Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

November 13, 2001

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

Published on November 13, 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 SEPTEMBER 30, 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 September 30, 2001 there were 31,916,680 shares of Common Stock ($0.004
par value) outstanding.
- -1-


RESMED INC AND SUBSIDIARIES
INDEX

PART I FINANCIAL INFORMATION
- ---------------------------------- Page

Item 1 Financial Statements
Condensed Consolidated Balance Sheets as of September 3
30, 2001 and June 30, 2001 (unaudited)

Condensed Consolidated Statements of Income (unaudited) 4
For Three Months Ended September 30, 2001 and 2000

Condensed Consolidated Statements of Cash Flows (unaudited) 5
For the Three Months Ended September 30, 2001 and 2000

Notes to Condensed Consolidated Financial Statements 6

Item 2 Management's Discussion and Analysis of Financial Condition 16
And Results of Operations

Item 3 Quantitative and Qualitative Disclosures About Market Risk 18


PART II OTHER INFORMATION
- ------------------------------

Item 1 Legal Proceedings 19

Item 2 Changes in Securities and Use of Proceeds 19

Item 3 Defaults Upon Senior Securities 19

Item 4 Submission of Matters to a Vote of Security Holders 19

Item 5 Other Information 19

Item 6 Signatures 20

- -2-


PART I - FINANCIAL INFORMATION Item 1




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

September 30, June 30,
2001 2001

ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 60,444 $ 40,136
Marketable securities - available-for-sale. . . . . . . . . . . . . 83,066 62,616
Accounts receivable, net of allowance for doubtful accounts of
948 at September 30, 2001 and $892 at June 30, 2001. . . . . . . . 33,503 32,248
Inventories, net (Note 4) . . . . . . . . . . . . . . . . . . . . . 32,447 29,994
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . 4,388 4,152
Prepaid expenses and other current assets . . . . . . . . . . . . . 12,449 8,736
--------------- ----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . 226,297 177,882
--------------- ----------

Property, plant and equipment, net of accumulated amortization of
$22,040 at September 30, 2001 and $19,930 at June 30, 2001 . . . . 54,929 55,092
Patents, net of accumulated amortization of $1,088 at September
30, 2001 and $1,030 at June 30, 2001 . . . . . . . . . . . . . . . 1,640 1,390
Goodwill (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . 51,372 47,870
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,232 5,856
--------------- ----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 341,470 $ 288,090
=============== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,374 $ 7,971
Accrued expenses and other liabilities. . . . . . . . . . . . . . . 24,145 16,751
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . 9,115 8,888
--------------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 39,634 33,610
--------------- ----------
Non current liabilities:
Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . 5,211 4,114
Convertible subordinated notes. . . . . . . . . . . . . . . . . . . 180,000 150,000
--------------- ----------
Total non current liabilities . . . . . . . . . . . . . . . . . . . 185,211 154,114
--------------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 224,845 187,724
--------------- ----------
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 31,916,680 at September
30, 2001 and 31,478,780 at June 30, 2001 . . . . . . . . . . . . . 128 126
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . 57,992 52,675
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 85,675 77,137
Accumulated other comprehensive loss. . . . . . . . . . . . . . . . (27,170) (29,572)
--------------- ----------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . 116,625 100,366
--------------- ----------
Commitments and contingencies (Note 7). . . . . . . . . . . . . . . - -
--------------- ----------
$ 341,470 $ 288,090
=============== ==========

See the accompanying notes to the condensed consolidated financial statements.

- -3-


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


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

Three Months Ended
September 30,
2001 2000
-------------------- --------

Net revenue. . . . . . . . . . . . . $ 46,129 $31,082
Cost of sales. . . . . . . . . . . . 15,296 9,995
-------------------- --------
Gross profit . . . . . . . . . . . . 30,833 21,087
-------------------- --------
Operating expenses
Selling, general and administrative. 14,285 9,591
Research and development . . . . . . 3,361 2,389
-------------------- --------
Total operating expenses . . . . . . 17,646 11,980
-------------------- --------
Income from operations . . . . . . . 13,187 9,107
-------------------- --------
Other income (expense), net:
Interest income (expense), net . . . (735) (2)
Other, net . . . . . . . . . . . . . 117 883
-------------------- --------
Total other income (expense), net. . (618) 881
--------------------- -------

Income before income taxes . . . . . 12,569 9,988
Income taxes . . . . . . . . . . . . 4,031 3,408
-------------------- --------
Net income . . . . . . . . . . . . . $ 8,538 $ 6,580
==================== ========

Basic earnings per share . . . . . . $ 0.27 $ 0.21
Diluted earnings per share . . . . . $ 0.25 $ 0.20

Basic shares outstanding (000's) . . 31,722 30,810
Diluted shares outstanding (000's) . 34,093 33,078


See the accompanying notes to the condensed consolidated financial statements.

- -4-


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




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

Three Months Ended
September 30,
2001 2000
----------------- -----------

Cash flows from operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . $ 8,538 $ 6,580

Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . 2,228 1,964
Amortization of deferred borrowing costs. . . . . . . . . . 303 -
Provision for service warranties. . . . . . . . . . . . . . 49 26
Foreign currency options revaluation. . . . . . . . . . . . 635 852
Changes in operating assets and liabilities:
Accounts receivable, net. . . . . . . . . . . . . . . . . . (574) (2,424)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . (2,405) (2,052)
Prepaid expenses and other current assets . . . . . . . . . (3,027) (795)
Accounts payable, accrued expenses and other liabilities. . 5,481 2,139
-------------------- ---------
Net cash provided by operating activities. . . . . . . . . 11,228 6,290
-------------------- ---------

Cash flows from investing activities:
Purchases of property, plant and equipment. . . . . . . . . (2,654) (19,228)
Patent registration costs . . . . . . . . . . . . . . . . . (394) (143)
Purchase of non-trading investments . . . . . . . . . . . . (1,060) (495)
Purchases of marketable securities - available-for-sale . . (195,498) (9,258)
Proceeds from sale or maturity of marketable securities -
available-for-sale. . . . . . . . . . . . . . . . . . . . . 175,598 9,671
-------------------- ---------
Net cash used in investing activities . . . . . . . . . . . (24,008) (19,453)
-------------------- ---------

Cash flows provided by financing activities:
Proceeds from issuance of common stock. . . . . . . . . . . 5,319 2,554
Proceeds from borrowings, net of borrowing costs. . . . . . 28,402 10,000
Repayment of borrowings . . . . . . . . . . . . . . . . . . - (3,000)
-------------------- ---------
Net cash provided by financing activities . . . . . . . . . 33,721 9,554
-------------------- ---------
Effect of exchange rate changes on cash . . . . . . . . . . (633) (1,021)
-------------------- ---------
Net increase/(decrease) in cash and cash equivalents. . . . 20,308 (4,630)

Cash and cash equivalents at beginning of period. . . . . . 40,136 18,250
-------------------- ---------
Cash and cash equivalents at end of period. . . . . . . . . $ 60,444 $ 13,620
==================== =========

Supplemental disclosure of cash flow information:
Income taxes paid . . . . . . . . . . . . . . . . . . . . . $ 4,213 $ 1,624
Interest paid . . . . . . . . . . . . . . . . . . . . . . . - $ 175


See the accompanying notes to the condensed consolidated financial statements.

- -5-


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

RESMED INC AND SUBSIDIARIES
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 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 major distribution
and sales sites are located in the United States, the United Kingdom,
France, Germany, Sweden and Singapore.

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
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 generally accepted 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 September 30, 2001 are not necessarily indicative of
the results that may be expected for the year ended June 30, 2002.

(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 inter-company
transactions and balances have been eliminated on consolidation.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Actual results could differ
from management's estimates.

(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 capitalized and
progressively recognized as revenue over the life of the service contract.
Revenue from sale of marketing or 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 consolidated statements of cash
flows.

- -6-


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

RESMED INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

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

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

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

Property, plant and equipment are 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) 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
"Comprehensive Income", as described in Note 5, and are included in
accumulated other comprehensive loss on the condensed consolidated balance
sheet 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.

(h) Research and Development
--------------------------

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

(i) Earnings Per Share
--------------------

The weighted average shares used to calculate basic earnings per share was
31,722,000 and 30,810,000 for the three month periods ended September 30,
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 2,371,000 and 2,268,000 for
the three-month periods ended September 30, 2001 and 2000, respectively.

- -7-


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

RESMED INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

(j) 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, short
term debt, taxes payable 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.

(k) Foreign Exchange Risk Management
-----------------------------------

The Company enters into foreign currency call 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 in principally 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 in the consolidated
balance sheets as either other assets or other liabilities and are recorded
within other income, net on the Company's consolidated statements of
income. Unrealized gains and losses on currency derivatives are determined
based on dealer quoted prices.

From July 1, 2000 the Company adopted Statement of Financial Accounting
Standards No 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133), 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 counter parties to financial instruments. The credit
exposure of foreign exchange options at September 30, 2001 was $483,000
which represents the positive fair value of options held by the Company.

- -8-


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

RESMED INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

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


The Company held foreign currency option contracts with notional amounts
totaling $181,313,000 and $223,752,000 at September 30, 2001 and June 30,
2001, respectively to hedge foreign currency items. These contracts mature
at various dates prior to June 2003.

(l) 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.

(m) 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 September 30, 2001 and June 30, 2001, the Company's investments in debt
securities were classified on the accompanying consolidated balance sheet
as marketable securities-available-for-sale. These investments are
diversified among high credit quality securities in accordance with the
Company's investment policy.

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.

- -9-


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

RESMED INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

(n) Warranty
--------

Estimated future warranty costs related to certain products are charged to
operations in the period in which the related revenue is recognized.

(o) 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 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) Accounting Changes
-------------------

In July 2001, The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and
Other Intangible Assets. As allowed under the Standard, the Company has
adopted SFAS 142 effective July 1, 2001. SFAS 142 requires goodwill and
intangible assets with indefinite useful lives to no longer be amortized,
but instead be tested for impairment at least annually.

With the adoption of SFAS 142, the company reassessed the useful lives and
residual values of all acquired intangible assets to make any necessary
amortization period adjustments. Based on that assessment, only goodwill
was determined to have an indefinite useful life and no adjustments were
made to the amortization period or residual values of other intangible
assets.

SFAS 142 provides a six-month transitional period from the effective date
of adoption for the company to perform an assessment of whether there is an
indication that goodwill is impaired. To the extent that an indication of
impairment exists, the Company must perform a second test to measure the
amount of the impairment. The second test must be performed as soon as
possible, but no later than the end of the fiscal year. Any impairment
measured as of the date of adoption will be recognized as the cumulative
effect of a change in accounting principle. Because of the extensive effort
needed to complete this assessment, the Company has not determined whether
there is any indication that goodwill is impaired or estimated the amount
of any potential impairment.

- -10-


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

RESMED INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(3) Accounting Changes, Continued
-------------------------------

At September 30, 2001, the Company had goodwill (net of accumulated
amortization of $3.4 million) of $51.4 million which is being assessed for
impairment. The Company anticipates completing its initial assessment of
impairment by December 31, 2001. Should an indication of impairment exist,
the Company will perform the second test under SFAS 142 to measure and
record the amount of impairment, if any.

Effective July 1, 2001, the Company adopted FASB Statement of Financial
Accounting Standards ("SFAS") No. 141, Business Combinations. SFAS 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. The Company has evaluated the
impact of SFAS 141 and believes that it will not have a material impact on
the results of operations, financial position and liquidity of the Company.

In June 2001, the FASB issued SFAS No.143, "Accounting for Asset Retirement
Obligations, "which requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is
incurred if reasonable estimate of fair value can be made. The associated
asset retirement costs would be capitalized as part of the carrying amount
of the long-lived asset and depreciated over the life of the asset. The
liability is accreted at the end of each period through charges to
operating expense. If the obligation is settled for other than the carrying
amount of the liability, the Company will recognize a gain or loss on
settlement. The provisions of SFAS No. 143 are effective for fiscal years
beginning after June 15, 2002. The Company has not yet determined the
impact, if any, of adoption of SFAS No. 143.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". For long-lived assets to be
held and used, SFAS No. 144 retains the requirements of SFAS No. 121 to (a)
recognize an impairment loss only if the carrying amount of a long-lived
asset is not recoverable from its undiscounted cash flows and (b) measure
an impairment loss as the difference between the carrying amount and fair
value. Further, SFAS No. 144 eliminates the requirement to allocate
goodwill to long-lived assets to be tested for impairment, describes a
probability-weighted cash flow estimation approach to deal with situations
in which alternative courses of action to recover the carrying amount of a
long-lived asset are under consideration or a range is estimated for the
amount of possible future cash flows, and establishes a "primary-asset"
approach to determine the cash flow estimation period. For long-lived
assets to be disposed of other than by sale (e.g. assets abandoned,
exchanged or distributed to owners in a spinoff), SFAS No. 144 requires
that such assets be considered held and used until disposed of. Further, an
impairment loss should be recognized at the date an asset is exchanged for
a similar productive asset or distributed to owners in a spinoff if the
carrying amount exceeds its fair value.

- -11-

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

RESMED INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(3) Accounting Changes, Continued
-------------------------------

For long-lived assets to be disposed of by sale, SFAS No. 144 retains the
requirement of SFAS No. 121 to measure a long-lived asset classified as
held for sale at the lower of its carrying amount or fair value less cost
to sell and to cease depreciation. Discontinued operations would no longer
be measured on a net realizable value basis, and future operating losses
would no longer be recognized before they occur. SFAS No. 144 broadens the
presentation of discontinued operations to include a component of an
entity, establishes criteria to determine when a long-lived asset is held
for sale, prohibits retroactive reclassification of the asset as held for
sale at the balance sheet date if the criteria are met after the balance
sheet date but before issuance of the financial statements, and provides
accounting guidance for the reclassification of an asset from "held for
sale" to "held and used". The provisions of SFAS No. 144 are effective for
fiscal years beginning after December 15, 2001. The Company has not yet
determined the impact, if any, of adoption of SFAS No. 144.

(4) Inventories
-----------

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



September 30, June 30,
2001 2001

Raw materials. . $ 7,505 $ 7,584
Work in progress 654 98
Finished goods . 24,288 22,312
$ 32,447 $ 29,994
-------------- ---------


(5) 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 table below presents other comprehensive (income) loss:


Foreign Unrealized Accumulated Other
Currency Gains on Comprehensive
(In thousands) Items Securities Loss
---------- ----------- -------------------

Beginning balance, July 1, 2001 . . $ 29,572 - $ 29,572
Current period change . . . . . . . (2,039) (363) (2,402)
---------- ----------- -------------------
Ending balance, September 30, 2001. $ 27,533 (363) $ 27,170
========== =========== ===================


- -12-

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

RESMED INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(5) Comprehensive Income, Continued
---------------------------------

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 September 30, 2001 and June 30, 2001 consisted of
foreign currency translation adjustments with net debit balances of $27.5
million and $29.6 million, respectively and unrealized gains on securities
with net credit balance of $363,000 (net of tax of $187,000) and zero,
respectively.

(6) Goodwill and Other Intangible Assets
----------------------------------------

As described in Note 3, the Company adopted SFAS 142 on July 1, 2001. The
following table reconciles the prior year's reported operating income and
net income to their respective pro-forma balances adjusted to exclude
goodwill amortization expense which is no longer recorded under SFAS 142.


Three months ended
September 30
(In US$thousands, except per share amounts) 2001 2000
------------------- ------

Operating Income:
- -----------------
Reported income from operations . . . . . . $ 13,187 $9,107
Add back: goodwill amortization . . . . . . - 153
------------------- ------
Adjusted income from operations . . . . . . $ 13,187 $9,260
=================== ======

Net Income:
- -----------
Reported Net Income . . . . . . . . . . . . $ 8,538 $6,580
Add back: goodwill amortization after tax . - 153
------------------- ------
Adjusted net income . . . . . . . . . . . . $ 8,538 $6,733
=================== ======

Basic Earnings per share:
- -------------------------
Reported net income . . . . . . . . . . . . $ 0.27 $ 0.21
Goodwill amortization after tax . . . . . . - -
------------------- ------
$ 0.27 $ 0.21
=================== ======

Diluted earning per share:
- --------------------------
Reported net income . . . . . . . . . . . . $ 0.25 $ 0.20
Goodwill amortization after tax . . . . . . - -
------------------- ------
$ 0.25 $ 0.20
=================== ======


- -13-

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

RESMED INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(6) Goodwill and Other Intangible Assets, Continued
----------------------------------------------------

Changes in the carrying amount of goodwill for the three months ended
September 30, 2001, were as follows:




(In US$thousands)
Balance at June 30, 2001. . . . . . . . . $47,870
Foreign currency translation adjustments. 3,502
Balance at September 30, 2001 . . . . . . $51,372
=======


Other intangible assets amounted to $1.6 million (net of accumulated
amortization of $1.1 million) and $1.4 million (net of accumulated
amortization of $1.0 million) at September 30, 2001 and June 30, 2001,
respectively. These intangible assets consist of patents and are amortized
over the estimated useful life of the patent, generally five years. There
are no expected residual values related to these intangible assets.

(7) Commitments and Contingencies
-------------------------------

We are currently engaged in litigation relating to the enforcement and
defense of certain of our patents.

In January 1995, we 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 of
our patents. In February 1995, Respironics filed a complaint in the United
States District Court for the Western District of Pennsylvania against us
seeking a declaratory judgment that Respironics does not infringe claims of
these patents and that our 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, we 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 us reserving the right to reassert the charges in the event of a
favorable ruling on appeal. It is our intention to appeal the
summary judgment rulings after a final judgment in the consolidated
litigation has been entered in the District Court proceedings.

- -14-

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

RESMED INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(7) Commitments and Contingencies
-------------------------------

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 our
trademarks and patents. An initial decision has been made in favor of MAP.
Hofrichter has filed an appeal and have sought Court determination that the
MAP patents do not apply to certain Hofrichter products.

While we are prosecuting the above actions, there can be no assurance that
we will be successful.


- -15-

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

RESMED INC AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS

NET REVENUE
- ------------
Net revenue increased for the three months ended September 30, 2001 to $46.1
million from $31.1million for the three months ended September 30, 2000, an
increase of $15.0 million or 48%. The increase in net revenue is primarily
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 of MAP Medizin-Technologie GmbH "MAP" which contributed net revenue
of $6.2 million. Net revenue in North and Latin America increased to $21.6
million from $17.4 million for the quarter and in Europe increased to $19.7
million from $9.8 million for the quarter.

GROSS PROFIT
- -------------
Gross profit increased for the three months ended September 30, 2001 to $30.8
million from $21.1 million for the three months ended September 30, 2000, an
increase of $9.7 million or 46%. Gross profit as a percentage of net revenue
for the quarter ended September 30, 2001 was 67%, broadly consistent with the
September 30, 2000 quarter of 68%.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- ------------------------------------------------
Selling, general and administrative expenses increased for the three months
ended September 30, 2001 to $14.3 million from $9.6 million for the three months
ended September 30, 2000, an increase of $4.7 million or 49%. As a percentage
of net revenue, selling, general and administrative expenses for the three
months ended September 30, 2001 was 31% consistent with the quarter ended
September 30, 2000. The increase in gross selling, general and administrative
expenses was due primarily to an expansion of selling and administration
personnel associated with the growth of company operations, including S, G & A
expenses associated with MAP's operations.

RESEARCH AND DEVELOPMENT EXPENSES
- ------------------------------------
Research and development expenses increased for the three months ended September
30, 2001 to $3.4 million from $2.4 million or 41%. As a percentage of net
revenue, research and development expenses for the three months ended September
30, 2001 decreased to 7.3% from 7.7% for the period ended September 30, 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; also included is research and
development expenditure undertaken by MAP.

OTHER INCOME (EXPENSES), NET
- -------------------------------
Other income (expenses), net decreased for the three months ended September 30,
2001 to net expense of $0.6 million from net income of $0.9 million for the
three months ended September 30, 2000. The increase in other expense, net over
the three-month period primarily reflects increased interest expense associated
with the convertible debt issue in June 2001, partially offset by interest
income from cash and marketable securities and foreign currency gains.

- -16

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

RESMED INC AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS

INCOME TAXES
- -------------
The Company's effective income tax rate for the three months ended September 30,
2001 declined to approximately 32.1% from approximately 34.1% for the three
months ended September 30, 2000. The lower tax rate was primarily due to the
lowering of the corporate tax rate in Australia from 34% to 30%, effective from
July 1, 2001.

LIQUIDITY AND CAPITAL RESOURCES
- ----------------------------------
The Company had cash and cash equivalents and marketable securities
available-for-sale of approximately $143.5 million and $102.8 million, at
September 30, 2001 and June 30, 2001, respectively. The Company's working
capital approximated $186.7 million and $144.3 million, at September 30, 2001
and June 30, 2001, respectively.

During the three months ended September 30, 2001, the Company's operations
generated $11.2 million cash from operations, primarily as a result of increased
profit from operations and improvement in working capital balances. During the
three months ended September 30, 2000 approximately $6.3 million of cash was
provided by operations.

The Company's capital expenditures for the three month periods ended September
30, 2001 and 2000 aggregated $2.7 million and $19.2 million, respectively. The
majority of the expenditures in the three-month period ended September 30, 2001
related to the rollout of the Oracle ERP platform and to a lesser extent,
production tooling and equipment. The majority of the expenditure in the
three-month period ended September 30, 2000 related to the $17.2 million
purchase of the land and buildings of the Company's US headquarters in Poway,
California. As a result of these capital expenditures, the Company's September
30, 2001 balance sheet reflects net property, plant and equipment of
approximately $54.9 million at September 30, 2001, compared to $55.1 million at
June 30, 2001.

On July 3, 2001, the Company received $30.0 million in over allotments for its
4% convertible subordinated notes issue. This increased the total amount of
convertible subordinated notes issued to $180.0 million.

On October 25, 2001, the Company purchased a 30-acre site at Norwest Business
Park, located northwest of Sydney, Australia. The land cost, staged over an
18-month period, is approximately US$21 million and we expect the first
building, a manufacturing facility, to be operational on this site in early
2003. New R&D and office facilities will follow by mid-2004. We estimate that
the building costs will be approximately US$22.5 million and anticipate that
this cost will be eventually more than half offset by the sale of the Company's
existing Sydney facility. The purchase will be funded from existing cash
reserves.

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 sales 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 and cash generated from operations.
- -17


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

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 expenditures. 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 Euro's and the 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 Company does not use foreign currency forward exchange contracts or
purchased currency options for trading purposes.
The table below provides information about the Company's foreign currency
derivative financial instruments 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 September 30, 2001. The table presents the
notional amounts and weighted average exchange rates by 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 the options contracts.



- --------------------------------------------------------------------------------------------------------------------
Fair Value
Assets / (Liabilities)
(In US$ thousands) 2002 2003 Total September 30 June 30
2001 2001

Foreign Exchange Call
Options

(Receive AUS$/Pay US$)
Option amount . . . . . $ 147,000 $ 18,000 $ 165,000 $278 $577
Average contractual
exchange rate . . . . . AUS $1 = USD 0.593 AUS $1 = USD 0.560 AUS $1 = USD 0.589

(Receive AUS$/Pay Euro)
Option amount . . . . . $ 8,187 $ 8,126 $ 16,313 $205 $20
Average contractual
exchange rate . . . . . AUS $1 = Euro 0.632 AUS $1 = Euro 0.574 AUS $1 = Euro 0.6034
- --------------------------------------------------------------------------------------------------------------------



INTEREST RATE RISK
- --------------------
We are exposed to risk associated with changes in interest rates affecting the
return on investments.
At September 30, 2001, we maintained a portion of our cash and cash equivalents
in financial instruments with original maturities of three months or less. We
maintain a short-term investment portfolio containing financial instruments in
which the majority of funds invested have original maturities of greater than
three months but less than twelve months. The financial instruments,
principally comprised of corporate obligations, are subject to interest rate
risk and will decline in value if interest rates increase.
A hypothetical 100 basis point change in interest rates during the three months
ended September 30, 2001, would have resulted in approximately $0.3 million
change in pre-tax income. In addition, the value of our marketable securities
would change by approximately $0.5 million following a hypothetical 100 basis
point change in interest rates. We do not use derivative financial instruments
in our investment portfolio.
- -18-



PART II - OTHER INFORMATION Items 1-5
- --------------------------------------------------------------------------------

RESMED INC AND SUBSIDIARIES

Item 1 Legal Proceedings
Refer Note 7 to the Condensed Consolidated Financial Statements

Item 2 Changes in Securities and Use of Proceeds
None

Item 3 Defaults Upon Senior Securities
None

Item 4 Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on
November 5, 2001. The holders of 25,734,326 shares of the Company's
stock (approximately 81% of the outstanding shares) were present at
the meeting in person or by proxy. The matters voted upon at the
meeting were (1) to elect two directors, to serve for a three-year
term; (2) to ratify the selection of auditors of the Company for the
fiscal year ending June 30, 2002; and (3) to transact such other
business as may properly come before the meeting.

(1) Mr Michael A Quinn and Dr Christopher Bartlett, nominated by the
Company's Board of Directors, were elected to serve until 2004.
There were no other nominees.

Shares were voted as follows:



NAME. . . . . . . . . . FOR WITHHOLDING VOTE FOR
Mr Michael A Quinn. . . 22,398,180 113,917
Dr Christopher Bartlett 22,397,980 114,117


(2) The selection of KPMG LLP as independent public accountants for
the 2002 fiscal year was ratified: affirmative votes, 22,500,978
shares; negative votes 37,081 shares.

(3) There was no other business transacted at the meeting.


Item 5 Other Information
None

- -19-


PART II - OTHER INFORMATION Item 6
- --------------------------------------------------------------------------------
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

- -20-