(Liabilities)

FOREIGN EXCHANGE CALL OPTIONS

(Receive AUS$/Pay US$)
Option amount. . . . . . . . . . . $48,000 $178,000 - $226,000 $359
Average contractual exchange rate. AUS $1 = USD 0.632 AUS $1 = USD 0.608 AUS $1 = USD 0.613

(Receive AUS$/Pay Euro)
Option amount. . . . . . . . . . . $3,427 $9,099 $373 $12,889 $13
Average contractual exchange rate. AUS $1 = Euro 0.657 AUS $1 = Euro 0.659 AUS $1 = Euro 0.667 AUS $1 = Euro 0.659

FORWARD EXCHANGE CONTRACT

(Pay US$/Receive Euro)
Contract amount. . . . . . . . . . $37,496 - - $37,496 -
Contractual exchange rate. . . . . USD 1= 0.9167 Euro USD 1= 0.9167 Euro



- -18-

Interest Rate Risk
- --------------------

The Company is exposed to risk associated with changes in interest rates
affecting the return of investments and the cost of its debt.

At March 31, 2001, the Company maintained a portion of cash and cash equivalents
in financial instruments with original maturities of three months or less. The
Company also had short term debt of $35.4 million and a payable to the former
MAP shareholders of $40.1 million. A hypothetical 100 basis point change in
interest rates during the three month period ended March 31, 2001 would have
resulted in approximately a $0.1 million change in pre tax income. The Company
does not use derivative financial instruments to manage interest rate risk.

- -19-


PART II - OTHER INFORMATION Items 1-6
- -------------------------------------------------------------------------------
RESMED INC AND SUBSIDIARIES


Item 1 Legal Proceedings
See Note 5 to the Condensed Consolidated Financial Statements

Item 2 Changes in Securities
None

Item 3 Defaults Upon Senior Securities
None

Item 4 Submission of Matters to a Vote of Security Holders
None

Item 5 Other Information
None

Item 6 Exhibits and Report on Form 8K

On May 1, 2001 ResMed Inc filed a Form 8-K/A reporting Pro Forma Condensed
Consolidated Financial Information associated with the acquisition, on February
16, 2001, of MAP Medizin-Technologie GmbH.

- -20-


PART II - OTHER INFORMATION Signatures
- --------------------------------------------------------------------------------
RESMED INC AND SUBSIDIARIES
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



ResMed Inc




/S/ PETER C FARRELL
________________________________________________________
Peter C Farrell
President and Chief Executive Officer





/S/ ADRIAN M SMITH
________________________________________________________
Adrian M Smith
Vice President Finance and Chief Financial Officer