PRESS RELEASE
Published on November 8, 2004
Exhibit 99.1
RESMED ANNOUNCES RECORD FINANCIAL RESULTS
FOR QUARTER ENDED SEPTEMBER 30, 2004
SAN DIEGO, California, November 8, 2004...ResMed Inc (NYSE: RMD) today announced revenue and income results for the quarter ended September 30, 2004. Revenue for the quarter was $87.7 million, a 20% increase over the quarter ended September 30, 2003. Income from operations, excluding the impact of $2.0 million in restructuring expenses described below, and net income, excluding the impact of restructuring expenses, for the September 30, 2004 quarter increased to $22.9 million and $15.1 million respectively, an increase of 21% and 23%. Diluted earnings per share, excluding the impact of restructuring expenses, for the quarter ended September 30, 2004 was $0.43, an increase of 23%, compared to the September 2003 quarter. Net income for the current quarter was $13.9 million or $0.39 per diluted share including after-tax restructuring expenses of $1.2 million. Gross margin was 64%, consistent with the June 2004 quarter.
Selling, general and administration (SG&A) costs for the quarter were $26.7 million, an increase of $4.5 million or 20%, over the same period in fiscal 2004. The increase in SG&A related primarily to an increase in selling and administration personnel to meet expanding opportunities in the sleep-disordered breathing market. SG&A expenditure as a percentage of revenue was 30% in the September quarter, consistent with the same period in fiscal 2004.
Research and development expenditure, approximately 8% of revenues, increased 13% during the three months ended September 30, 2004 to $6.8 million, from $6.0 million in the quarter ended September 30, 2003. The increase reflects ResMeds continuing commitment to clinical research and product development, particularly in the evolving cardiovascular area, as well as a stronger Australian dollar. ResMed intends to continue to spend approximately 8% of revenues on R&D during the rest of fiscal year 2005.
Restructuring expenses incurred during the quarter ended September 30, 2004 of $2.0 million ($1.2 million net of tax) consisted of expenses associated with the Companys decision to integrate the operations of ResMed Germany, based in Moenchengladbach, and MAP, based in Munich, into a single operating unit based in Munich. The Company estimates that it will incur total restructuring expenses of $4.5 million ($2.7 million net of tax). This $4.5 million includes the $2.0 million recognized during the quarter ended September 30, 2004. The Company expects to incur the remaining restructuring expenses over the course of fiscal year 2005. With the financial information included in this press release, the Company is providing a tabular reconciliation of GAAP operating income and GAAP net income with operating income, and net income, excluding the impact of restructuring expenses.
Inventory, at $61.1 million, reflects a return to normal production levels following the successful relocation of the Sydney manufacturing facility in the June 2004 quarter. Accounts receivable days sales outstanding, at 70 days, were comparable to the September 2003 quarter.
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Peter C. Farrell, PhD, Chairman and Chief Executive Officer, commented, These strong financial results for the September quarter of fiscal 2005 reflect ResMeds continuing sales and profit growth. Operating cash flow increased by 32% to $16.6 million, compared to $12.6 million in the September quarter last year. Domestic sales increased by an extremely robust 32% over the September 2004 quarter to $45.6 million, reflecting continued healthy domestic demand for our sleep-disordered breathing products. International sales increased by 10% over the September 2003 quarter, to $42.1 million, reflecting growth in our major markets, and a stronger Euro, offset by lower sales in Japan. Reduced sales to Japan were primarily due to an unanticipated delay in introducing a new bilevel product into Japan. Excluding sales to the Japanese market, international sales increased by 24%.
Dr. Farrell further commented, We continue to make good progress on the cardiovascular and bariatric surgery fronts, which were reflected in our strong domestic growth.
ResMed is a leading developer, manufacturer, and marketer of medical equipment for the diagnosis, treatment, and management of sleep-disordered breathing, selling a comprehensive range of products in over 60 countries.
ResMed will host a conference call at 1:30 p.m. U.S. Pacific Standard Time today to discuss these quarterly results. Individuals wishing to access the conference call may do so via ResMeds Web site at www.resmed.com or by dialing (800) 901-5213 (domestic) or +1 (617) 786-2962 (international) and entering conference I.D. No. 23102063. Please allow extra time prior to the call to visit the Web site and download the streaming media player (Windows Media Player) required to listen to the Internet broadcast. The online archive of the broadcast will be available approximately 90 minutes after the live call and will be available for two weeks. A telephone replay of the conference call is available by dialing (888) 286-8010 (domestic) and +1 (617) 801-6888 (international) and entering conference I.D. No. 99358385.
Further information can be obtained by contacting Hillary Theakston at ResMed Inc, San Diego, (858) 746-2610; Adrian Smith at ResMed Limited, Sydney on +61 (2) 9886-5407; or by visiting the Companys multilingual Web site at www.resmed.com.
Statements contained in this release that are not historical facts are forward-looking statements as contemplated by the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including statements regarding the Companys future revenue, earnings or expenses, new product development and new markets for the Companys products, are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied in the forward-looking statements. Those risks and uncertainties are discussed in the Companys Annual Report on Form 10-K for its most recent fiscal year and in other reports the Company files with the U.S. Securities & Exchange Commission. Those reports are available on the Companys Web site.
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RESMED INC AND SUBSIDIARIES
Consolidated Statements of Income (unaudited)
(In US$ thousands, except per share data)
| Three Months Ended September 30, |
||||||||
|
2004 |
2003 |
|||||||
| Net revenue |
$ | 87,733 | $ | 72,878 | ||||
| Cost of sales |
31,322 | 25,720 | ||||||
| Gross profit |
56,411 | 47,158 | ||||||
| Operating expenses: |
||||||||
| Selling, general and administrative |
26,664 | 22,187 | ||||||
| Research and development |
6,819 | 6,017 | ||||||
| Restructuring expenses |
1,968 | | ||||||
| Total operating expenses |
35,451 | 28,204 | ||||||
| Income from operations |
20,960 | 18,954 | ||||||
| Other income (expense), net: |
||||||||
| Interest income (expense), net |
(321 | ) | (394 | ) | ||||
| Other, net |
31 | (652 | ) | |||||
| Total other income (expense), net |
(290 | ) | (1,046 | ) | ||||
| Income before income taxes |
20,670 | 17,908 | ||||||
| Income taxes |
6,744 | 5,659 | ||||||
| Net income |
$ | 13,926 | $ | 12,249 | ||||
| Basic earnings per share |
$ | 0.41 | $ | 0.36 | ||||
| Diluted earnings per share |
$ | 0.39 | $ | 0.35 | ||||
| Diluted earnings per share excluding the impact of restructuring expenses(1) |
$ | 0.43 | $ | 0.35 | ||||
| Basic shares outstanding |
33,888 | 33,649 | ||||||
| Diluted shares outstanding |
35,258 | 35,089 | ||||||
| (1) | See reconciliation of non-GAAP financial measures in table at end of press release. |
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RESMED INC AND SUBSIDIARIES
Consolidated Balance Sheets
(In US$ thousands except share and per share data)
|
September 30, 2004 |
June 30, 2004 |
|||||||
| (unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 141,620 | $ | 128,907 | ||||
| Marketable securities - available for sale |
2,744 | 12,021 | ||||||
| Accounts receivable, net |
68,752 | 67,242 | ||||||
| Inventories |
61,142 | 55,797 | ||||||
| Deferred income taxes |
8,536 | 7,041 | ||||||
| Prepaid expenses and other current assets |
6,774 | 6,821 | ||||||
| Total current assets |
289,568 | 277,829 | ||||||
| Property, plant and equipment, net of accumulated depreciation |
154,130 | 147,268 | ||||||
| Patents, net of accumulated amortization |
5,307 | 4,814 | ||||||
| Goodwill |
107,487 | 106,075 | ||||||
| Other assets |
8,612 | 8,173 | ||||||
| Total assets |
$ | 565,104 | $ | 544,159 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 17,945 | $ | 18,574 | ||||
| Accrued expenses |
24,981 | 22,591 | ||||||
| Income taxes payable |
10,382 | 8,470 | ||||||
| Deferred revenue |
9,325 | 8,759 | ||||||
| Current portion of deferred profit on sale and leaseback |
1,663 | 2,197 | ||||||
| Total current liabilities |
64,296 | 60,591 | ||||||
| Non current liabilities: |
||||||||
| Deferred revenue |
9,271 | 8,819 | ||||||
| Convertible subordinated notes |
113,250 | 113,250 | ||||||
| Total non-current liabilities |
122,521 | 122,069 | ||||||
| Total liabilities |
$ | 186,817 | $ | 182,660 | ||||
| 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 33,858,518 at September 30, 2004 and 33,858,272 at June 30, 2004 (excluding 1,127,459 and 886,369 shares held as Treasury Stock respectively) |
135 | 135 | ||||||
| Additional paid-in capital |
136,642 | 132,875 | ||||||
| Retained earnings |
231,582 | 217,656 | ||||||
| Treasury stock |
(41,405 | ) | (30,440 | ) | ||||
| Accumulated other comprehensive income |
51,333 | 41,273 | ||||||
| Total stockholders equity |
378,287 | 361,499 | ||||||
| Total liabilities and stockholders equity |
$ | 565,104 | $ | 544,159 | ||||
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Reconciliation of Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands except per share amounts)
In managing its business, ResMed makes use of certain non-GAAP financial measures in evaluating the Companys results of operations. The measure, operating income, excluding the impact of restructuring expenses, is reconciled with GAAP operating income in the table below:
|
Three Months Ended September 30, |
||||
|
2004 |
2003 |
|||
| GAAP operating income |
20,960 | 18,954 | ||
| Restructuring expenses |
1,968 | | ||
| Operating income, excluding the impact of restructuring expenses |
22,928 | 18,954 | ||
The measure, net income, excluding the impact of restructuring expenses, is reconciled with GAAP net income in the table below:
|
Three Months Ended September 30, |
||||||
|
2004 |
2003 |
|||||
| GAAP net income |
13,926 | 12,249 | ||||
| Restructuring expenses, net of tax |
1,192 | | ||||
| Net income, excluding the impact of restructuring expenses |
15,118 | 12,249 | ||||
| Diluted shares outstanding |
35,258 | 35,089 | ||||
| Diluted earnings per share, excluding the impact of restructuring expenses |
$ | 0.43 | $ | 0.35 | ||
ResMed believes that presenting diluted earnings per share, excluding the impact of restructuring expenses, is an additional measure of performance that investors can use to compare operating results between reporting periods. Management of the Company uses this information in evaluating the Companys results of operations and believes that this information also provides investors better insight in evaluating the Companys earnings performance from core operations. The events giving rise to these restructuring expenses are not associated with the Companys normal operating business and are expected to result in future market opportunities, cost savings, and other benefits.
End