______________________________________________________________________________________________
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 March 31, 2022 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 9001 Spectrum Center Blvd. Title of each class Name of each exchange on which registered Common Stock, par value $0.004 per share RMD New York Stock Exchange Yes x No Large Accelerated Filer x Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company o Emerging Growth Company o INDEX Item 1. Financial Statements September 30, June 30, Assets Current assets: Cash and cash equivalents $ 276,149 $ 295,278 Accounts receivable, net of allowances of $29,917 and $32,138 575,554 614,292 Inventories (note 3) 506,644 457,033 Prepaid taxes 77,826 72,409 Prepaid expenses and other current assets 150,082 135,745 Total current assets 1,586,255 1,574,757 Non-current assets: Property, plant and equipment, net (note 3) 467,344 463,490 Operating lease right-of-use assets 134,375 128,575 Goodwill (note 4) 1,922,037 1,927,901 Other intangible assets, net (note 3) 375,400 392,582 Deferred income taxes 80,765 79,904 Prepaid taxes and other non-current assets 162,991 160,916 Total non-current assets 3,142,912 3,153,368 Total assets $ 4,729,167 $ 4,728,125 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 173,696 $ 138,008 Accrued expenses 274,106 320,599 Operating lease liabilities, current 22,919 23,585 Deferred revenue 112,528 109,611 Income taxes payable (note 6) 28,909 307,963 Short-term debt, net (note 8) 12,000 12,000 Total current liabilities 624,158 911,766 Non-current liabilities: Deferred revenue 93,255 91,496 Deferred income taxes 11,294 11,319 Operating lease liabilities, non-current 121,518 114,779 Other long-term liabilities 5,981 6,802 Long-term debt, net (note 8) 793,668 643,351 Long-term income taxes payable (note 6) 53,244 62,933 Total non-current liabilities 1,078,960 930,680 Total liabilities 1,703,118 1,842,446 Commitments and contingencies (note 10) Stockholders’ equity: Preferred stock, $0.01 par value, 2,000,000 shares authorized; NaN issued - - Common stock, $0.004 par value, 350,000,000 shares authorized; 583 583 Additional paid-in capital 1,643,661 1,622,199 Retained earnings 3,222,064 3,079,640 Treasury stock, at cost, 41,836,234 shares at September 30, 2021 and June 30, 2021 (1,623,256) (1,623,256) Accumulated other comprehensive loss (217,003) (193,487) Total stockholders’ equity 3,026,049 2,885,679 Total liabilities and stockholders’ equity $ 4,729,167 $ 4,728,125 RESMED INC. AND SUBSIDIARIES Three Months Ended 2021 2020 Net revenue - Sleep and Respiratory Care products $ 806,499 $ 659,801 Net revenue - Software as a Service 97,516 92,143 Net revenue 904,015 751,944 Cost of sales - Sleep and Respiratory Care products 349,681 268,990 Cost of sales - Software as a Service 36,986 32,314 Cost of sales (exclusive of amortization shown separately below) 386,667 301,304 Amortization of acquired intangible assets - Sleep and Respiratory Care products 900 1,955 Amortization of acquired intangible assets - Software as a Service 10,159 10,024 Amortization of acquired intangible assets 11,059 11,979 Total cost of sales 397,726 313,283 Gross profit 506,289 438,661 Selling, general, and administrative 176,719 158,989 Research and development 59,950 54,533 Amortization of acquired intangible assets 7,707 8,243 Total operating expenses 244,376 221,765 Income from operations 261,913 216,896 Other income (loss), net: Interest (expense) income, net (5,360) (6,725) Loss attributable to equity method investments (note 5) (1,386) (2,288) Gain (loss) on equity investments (note 5) 5,612 8,476 Other, net (1,991) (505) Total other income (loss), net (3,125) (1,042) Income before income taxes 258,788 215,854 Income taxes 55,175 37,482 Net income $ 203,613 $ 178,372 Basic earnings per share (note 9) $ 1.40 $ 1.23 Diluted earnings per share (note 9) $ 1.39 $ 1.22 Dividend declared per share $ 0.42 $ 0.39 Basic shares outstanding (000's) 145,680 144,900 Diluted shares outstanding (000's) 146,860 146,100 RESMED INC. AND SUBSIDIARIES Three Months Ended 2021 2020 Net income $ 203,613 $ 178,372 Other comprehensive income (loss): Foreign currency translation (loss) gain adjustments (23,516) 43,791 Comprehensive income $ 180,097 $ 222,163 RESMED INC. AND SUBSIDIARIES Common Stock Additional Treasury Stock Retained Accumulated Shares Amount Capital Shares Amount Earnings Income (Loss) Total Balance, June 30, 2021 187,485 $ 583 $ 1,622,199 (41,836) $ (1,623,256) $ 3,079,640 $ (193,487) $ 2,885,679 Common stock issued on exercise of options 61 - 4,354 - - - - 4,354 Common stock issued on vesting of restricted stock units, net of shares withheld for tax 1 - (195) - - - - (195) Stock-based compensation costs - - 17,303 - - - - 17,303 Other comprehensive income - - - - - - (23,516) (23,516) Net income - - - - - 203,613 - 203,613 Dividends declared ($0.42 per common share) - - - - - (61,189) - (61,189) Balance, September 30, 2021 187,547 $ 583 $ 1,643,661 (41,836) $ (1,623,256) $ 3,222,064 $ (217,003) $ 3,026,049 RESMED INC. AND SUBSIDIARIES Common Stock Additional Treasury Stock Retained Accumulated Shares Amount Capital Shares Amount Earnings Income (Loss) Total Balance, June 30, 2020 186,723 $ 580 $ 1,570,694 (41,836) $ (1,623,256) $ 2,832,991 $ (283,982) $ 2,497,027 Common stock issued on exercise of options 18 - 1,026 - - - - 1,026 Common stock issued on vesting of restricted stock units, net of shares withheld for tax 3 - 227 - - - - 227 Stock-based compensation costs - - 16,071 - - - - 16,071 Other comprehensive income (loss) - - - - - - 43,791 43,791 Cumulative effect adjustment from adoption of the credit loss standard, net of tax - - - - - (1,143) - (1,143) Net income - - - - - 178,372 - 178,372 Dividends declared ($0.39 per common share) - - - - - (56,511) - (56,511) Balance, September 30, 2020 186,744 $ 580 $ 1,588,018 (41,836) $ (1,623,256) $ 2,953,709 $ (240,191) $ 2,678,860 RESMED INC. AND SUBSIDIARIES Three Months Ended 2021 2020 Cash flows from operating activities: Net income $ 203,613 $ 178,372 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 39,102 39,466 Amortization of right-of-use assets 8,517 10,422 Stock-based compensation costs 17,303 16,071 Loss attributable to equity method investments (note 5) 1,386 2,288 (Gain) loss on equity investments (note 5) (5,612) (8,476) Changes in operating assets and liabilities: Accounts receivable 33,704 16,110 Inventories (55,976) (52,396) Prepaid expenses, net deferred income taxes and other current assets (14,391) 3,415 Accounts payable, accrued expenses, income taxes payable and other (293,303) (61,273) Net cash (used in) / provided by operating activities (65,657) 143,999 Cash flows from investing activities: Purchases of property, plant and equipment (27,340) (13,501) Patent registration and acquisition costs (4,453) (5,237) Purchases of investments (note 5) (6,600) (8,196) (Payments) / proceeds on maturity of foreign currency contracts (3,481) 4,824 Net cash used in investing activities (41,874) (22,110) Cash flows from financing activities: Proceeds from issuance of common stock, net 4,354 1,026 Taxes paid related to net share settlement of equity awards (195) 227 Proceeds from borrowings, net of borrowing costs 150,000 55,000 Repayment of borrowings - (175,000) Dividends paid (61,189) (56,511) Net cash (used in) / provided by financing activities 92,970 (175,258) Effect of exchange rate changes on cash (4,568) 11,627 Net decrease in cash and cash equivalents (19,129) (41,742) Cash and cash equivalents at beginning of period 295,278 463,156 Cash and cash equivalents at end of period $ 276,149 $ 421,414 Supplemental disclosure of cash flow information: Income taxes paid, net of refunds $ 345,909 $ 51,370 Interest paid $ 5,360 $ 6,842 PART I – FINANCIAL INFORMATION Item 1 RESMED INC. AND SUBSIDIARIES Three Months Ended 2021 2020 U.S., Canada and Latin America Devices $ 275,932 $ 197,393 Masks and other 215,106 205,760 Total Sleep and Respiratory Care $ 491,038 $ 403,153 Software as a Service 97,516 92,143 Total $ 588,554 $ 495,296 Combined Europe, Asia and other markets Devices $ 218,226 $ 176,026 Masks and other 97,235 80,622 Total Sleep and Respiratory Care $ 315,461 $ 256,648 Global revenue Devices $ 494,158 $ 373,419 Masks and other 312,341 286,382 Total Sleep and Respiratory Care $ 806,499 $ 659,801 Software as a Service 97,516 92,143 Total $ 904,015 $ 751,944 Performance obligations and contract balances September 30, June 30, Balance sheet caption Contract assets Accounts receivable, net $ 575,554 $ 614,292 Accounts receivable, net Unbilled revenue, current 25,799 10,893 Prepaid expenses and other current assets Unbilled revenue, non-current 7,267 6,214 Prepaid taxes and other non-current assets Contract liabilities Deferred revenue, current (112,528) (109,611) Deferred revenue (current liabilities) Deferred revenue, non-current (93,255) (91,496) Deferred revenue (non-current liabilities) Lease Revenue Three Months Ended 2021 2020 Sales-type lease revenue $ 4,087 $ 1,960 Operating lease revenue 25,157 24,779 Total lease revenue $ 29,244 $ 26,739 2021-08 “Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” PART I – FINANCIAL INFORMATION Item 1 The table below presents a reconciliation of net revenues and net operating profit by reportable segments (in thousands): Three Months Ended 2021 2020 Net revenue by segment Total Sleep and Respiratory Care $ 806,499 $ 659,801 Software as a Service 97,516 92,143 Total $ 904,015 $ 751,944 Depreciation and amortization by segment Sleep and Respiratory Care $ 18,017 $ 13,147 Software as a Service 1,701 971 Amortization of acquired intangible assets and corporate assets 19,384 25,348 Total $ 39,102 $ 39,466 Net operating profit by segment Sleep and Respiratory Care $ 297,224 $ 248,181 Software as a Service 22,019 23,586 Total $ 319,243 $ 271,767 Reconciling items Corporate costs $ 38,564 $ 34,649 Amortization of acquired intangible assets 18,766 20,222 Interest expense (income), net 5,360 6,725 Loss attributable to equity method investments 1,386 2,288 (Gain) loss on equity investments (5,612) (8,476) Other, net 1,991 505 Income before income taxes $ 258,788 $ 215,854 Inventories September 30, June 30, Raw materials $ 220,784 $ 155,419 Work in progress 3,494 4,647 Finished goods 282,366 296,967 Total inventories $ 506,644 $ 457,033 Property, Plant and Equipment September 30, June 30, Property, plant and equipment, at cost $ 1,084,064 $ 1,085,629 Accumulated depreciation and amortization (616,720) (622,139) Property, plant and equipment, net $ 467,344 $ 463,490 Other Intangible Assets September 30, June 30, Developed/core product technology $ 353,530 $ 383,319 Accumulated amortization (220,319) (239,049) Developed/core product technology, net 133,211 144,270 Customer relationships 261,736 272,703 Accumulated amortization (85,861) (90,976) Customer relationships, net 175,875 181,727 Other intangibles 194,472 197,662 Accumulated amortization (128,158) (131,077) Other intangibles, net 66,314 66,585 Total other intangibles, net $ 375,400 $ 392,582 (4) Goodwill Three Months Ended September 30, 2021 Sleep and SaaS Total Balance at the beginning of the period $ 633,183 $ 1,294,718 $ 1,927,901 Foreign currency translation adjustments (5,864) - (5,864) Balance at the end of the period $ 627,319 $ 1,294,718 $ 1,922,037 Measurement category September 30, June 30, Fair value $ 33,138 $ 29,084 Measurement alternative 31,160 23,002 Equity method 15,768 17,154 Total $ 80,066 $ 69,240 Three Months Ended Non-marketable securities Marketable securities Equity method investments Total Balance at the beginning of the period $ 23,002 $ 29,084 $ 17,154 $ 69,240 Investments 3,000 3,600 - 6,600 Observable price adjustments on non-marketable equity securities 5,367 - - 5,367 Ongoing mark-to-market adjustments on marketable equity securities - 454 - 454 Impairment of investments (209) - - (209) Loss attributable to equity method investments - - (1,386) (1,386) Carrying value at the end of the period $ 31,160 $ 33,138 $ 15,768 $ 80,066 Three Months Ended Non-marketable securities Marketable securities Equity method investments Total Balance at the beginning of the period $ 30,033 $ - $ 14,109 $ 44,142 Investments 1,946 - 6,250 8,196 Ongoing mark-to-market adjustments on marketable equity securities - 8,476 - 8,476 Reclassifications (1) (10,569) 10,569 - - Loss attributable to equity method investments - - (2,288) (2,288) Carrying value at the end of the period $ 21,410 $ 19,045 $ 18,071 $ 58,526 (1)Net additions (reductions) to investments includes additions from purchases, reductions due to exits of securities, or reclassifications due to our acquisition of an investee in which we held a prior equity interest. Net unrealized Net unrealized gains recognized for equity investments in non-marketable and marketable securities held as of March 31, 2021 for the three and nine months ended March 31, 2021 were $4.7 million and $9.4 million, respectively. Three Months Ended 2021 2020 Balance at the beginning of the period $ 22,032 $ 21,132 Warranty accruals for the period 5,413 5,347 Warranty costs incurred for the period (3,972) (3,428) Foreign currency translation adjustments (513) 640 Balance at the end of the period $ 22,960 $ 23,691 September 30, June 30, Short-term debt $ 12,000 $ 12,000 - Long-term debt $ 796,000 $ 646,000 Deferred borrowing costs (2,332) (2,649) Long-term debt, net $ 793,668 $ 643,351 Total debt $ 805,668 $ 655,351 On November 5, 2018, we entered into a first amendment to the Revolving Credit Agreement to, among other things, increase the size of our senior unsecured revolving credit facility from $800.0 million to $1.6 billion, with an uncommitted option to increase the revolving credit facility by an additional $300.0 million. (9) Earnings (Loss) Per Share Three Months Ended 2021 2020 Numerator: Net income $ 203,613 $ 178,372 Denominator: Basic weighted-average common shares outstanding 145,680 144,900 Effect of dilutive securities: Stock options and restricted stock units 1,180 1,200 Diluted weighted average shares 146,860 146,100 Basic earnings per share $ 1.40 $ 1.23 Diluted earnings per share $ 1.39 $ 1.22 Litigation proceeding to discovery. matters that remain open. Contingent Obligations Under Recourse Provisions PART I – FINANCIAL INFORMATION Item 2 . PART I – FINANCIAL INFORMATION Item 2 Overview March 31, 2022, compared to diluted loss per share of $0.54 for the three months ended March 31, 2021. PART I – FINANCIAL INFORMATION Item 2 business. PART I – FINANCIAL INFORMATION Item 2 Results of Operations March 31, 2021 Three Months Ended 2021 2020 % Change Constant Currency* U.S., Canada and Latin America Devices $ 275,932 $ 197,393 40 % Masks and other 215,106 205,760 5 Total Sleep and Respiratory Care $ 491,038 $ 403,153 22 Software as a Service 97,516 92,143 6 Total $ 588,554 $ 495,296 19 Combined Europe, Asia and other markets Devices $ 218,226 $ 176,026 24 % 22 % Masks and other 97,235 80,622 21 18 Total Sleep and Respiratory Care $ 315,461 $ 256,648 23 21 Global revenue Devices $ 494,158 $ 373,419 32 % 31 % Masks and other 312,341 286,382 9 8 Total Sleep and Respiratory Care $ 806,499 $ 659,801 22 21 Software as a Service 97,516 92,143 6 6 Total $ 904,015 $ 751,944 20 19 March 31, 2021. Software as a Service March 31, 2021. Three Months Ended 2021 2020 Change % Change Constant Currency Selling, general, and administrative $ 176,719 $ 158,989 $ 17,730 11 % 10 % as a % of net revenue 19.5 % 21.1 % Research and development 59,950 54,533 5,417 10 % 9 % as a % of net revenue 6.6 % 7.3 % Amortization of acquired intangible assets 7,707 8,243 (536) (7) % (7) % March 31, 2022, compared to 20.9% for the three months ended March 31, 2021. March 31, 2021. March 31, 2021. PART I – FINANCIAL INFORMATION Item 2 Restructuring Expenses Three Months Ended 2021 2020 Change Interest (expense) income, net $ (5,360) $ (6,725) $ 1,365 Loss attributable to equity method investments (1,386) (2,288) 902 Gain (loss) on equity investments 5,612 8,476 (2,864) Other, net (1,991) (505) (1,486) Total other income (loss), net $ (3,125) $ (1,042) $ (2,083) March 31, 2021. Additionally, interest expense, net, decreased to $5.5 million for the three months ended March 31, 2022 compared to $5.8 million for the three months ended March 31, 2021. The measure “non-GAAP cost of sales” is equal to GAAP cost of sales less amortization of acquired intangible assets relating to cost of Three Months Ended September 30, September 30, GAAP Net revenue $ 904,015 $ 751,944 GAAP Cost of sales $ 397,726 $ 313,283 Less: Amortization of acquired intangibles (11,059) (11,979) Non-GAAP cost of sales $ 386,667 $ 301,304 GAAP gross profit $ 506,289 $ 438,661 GAAP gross margin 56.0 % 58.3 % Non-GAAP gross profit $ 517,348 $ 450,640 Non-GAAP gross margin 57.2 % 59.9 % Three Months Ended September 30, September 30, GAAP income from operations $ 261,913 $ 216,896 Amortization of acquired intangibles - cost of sales 11,059 11,979 Amortization of acquired intangibles - operating expenses 7,707 8,243 Non-GAAP income from operations $ 280,679 $ 237,118 Three Months Ended September 30, September 30, GAAP net income $ 203,613 $ 178,372 Amortization of acquired intangibles - cost of sales, net of tax 8,435 9,169 Amortization of acquired intangibles - operating expenses, net of tax 5,878 6,309 Reserve for disputed tax positions 4,111 - (Gain) loss on equity investments - (8,476) Non-GAAP net income $ 222,037 $ 185,374 Diluted shares outstanding 146,860 146,100 GAAP diluted earnings per share $ 1.39 $ 1.22 Non-GAAP diluted earnings per share $ 1.51 $ 1.27 As of Three Months Ended 2021 2020 Net cash (used in) / provided by operating activities $ (65,657) $ 143,999 Net cash used in investing activities (41,874) (22,110) Net cash (used in) / provided by financing activities 92,970 (175,258) Effect of exchange rate changes on cash (4,568) 11,627 Net decrease in cash and cash equivalents $ (19,129) $ (41,742) March 31, 2021. March 31, 2021. Financing Activities PART I – FINANCIAL INFORMATION Item 3 U.S. Canadian Chinese Dollar Euro Dollar Yuan (USD) (EUR) (CAD) (CNY) AUD Functional: Net Assets/(Liabilities) (56,908) (38,035) - 11,386 Foreign Currency Hedges 80,000 - - (12,410) Net Total 23,092 (38,035) - (1,023) USD Functional: Net Assets/(Liabilities) - (8) 22,695 - Foreign Currency Hedges - - (19,727) - Net Total - (8) 2,968 - EURO Functional: Net Assets/(Liabilities) (44,001) - - - Foreign Currency Hedges 40,000 - - - Net Total (4,001) - - - SGD Functional: Net Assets/(Liabilities) 282,301 10,300 - 916 Foreign Currency Hedges (300,000) - - - Net Total (17,699) 10,300 - 916 PART I – FINANCIAL INFORMATION Item 3 The table below provides information about our material foreign currency derivative financial instruments and presents the information in U.S. dollar equivalents. The table summarizes information on instruments and transactions that are sensitive to foreign currency exchange rates, including foreign currency call options, collars and forward contracts held at Fair Value Assets / (Liabilities) Foreign Exchange Contracts Year 1 Year 2 Total September 30, June 30, USD/AUD Contract amount 80,000 - 80,000 783 (652) Ave. contractual exchange rate USD 1 = USD 1 = AUD/Euro Contract amount 46,308 - 46,308 (166) 1,172 Ave. contractual exchange rate AUD 1 = AUD 1 = SGD/Euro Contract amount 23,154 - 23,154 84 (88) Ave. contractual exchange rate SGD 1 = - SGD 1 = SGD/USD Contract amount 300,000 - 300,000 (1,185) (177) Ave. contractual exchange rate SGD 1 = SGD 1 = AUD/CNY Contract amount 12,410 - 12,410 (672) (130) Ave. contractual exchange rate AUD 1 = AUD 1 = USD/EUR Contract amount 40,000 - 40,000 490 169 Ave. contractual exchange rate USD 1 = USD 1 = USD/CAD Contract amount 19,727 - 19,727 384 (44) Ave. contractual exchange rate USD 1 = USD 1 = Item 4 Controls and Procedures PART II. OTHER INFORMATION 3.1 3.2 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32* 101 The following financial statements from ResMed Inc.’s Quarterly Report on Form 10-Q for the quarter ended 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). Signatures 2022 ResMed Inc. Michael J. Farrell Chief executive officer (Principal Executive Officer) /s/ BRETT A. SANDERCOCK Brett A. Sandercock Chief financial officer (Principal Financial Officer)______________________________________________________________________________________________September 30, 2021¨o__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________¨o¨o¨¨¨¨¨o¨o No xOctoberApril 25, 2021,2022 there were 145,723,142146,284,655 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 SUBSIDIARIESIndex
2021
2021
at September 30, 2021 and June 30, 2021, respectively
187,547,442 issued and 145,711,208 outstanding at September 30, 2021 and
187,484,592 issued and 145,648,358 outstanding at June 30, 2021 March 31,
2022June 30,
2021Assets Current assets: Cash and cash equivalents $ 201,769 $ 295,278 Accounts receivable, net of allowances of $24,411 and $32,138 at March 31, 2022 and June 30, 2021, respectively 508,580 614,292 Inventories (note 3) 664,943 457,033 Prepaid taxes 108,898 72,409 Prepaid expenses and other current assets 220,110 135,745 Total current assets 1,704,300 1,574,757 Non-current assets: Property, plant and equipment, net (note 3) 513,250 463,490 Operating lease right-of-use assets 141,173 128,575 Goodwill (note 4) 1,946,317 1,927,901 Other intangible assets, net (note 3) 355,984 392,582 Deferred income taxes 74,840 79,904 Prepaid taxes and other non-current assets 169,400 160,916 Total non-current assets 3,200,964 3,153,368 Total assets $ 4,905,264 $ 4,728,125 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 149,797 $ 138,008 Accrued expenses 326,276 320,599 Operating lease liabilities, current 24,130 23,585 Deferred revenue 112,449 109,611 Income taxes payable (note 6) 42,646 307,963 Short-term debt, net (note 8) 11,967 12,000 Total current liabilities 667,265 911,766 Non-current liabilities: Deferred revenue 94,094 91,496 Deferred income taxes 10,711 11,319 Operating lease liabilities, non-current 127,254 114,779 Other long-term liabilities 5,103 6,802 Long-term debt, net (note 8) 668,735 643,351 Long-term income taxes payable (note 6) 53,298 62,933 Total non-current liabilities 959,195 930,680 Total liabilities 1,626,460 1,842,446 Commitments and contingencies (note 10) 0 0 Stockholders’ equity: Preferred stock, $0.01 par value, 2,000,000 shares authorized; none issued — — Common stock, $0.004 par value, 350,000,000 shares authorized; 188,102,293 issued and 146,266,059 outstanding at March 31, 2022 and 187,484,592 issued and 145,648,358 outstanding at June 30, 2021 585 583 Additional paid-in capital 1,645,453 1,622,199 Retained earnings 3,480,163 3,079,640 Treasury stock, at cost, 41,836,234 shares at March 31, 2022 and June 30, 2021 (1,623,256) (1,623,256) Accumulated other comprehensive loss (224,141) (193,487) Total stockholders’ equity 3,278,804 2,885,679 Total liabilities and stockholders’ equity $ 4,905,264 $ 4,728,125
September 30, 0
Three Months Ended
March 31,Nine Months Ended
March 31, 2022 2021 2022 2021 Net revenue - Sleep and Respiratory Care products $ 763,358 $ 674,931 $ 2,365,697 $ 2,042,909 Net revenue - Software as a Service 101,142 93,836 297,693 277,813 Net revenue 864,500 768,767 2,663,390 2,320,722 Cost of sales - Sleep and Respiratory Care products 324,618 270,351 1,017,494 833,203 Cost of sales - Software as a Service 37,703 40,234 110,820 105,050 Cost of sales (exclusive of amortization shown separately below) 362,321 310,585 1,128,314 938,253 Amortization of acquired intangible assets - Sleep and Respiratory Care products 1,071 900 3,043 3,995 Amortization of acquired intangible assets - Software as a Service 9,911 10,024 30,228 30,071 Amortization of acquired intangible assets 10,982 10,924 33,271 34,066 Total cost of sales 373,303 321,509 1,161,585 972,319 Gross profit 491,197 447,258 1,501,805 1,348,403 Selling, general, and administrative 182,401 160,446 544,483 488,904 Research and development 66,801 55,941 189,258 165,409 Amortization of acquired intangible assets 7,730 7,445 23,175 23,377 Restructuring expenses (note 11) — — — 8,673 Total operating expenses 256,932 223,832 756,916 686,363 Income from operations 234,265 223,426 744,889 662,040 Other income (loss), net: Interest (expense) income, net (5,462) (5,823) (16,770) (18,341) Loss attributable to equity method investments (note 5) (2,627) (4,969) (5,927) (9,895) Gain (loss) on equity investments (note 5) (1,735) 4,666 (527) 9,442 Other, net 1,878 705 729 1,205 Total other income (loss), net (7,946) (5,421) (22,495) (17,589) Income before income taxes 226,319 218,005 722,394 644,451 Income taxes 47,307 296,486 138,018 365,046 Net income (loss) $ 179,012 $ (78,481) $ 584,376 $ 279,405 Basic earnings (loss) per share (note 9) $ 1.22 $ (0.54) $ 4.00 $ 1.92 Diluted earnings (loss) per share (note 9) $ 1.22 $ (0.54) $ 3.97 $ 1.91 Dividend declared per share $ 0.42 $ 0.39 $ 1.26 $ 1.17 Basic shares outstanding (000's) 146,240 145,513 145,969 145,217 Diluted shares outstanding (000's) 146,962 145,513 147,034 146,394
September 30, Three Months Ended
March 31,Nine Months Ended
March 31, 2022 2021 2022 2021 Net income (loss) $ 179,012 $ (78,481) $ 584,376 $ 279,405 Other comprehensive income (loss): Foreign currency translation (loss) gain adjustments (1,046) (32,822) (30,654) 88,009 Comprehensive income (loss) $ 177,966 $ (111,303) $ 553,722 $ 367,414 Common Stock Treasury Stock Total Shares Amount Shares Amount Balance, June 30, 2021 187,485 $ 583 $ 1,622,199 (41,836) $ (1,623,256) $ 3,079,640 $ (193,487) $ 2,885,679 Common stock issued on exercise of options 61 — 4,354 — — — — 4,354 Common stock issued on vesting of restricted stock units, net of shares withheld for tax 1 — (195) — — — — (195) Stock-based compensation costs — — 17,303 — — — — 17,303 Other comprehensive income — — — — — — (23,516) (23,516) Net income — — — — — 203,613 — 203,613 Dividends declared ($0.42 per common share) — — — — — (61,189) — (61,189) Balance, September 30, 2021 187,547 $ 583 $ 1,643,661 (41,836) $ (1,623,256) $ 3,222,064 $ (217,003) $ 3,026,049 Common stock issued on exercise of options 39 — 2,378 — — — — 2,378 Common stock issued on vesting of restricted stock units, net of shares withheld for tax 361 2 (49,832) — — — — (49,830) Common stock issued on employee stock purchase plan 101 — 16,723 — — — — 16,723 Stock-based compensation costs — — 16,101 — — — — 16,101 Other comprehensive income — — — — — — (6,092) (6,092) Net income — — — — — 201,751 — 201,751 Dividends declared ($0.42 per common share) — — — — — (61,245) — (61,245) Balance, December 31, 2021 188,048 $ 585 $ 1,629,031 (41,836) $ (1,623,256) $ 3,362,570 $ (223,095) $ 3,145,835 Common stock issued on exercise of options 49 — 2,814 — — — — 2,814 Common stock issued on vesting of restricted stock units, net of shares withheld for tax 5 — (2,253) — — — — (2,253) Stock-based compensation costs — — 15,861 — — — — 15,861 Other comprehensive income — — — — — — (1,046) (1,046) Net income — — — — — 179,012 — 179,012 Dividends declared ($0.42 per common share) — — — — — (61,419) — (61,419) Balance, March 31, 2022 188,102 $ 585 $ 1,645,453 (41,836) $ (1,623,256) $ 3,480,163 $ (224,141) $ 3,278,804
Paid-in
Other
Comprehensive
Paid-in
Other
Comprehensive Common Stock Treasury Stock Total Shares Amount Shares Amount Balance, June 30, 2020 186,723 $ 580 $ 1,570,694 (41,836) $ (1,623,256) $ 2,832,991 $ (283,982) $ 2,497,027 Common stock issued on exercise of options 18 — 1,026 — — — — 1,026 Common stock issued on vesting of restricted stock units, net of shares withheld for tax 3 — 227 — — — — 227 Stock-based compensation costs — — 16,071 — — — — 16,071 Other comprehensive income (loss) — — — — — — 43,791 43,791 Cumulative effect adjustment from adoption of the credit loss standard, net of tax — — — — — (1,143) — (1,143) Net income — — — — — 178,372 — 178,372 Dividends declared ($0.39 per common share) — — — — — (56,511) — (56,511) Balance, September 30, 2020 186,744 $ 580 $ 1,588,018 (41,836) $ (1,623,256) $ 2,953,709 $ (240,191) $ 2,678,860 Common stock issued on exercise of options 29 — 1,857 — — — — 1,857 Common stock issued on vesting of restricted stock units, net of shares withheld for tax 451 2 (46,734) — — — — (46,732) Common stock issued on employee stock purchase plan 116 — 15,729 — — — — 15,729 Stock-based compensation costs — — 15,370 — — — — 15,370 Other comprehensive income — — — — — — 77,040 77,040 Net income — — — — — 179,514 — 179,514 Dividends declared ($0.39 per common share) — — — — — (56,654) — (56,654) Balance, December 31, 2020 187,340 $ 582 $ 1,574,240 (41,836) $ (1,623,256) $ 3,076,569 $ (163,151) $ 2,864,984 Common stock issued on exercise of options 1 — 139 — — — — 139 Common stock issued on vesting of restricted stock units, net of shares withheld for tax 12 — (3,431) — — — — (3,431) Common stock issued on employee stock purchase plan — — 6 — — — — 6 Stock-based compensation costs — — 15,591 — — — — 15,591 Other comprehensive income — — — — — — (32,822) (32,822) Net income (loss) — — — — — (78,481) — (78,481) Dividends declared ($0.39 per common share) — — — — — (56,752) — (56,752) Balance, March 31, 2021 187,353 $ 582 $ 1,586,545 (41,836) $ (1,623,256) $ 2,941,336 $ (195,973) $ 2,709,234
September 30, Nine Months Ended
March 31, 2022 2021 Cash flows from operating activities: Net income $ 584,376 $ 279,405 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 122,198 120,034 Amortization of right-of-use assets 26,636 25,805 Stock-based compensation costs 49,265 47,032 Loss attributable to equity method investments (note 5) 5,927 9,895 (Gain) loss on equity investments (note 5) 527 (9,442) Restructuring expenses (note 11) — 8,673 Changes in operating assets and liabilities: Accounts receivable 98,158 (39,899) Inventories (209,476) (48,393) Prepaid expenses, net deferred income taxes and other current assets (127,977) (41,036) Accounts payable, accrued expenses, income taxes payable and other (277,973) 158,119 Net cash provided by operating activities 271,661 510,193 Cash flows from investing activities: Purchases of property, plant and equipment (106,192) (74,805) Patent registration and acquisition costs (17,449) (11,149) Business acquisitions, net of cash acquired (35,915) (30,704) Purchases of investments (note 5) (16,614) (20,038) Proceeds from sale of investment 6,802 — (Payments) / proceeds on maturity of foreign currency contracts (5,309) 26,306 Net cash used in investing activities (174,677) (110,390) Cash flows from financing activities: Proceeds from issuance of common stock, net 26,269 18,759 Taxes paid related to net share settlement of equity awards (52,278) (49,938) Payments of business combination contingent consideration — (3,500) Proceeds from borrowings, net of borrowing costs 160,000 90,000 Repayment of borrowings (136,000) (536,000) Dividends paid (183,853) (169,917) Net cash used in financing activities (185,862) (650,596) Effect of exchange rate changes on cash (4,631) 18,272 Net decrease in cash and cash equivalents (93,509) (232,521) Cash and cash equivalents at beginning of period 295,278 463,156 Cash and cash equivalents at end of period $ 201,769 $ 230,635 Supplemental disclosure of cash flow information: Income taxes paid, net of refunds $ 432,268 $ 180,307 Interest paid $ 16,770 $ 18,644 Fair value of assets acquired, excluding cash $ 8,986 $ 15,992 Liabilities assumed (2,492) (3,309) Goodwill on acquisition 33,499 24,202 Previously held equity interest (4,078) — Deferred payments — (1,681) Cash paid for acquisitions $ 35,915 $ 35,204 RESMED INC. AND SUBSIDIARIESNotes to the Condensed Consolidated Financial Statements(Unaudited)September 30,March 31, 2022 and March 31, 2021 and September 30, 2020 are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K (our “Form 10-K”) for the year ended June 30, 2021.PART I – FINANCIAL INFORMATION Item 1
September 30,PART I – FINANCIAL INFORMATIONItem 1RESMED INC. AND SUBSIDIARIESNotes to the Condensed Consolidated Financial Statements(Unaudited)Three Months Ended
March 31,Nine Months Ended
March 31,2022 2021 2022 2021 U.S., Canada and Latin America Devices $ 250,768 $ 192,897 $ 771,475 $ 595,287 Masks and other 224,665 209,984 681,803 637,507 Total Sleep and Respiratory Care $ 475,433 $ 402,881 $ 1,453,278 $ 1,232,794 Software as a Service 101,142 93,836 297,693 277,813 Total $ 576,575 $ 496,717 $ 1,750,971 $ 1,510,607 Combined Europe, Asia and other markets Devices $ 182,307 $ 172,838 $ 608,268 $ 536,856 Masks and other 105,618 99,212 304,151 273,259 Total Sleep and Respiratory Care $ 287,925 $ 272,050 $ 912,419 $ 810,115 Global revenue Devices $ 433,075 $ 365,735 $ 1,379,743 $ 1,132,143 Masks and other 330,283 309,196 985,954 910,766 Total Sleep and Respiratory Care $ 763,358 $ 674,931 $ 2,365,697 $ 2,042,909 Software as a Service 101,142 93,836 297,693 277,813 Total $ 864,500 $ 768,767 $ 2,663,390 $ 2,320,722 are provided at a point in time. For products in our Sleep and Respiratory Care business, we transfer control and recognize a sale when products are shipped to the customer in accordance with the contractual shipping terms. For our SaaS business, revenue associated with professional services are recognized as they are provided. We defer the recognition of a portion of the consideration received when performance obligations are not yet satisfied. Consideration received from customers in advance of revenue recognition is classified as deferred revenue. Performance obligations resulting in deferred revenue in our Sleep and Respiratory Care business relate primarily to extended warranties on our devices and the provision of data for patient monitoring. Performance obligations resulting in deferred revenue in our SaaS business relate primarily to the provision of software access with maintenance and support over an agreed term and material rights associated with future discounts upon renewal of some SaaS contracts. Generally, deferred revenue will be recognized over a period of one year to five years. Our contracts do not contain significant financing components.
2021
2021 March 31,
2022June 30,
2021Balance sheet caption Contract assets Accounts receivable, net $ 508,580 $ 614,292 Accounts receivable, net Unbilled revenue, current 25,653 10,893 Prepaid expenses and other current assets Unbilled revenue, non-current 7,018 6,214 Prepaid taxes and other non-current assets Contract liabilities Deferred revenue, current (112,449) (109,611) Deferred revenue (current liabilities) Deferred revenue, non-current (94,094) (91,496) Deferred revenue (non-current liabilities) PART I – FINANCIAL INFORMATION Item 1 , rebates, discounts, free goods) and returns offered to our customers and their customers. When we give customers the right to return eligible products and receive credit, returns are estimated based on an analysis of historical experience. However, returns of products, excluding warranty-related returns, are infrequent and insignificant. We adjust the estimate of revenue at the earlier of when the most likely amount of consideration can be estimated, the amount expected to be received changes, or when the consideration becomes fixed.PART I – FINANCIAL INFORMATIONItem 1RESMED INC. AND SUBSIDIARIESNotes to the Condensed Consolidated Financial Statements(Unaudited)Three Months Ended
March 31,Nine Months Ended
March 31,2022 2021 2022 2021 Sales-type lease revenue $ 946 $ 2,031 $ 6,598 $ 5,854 Operating lease revenue 19,797 22,746 69,380 72,551 Total lease revenue $ 20,743 $ 24,777 $ 75,978 $ 78,405
September 30,PART I – FINANCIAL INFORMATION Item 1 issuedadopted accounting standards not yet adoptedpronouncements2020-04 “Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting”March 2020,October 2021, the FASB issued ASU No. 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting”2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (Topic 848)805), which provides optional expedientsrequires contract assets and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expectedcontract liabilities acquired in a business combination to be discontinued because of reference rate reform.recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. The guidance is effective for us asbeginning in the first quarter of March 12, 2020 through December 31,the year ending June 30, 2024 and early adoption is permitted. We elected to early adopt this standard in the second quarter of our fiscal year ending June 30, 2022. We will evaluate transactions or contract modifications occurring as a resultdo not expect the adoption of reference rate reform and determine whether to apply the optional guidance on an ongoing basis. The ASU is currently not expected2021-08 to have a material impact on our consolidated financial statements.RESMED INC. AND SUBSIDIARIESNotes to the Condensed Consolidated Financial Statements(Unaudited)
September 30,Three Months Ended
March 31,Nine Months Ended
March 31,2022 2021 2022 2021 Net revenue by segment Total Sleep and Respiratory Care $ 763,358 $ 674,931 $ 2,365,697 $ 2,042,909 Software as a Service 101,142 93,836 297,693 277,813 Total $ 864,500 $ 768,767 $ 2,663,390 $ 2,320,722 Depreciation and amortization by segment Sleep and Respiratory Care $ 21,008 $ 13,589 $ 58,372 $ 39,979 Software as a Service 1,863 1,491 5,421 3,599 Amortization of acquired intangible assets and corporate assets 19,435 24,908 58,405 76,456 Total $ 42,306 $ 39,988 $ 122,198 $ 120,034 Net operating profit by segment Sleep and Respiratory Care $ 267,808 $ 253,693 $ 847,589 $ 763,534 Software as a Service 23,649 23,052 68,668 70,929 Total $ 291,457 $ 276,745 $ 916,257 $ 834,463 Reconciling items Corporate costs $ 38,480 $ 34,950 $ 114,922 $ 106,307 Amortization of acquired intangible assets 18,712 18,369 56,446 57,443 Restructuring expenses Restructuring expenses — — — 8,673 Interest expense (income), net 5,462 5,823 16,770 18,341 Loss attributable to equity method investments 2,627 4,969 5,927 9,895 (Gain) loss on equity investments 1,735 (4,666) 527 (9,442) Other, net (1,878) (705) (729) (1,205) Income before income taxes $ 226,319 $ 218,005 $ 722,394 $ 644,451 Inventories March 31,
2022June 30,
2021Raw materials $ 340,335 $ 155,419 Work in progress 4,481 4,647 Finished goods 320,127 296,967 Total inventories $ 664,943 $ 457,033 Property, Plant and Equipment March 31,
2022June 30,
2021Property, plant and equipment, at cost $ 1,165,391 $ 1,085,629 Accumulated depreciation and amortization (652,141) (622,139) Property, plant and equipment, net $ 513,250 $ 463,490
2021
2021PART I – FINANCIAL INFORMATION Item 1 RESMED INC. AND SUBSIDIARIES
2021
2021Notes to the Condensed Consolidated Financial Statements
2021
2021Other Intangible Assets March 31,
2022June 30,
2021Developed/core product technology $ 352,304 $ 383,319 Accumulated amortization (234,540) (239,049) Developed/core product technology, net 117,764 144,270 Customer relationships 251,693 272,703 Accumulated amortization (86,212) (90,976) Customer relationships, net 165,481 181,727 Other intangibles 211,227 197,662 Accumulated amortization (138,488) (131,077) Other intangibles, net 72,739 66,585 Total other intangibles, net $ 355,984 $ 392,582 PART I – FINANCIAL INFORMATIONItem 1RESMED INC. AND SUBSIDIARIESNotes to the Condensed Consolidated Financial Statements(Unaudited)Nine Months Ended March 31, 2022
Respiratory CareSleep and
Respiratory CareSaaS Total Balance at the beginning of the period $ 633,183 $ 1,294,718 $ 1,927,901 Business acquisitions Business acquisitions 33,499 — 33,499 Foreign currency translation adjustments (15,083) — (15,083) Balance at the end of the period $ 651,599 $ 1,294,718 $ 1,946,317 usage.usage. All gains and losses on marketable and non-marketable equity securities, realized and unrealized, are recognized in gain (loss) on equity investments as a component of other income (loss), net on the condensed consolidated statements of operations.PART I – FINANCIAL INFORMATION Item 1
2021
2021Measurement category March 31,
2022June 30,
2021Fair value $ 17,842 $ 29,084 Measurement alternative 38,180 23,002 Equity method 12,477 17,154 Total $ 68,499 $ 69,240
September 30, 2021 Nine Months Ended March 31, 2022 Non-marketable securities Marketable securities Equity method investments Total Balance at the beginning of the period $ 23,002 $ 29,084 $ 17,154 $ 69,240 7,665 (3,202) 1,250 5,713 Observable price adjustments on non-marketable equity securities 5,367 — — 5,367 Unrealized losses on marketable equity securities Unrealized losses on marketable equity securities — (9,666) — (9,666) Realized gains on marketable and non-marketable equity securities Realized gains on marketable and non-marketable equity securities 2,355 1,626 — 3,981 Impairment of investments (209) — — (209) Loss attributable to equity method investments — — (5,927) (5,927) Carrying value at the end of the period $ 38,180 $ 17,842 $ 12,477 $ 68,499
September 30, 2020Nine Months Ended March 31, 2021 Non-marketable securities Marketable securities Equity method investments Total Balance at the beginning of the period $ 30,033 $ — $ 14,109 $ 44,142 Additions to investments 2,538 5,000 12,500 20,038 Observable price adjustments on non-marketable equity securities 1,000 — — 1,000 Unrealized gains on marketable equity securities — 8,442 — 8,442 (10,569) 10,569 — — Loss attributable to equity method investments — — (9,895) (9,895) Carrying value at the end of the period $ 23,002 $ 24,011 $ 16,714 $ 63,727 threenine months ended September 30, 2020,March 31, 2021, one of our investments, which was previously accounted for under the measurement alternative, completed its initial public offering which resulted in a change of accounting methodology to fair value.PART I – FINANCIAL INFORMATIONItem 1RESMED INC. AND SUBSIDIARIESNotes to the Condensed Consolidated Financial Statements(Unaudited)gainslosses recognized for the three months ended September 30, 2021 and 2020 for equity investments in non-marketable and marketable securities still held as of those respective datesMarch 31, 2022 for the three and nine months ended March 31, 2022 were a gain of $5.6$1.7 million and $8.5$4.5 million, respectively.PART I – FINANCIAL INFORMATION Item 1
September 30,Nine Months Ended
March 31,2022 2021 Balance at the beginning of the period $ 22,032 $ 21,132 Warranty accruals for the period 14,653 11,521 Warranty costs incurred for the period (9,689) (11,253) Foreign currency translation adjustments 41 1,566 Balance at the end of the period $ 27,037 $ 22,966
2021
2021March 31,
2022June 30,
2021Short-term debt $ 11,967 $ 12,000 Long-term debt $ 670,000 $ 646,000 Deferred borrowing costs (1,265) (2,649) Long-term debt, net $ 668,735 $ 643,351 Total debt $ 680,702 $ 655,351 PART I – FINANCIAL INFORMATIONItem 1RESMED INC. AND SUBSIDIARIESNotes to the Condensed Consolidated Financial Statements(Unaudited)PART I – FINANCIAL INFORMATION Item 1 September 30, 2021,March 31, 2022, the interest rate that was being charged on the outstanding principal amounts was 0.9%1.1%. An applicable commitment fee of 0.100% to 0.175% (depending on the then-applicable leverage ratio) applies on the unused portion of the revolving credit facility. As of September 30, 2021,March 31, 2022, we had $1.5$1.6 billion available for draw down under the revolving credit facility.September 30, 2021March 31, 2022 and June 30, 2021, which was $308.0$182.0 million and $158.0 million, respectively. Quoted market prices in active markets for identicalsimilar liabilities based inputs (Level 1)2) were used to estimate fair value.September 30, 2021March 31, 2022 and June 30, 2021 the Senior Notes had a carrying amount of $500.0 million, excluding deferred borrowing costs, and an estimated fair value of $527.2$495.9 million and $530.4 million, respectively. Quoted market prices in active markets for identicalsimilar liabilities based inputs (Level 1)2) were used to estimate fair value.September 30, 2021,March 31, 2022, we were in compliance with our debt covenants and there was $808.0$682.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.PART I – FINANCIAL INFORMATIONItem 1RESMED INC. AND SUBSIDIARIESNotes to the Condensed Consolidated Financial Statements(Unaudited)PART I – FINANCIAL INFORMATION Item 1 1,322307,368 and 109,475225,580 for the three months ended September 30,March 31, 2022 and 2021, respectively, and 2020,52,599 and 200,341 for the nine months ended March 31, 2022 and 2021, respectively, as the effect would have been anti-dilutive.
September 30,Three Months Ended
March 31,Nine Months Ended
March 31,2022 2021 2022 2021 Numerator: Net income (loss) Net income (loss) $ 179,012 $ (78,481) $ 584,376 $ 279,405 Denominator: Basic weighted-average common shares outstanding 146,240 145,513 145,969 145,217 Effect of dilutive securities: Stock options and restricted stock units 722 — 1,065 1,177 Diluted weighted average shares 146,962 145,513 147,034 146,394 Basic earnings (loss) per share Basic earnings (loss) per share $ 1.22 $ (0.54) $ 4.00 $ 1.92 Diluted earnings (loss) per share Diluted earnings (loss) per share $ 1.22 $ (0.54) $ 3.97 $ 1.91 moneymonetary damages and attorneys’ fees. ResMed answered the complaint on September 30, 2021 and filed a motion to dismiss the complaint on the basis that the patents are invalid because the subject matter of the patents is not patentable under the Supreme Court and Federal Circuit precedent. The motion to dismiss was granted in part, and denied in part. The matter is pending.meritsmerits. The administrative law judge issued an initial determination on April 1, 2022, finding no violation of any of the Philips patents asserted in the ITC. Philips is seeking review by the full International Trade Commission, and the Commission is expected to issue an initialits final determination on or about January 27,August 1, 2022. On December 17, 2020, Philips filed companion cases for patent infringement against the same defendants in the United States District Court for the District of Delaware, case nos. 1:20-cv-01707, 01708, 01709, 01710, 01711, and 01713 (CFC) seeking damages, an injunction, and a declaration from the court on the amount of a fair reasonable and non-discriminatory license rate for the standard essential patents it is asserting against the defendants. The district court cases have been stayed pending the resolution of the ITC proceedings. ResMed is not a party to the ITC investigation or the district court cases but sells products that incorporate some of the communications modules at issue in the cases.PART I – FINANCIAL INFORMATION Item 1 these matters.PART I – FINANCIAL INFORMATIONItem 1RESMED INC. AND SUBSIDIARIESNotes to the Condensed Consolidated Financial Statements(Unaudited)threenine months ended September 30,March 31, 2022 and March 31, 2021, and September 30, 2020, receivables sold with limited recourse were $49.5$126.2 million and $30.6$112.2 million, respectively. As of September 30, 2021,March 31, 2022, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $36.0$47.0 million and $8.1$3.4 million, respectively. As of June 30, 2021, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $30.2 million and $8.2 million, respectively.globally;globally, changes in our business or growth strategy or an inability to execute our strategy due to changes in our industry or the economy generally, the emergence of new or growing competitors, the actions or omissions of third parties, including suppliers, customers, competitors and governmental authorities and various other factors. If any one or more of these risks or uncertainties materialize, or underlying estimates or assumptions prove incorrect, actual results may vary significantly from those expressed in our forward-looking statements, and there can be no assurance that the forward-looking statements contained in this report will in fact occur.
September 30, 2021.March 31, 2022. Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. Management’s discussion and analysis is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and notes included in this report.portable oxygen concentrators and cloud-based software informatics solutions to manage patient outcomes and customer and provider business processes. Our growth has been fueled by geographic expansion, our research and product development efforts, acquisitions and an increasing awareness of SDB and respiratory conditions like chronic obstructive pulmonary disease as significant health concerns.September 30, 2021,March 31, 2022, we invested $60.0$66.8 million on research and development activities, which represents 6.6%7.7% of net revenues, with a continued focus on the development and commercialization of new, innovative products and solutions that improve patient outcomes, create efficiencies for our customers and help physicians and providers better manage chronic disease and lower healthcare costs. During the three months ended September 30, 2021March 31, 2022 we continued the launch of AirSense 11, which introduces new features such as a touch screen, algorithms for patients new to therapy and digital enhancements and over-the-air update capabilities. Due to multiple acquisitions, including Brightree in April 2016, HEALTHCAREfirst in July 2018 and MatrixCare in November 2018, our operations now include out-of-hospital software platforms designed to support the professionals and caregivers who help people stay healthy in the home or care setting of their choice. These platforms comprise our SaaS business. These products, our cloud-based remote monitoring and therapy management system, and a robust product pipeline, should continue to provide us with a strong platform for future growth.September 30, 2021March 31, 2022 was $904.0$864.5 million, an increase of 20%12% compared to the three months ended September 30, 2020.March 31, 2021. Gross margin was 56.0%56.8% for the three months ended September 30, 2021March 31, 2022 compared to 58.3%58.2% for the three months ended September 30, 2020.March 31, 2021. Diluted earnings per share was $1.39 for the three months ended September 30, 2021, compared to diluted earnings per share of $1.22 for the three months ended September 30, 2020.September 30, 2021,March 31, 2022, our cash and cash equivalents totaled $276.1$201.8 million, our total assets were $4.7$4.9 billion and our stockholders’ equity was $3.0$3.3 billion.ImpactKey Trends and Economic Factors Affecting Our BusinessCOVID-19In March 2020, the World Health Organization declared the outbreakavailability of raw materials and electronic components. The lack of raw materials and electronic components is also impacting companies outside of our direct industry, which is resulting in a novel strain of coronavirus (“COVID-19”)competitive supply environment causing higher costs, requiring us to commit to minimum purchase obligations as well as make upfront payments to our suppliers. Additionally, we have observed a reduction in both inbound and outbound transportation capacity as a pandemic. Our primary goal duringresult of port closures and delays associated with the pandemic, which is causing longer lead times in receiving raw materials into and distributing finished goods out of our manufacturing facilities, in addition to increased freight costs. These highly competitive and constrained supply chain conditions are increasing our cost of sales, which has and may continue to decrease our gross margin. Given the ongoing uncertainty regarding the duration and extent of the COVID-19 pandemic, iswe are uncertain as to the preservationduration and extent of life. We have prioritized protecting the health and safetyconstraint on our supply chain.employees and continuing to use our employees’ talents and our resources to help society meet and overcome the challenges the pandemic poses.During the three months ended September 30, 2021, we did not observe material incrementalcompetitors, Philips, has resulted in increased demand for our ventilator devicessleep and masks associated with respiratory care devices. The supply chain disruptions outlined above have constrained and restricted our ability to meet this increased demand and we expect these constraints will continue for the remainder of the fiscal year ending June 30, 2022. pandemic. As such, weWe did not observe material incremental demand for our ventilator devices and masks associated with the pandemic during the three months ended March 31, 2022 and do not expect material COVID-19-generated demand for our ventilator products for the remainder of the fiscal year ending June 30, 2022.Diagnosticor HME, suppliers(“HME”) distributors, and sleep clinics have been impactedlargely recovered towards pre-pandemic levels as vaccines and in some instances, been required, to temporarily close due to governments’ “shelter-in-place” orders, quarantines or similar orders or restrictions enacted to control the spread of COVID-19. In some countries, new patients are prescribed sleep apnea treatment through hospitals that are directing their resources to critical care, including COVID-19 treatment. The impact on these diagnostic and prescription pathways has resulted in a decrease in demand from new patients for our products designed to treat sleep apnea. Although certain governments have begun to reduce or remove COVID-19 restrictions and implement vaccination programs to varying degrees, we are uncertain as to the duration and extent of the impact on demand for our sleep devices. However, due to the nature of the installed base of existing patients using our devices,boosters roll out globally. Likewise, we have not seen any significant adverse impact on demand for re-supply ofcontinued to observe stabilizing patient flow in our masks.Our SaaS business has also been affected by COVID-19 and measures taken to control the spread of COVID-19. Some of our existing and potential SaaS customers are HME distributors and have been impacted by the same temporary business closures noted above. We also have existing and potential SaaS customers that operateout-of-hospital care facilities and are either receiving and treating patients infected with COVID-19 or have implemented significant measures to safeguard their facilities against a potential COVID-19 outbreak. Given these challenging business conditions, businesses may be deterred from adopting new or changing SaaS platforms, which may adversely impact our ability to engage new customers forsettings within our SaaS businesses, or expand the services used by existing customers.but since COVID-19 was declared a pandemic in March 2020,as we were able to broadly maintain our operations, and we are beginning the slow and careful process of progressively returning to work in some ofreopen our offices around the world. The pandemic has not negatively impacted our liquidity position.
September 30, 2021March 31, 2022 Compared to the Three Months Ended September 30, 2020September 30, 2021March 31, 2022 increased to $904.0$864.5 million from $751.9$768.8 million for the three months ended September 30, 2020,March 31, 2021, an increase of $152.1$95.7 million or 20%12% (a 19%14% increase on a constant currency basis). The following table summarizes our net revenue disaggregated by segment, product and region (in thousands):
September 30,Three Months Ended
March 31,% Change Constant Currency* 2022 2021 U.S., Canada and Latin America Devices $ 250,768 $ 192,897 30 % Masks and other 224,665 209,984 7 Total Sleep and Respiratory Care $ 475,433 $ 402,881 18 Software as a Service 101,142 93,836 8 Total $ 576,575 $ 496,717 16 Combined Europe, Asia and other markets Devices $ 182,307 $ 172,838 5 % 10 % Masks and other 105,618 99,212 6 13 Total Sleep and Respiratory Care $ 287,925 $ 272,050 6 11 Global revenue Devices $ 433,075 $ 365,735 18 % 21 % Masks and other 330,283 309,196 7 9 Total Sleep and Respiratory Care $ 763,358 $ 674,931 13 15 Software as a Service 101,142 93,836 8 8 Total $ 864,500 $ 768,767 12 14 September 30, 2021March 31, 2022 was $806.5$763.4 million, an increase of 22%13% compared to net revenue for the three months ended September 30, 2020.March 31, 2021. Movements in international currencies against the U.S. dollar positivelynegatively impacted net revenue by approximately $6.2$14.4 million for the three months ended September 30, 2021.March 31, 2022. Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended September 30, 2021March 31, 2022 increased by 21%15% compared to the three months ended September 30, 2020.March 31, 2021. The increase in net revenue was primarily attributable to an increase in unit sales of our devices and masks, including increased demand following a recent product recall by one of our competitors.PART I – FINANCIAL INFORMATION Item 2 PART I – FINANCIAL INFORMATION Item 2 Nine Months Ended
March 31,% Change Constant Currency* 2022 2021 U.S., Canada and Latin America Devices $ 771,475 $ 595,287 30 % Masks and other 681,803 637,507 7 Total Sleep and Respiratory Care $ 1,453,278 $ 1,232,794 18 Software as a Service 297,693 277,813 7 Total $ 1,750,971 $ 1,510,607 16 Combined Europe, Asia and other markets Devices $ 608,268 $ 536,856 13 % 15 % Masks and other 304,151 273,259 11 14 Total Sleep and Respiratory Care $ 912,419 $ 810,115 13 15 Global revenue Devices $ 1,379,743 $ 1,132,143 22 % 23 % Masks and other 985,954 910,766 8 9 Total Sleep and Respiratory Care $ 2,365,697 $ 2,042,909 16 16 Software as a Service 297,693 277,813 7 7 Total $ 2,663,390 $ 2,320,722 15 15 threenine months ended September 30, 2021March 31, 2022 increased to $491.0$1,453.3 million from $403.2$1,232.8 million for the threenine months ended September 30, 2020,March 31, 2021, an increase of $87.9$220.5 million or 22%18%. The increase was primarily due to an increase in unit sales of our devices and masks, including recovery of core sleep patient flow that was previously impacted by the pandemic and increased demand following a recent product recall by one of our competitors, partially offset by decreased COVID-19 related demand for our ventilators.threenine months ended September 30, 2021March 31, 2022 to $315.5$912.4 million from $256.6$810.1 million for the threenine months ended September 30, 2020,March 31, 2021, an increase of $58.8$102.3 million or 23%13% (a 21%15% increase on a constant currency basis). The constant currency increase in sales in combined Europe, Asia and other markets predominantly reflects an increase in unit sales of our devices and masks, including recovery of core sleep patient flow that was previously impacted by the pandemic and increased demand following a recent product recall by one of our competitors, partially offset by decreased COVID-19-related demand for our ventilators.threenine months ended September 30, 2021March 31, 2022 increased to $494.2$1,379.7 million from $373.4$1,132.1 million for the threenine months ended September 30, 2020,March 31, 2021, an increase of $120.7$247.6 million or 32%22%, including an increase of 40%30% in the U.S.,PART I – FINANCIAL INFORMATION Item 2 24%13% in combined Europe, Asia and other markets (a 22%15% increase on a constant currency basis). Excluding the impact of foreign currency movements, device sales for the threenine months ended September 30, 2021March 31, 2022 increased by 31%23%.threenine months ended September 30, 2021March 31, 2022 increased to $312.3$986.0 million from $286.4$910.8 million for the threenine months ended September 30, 2020,March 31, 2021, an increase of $26.0$75.2 million or 9%8%, including an increase of 5%7% in the U.S., Canada and Latin America and an increase of 21%11% in combined Europe, Asia and other markets (an 18%(a 14% increase on a constant currency basis). Excluding the impact of foreign currency movements, masks and other sales increased by 8%9%, compared to the threenine months ended September 30, 2020.PART I – FINANCIAL INFORMATIONItem 2RESMED INC. AND SUBSIDIARIESManagement’s Discussion and Analysis of Financial Condition and Results of Operationsthreenine months ended September 30, 2021March 31, 2022 was $97.5$297.7 million, an increase of 6%7% compared to the threenine months ended September 30, 2020.March 31, 2021. The increase was predominantly due to continued growth in resupply service offeringsour HME and Home Health and Hospice segments, in addition to stabilizing patient flow in our out-of-hospital care settings.September 30, 2021March 31, 2022 to $506.3$491.2 million from $438.7$447.3 million for the three months ended September 30, 2020,March 31, 2021, an increase of $67.6$43.9 million or 15%10%. Gross margin, which is gross profit as a percentage of net revenue, for the three months ended September 30, 2021March 31, 2022 was 56.0%56.8% compared to 58.3%58.2% for the three months ended September 30, 2020.September 30, 2021March 31, 2022 compared to the three months ended September 30, 2020March 31, 2021 was due primarily to higher logistics and manufacturing and logistics costs, partially offset by favorable changes in product mix and declines in average selling prices.Three Months Ended
March 31,Change % Change Constant Currency 2022 2021 Selling, general, and administrative $ 182,401 $ 160,446 $ 21,955 14 % 17 % as a % of net revenue 21.1 % 20.9 % Research and development 66,801 55,941 10,860 19 % 22 % as a % of net revenue 7.7 % 7.3 % Amortization of acquired intangible assets 7,730 7,445 285 4 % 4 % Nine Months Ended
March 31,Change % Change Constant Currency 2022 2021 Selling, general, and administrative $ 544,483 $ 488,904 $ 55,579 11 % 13 % as a % of net revenue 20.4 % 21.1 % Research and development 189,258 165,409 23,849 14 % 15 % as a % of net revenue 7.1 % 7.1 % Amortization of acquired intangible assets 23,175 23,377 (202) (1) % (1) %
September 30,PART I – FINANCIAL INFORMATION Item 2 September 30, 2021March 31, 2022 to $176.7$182.4 million from $159.0$160.4 million for the three months ended September 30, 2020,March 31, 2021, an increase of $17.7$22.0 million or 11%14%. Selling, general, and administrative expenses were unfavorablyfavorably impacted by the movement of international currencies against the U.S. dollar, which increaseddecreased our expenses by approximately $1.6$5.7 million, as reported in U.S. dollars. Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the three months ended September 30, 2021March 31, 2022 increased by 10%17% compared to the three months ended September 30, 2020.March 31, 2021. As a percentage of net revenue, selling, general, and administrative expenses were 19.5% for the three months ended September 30, 2021, compared to 21.1% for the three months ended September 30, 2020.September 30, 2021March 31, 2022 compared to the three months ended September 30, 2020.ResearchMarch 31, 2021.Development ExpensesResearch and developmentadministrative expenses increased for the threenine months ended September 30, 2021March 31, 2022 to $60.0$544.5 million from $54.5$488.9 million for the threenine months ended September 30, 2020,March 31, 2021, an increase of $5.4$55.6 million or 10%11%. ResearchSelling, general, and developmentadministrative expenses were unfavorablyfavorably impacted by the movement of international currencies against the U.S. dollar, which increaseddecreased our expenses by approximately $0.7$5.7 million, as reported in U.S. dollars. Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the nine months ended March 31, 2022 increased by 13% compared to the nine months ended March 31, 2021. As a percentage of net revenue, selling, general, and administrative expenses were 20.4% for the nine months ended March 31, 2022, compared to 21.1% for the nine months ended March 31, 2021.September 30,March 31, 2021, an increase of $10.9 million, or 19%. Research and development expenses were favorably impacted by the movement of international currencies against the U.S. dollar, which decreased our expenses by approximately $1.5 million for the three months ended March 31, 2022, as reported in U.S. dollars. Excluding the impact of foreign currency movements, research and development expenses increased by 9%22% compared to the three months ended September 30, 2020.March 31, 2021. As a percentage of net revenue, research and development expenses were 6.6%7.7% for the three months ended September 30, 2021,March 31, 2022, compared to 7.3% for the three months ended September 30, 2020.September 30, 2021March 31, 2022 totaled $7.7 million compared to $8.2$7.4 million for the three months ended September 30, 2020.
September 30,Three Months Ended
March 31,2022 2021 Change Interest (expense) income, net $ (5,462) $ (5,823) $ 361 Loss attributable to equity method investments (2,627) (4,969) 2,342 Gain (loss) on equity investments (1,735) 4,666 (6,401) Other, net 1,878 705 1,173 Total other income (loss), net $ (7,946) $ (5,421) $ (2,525) Nine Months Ended
March 31,2022 2021 Change Interest (expense) income, net $ (16,770) $ (18,341) $ 1,571 Loss attributable to equity method investments (5,927) (9,895) 3,968 Gain (loss) on equity investments (527) 9,442 (9,969) Other, net 729 1,205 (476) Total other income (loss), net $ (22,495) $ (17,589) $ (4,906) September 30, 2021March 31, 2022 was a loss of $3.1$7.9 million compared to a loss of $1.0$5.4 million for the three months ended September 30, 2020.March 31, 2021. The increase in loss was primarily due to lower net unrealized gainslosses associated with our investments in marketable and non-marketable equity securities, which were a gainloss of $5.6$1.7 million for the three months ended September 30, 2021March 31, 2022 compared to a gain of $8.5$4.7 million for the three months ended September 30, 2020.March 31, 2021. This was offset by a decrease in interest expense, net, to $5.4 million for the three months ended September 30, 2021 compared to $6.7 million for the three months ended September 30, 2020. We also recorded lower losses attributable to equity method investments for the three months ended September 30, 2021March 31, 2022 of $1.4$2.6 million compared to $2.3$5.0 million for the three months ended September 30, 2020.September 30, 2021March 31, 2022 was 21.3%20.9% and 19.1% as compared to 17.4%136.0% and 56.6% for the three and nine months ended SeptemberMarch 31, 2020.2021. Our effective rate of 19.1% for the nine months ended March 31, 2021 differs from the statutory rate of 21.0% primarily due to research credits, foreign operations and windfall tax benefits related to the vesting or settlement of employee share-based awards. The increase todecrease in our effective taxPART I – FINANCIAL INFORMATION Item 2 changesthe decrease in unrecognized tax benefits recorded in connection with the geographic mix of our earnings. Australian Tax Office ("ATO") transfer pricing dispute, outlined below.Australian Taxation Office (“ATO”)ATO in relation to the previously disclosed transfer pricing dispute for the tax years 2009 through 2018 (“ATO settlement”). The ATO settlement fully resolved the dispute for all prior years, with no admission of liability and provides clarity in relation to certain future taxation principles.September 30,March 31, 2022 was $179.0 million compared to a net loss of $78.5 million for the three months ended March 31, 2021, an increase of $257.5 million. Our net income for the nine months ended March 31, 2022 was $203.6$584.4 million compared to net income of $178.4$279.4 million for the threenine months ended September 30, 2020,March 31, 2021, an increase of 14%$305.0 million, or 109%.September 30, 2021March 31, 2022 was $1.39$1.22 per diluted share compared to diluted loss per share of $0.54 for the three months ended March 31, 2021. Our diluted earnings per share for the nine months ended March 31, 2022 was $3.97 per diluted share compared to diluted earnings per share of $1.22$1.91 for the threenine months ended September 30, 2020,March 31, 2021, an increase of 14%108%.PART I – FINANCIAL INFORMATIONItem 2RESMED INC. AND SUBSIDIARIESManagement’s Discussion and Analysis of Financial Condition and Results of Operationssales.sales and restructuring expense associated with inventory write-downs following the closure of the portable oxygen concentrator business. The measure “non-GAAP gross profit” is the difference between GAAP net revenue and non-GAAP cost of sales, and “non-GAAP gross margin” is the ratio of non-GAAP gross profit to GAAP net revenue.PART I – FINANCIAL INFORMATION Item 2 Three Months Ended
March 31,Nine Months Ended
March 31,
2021
20202022 2021 2022 2021 GAAP Net revenue $ 864,500 $ 768,767 $ 2,663,390 $ 2,320,722 GAAP Cost of sales $ 373,303 $ 321,509 $ 1,161,585 $ 972,319 (10,982) (10,924) (33,271) (34,066) — — — (5,232) Non-GAAP cost of sales $ 362,321 $ 310,585 $ 1,128,314 $ 933,021 GAAP gross profit $ 491,197 $ 447,258 $ 1,501,805 $ 1,348,403 GAAP gross margin 56.8 % 58.2 % 56.4 % 58.1 % Non-GAAP gross profit $ 502,179 $ 458,182 $ 1,535,076 $ 1,387,701 Non-GAAP gross margin 58.1 % 59.6 % 57.6 % 59.8 % intangibles.intangibles and restructuring expense associated with the closure of the portable oxygen concentrator business. Non-GAAP income from operations is reconciled with GAAP income from operations below (in thousands):Three Months Ended
March 31,Nine Months Ended
March 31,
2021
20202022 2021 2022 2021 GAAP income from operations $ 234,265 $ 223,426 $ 744,889 $ 662,040 Amortization of acquired intangibles - cost of sales 10,982 10,924 33,271 34,066 Amortization of acquired intangibles - operating expenses 7,730 7,445 23,175 23,377 Restructuring - cost of sales Restructuring - cost of sales — — — 5,232 Restructuring - operating expenses Restructuring - operating expenses — — — 8,673 Non-GAAP income from operations $ 252,977 $ 241,795 $ 801,335 $ 733,388 PART I – FINANCIAL INFORMATION Item 2 Three Months Ended
March 31,Nine Months Ended
March 31,
2021
2020 2022 2021 2022 2021 GAAP net income (loss) GAAP net income (loss) $ 179,012 $ (78,481) $ 584,376 $ 279,405 Amortization of acquired intangibles - cost of sales, net of tax 8,374 8,395 25,373 26,136 Amortization of acquired intangibles - operating expenses, net of tax 5,894 5,721 17,673 17,936 Reserve for disputed tax positions — 254,776 4,111 254,776 Restructuring - cost of sales, net of tax Restructuring - cost of sales, net of tax — — — 4,663 Restructuring - operating expenses, net of tax Restructuring - operating expenses, net of tax — — — 7,730 (Gain) loss on equity investments — — — (8,476) Non-GAAP net income $ 193,280 $ 190,411 $ 631,533 $ 582,170 GAAP diluted shares outstanding GAAP diluted shares outstanding 146,962 145,513 147,034 146,394 Anti-dilutive shares excluded from GAAP Anti-dilutive shares excluded from GAAP — 858 — — Non-GAAP diluted shares outstanding Non-GAAP diluted shares outstanding 146,962 146,371 147,034 146,394 GAAP diluted earnings (loss) per share GAAP diluted earnings (loss) per share $ 1.22 $ (0.54) $ 3.97 $ 1.91 Non-GAAP diluted earnings per share $ 1.32 $ 1.30 $ 4.30 $ 3.98 PART I – FINANCIAL INFORMATIONItem 2RESMED INC. AND SUBSIDIARIESManagement’s Discussion and Analysis of Financial Condition and Results of OperationsSeptember 30, 2021March 31, 2022 and June 30, 2021, we had cash and cash equivalents of $276.1$201.8 million and $295.3 million, respectively. Our cash and cash equivalents held within the United States at September 30, 2021March 31, 2022 and June 30, 2021 were $94.5$57.2 million and $106.7 million, respectively. Our remaining cash and cash equivalent balances at September 30, 2021March 31, 2022 and June 30, 2021, were $181.6$144.6 million and $188.6 million, respectively. Our cash and cash equivalent balances are held at highly rated financial institutions.September 30, 2021,March 31, 2022, we had $1.5$1.6 billion available for draw down under the revolver credit facility and a combined total of $1.7$1.8 billion in cash and available liquidity under the revolving credit facility.PART I – FINANCIAL INFORMATION Item 2 September 30, 2021,March 31, 2022, we had $1.5$1.6 billion available for draw down under the revolving credit facility.September 30, 2021,March 31, 2022, there was a total of $808.0$682.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes. We expect to satisfy all of our liquidity and long-term debt requirements through a combination of cash on hand, cash generated from operations and debt facilities.
September 30, Nine Months Ended
March 31, 2022 2021 Net cash provided by operating activities $ 271,661 $ 510,193 Net cash used in investing activities (174,677) (110,390) Net cash used in financing activities (185,862) (650,596) Effect of exchange rate changes on cash (4,631) 18,272 Net decrease in cash and cash equivalents $ (93,509) $ (232,521) used inprovided by operating activities was $65.7$271.7 million for the threenine months ended September 30, 2021,March 31, 2022, compared to cash provided of $144.0$510.2 million for the threenine months ended September 30, 2020.March 31, 2021. The $209.7$238.5 million decrease in cash flow from operations was primarily due to the payment of our tax settlement with the ATO of $284.8 million and greater purchases and prepayments of inventory to secure adequate components for the increasing sales demand, partly offset by an increase in operating profit and other net changes in working capital balances compared to the threenine months ended September 30, 2020.$41.9$174.7 million for the threenine months ended September 30, 2021,March 31, 2022, compared to cash used of $22.1$110.4 million for the threenine months ended September 30, 2020.March 31, 2021. The $19.8$64.3 million decrease in cash flow from investing activities was primarily due to an increase in capital expenditurespurchases of property, plant and a net decreaseequipment and an increase in proceedspayments on maturity of foreign currency contracts compared to threethe nine months ended September 30, 2020.PART I – FINANCIAL INFORMATIONItem 2RESMED INC. AND SUBSIDIARIESManagement’s Discussion and Analysis of Financial Condition and Results of Operationsprovided byused in financing activities was $93.0$185.9 million for the threenine months ended September 30, 2021,March 31, 2022, compared to cash used of $175.3$650.6 million for the threenine months ended September 30, 2020.March 31, 2021. The $268.2$464.7 million increase in cash flow from financing activities was primarily due to borrowing activity under our Revolving Credit Agreement. We borrowed $150.0Proceeds from borrowings, net of repayments, for the nine months ended March 31, 2022 were $24.0 million compared to net repayments of $446.0 million during the threenine months ended September 30, 2021, compared to a net repaymentMarch 31, 2021.PART I – FINANCIAL INFORMATION Item 2 September 30, 2021,March 31, 2022, we paid cash dividends of $0.42 per common share totaling $61.2$61.4 million. On OctoberApril 28, 2021,2022, our board of directors declared a cash dividend of $0.42 per common share, to be paid on DecemberJune 16, 2021,2022, to shareholders of record as of the close of business on November 11, 2021.May 12, 2022. Future dividends are subject to approval by our board of directors.September 30, 2021,March 31, 2022, we have repurchased a total of 41.8 million shares for an aggregate of $1.6 billion. We have temporarily suspended our share repurchase program due to recent acquisitions, and more recently, as a response to the COVID-19 pandemic. Accordingly, we did not repurchase any shares during the three and nine months ended September 30, 2021March 31, 2022 and 2020.2021. Shares that are repurchased are classified as treasury stock pending future use and reduce the number of shares of common stock outstanding used in calculating earnings (loss) per share. There is no expiration date for this program, and the program may be accelerated, suspended, delayed or discontinued at any time at the discretion of our board of directors. At September 30, 2021,March 31, 2022, 12.9 million additional shares can be repurchased under the approved share repurchase program.AsSeptember 30, 2021,March 31, 2022 were as follows: Payments Due by March 31, Total 2023 2024 2025 2026 2027 Thereafter Purchase obligations 1,570,247 1,465,590 89,710 13,555 1,392 — — werehave been no material changes outside of the ordinary course of business in our outstanding contractual obligations from those disclosed within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.September 30, 2021,March 31, 2022, we are not involved in any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC.September 30, 2021March 31, 2022 (in thousands): U.S.
Dollar
(USD)Euro
(EUR)Canadian
Dollar
(CAD)Chinese
Yuan
(CNY)AUD Functional: Net Assets/(Liabilities) 49,745 (73,538) — 11,801 Foreign Currency Hedges (60,000) 55,478 — (12,616) Net Total (10,255) (18,060) — (815) USD Functional: Net Assets/(Liabilities) — — 21,041 — Foreign Currency Hedges — — (20,028) — Net Total — — 1,013 — SGD Functional: Net Assets/(Liabilities) 345,779 (24,829) — 931 Foreign Currency Hedges (330,000) — — — Net Total 15,779 (24,829) — 931 September 30, 2021.March 31, 2022. The table presents the notional amounts and weighted average exchange rates by contractual maturity dates for our foreign currency derivative financial instruments, including the forward contracts used to hedge our foreign currency denominated assets and liabilities. These notional amounts generally are used to calculate payments to be exchanged under the contracts (in thousands, except exchange rates).Fair Value Assets / (Liabilities)
2021
2021Foreign Exchange Contracts Year 1 Year 2 Total March 31,
2022June 30,
2021USD/AUD Contract amount 60,000 — 60,000 2,533 (652)
AUD 1.3702
AUD 1.3702Ave. contractual exchange rate USD 1 =
AUD 0.7196USD 1 =
AUD 0.7196AUD/Euro Contract amount 110,956 — 110,956 (128) 1,172
Euro 0.6547
Euro 0.6547Ave. contractual exchange rate AUD 1 =
Euro 0.6864AUD 1 =
Euro 0.6864SGD/Euro Contract amount 22,191 — 22,191 (18) (88)
Euro 0.6369
Euro 0.6369Ave. contractual exchange rate SGD 1 =
Euro 0.7117— SGD 1 =
Euro 0.7117SGD/USD Contract amount 330,000 — 330,000 (641) (177)
USD 0.7392
USD 0.7392Ave. contractual exchange rate SGD 1 =
USD 0.7401SGD 1 =
USD 0.7401AUD/CNY Contract amount 12,616 — 12,616 (611) (130)
CNY 5.0312
CNY 5.0312Ave. contractual exchange rate AUD 1 =
CNY 5.0312AUD 1 =
CNY 5.0312USD/EUR Contract amount — — 169
EUR 0.8527
EUR 0.8527Ave. contractual exchange rate USD 1 =
EURUSD 1 =
EURUSD/CAD Contract amount 20,028 — 20,028 83 (44)
CAD 1.2431
CAD 1.2431Ave. contractual exchange rate USD 1 =
CAD 1.2431USD 1 =
CAD 1.2431September 30, 2021,March 31, 2022, we held cash and cash equivalents of $276.1$201.8 million principally comprised of bank term deposits and at-call accounts and are invested at both short-term fixed interest rates and variable interest rates. At September 30, 2021,March 31, 2022, there was $308.0$182.0 million outstanding under the Revolving Credit Agreement and Term Credit Agreement, which are subject to variable interest rates. A hypothetical 10% change in interest rates during the three and nine months ended September 30, 2021,March 31, 2022, would not have had a material impact on pretax income. We have no interest rate hedging agreements.September 30, 2021.March 31, 2022.September 30, 2021,March 31, 2022, there have been no further material changes to such risk factors., and more recently, as a response to the COVID-19 pandemic.pandemic. As a result, we did not repurchase any shares during the three months ended September 30, 2021.March 31, 2022. However, there is no expiration date for this program, and we may, at any time, elect to resume the share repurchase program as the circumstances allow. Since the inception of the share buyback programs, we have repurchased 41.8 million shares at a total cost of $1.6 billion. At September 30, 2021,March 31, 2022, 12.9 million additional shares of common stock can be repurchased under the approved share repurchase program.
September 30, 2021,March 31, 2022, filed on OctoberApril 28, 2021,2022, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, (v) the Notes to the Condensed Consolidated Financial Statements.* In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.October2021ResMed Inc.