October 25, 2019 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

______________________________________________________________________________________________

FORM 10-Q

______________________________________________________________________________________________

(Mark One)


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019


¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-15317

______________________________________________________________________________________________

ResMed Inc.

(Exact name of registrant as specified in its charter)

______________________________________________________________________________________________

Delaware

(State or other jurisdiction of incorporation or organization)

98-0152841

(I.R.S. Employer Identification No.)

9001 Spectrum Center Blvd.

San Diego, CA 92123

United States of America

(Address of principal executive offices)

(858) 836-5000

(Registrant’s telephone number, including area code)

______________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.004 per share

RMD

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller Reporting Company	¨
Emerging Growth Company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes ¨ No ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At October 21, 2019, there were 143,786,123 shares of Common Stock ($0.004 par value) outstanding. This number excludes 41,836,234 shares held by the registrant as treasury shares.

Table of Contents

RESMED INC. AND SUBSIDIARIES

Index


Part I	Financial Information	3

Item 1	Financial Statements	3

	Condensed Consolidated Balance Sheets (Unaudited)	3

	Condensed Consolidated Statements of Income (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5

	Condensed Consolidated Statements of Changes in Equity (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows (Unaudited)	8

	Notes to the Condensed Consolidated Financial Statements (Unaudited)	9

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4	Controls and Procedures	30

Part II	Other Information	31

Item 1	Legal Proceedings	31

Item 1A	Risk Factors	31

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3	Defaults Upon Senior Securities	32

Item 4	Mine Safety Disclosures	32

Item 5	Other Information	32

Item 6	Exhibits	33

	Signatures	34

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

Item 1. Financial Statements

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

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



	September 30, ‎2019		June 30, ‎2019
Assets
Current assets:
Cash and cash equivalents	$	172,154	$	147,128
Accounts receivable, net of allowance for doubtful accounts of $24,492 and $25,171 ‎ at September 30, 2019 and June 30, 2019, respectively		493,836		528,484
Inventories (note 3)		357,033		349,641
Prepaid expenses and other current assets		138,075		120,113
Total current assets		1,161,098		1,145,366
Non-current assets:
Property, plant and equipment, net (note 3)		382,970		387,460
Operating lease right-of-use assets (note 9)		81,650		-
Goodwill (note 4)		1,856,427		1,856,449
Other intangible assets, net (note 3)		496,847		521,950
Deferred income taxes		34,232		45,478
Prepaid taxes and other non-current assets		141,334		150,979
Total non-current assets		2,993,460		2,962,316
Total assets	$	4,154,558	$	4,107,682
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	109,742	$	115,725
Accrued expenses		231,253		266,359
Operating lease liabilities, current (note 9)		19,548		-
Deferred revenue		86,954		88,667
Income taxes payable (note 6)		90,968		73,248
Short-term debt, net (note 8)		11,992		11,992
Total current liabilities		550,457		555,991
Non-current liabilities:
Deferred revenue		82,668		81,143
Deferred income taxes		15,177		11,380
Operating lease liabilities, non-current (note 9)		65,838		-
Other long-term liabilities		2,047		2,058
Long-term debt, net (note 8)		1,208,210		1,258,861
Long-term income taxes payable (note 6)		112,910		126,056
Total non-current liabilities		1,486,850		1,479,498
Total liabilities		2,037,307		2,035,489
Commitments and contingencies (note 12)
Stockholders’ equity: (note 10)
Preferred stock, $0.01 par value, 2,000,000 shares authorized; none issued		-		-
Common stock, $0.004 par value, 350,000,000 shares authorized; 185,605,478 issued and 143,769,244 outstanding at September 30, 2019 and 185,491,064 issued and 143,654,830 outstanding at June 30, 2019		575		575
Additional paid-in capital		1,530,011		1,511,473
Retained earnings		2,500,506		2,436,410
Treasury stock, at cost, 41,836,234 shares at September 30, 2019 and 41,836,234 shares at June 30, 2019		(1,623,256)		(1,623,256)
Accumulated other comprehensive loss		(290,585)		(253,009)
Total stockholders’ equity		2,117,251		2,072,193
Total liabilities and stockholders’ equity	$	4,154,558	$	4,107,682

See the accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)

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



	Three Months Ended ‎September 30,
	2019		2018
Net revenue	$	681,056	$	588,279
Cost of sales (excluding amortization of acquired intangible assets)		276,001		245,186
Gross profit		405,055		343,093
Operating expenses:
Selling, general and administrative		167,440		147,303
Research and development		48,033		38,791
Amortization of acquired intangible assets		18,480		12,867
Total operating expenses		233,953		198,961
Income from operations		171,102		144,132
Other income (loss), net:
Interest income		449		922
Interest expense		(10,992)		(3,708)
Loss attributable to equity method investments (note 5)		(6,863)		-
Other, net		(3,109)		(2,465)
Total other income (loss), net		(20,515)		(5,251)
Income before income taxes		150,587		138,881
Income taxes		30,439		33,144
Net income	$	120,148	$	105,737
Basic earnings per share (note 11)	$	0.84	$	0.74
Diluted earnings per share (note 11)	$	0.83	$	0.73
Dividend declared per share	$	0.39	$	0.37
Basic shares outstanding (000's)		143,719		142,668
Diluted shares outstanding (000's)		145,099		144,030

‎

See the accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In US$ and in thousands)



	Three Months Ended ‎September 30,
	2019		2018
Net income	$	120,148	$	105,737
Other comprehensive income (loss):
Foreign currency translation (loss) gain adjustments		(37,576)		(12,872)
Comprehensive income	$	82,572	$	92,865

See the accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(In US$ and in thousands)



	Common Stock			Additional ‎Paid-in		Treasury Stock			Retained		Accumulated ‎Other ‎ Comprehensive
	Shares	Amount		Capital		Shares	Amount		Earnings		Income (Loss)		Total
Balance, June 30, 2019	185,491	$	575	$	1,511,473	(41,836)	$	(1,623,256)	$	2,436,410	$	(253,009)	$	2,072,193
Common stock issued on exercise of options	110		-		5,609	-		-		-		-		5,609
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	4		-		(327)	-		-		-		-		(327)
Stock-based compensation costs	-		-		13,256	-		-		-		-		13,256
Other comprehensive income	-		-		-	-		-		-		(37,576)		(37,576)
Net income	-		-		-	-		-		120,148		-		120,148
Dividends declared	-		-		-	-		-		(56,052)		-		(56,052)
Balance, September 30, 2019	185,605	$	575	$	1,530,011	(41,836)	$	(1,623,256)	$	2,500,506	$	(290,585)	$	2,117,251

‎

See the accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(In US$ and in thousands)


	Common Stock			Additional Paid-in		Treasury Stock			Retained		Accumulated Other Comprehensive
	Shares	Amount		Capital		Shares	Amount		Earnings		Income (Loss)		Total
Balance, June 30, 2018	184,316	$	571	$	1,450,821	(41,636)	$	(1,600,412)	$	2,432,328	$	(224,328)	$	2,058,980
Common stock issued on exercise of options	12		-		513	-		-		-		-		513
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	2		-		(141)	-		-		-		-		(141)
Treasury stock purchases	-		(1)		-	(200)		(22,844)		-		-		(22,845)
Stock-based compensation costs	-		-		12,476	-		-		-		-		12,476
Other comprehensive income	-		-		-	-		-		-		(12,872)		(12,872)
Net income	-		-		-	-		-		105,737		-		105,737
Cumulative effect of change in accounting ‎standards	-		-		-	-		-		(188,799)		-		(188,799)
Dividends declared	-		-		-	-		-		(52,793)		-		(52,793)
Balance, September 30, 2018	184,330	$	570	$	1,463,669	(41,836)	$	(1,623,256)	$	2,296,473	$	(237,200)	$	1,900,256

See the accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In US$ and in thousands)



	Three Months Ended ‎September 30,
	2019		2018
Cash flows from operating activities:
Net income	$	120,148	$	105,737
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		37,954		30,424
Amortization of right-of-use-assets		5,963		-
Stock-based compensation costs		13,256		12,477
Loss attributable to equity method investments (note 5)		6,863		-
Impairment of equity investments (note 5)		2,590		1,711
Changes in fair value of business combination contingent consideration		(8)		(183)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable		28,286		20,342
Inventories		(14,204)		(15,661)
Prepaid expenses, net deferred income taxes and other current assets		(8,407)		(7,703)
Accounts payable, accrued expenses and other		(30,078)		(99,025)
Net cash provided by operating activities		162,363		48,119
Cash flows from investing activities:
Purchases of property, plant and equipment		(22,671)		(12,994)
Patent registration costs		(2,069)		(2,611)
Business acquisitions, net of cash acquired (note 13)		-		(126,439)
Purchases of investments (note 5)		(2,741)		(2,467)
Payments on maturity of foreign currency contracts		(5,743)		(3,678)
Net cash used in investing activities		(33,224)		(148,189)
Cash flows from financing activities:
Proceeds from issuance of common stock, net		5,609		513
Taxes paid related to net share settlement of equity awards		(326)		(124)
Purchases of treasury stock		-		(19,399)
Payments of business combination contingent consideration		(302)		(240)
Proceeds from borrowings, net of borrowing costs		565,000		303,000
Repayment of borrowings		(614,003)		(86,133)
Dividends paid		(56,052)		(52,793)
Net cash provided by (used in) financing activities		(100,074)		144,824
Effect of exchange rate changes on cash		(4,039)		(3,267)
Net increase in cash and cash equivalents		25,026		41,487
Cash and cash equivalents at beginning of period		147,128		188,701
Cash and cash equivalents at end of period	$	172,154	$	230,188
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds	$	30,937

Form: 10-Q

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