PRESS RELEASE
Published on February 3, 2005
Exhibit 99.1
RESMED INC ANNOUNCES RECORD FINANCIAL RESULTS FOR
QUARTER AND SIX MONTHS ENDED DECEMBER 31, 2004
SAN DIEGO, California, February 3, 2005 - ResMed Inc (NYSE: RMD) today announced record revenue and income results for the quarter ended December 31, 2004. Revenue for the quarter was $103.9 million, a 26% increase over the quarter ended December 31, 2003. For the December 31, 2004 quarter, income from operations and net income, both excluding the impact of restructuring expenses and donation to foundation described below, were $27.1 million and $18.3 million, an increase of 36% and 27%, respectively. Diluted earnings per share, excluding the impact of restructuring expenses and donation to foundation, for the quarter ended December 31, 2004 were $0.52, an increase of 27%, compared to the December 2003 quarter. Net income for the current quarter was $17.4 million or $0.49 per diluted share including after-tax restructuring expenses of $0.6 million. Gross margin was 66%.
Selling, general and administration (SG&A) costs for the quarter were $33.5 million, an increase of $7.7 million or 30% over the same period in fiscal 2003. The increase in gross 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 32% in the December quarter, compared to 31% for the same period in fiscal 2004.
Research and development expenditure, at approximately 8% of revenues, increased 16% during the three months ended December 31, 2004 to $7.8 million from $6.8 million in the quarter ended December 31, 2003. The increase reflects ResMeds continuing commitment to clinical research and product development, 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.
For the six months ended December 31, 2004 revenues were $191.6 million, an increase of 23% over the $155.2 million for the six months ended December 31, 2003. For the six months ended December 31, 2004, income from operations and net income, both excluding the impact of restructuring expenses and donation to foundation described below were $50.0 million and $33.4 million, an increase of 29% and 25% respectively. Net income for the six months ended December 31, 2004 was $31.3 million or $0.89 per diluted share including after tax restructuring expenses of $1.8 million.
Restructuring expenses incurred during the quarter ended December 31, 2004 of $1.0 million ($0.6 million net of tax) consisted of expenses associated with the previously-announced integration of the Companys German operations.
During the quarter, we committed to donate $500,000 to the ResMed Foundations. The foundations were established to promote awareness of and research into the serious medical consequences of untreated SDB.
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 and excluding the impact of the donation to the foundation.
Inventory at $64.9 million, increased by $3.8 million compared to September 2004 levels. Accounts receivable days sales outstanding, at 66 days, improved compared to the September 2004 quarter of 70 days.
Peter C. Farrell PhD, Chairman and Chief Executive Officer, commented, These robust financial results for the second quarter of fiscal 2005 reflect ResMeds continuing sales and profit growth. Domestic sales increased by 27% over the December 2004 quarter to $52.3 million, reflecting an outstanding effort from our sales team and strong demand for our new Mirage Swift patient interface. International sales increased by 25% over the December 2004 quarter, to $51.6 million, reflecting
growth in all our major markets as well as a stronger Euro. In addition, we expanded our international operations with the acquisition of Resprecare, our exclusive distributor in the Netherlands, and we continue to evaluate additional opportunities for international expansion. Our operating cash flow for the December quarter was a very robust $22.3 million.
We achieved significant growth in the first half of fiscal 2005. In the current quarter, we are focused on growing above the tremendous financial results we delivered in the third quarter of last year. We reiterate our expectation for market growth of 15 to 20 percent over the next 12 to 18 months, Dr. Farrell further commented. Even as we continue to grow in our key markets throughout the world, most remain under-penetrated, and patients remain underserved. To best address these global opportunities, we are enhancing our leadership structure to support continued, encouraging growth. Keith Serzen has been promoted to Chief Operating Officer, Americas and Adrian Smith has assumed the additional responsibility of Acting Chief Operating Officer, Europe. These modifications to the geographic leadership structure support our core, customer-focused values while providing strengthened leadership.
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. Pacific Standard Time (PST) 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 (888) 396-2386 (domestic) or +1 (617) 847-8712 (international) and entering conference I.D. No. 82312541. 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. 51571140.
Further information can be obtained by contacting Hillary Theakston at ResMed Inc. San Diego (858) 746-2610; Brett Sandercock ResMed Limited Sydney on +61 (2) 9886-5406; 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 materially differ 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 US Securities & Exchange Commission. Those reports are available on the Companys Web site.
- More -
RESMED INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(In US$ thousands, except per share data)
|
Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||
|
2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net revenue |
$ | 103,893 | $ | 82,292 | $ | 191,626 | $ | 155,170 | ||||||||
| Cost of sales |
35,515 | 29,868 | 66,837 | 55,588 | ||||||||||||
| Gross profit |
68,378 | 52,424 | 124,789 | 99,582 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling, general and administrative |
33,469 | 25,765 | 60,133 | 47,952 | ||||||||||||
| Donation to Foundation |
500 | 500 | 500 | 500 | ||||||||||||
| Research and development |
7,842 | 6,766 | 14,661 | 12,783 | ||||||||||||
| Restructuring expenses |
958 | 0 | 2,926 | 0 | ||||||||||||
| Total operating expenses |
42,769 | 33,031 | 78,220 | 61,235 | ||||||||||||
| Income from operations |
25,609 | 19,393 | 46,569 | 38,347 | ||||||||||||
| Other income (expenses), net |
||||||||||||||||
| Interest income (expense), net |
(159 | ) | (368 | ) | (480 | ) | (762 | ) | ||||||||
| Other, net |
679 | 1,883 | 710 | 1,231 | ||||||||||||
| Total other income (expenses), net |
520 | 1,515 | 230 | 469 | ||||||||||||
| Income before income taxes |
26,129 | 20,908 | 46,799 | 38,816 | ||||||||||||
| Income taxes |
8,725 | 6,757 | 15,469 | 12,416 | ||||||||||||
| Net income |
17,404 | $ | 14,151 | $ | 31,330 | $ | 26,400 | |||||||||
| Basic earnings per share |
$ | 0.51 | $ | 0.42 | $ | 0.92 | $ | 0.78 | ||||||||
| Diluted earnings per share(1) |
$ | 0.49 | $ | 0.40 | $ | 0.89 | $ | 0.75 | ||||||||
| Diluted earnings per share excluding the impact of of restructuring expenses and donation(2) |
$ | 0.52 | $ | 0.41 | $ | 0.95 | $ | 0.76 | ||||||||
| Basic shares outstanding |
34,012 | 33,663 | 33,951 | 33,658 | ||||||||||||
| Diluted shares outstanding |
37,102 | 35,044 | 37,115 | 35,069 | ||||||||||||
| (1) | Diluted earnings per share has been calculated after adjusting the numerator (net income) by $821,000 and $1,642,000 for the three months ended December 31 and six months ended December 31, respectively, for the effect of assumed conversion of our convertible subordinated notes. |
| (2) | See reconciliation of non-GAAP financial measures in table at end of press release. |
- More -
RESMED INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(In US$ thousands except share and per share data)
|
December 31, 2004 |
June 30, 2004 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 143,068 | $ | 128,907 | ||||
| Marketable securities - available for sale |
21,976 | 12,021 | ||||||
| Accounts receivable, net |
76,861 | 67,242 | ||||||
| Inventories |
64,854 | 55,797 | ||||||
| Deferred income taxes |
9,238 | 7,041 | ||||||
| Prepaid expenses and other current assets |
7,249 | 6,821 | ||||||
| Total current assets |
323,246 | 277,829 | ||||||
| Property, plant and equipment, net of accumulated depreciation |
166,399 | 147,268 | ||||||
| Goodwill and Intangibles |
125,335 | 110,889 | ||||||
| Other assets |
9,511 | 8,173 | ||||||
| Total assets |
$ | 624,491 | $ | 544,159 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 17,820 | $ | 18,574 | ||||
| Accrued expenses |
28,134 | 22,591 | ||||||
| Income taxes payable |
14,895 | 8,470 | ||||||
| Deferred revenue |
11,337 | 8,759 | ||||||
| Current portion of deferred profit on sale and leaseback |
1,116 | 2,197 | ||||||
| Total current liabilities |
73,302 | 60,591 | ||||||
| Non Current Liabilities: |
||||||||
| Deferred Revenue |
10,540 | 8,819 | ||||||
| Convertible subordinated notes |
113,250 | 113,250 | ||||||
| Total non-current liabilities |
123,790 | 122,069 | ||||||
| Total liabilities |
197,092 | $ | 182,660 | |||||
| Stockholders equity: |
||||||||
| Common Stock |
136 | 135 | ||||||
| Additional paid-in capital |
143,051 | 132,875 | ||||||
| Retained earnings |
248,986 | 217,656 | ||||||
| Treasury stock |
(41,405 | ) | (30,440 | ) | ||||
| Accumulated other comprehensive income |
76,631 | 41,273 | ||||||
| Total stockholders equity |
427,399 | 361,499 | ||||||
| Total liabilities and stockholders equity |
$ | 624,491 | $ | 544,159 | ||||
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 and donation to foundation, is reconciled with GAAP operating income in the table below:
|
Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||
|
2004 |
2003 |
2004 |
2003 |
|||||||||
| GAAP operating income |
25,609 | 19,393 | 46,569 | 38,347 | ||||||||
| Restructuring expenses |
958 | | 2,926 | | ||||||||
| Donation to Foundation |
500 | 500 | 500 | 500 | ||||||||
| Operating income, excluding the impact of restructuring expenses and donation to foundation |
27,067 | 19,893 | 49,995 | 38,847 | ||||||||
| The measure, net income, excluding the impact of restructuring expenses and donation to foundation, is reconciled with GAAP net income in the table below: | ||||||||||||
|
Three Months Ended December 30, |
Six Months Ended December 30, |
|||||||||||
|
2004 |
2003 |
2004 |
2003 |
|||||||||
| GAAP net income |
17,404 | 14,151 | 31,330 | 26,400 | ||||||||
| Restructuring expenses, net of tax |
613 | | 1,805 | | ||||||||
| Donation to foundation, net of tax |
310 | 310 | 310 | 310 | ||||||||
| Net income, excluding the impact of restructuring expenses and donation to foundation |
18,327 | 14,461 | 33,445 | 26,710 | ||||||||
| Diluted shares outstanding |
37,102 | 35,044 | 37,115 | 35,069 | ||||||||
| Diluted earnings per share, excluding the impact of restructuring expenses and donation to foundation Operating income, excluding the impact of restructuring expenses |
$ | 0.52 | $ | 0.41 | $ | 0.95 | $ | 0.76 | ||||
ResMed believes that presenting diluted earnings per share, excluding the impact of restructuring expenses and donation to foundation, 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 and donation to foundation are not associated with the Companys normal operating business and are expected to result in future market opportunities, cost savings, and other benefits.