Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

May 15, 1997

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

Published on May 15, 1997





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, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSACTION PERIOD FROM ___________ TO
_____________

Commission file number: 0-26038


ResMed Inc.
(Exact name of registrant as specified in its charter)


Delaware 98-0152841
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)



5744 Pacific Center Boulevard
Suite 311
San Diego CA 92121
United States Of America
(Address of principal executive offices)

619 622 2040
(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, 1997, there were 7,193,777 shares of Common Stock ($0.004 par
value) outstanding.


INDEX





PART I FINANCIAL INFORMATION


Page

Item 1 Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1997 3
(unaudited) and June 30, 1996

Unaudited Condensed Consolidated Statements of Income for 4
the Three Months Ended March 31, 1997 and 1996 and the
Nine Months ended March 31, 1997 and 1996

Unaudited Condensed Consolidated Statements of Cash Flows 5
for the Nine Months Ended March 31, 1997 and 1996

Notes to the Unaudited Condensed Consolidated Financial 6
Statements

Item 2 Management's Discussion and Analysis of Financial Condition 11
and Results of Operations







PART II OTHER INFORMATION


Item 1 Legal Proceedings 14

Item 2 Changes in Securities 14

Item 3 Defaults Upon Senior Securities 14

Item 4 Submission of Matters to a Vote of Security Holders 14

Item 5 Other Information 14

Item 6 Exhibits and Reports on Form 8-K 14

SIGNATURES 16











- -2-



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements




RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets
(in US$thousands, except per share data)


March 31, June 30,
------------- ------------
1997 1996
------------- ------------
Assets (unaudited)
Current assets:
Cash and cash equivalents 8,635 5,510
Marketable securities - available for sale 18,667 18,021
Accounts receivable, net of allowance of $188 at March 31, 1997
and $175 at June 30, 1996 7,794 6,252
Government grants receivable 772 915
Inventories 5,165 6,134
Prepaid expenses and other current assets 2,121 1,014
___________ ___________
Total current assets 43,154 37,846

Property, plant and equipment, net 4,407 3,284
Patents, net of accumulated amortization of $319 at
March 31,1997 and $260 at June 30, 1996 258 217
Deferred income taxes 29 27
Goodwill, net 4,586 4,309
Other assets 1,209 1,263
___________ ___________
Total assets 53,643 46,946
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 1,730 2,421
Accrued expenses 5,021 2,815
Income taxes payable 2,601 1,857
Current portion of long-term debt 289 289
___________ ___________
Total current liabilities 9,641 7,382

Long-term debt, less current portion 431 578
___________ ___________
Total liabilities 10,072 7,960
___________ ___________
Stockholders' equity:
Preferred stock, $0.01 par value, 2,000,000 shares
authorized; none issued - -
Common Stock $0.004 par value; 15,000,000 shares authorized;
issued and outstanding 7,193,777 at March 31, 1997
7,172,408 at June 30, 1996 29 29
Additional paid-in capital 29,551 29,407
Retained earnings 14,523 9,103
Foreign currency translation adjustment (532) 447
___________ ___________
43,571 38,986
___________ ___________
Commitments and contingencies
___________ ___________
Total liabilities and stockholders' equity 53,643 46,946
=========== ===========


See accompanying notes to condensed consolidated financial statements.



- -3-

RESMED INC. AND SUBSIDIARIES




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

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

1997 1996 1997 1996
------------------- ----------------- ------------- -------------

Net revenue 12,468 9,360 35,196 23,959
Cost of sales 5,120 4,774 14,685 11,990
____________ ____________ ____________ ____________
Gross profit 7,348 4,586 20,511 11,969
____________ ____________ ____________ ____________

Operating expenses
Selling, general and administrative
expenses 4,064 2,902 12,120 7,501
Research and development expenses 1,065 640 2,747 2,011
____________ ____________ ____________ ____________
Total operating expenses 5,129 3,542 14,867 9,512
____________ ____________ ____________ ____________
Income from operations 2,219 1,044 5,644 2,457
____________ ____________ ____________ ____________

Other income, net:
Interest income, net 307 283 851 814
Government grants 41 129 219 434
Other income, net 266 353 1,299 594
____________ ____________ ____________ ____________
Total other income, net 614 765 2,369 1,842
____________ ____________ ____________ ____________

Income before income taxes 2,833 1,809 8,013 4,299
Income taxes 935 602 2,593 1,290
____________ ____________ ____________ ____________
Net income 1,898 1,207 5,420 3,009
============ ============ ============ ============

Net income per common and common
equivalent share:
Primary $ 0.26 $ 0.17 $ 0.74 $ 0.42
Assuming full dilution $ 0.26 $ 0.17 $ 0.74 $ 0.42

Weighted average shares per common
and common equivalent outstanding:
Primary 7,365 7,193 7,327 7,179
Assuming full dilution 7,366 7,227 7,358 7,201



See accompanying notes to condensed consolidated financial statements.



- -4-

RESMED INC. AND SUBSIDIARIES




Unaudited Condensed Consolidated Statements of Cash Flows
(in US$thousands)

Nine Months Ended
March 31,
------------------


1997 1996
------------------ -------------

Cash flows from operating activities:
Net income 5,420 3,009
____________ ____________
Adjustment to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,786 743
Provision for service warranties 63 (8)
Deferred income taxes 2 11
Foreign currency options (935) (493)
Changes in operating assets and liabilities net of effects
from acquisitions:
Accounts receivable, net (1,586) (1,805)
Government grants 139 (48)
Inventories 577 (133)
Prepaid expenses and other current assets (1,139) (585)
Accounts payable, accrued expenses and income tax payable 2,354 270
____________ ____________
Net cash provided by operating activities 6,681 961
____________ ____________
Cash flows used in investing activities:
Purchases of property, plant and equipment (2,594) (931)
Purchases of patents (105) (44)
Payment business acquisitions (1,035) (6,517)
Proceeds from sale of non trading investments 1,243 -
Loans receivable (225) -
Purchase of non-trading investments - (350)
Purchases of marketable securities - available for sale (40,794) (76,392)
Proceeds from sale of marketable securities - available for sale 40,148 78,821
____________ ____________
Net cash used in investing activities (3,362) (5,413)
____________ ____________
Cash flows provided by (used in) financing activities:
Proceeds from issuance of common stock 143 4,991
Repayment of long term debt (146) -
____________ ____________
Net cash provided by (used in) financing activities (3) 4,991
____________ ____________
Effect of exchange rate changes on cash (191) 214
____________ ____________
Net increase in cash and cash equivalents 3,125 753
____________ ____________
Cash and cash equivalents at beginning of period 5,510 3,256
____________ ____________
Cash and cash equivalents at end of period 8,635 4,009
============ ============
Supplemental disclosure of cash flow information:
Income taxes paid 1,755 945
Interest paid - -


See accompany notes to condensed consolidated financial statements.



- -5-


RESMED INC. AND SUBSIDIARIES

NOTES TO THE 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 ResMed Holdings Ltd. (RHL), a company resident in
Australia. RHL 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 and Europe.

The accompanying unaudited 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 March 31, 1997 and the nine months ended March 31,1997 are not
necessarily indicative of the results that may be expected for the year ended
June 30, 1997.

(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.

(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-

RESMED INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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 is recorded at cost. Depreciation expense
is computed using the straight-line method over the estimated useful lives of
the assets, generally two to 10 years. Assets held under capital leases are
recorded at the lower of the net present value of the minimum lease payments
or the fair value of the leased asset at the inception of the lease.
Amortization expense is computed using the straight-line method over the
shorter of the estimated useful lives of the assets or the period of the
related lease. 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) 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 of the Company's proprietary positive airway pressure
technology and to assist development of export markets. Grants have been
recognized in the amount of $41,000 and $129,000 for the three month period
ended March 31, 1997 and 1996, respectively and $219,000 and $434,000 for the
nine month periods ended March 31, 1997 and 1996, respectively. Subsequent to
June 30, 1996 the Company ceased to qualify for the payment of grants for the
development of export markets.

(h) Foreign Currency:

The consolidated financial statements of the Company's non-U.S.
subsidiaries are translated into U.S. dollars for financial reporting
purposes. Assets and liabilities of non-U.S. subsidiaries whose functional
currencies are other than the U.S. dollar are translated at period end
exchange rates, revenue and expense transactions are translated at average
exchange rates for the period. Cumulative translation effects are reflected in
stockholders' equity. Gains and losses on transactions, denominated in other
than the functional currency of the entity, are reflected in operations.

(i) Research and Development:

All research and development costs are expensed in the period incurred.
- -7-

RESMED INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(2) Summary of Significant Accounting Policies, Continued

(j) Net Income per Common and Common Equivalent Share:

Primary net income per common and common equivalent share and net income
per common and common equivalent share assuming full dilution are computed
using the weighted average number of shares outstanding, adjusted for the
incremental shares attributed to outstanding options to purchase common stock
as determined under the treasury stock method.

(k) 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, accounts payable and
long-term debt, approximate their fair value. The Company does not hold or
issue financial instruments for trading purposes.

The following table presents carrying amounts and estimated fair values
of the Company's financial instruments at March 31, 1997 and June 30, 1996.
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.





March 31, 1997 June 30, 1996
---------------- -------------

Carrying Fair Carrying Fair
Amount Value Amount Value
------------ ---------- ---------- --------
(US$in thousands)
Financial assets
Cash and cash equivalents $ 8,635 8,635 5,510 5,510
Marketable securities -
available for sale 18,667 18,667 18,021 18,021
Accounts receivable, net 7,794 7,794 6,252 6,252
Government grants 772 772 915 915
Other assets 1,209 1,209 1,263 1,263
Financial liabilities
Accounts payable 1,730 1,730 2,421 2,421
Long - term debt 720 720 867 867




Carrying amounts shown in the table are included in the statement of
financial position under the indicated captions.





- -8-

RESMED INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(2) Summary of Significant Accounting Policies, Continued

(l) Foreign Exchange Risk Management:

The Company enters into various types of foreign exchange contracts in
managing its foreign exchange risk, including derivative financial instruments
encompassing forward exchange contracts and foreign currency options.

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, Pound Sterling and
Deutschmarks. The terms of such foreign exchange contracts generally do not
exceed three years.

Premiums to enter certain foreign currency options are included in other
assets and are amortized over the period of the agreement in the consolidated
statement of income against other income, net. At March 31, 1997 unamortized
premiums amounted to $805,398.

Unrealized gains or losses are recognized as incurred in the statement of
financial position 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.

The Company is exposed to credit-related losses in the event of
non-performance by counterparts to financial instruments, but it does not
expect any counterparts to fail to meet their obligations given their high
credit ratings. The credit exposure of foreign exchange options is
represented by the fair value of options with a positive fair value at the
reporting date.

At March 31, 1997 the Company held foreign currency option contracts with
notional amounts totaling $25,227,000 to hedge foreign currency items. These
contracts mature at various dates prior to March 1999.

(m) Income Taxes:

The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement 109).
Statement 109 requires an asset and liability method of accounting for income
taxes. Under the asset and liability method of Statement 109, 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. Under Statement 109, 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.
- -9-


(3) Inventories




Inventories were comprised of the following at March 31, 1997 and June 30, 1996:


March 31, June 30,
1997 1996
-------- --------

Raw materials $ 1,550 $ 2,088
Work in progress 497 257
Finished goods 3,118 3,789
________ ________
$ 5,165 $ 6,134
======== ========




































- -10-


RESMED INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Net Revenues

Net revenues increased for the three months ended March 31, 1997 to $12.5
million from $9.4 million for the three months ended March 31, 1996, an
increase of $3.1 million or 33%. For the nine month period ended March 31,
1997 net revenues increased to $35.2 million from $24.0 million in the nine
month period ended March 31, 1996 an increase of $11.2 million or 47%. Both
the three month and nine month increases in net revenues were primarily
attributable to an increase in unit sales of the Company's flow generators and
accessories in North America and Europe. In fiscal 1997 net revenues in North
America increased to $5.4 million from $4.5 million for the quarter, and to
$14.7 million from $12.1 million for the nine month period ended March 31. In
Europe net revenue increased to $5.2 million from $3.6 million for the
quarter, and to $15.8 million from $8.0 million for the nine month period
ended March 31, respectively.

Gross Profit

Gross profit increased for the three months ended March 31, 1997 to $7.4
million from $4.6 million for the three months ended March 31, 1996, an
increase of $2.8 million or 60%. Gross profit as a percentage of net revenues
increased for the quarter ended March 31, 1997 to 59% from 49% in three months
ended March 31, 1996. These increases resulted primarily from increased unit
sales of higher margin products.

For the nine month period ended March 31, 1997 gross profit also increased to
$20.5 million from $12.0 million in the same period of fiscal 1996 an increase
of $8.5 million or 71%. Gross profit as a percentage of net revenues
increased for the nine month period ended March 31, 1997 to 58% from 50%
achieved for the nine months ended March 31, 1996. These increases also
resulted from increased unit sales of higher margin products and strong
European sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased for the three months
ended March 31, 1997 to $4.1 million from $2.9 million for the three months
ended March 31, 1996, an increase of $1.2 million or 40%. As a percentage of
net revenues, selling, general and administrative expenses increased to 33%
for the quarter ended March 31, 1997 from 31% for the three months ended March
31, 1996. The increase in gross selling, general and administrative expenses
was due to an increase from 90 to 103 in the number of sales and
administrative personnel, an increase in legal fees from $129,000 to $331,000
associated, with ongoing legal action (refer Part II Item 1) and other
expenses related to the increase in Company sales.

Selling, general and administrative expenses for the nine months ended March
31, 1997 also increased to $12.1 million from $7.5 million for the nine months
ended March 31, 1996, an increase of $4.6 million or 62%. As a percentage of
net revenues, selling, general and administration expenses increased to 34%
for the nine months ended March 31, 1997 from 31% in the nine months ended
March 31, 1996.

The increase in selling, general and administrative expenses was primarily due
to the increase in the number of sales and administrative personnel noted
above, an increase in legal fees from $512,000 to $1,006,000 and other
expenses related to direct distribution activities in Europe.

- -11-

RESMED INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Research and Development Expenses

Research and development expenses increased for the three months ended March
31, 1997 to $1,065,000 from $640,000 for the three months ended March 31,
1996, an increase of $425,000 or 66%. As a percentage of net revenues,
research and development expenses for the three months ended March 31, 1997
increased to 9% from 7% for the period ended March 31, 1996. The increase in
gross research and development expenses was due to an increased use of
consultants as well as increased evaluation and testing procedures incurred to
facilitate development of a number of new products.

For the nine month period ended March 31, 1997 research and development
expenses increased to $2.7 million from $2.0 million for the corresponding
period in fiscal 1996, an increase of $736,000 or 37%. As a percentage of net
revenues, research and development expenses remained static for the nine
months ended March 31, 1997 at 8 %. The increase in gross research and
development expenditure for the nine months reflects additional costs relating
to development and evaluation of new products.

Other Income, Net

Other income, net declined for the three months ended March 31, 1997 to
$614,000 from $765,000 for the three months ended March 31, 1996, a decrease
of $151,000 or 20%. A large proportion of this decrease arose due to a
decline in Government grants income for the three months ended March 31, 1997
to $41,000 from $129,000 for the three months ended March 31, 1996 reflecting
the termination of Australian Federal Government export grants program
effective June 30, 1996. This termination was marginally offset by an
increase in both manufacturing and research activity for which the Company
receives grant revenues.

Other income, net increased for the nine months ended March 31, 1997 to $2.4
million, from $1.8 million for the nine months ended March 31, 1996 an
increase of $527,000 or 29%. The increase in other net income over the nine
month period for the corresponding period in fiscal 1996, primarily reflects
additional foreign currency gains of $1,576,000 relating to foreign currency
option contracts.

Income Taxes

The Company's effective income tax rate for the three months ended March 31,
1997 remained static at approximately 33% in comparison to the three months
ended March 31, 1996 and to 32% from 30% for the nine month period then ended.
The 150% research and development deduction was only available on expenses
incurred up to August 20, 1996. Subsequent to August 20, 1996 the Company
receives a 125% deduction for research and development expenditures incurred
in Australia, due to revised Australian taxation legislation.







- -12-


RESMED INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Liquidity and Capital Resources

As of March 31, 1997 and June 30, 1996, the Company had cash and cash
equivalents and marketable securities available for sale of approximately
$27.3 million and $23.5 million, respectively. The Company's working capital
approximated $33.7 million and $30.5 million, at March 31, 1997 and June 30,
1996, respectively. The increase in working capital balances reflects the
increase in cash generated from operations.

During the nine months ended March 31, 1997, the Company's operations
generated $6.7 million cash from operations, primarily as a result of
increased profit from operations, offset partially by increases in accounts
receivable due to increased sales. During the nine months ended March 31,
1996 approximately $1.0 million of cash was generated by operations.

The Company's capital expenditures for the nine month period ended March 31,
1997 and 1996 aggregated $2.7 million and $1.0 million respectively. The
majority of the expenditures in the nine month period ending March 31, 1997
relates to purchase of computer software and hardware, production tooling and
equipment and, to a lesser extent, office furniture and research and
development equipment. As a result of these capital expenditures, the
Company's March 31, 1997 balance sheet reflects net property plant and
equipment of approximately $4.6 million, compared to $3.3 million at June 30,
1996.

In addition, during the nine month period ended March 31, 1997 the Company
realized $1.2 million from the restructuring of its foreign currency options
and paid $1.0 million in business acquisition payments in relation to the
acquisition of Priess and the liquid silicone moulding operations of TQR Pty
Limited in February 1997.

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.

In May 1993, the Australian Federal Government agreed to lend the Company up
to $870,000 over a six year term. Such a loan bears no interest for the first
three years but bears interest at a rate of 3.8% thereafter until maturity.
The outstanding principal balance of such loan was $720,000 and $867,000 at
March 31, 1997 and June 30, 1996, respectively.










- -13-


RESMED INC. AND SUBSIDIARIES

PART II OTHER INFORMATION

Item 1. Legal Proceedings

In October 1994, in Australia, a patent held by ResMed was revoked on
appeal on grounds that the patent was not entitled to claim priority to a
"provisional" application, which was filed before the inventor's publication.
As a result of this claim, ResMed, based in part on advice from legal counsel,
at June 30, 1994 accrued approximately $300,000 for costs associated with this
patent litigation. On March 24, 1997 the Federal Court of Australia issued a
determination in respect to the outstanding costs which required ResMed to pay
approximately $246,000 in final and total settlement of all claims. This
amount is included in the $300,000 provided and is disclosed in accrued
expenses on consolidated balance sheets.

In January 1995, the Company filed a complaint for patent infringement in
the United States District Court against Respironics Inc., a Delaware
registered company. In response, in February 1995, Respironics filed a
complaint against the Company that asserts, (i) Respironics does not infringe
the subject patents; and (ii) that the subject patents are invalid and
unenforceable. Management believes, based, in part on advice from legal
counsel, that this action will not have a material adverse effect on the
operations or financial position of the Company.

In May 1995, Respironics and its Australian distributor filed a statement
of claim against the Company and its President in the Federal Court of
Australia, New South Wales District Registry. The statement of claim alleges
that the Company engaged in unfair trade practices, including misuse of the
power afforded by its Australian patents and dominant market position in
violation of the Australian Trade Practices Act. The statement of claim
asserts damage claims in the aggregate amount of approximately $901,000,
constituting lost profit on sales. While the Company intends to defend this
action vigorously, there can be no assurance that the Company will be
successful in defending such action or that the Company will not be required
to make significant payments to the claimants. Furthermore, the Company
expects to incur ongoing legal costs in defending such action.

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


- -14-

RESMED INC. AND SUBSIDIARIES

Item 6. Exhibits and Report on Form 8K

Exhibits

Exhibit 27.1 Financial Data Schedule

Report on Form 8-K

The Company lodged a report under item 5 of Form 8-K on May 5, 1997, in
relation to the declaration of a dividend paid in the form of preferred stock
purchase rights, issued pursuant to a Rights Agreement dated April 23, 1997
between the Company and American Stock Transfer and Trust Company.

Exhibits thereto

[4.] Rights Agreement, dated as of April 23, 1997, between ResMed, Inc.
and American Stock Transfer & Trust Company, which includes the form of
Certificate of Determination of the Series A Junior Participating Preferred
Stock of ResMed, Inc. as Exhibit A, the form of Right Certificate as Exhibit B
and the Summary of Rights to Purchase Preferred Shares as Exhibit C.

[20.] Form of Letter to be sent to the holders of ResMed, Inc. Common
Stock.

[99.] Text of Press Release, dated April 16, 1997.























- -15-

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




















- -16-