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ResMed Inc. Announces Record Financial Results for the Quarter Ended September 30, 2010
Date:10/28/2010

SAN DIEGO, Oct. 28 /PRNewswire-FirstCall/ -- ResMed Inc. (NYSE: RMD) today announced record revenue and income for the quarter ended September 30, 2010.  Revenue for the quarter ended September 30, 2010 was $282.0 million, a 14% increase (a 17% increase on a constant currency basis) over the quarter ended September 30, 2009.  For the quarter ended September 30, 2010, income from operations was $66.4 million and net income was $56.7 million, an increase of 26% and 35%, respectively, compared to the quarter ended September 30, 2009.  Diluted earnings per share for the quarter ended September 30, 2010 were $0.36, an increase of 33% compared to the quarter ended September 30, 2009.  

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SG&A expenses were $84.8 million for the quarter ended September 30, 2010, an increase of $8.0 million, or 10% (a 12% increase on a constant currency basis) over the quarter ended September 30, 2009.  The increase in SG&A was primarily due to expenses necessary to support sales growth.  SG&A costs were 30% of revenue in the quarter ended September 30, 2010, compared to 31% in the quarter ended September 30, 2009.R&D expenses were $19.7 million for the quarter ended September 30, 2010, or 7% of revenue.  R&D expenses increased by 10% (a 6% increase on a constant currency basis) compared to the quarter ended September 30, 2009.  R&D expenses were negatively impacted by the depreciation of the U.S. dollar against the Australian dollar.

The company amortized acquired intangibles of $2.0 million ($1.4 million, net of tax) during the quarter ended September 30, 2010. Stock-based compensation costs incurred during the quarter ended September 30, 2010 of $8.4 million ($6.1 million, net of tax) consisted of expenses associated with stock options, restricted stock units, and our employee stock purchase plan.  

Inventory, at $214.2 million, increased by $28.6 million compared to June 30, 2010.  Accounts receivable days sales outstanding, at 70 days, decreased by 1 day compared to June 30, 2010.

Kieran T. Gallahue, President and Chief Executive Officer, commented, "In the first quarter of fiscal 2011 we continued to show strong growth year-over-year across the globe.  Our favorable mix of product sales and market share gains led to a 16% revenue increase in the Americas over the prior year's quarter, resulting in $155.6 million in sales. Revenue outside the Americas increased by 13% to $126.4 million over the prior year's quarter, or a 19% increase on a constant currency basis.  Globally, our growth in flow generators was driven by strong sales of the new S9™ AutoSet and Elite products and the late quarter release of the S9 Escape series. Mask sales were strong this quarter across all markets.  Operating profit for the September quarter was $66.4 million and cash flow from operations was $59.1 million, demonstrating excellent operating performance.

"The findings from recent clinical studies continue to demonstrate the importance of diagnosing and treating sleep-disordered breathing (SDB). There is abundant evidence supporting the correlation of SDB with heart failure, stroke, atrial fibrillation, diabetes, hypertension and even the dementia associated with Alzheimer's disease.  Increasingly, there is evidence coming to light that early intervention in the treatment of SDB may slow or prevent the progression of these co-morbidities. In addition, studies have been conducted at institutions such as Harvard Medical School showing that a lack of sleep negatively affects perception and judgment in the workplace, including the transportation industry, which can result in reduced efficiency, productivity and increased errors and accidents. The increase in awareness of the role that SDB plays in these costly and debilitating co-morbidities and in the reduction in workplace safety and productivity, should continue to be a major driver of market expansion."

About ResMedResMed is a leading developer, manufacturer and distributor of medical equipment for treating, diagnosing, and managing sleep-disordered breathing and other respiratory disorders. The company is dedicated to developing innovative products to improve the lives of those who suffer from these conditions and to increasing awareness among patients and healthcare professionals of the potentially serious health consequences of untreated sleep-disordered breathing. For more information on ResMed, visit www.resmed.com.

ResMed will host a conference call at 1:30 p.m. US Pacific Time today to discuss these quarterly results.  Individuals wishing to access the conference call may do so via ResMed's Website at www.resmed.com or by dialing (866) 783-2144 (domestic) or +1 (857) 350-1603 (international) and entering conference pass code no. 64219936. 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. 90239322.

Further information can be obtained by contacting Constance Bienfait at ResMed Inc., San Diego, at (858) 836-5971; Brett Sandercock at ResMed Limited, Sydney, on (+612) 8884-2090; or by visiting the Company's 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 Company's future revenue, earnings or expenses, new product development and new markets for the Company's 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 Company's 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 Company's Web site.ResMed Inc and SubsidiariesCondensed Consolidated Statements of Income (Unaudited)

(In US$ thousands, except per share data)Three Months Ended

September 30,2010

2009Net revenue

$282,012

$246,992Cost of sales

108,058

96,814Gross profit

173,954

150,178Operating expensesSelling, general and administrative

84,791

76,756Research and development

19,739

17,914Amortization of acquired intangible assets

2,030

1,845Donation to Foundation

1,000

1,000Total operating expenses

107,560

97,515Income from operations

66,394

52,663Other income, net:Interest income, net

5,097

2,125Other, net

5,063

3,118Total other income, net

10,160

5,243Income before income taxes

76,554

57,906Income taxes

19,846

15,804Net income

$56,708

$42,102Basic earnings per share

$0.37

$0.28Diluted earnings per share

$0.36

$0.27Basic shares outstanding

151,474

150,788Diluted shares outstanding

156,752

153,524All share and per share information has been adjusted to reflect the two-for-one stock split effected in the form of a 100% stock dividend that was declared on August 5, 2010 and distributed on August 30, 2010.

ResMed Inc And SubsidiariesCondensed Consolidated Balance Sheets (Unaudited)

(In US$ thousands except share and per share data)September 30,

June 30,2010

2010ASSETSCurrent assets:Cash and cash equivalents

$540,004

$488,776Accounts receivable, net

225,836

226,911Inventories

214,208

185,642Deferred income taxes

14,525

14,112Income taxes receivable

12,165

5,317Prepaid expenses and other current assets

61,773

64,583Total current assets

1,068,511

985,341Property, plant and equipment, net

423,940

387,148Goodwill

222,327

198,625Other intangibles

49,985

30,925Deferred income taxes

20,170

19,042Other assets

7,297

5,316Total non-current assets

723,719

641,056Total assets

$1,792,230

$1,626,397LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable

43,071

57,535Accrued expenses

84,770

80,883Deferred revenue

35,455

29,507Income taxes payable

28,779

22,656Deferred income taxes

440

402Current portion of long-term debt

93,800

121,689Total current liabilities

286,315

312,672Non-current liabilities:Deferred income taxes

11,344

10,793Deferred revenue

14,741

12,755Income taxes payable

2,985

2,641Total non-current liabilities

29,070

26,189Total liabilities

315,385

338,861Stockholders' Equity:Common stock

606

605Additional paid-in capital

684,696

660,185Retained earnings

941,584

884,876Treasury stock

(362,377)

(344,505)Accumulated other comprehensive income

212,336

86,375Total stockholders' equity

1,476,845

1,287,536Total liabilities and stockholders' equity

$1,792,230

$1,626,397
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SOURCE ResMed Inc.
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