Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

January 31, 2020

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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 December 31, 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 January 27, 2020, there were 144,616,947 shares of Common Stock ($0.004 par value) outstanding. This number excludes 41,836,234 shares held by the registrant as treasury shares. 


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

31

Item 4

Controls and Procedures

33

Part II

Other Information

34

Item 1

Legal Proceedings

34

Item 1A

Risk Factors

34

  

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

34

Item 3

Defaults Upon Senior Securities

35

Item 4

Mine Safety Disclosures

35

  

Item 5

Other Information

35

Item 6

Exhibits

36

Signatures

37

 

2


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)

December 31,
2019

June 30,
2019

Assets

Current assets:

Cash and cash equivalents

$

204,095 

$

147,128 

Accounts receivable, net of allowance for doubtful accounts of $26,854 and $25,171
  at December 31, 2019 and June 30, 2019, respectively

528,039 

528,484 

Inventories (note 3)

377,784 

349,641 

Prepaid expenses and other current assets

190,567 

120,113 

Total current assets

1,300,485 

1,145,366 

Non-current assets:

Property, plant and equipment, net (note 3)

408,364 

387,460 

Operating lease right-of-use assets (note 9)

96,745 

-

Goodwill (note 4)

1,870,647 

1,856,449 

Other intangible assets, net (note 3)

480,861 

521,950 

Deferred income taxes

32,889 

45,478 

Prepaid taxes and other non-current assets

163,948 

150,979 

Total non-current assets

3,053,454 

2,962,316 

Total assets

$

4,353,939 

$

4,107,682 

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

114,322 

$

115,725 

Accrued expenses

217,847 

266,359 

Operating lease liabilities, current (note 9)

20,038 

-

Deferred revenue

92,950 

88,667 

Income taxes payable (note 6)

42,904 

73,248 

Short-term debt, net (note 8)

11,984 

11,992 

Total current liabilities

500,045 

555,991 

Non-current liabilities:

Deferred revenue

86,140 

81,143 

Deferred income taxes

27,709 

11,380 

Operating lease liabilities, non-current (note 9)

79,458 

-

Other long-term liabilities

2,062 

2,058 

Long-term debt, net (note 8)

1,287,509 

1,258,861 

Long-term income taxes payable (note 6)

112,910 

126,056 

Total non-current liabilities

1,595,788 

1,479,498 

Total liabilities

2,095,833 

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;
  186,434,945 issued and 144,598,711 outstanding at December 31, 2019 and
  185,491,064 issued and 143,654,830 outstanding at June 30, 2019

578 

575 

Additional paid-in capital

1,521,992 

1,511,473 

Retained earnings

2,604,910 

2,436,410 

Treasury stock, at cost, 41,836,234 shares at December 31, 2019 and June 30, 2019

(1,623,256)

(1,623,256)

Accumulated other comprehensive loss

(246,118)

(253,009)

Total stockholders’ equity

2,258,106 

2,072,193 

Total liabilities and stockholders’ equity

$

4,353,939 

$

4,107,682 

 

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

3


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
December 31,

Six Months Ended
December 31,

2019

2018

2019

2018

Net revenue

$

736,157 

$

651,100 

$

1,417,213 

$

1,239,380 

Cost of sales

296,975 

267,369 

572,976 

512,556 

Amortization of acquired intangible assets

12,052 

9,199 

25,488 

16,154 

Total cost of sales

309,027 

276,568 

598,464 

528,710 

Gross profit

427,130 

374,532 

818,749 

710,670 

Selling, general and administrative

171,422 

161,579 

338,862 

308,881 

Research and development

49,943 

43,111 

97,976 

81,902 

Amortization of acquired intangible assets

8,556 

6,641 

13,599 

12,553 

Litigation settlement expenses

(600)

-

(600)

-

Acquisition related expenses

-

6,123 

-

6,123 

Total operating expenses

229,321 

217,454 

449,837 

409,459 

Income from operations

197,809 

157,078 

368,912 

301,211 

Other income (loss), net:

Interest income

202 

678 

650 

1,600 

Interest expense

(10,220)

(7,487)

(21,212)

(11,195)

Loss attributable to equity method investments (note 5)

(6,924)

(3,375)

(13,786)

(3,375)

Other, net

(2,115)

(621)

(5,225)

(3,086)

Total other income (loss), net

(19,057)

(10,805)

(39,573)

(16,056)

Income before income taxes

178,752 

146,273 

329,339 

285,155 

Income taxes

18,198 

21,634 

48,637 

54,778 

Net income

$

160,554 

$

124,639 

$

280,702 

$

230,377 

Basic earnings per share (note 11)

$

1.11 

$

0.87 

$

1.95 

$

1.61 

Diluted earnings per share (note 11)

$

1.10 

$

0.86 

$

1.93 

$

1.60 

Dividend declared per share

$

0.39 

$

0.37 

$

0.78 

$

0.74 

Basic shares outstanding (000's)

144,212 

142,923 

143,966 

142,796 

Diluted shares outstanding (000's)

145,575 

144,349 

145,479 

144,418 

 


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

4


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
December 31,

Six Months Ended
December 31,

2019

2018

2019

2018

Net income

$

160,554 

$

124,639 

$

280,702 

$

230,377 

Other comprehensive income (loss):

Foreign currency translation (loss) gain adjustments

44,467 

(13,117)

6,891 

(25,989)

Comprehensive income

$

205,021 

$

111,522 

$

287,593 

$

204,388 

 

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

5


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 

Common stock issued on exercise of options

117 

-

6,498 

-

-

-

-

6,498 

Common stock issued on vesting of restricted stock units, net of shares withheld for tax

576 

3 

(40,764)

-

-

-

-

(40,761)

Common stock issued on employee stock purchase plan

137 

-

12,190 

-

-

-

-

12,190 

Treasury stock purchases

-

-

-

-

-

-

-

Stock-based compensation costs

-

-

14,057 

-

-

-

-

14,057 

Other comprehensive income

-

-

-

-

-

-

44,467 

44,467 

Net income

-

-

-

-

-

160,554 

-

160,554 

Dividends declared

-

-

-

-

-

(56,150)

-

(56,150)

Balance, December 31, 2019

186,435 

$

578 

$

1,521,992 

(41,836)

$

(1,623,256)

$

2,604,910 

$

(246,118)

$

2,258,106 


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

6


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)