RESMED ANNOUNCES RECORD FINANCIAL RESULTS FOR
QUARTER AND NINE MONTHS ENDED MARCH 31, 2003
SAN DIEGO, California, April 22, 2003 ResMed Inc. (NYSE: RMD) announced record
revenue and income results for the quarter and nine months ended March 31, 2003.
Revenue for the quarter was $69.0 million, an increase of 31% over the quarter
ended March 31, 2002. Income from operations and net income for the March 31,
2003, quarter increased to $17.1 million and $12.3 million respectively, an
increase of 26% and 33%, on adjusted fiscal 2002 comparables (see reconciliation
table at end of press release). On a GAAP basis, the net income result of $12.3
million represents $0.35 per share (on a fully diluted basis), up from $0.31 per
share in the March 2002 quarter.
Selling, general and administration (SG&A) costs for the quarter were $21.0
million, an increase of $4.6 million over the same period in fiscal 2002. The
increase in SG&A related primarily to an increase in selling and administration
personnel to meet expanding opportunities in the sleep-disordered breathing
market, the inclusion of Servo Magnetics Inc. (SMI) after its May 2002
acquisition, and litigation costs associated with outstanding patent
infringement lawsuits against competitors. SG&A expenditure as a percentage of
revenue was 30% in the March quarter compared to 31% for the same period in
fiscal 2002 and 32% in the quarter ended December 2002.
Research and development expenditure, at 7.3% of revenues, increased during the
three months ended March 31, 2003, to $5.1 million from $3.8 million in the
quarter ended March 31, 2002. The increase of 34% in research and development
outlays reflects ResMed's continuing commitment to innovation within its product
portfolio, as well as an ongoing commitment to clinical research and product
development, particularly in the evolving hypertension, stroke and congestive
heart failure markets. The increase was also affected by a stronger Australian
dollar.
For the nine months ended March 31, 2003, revenues were $192.9 million, an
increase of 30% over the $147.8 million for the nine months ended March 31,
2002. Net income for the nine months was $32.2 million or $0.94 per share,
compared with net income of $27.7 million or $0.81 per share for the same period
in fiscal 2002. Net income increased by 16% over the prior year period, or by
20% against adjusted fiscal 2002 comparables.
Inventories of $49.3 million were higher this quarter compared to the December
2002 quarter, predominantly reflecting a foreign currency translation impact
from a weaker US dollar. Inventory turnover improved 8 days from the December
quarter. Accounts receivable days sales outstanding, at 68 days, were consistent
with the December 2002 quarter and continue to compare favorably to industry
peers.
Peter C. Farrell PhD, Chairman and Chief Executive Officer, commented, "These
record profit and revenue results for the March quarter reflect ResMed's
continuing strong sales and profit growth. Our operating cash flow for the March
quarter was a record-breaking $17.0 million. Domestic sales increased by 27%
over the March 2002 quarter to a record $33.8 million, reflecting very healthy
domestic demand for our sleep-disordered breathing products as well as
contributions from our recently acquired subsidiary, SMI. This growth occurred
despite the full discontinuation of our direct U.S. distribution of MedCare
diagnostic products in the quarter. International sales increased by a healthy
35%, over the March 2002 quarter, reflecting growth across all European markets
as well as a stronger Euro."
Dr. Farrell also commented, "We continue to move forward in the overlapping
areas of sleep-disordered breathing and cardiovascular disease. Together with
Guidant Corporation, we co-sponsored a satellite symposium on sleep-disordered
breathing and heart disease at the American College of Cardiology's 52nd Annual
Scientific Session. We also announced our strategic alliance with MedCath
Corporation, a national provider of cardiovascular services. We are working with
MedCath and its cardiologist partners to help them screen, diagnose, and treat
their patients' sleep-disordered breathing."
Dr. Farrell concluded, "Finally, we were pleased to receive ongoing recognition
from the investment community during the quarter. Investor's Business Daily
ranked ResMed among `The Stable Seventy' public companies that it singled out in
its March 27, 2003 edition as providing `stellar, steady earnings growth over an
extended period.' Similarly, on April 7, 2003, Forbes.com included ResMed as one
of `The 25 Fastest-Growing Tech Companies.' We were particularly gratified
because both groups used criteria based on the past five years of performance in
making their evaluations. We manage our business for long-term success, and we
are proud of our record over the eight years we have been public. This result
marks the 32nd consecutive quarter in which we have achieved record revenue and
earnings."
Looking forward, we project the overall market for our products to continue to
grow at an approximate 20% annual rate over the next 12-18 months. We continue
to believe that our annual revenue growth will exceed this market growth rate.
ResMed is a leading developer, manufacturer, and marketer of medical equipment
for the diagnosis, treatment, and management of sleep-disordered breathing,
selling a comprehensive range of products in over 60 countries.
ResMed will host a conference call at 1:30 p.m. Pacific Daylight Time (PDT)
today to discuss these quarterly results. Individuals wishing to access the
conference call may do so via ResMed's Web site at www.resmed.com. Please allow
extra time prior to the call to visit the 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 (800) 642-1687 (domestic) and +1 (706)
645-9291 (international) and entering conference ID No. 9859588.
Further information can be obtained by contacting Wal Flicker at ResMed Inc, San
Diego, (858) 746-2211, 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. Such forward-looking statements, including
statements regarding the Company's future revenue and earnings projections, the
development of new markets for the Company's products, and the performance and
potential of the Company's new products, are subject to risks and uncertainties,
which could cause actual results to differ materially from those projected or
implied in the forward-looking statements. Such risks and uncertainties are
discussed in the Company's Annual Report on Form 10-K for its most recent fiscal
year.
RESMED INC. & SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(In US$ thousands, except per share data)
Three months ended Nine months ended
March 31, March 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net revenue $ 68,996 $ 52,776 $ 192,875 $ 147,829
Cost of sales 25,809 19,005 70,152 51,388
------------ ------------ ------------ ------------
Gross profit 43,187 33,771 122,723 96,441
------------ ------------ ------------ ------------
Operating expenses:
Selling, general and administrative 21,013 16,408 59,735 45,467
Research and development 5,068 3,792 14,299 10,770
Donation to Research Foundation - 1,000 - 1,000
------------ ------------ ------------ ------------
Total operating expenses 26,081 21,200 74,034 57,237
------------ ------------ ------------ ------------
Income from operations 17,106 12,571 48,689 39,204
------------ ------------ ------------ ------------
Other income (expenses), net:
Gain on debt extinguishment - 2,989 529 2,989
Interest income (expense), net (505) (893) (2,131) (2,461)
Other income, net 1,406 433 121 471
------------ ------------ ------------ ------------
Total other income (expenses), net 901 2,529 (1,481) 999
------------ ------------ ------------ ------------
Income before income taxes 18,007 15,100 47,208 40,203
Income taxes (5,757) (4,721) (15,003) (12,507)
------------ ------------ ------------ ------------
Net income $ 12,250 $ 10,379 $ 32,205 $ 27,696
------------ ------------ ------------ ------------
Basic earnings per share $ 0.37 $ 0.32 $ 0.98 $ 0.87
Diluted earnings per share $ 0.35 $ 0.31 $ 0.94 $ 0.81
Basic shares outstanding 33,065 32,217 32,980 31,992
Diluted shares outstanding 34,564 33,924 34,343 34,101
RESMED INC. & SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(In US$ thousands except share and per share data)
March 31, June 30,
2003 2002
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 93,715 $ 72,860
Marketable securities - available for sale 9,586 19,979
Accounts receivable, net 52,636 46,199
Inventories 49,305 41,173
Deferred income taxes 9,357 9,289
Prepaid expenses and other current assets 5,468 4,213
------------ ------------
Total current assets 220,067 193,713
------------ ------------
Property, plant and equipment, net of accumulated depreciation 92,199 79,279
Patents, net of accumulated amortization 3,137 2,653
Goodwill 98,639 92,536
Other assets 6,221 8,010
------------ ------------
Total assets $ 420,263 $ 376,191
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,027 $ 11,605
Accrued expenses 16,664 15,273
Income taxes payable 6,111 6,905
Payable for property purchase 6,331 11,552
Deferred revenue 5,704 3,636
Current portion of deferred profit on sale leaseback 2,077 1,933
------------ ------------
Total current liabilities 52,914 50,904
------------ ------------
Non Current Liabilities:
Deferred Revenue 7,007 5,402
Deferred profit on sale and leaseback 2,424 3,705
Convertible subordinated notes 113,250 123,250
------------ ------------
Total non-current liabilities 122,681 132,357
------------ ------------
Total liabilities $ 175,595 $ 183,261
------------ ------------
Stockholders' Equity:
Preferred stock, $0.01 par value, 2,000,000 shares authorized; none issued - -
Series A Junior Participating preferred stock, $0.01 par value, 250,000
shares authorized; none issued - -
Common Stock $0.004 par value 100,000,000 shares authorized; issued and
outstanding 33,126,910 at March 31, 2003 and 32,818,160 at June 30, 2002
(excluding 415,365 and 290,047 shares held as Treasury stock respectively) 133 132
Additional paid-in capital 98,715 94,153
Retained earnings 146,848 114,643
Treasury stock (11,415) (7,873)
Accumulated other comprehensive income (loss) 10,387 (8,125)
------------ ------------
Total stockholders' equity $ 244,668 $ 192,930
------------ ------------
Total liabilities and stockholders' equity $ 420,263 $ 376,191
------------ ------------
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
In managing its business, ResMed makes use of certain non-GAAP financial
measures to take account of certain one-time items. These measures, "Income from
Operations, as adjusted," and "Net Income, as adjusted" are reconciled to the
attached financial statements as noted below.
Three months ended Nine months ended
March 31, March 31,
2003 2002 2003 2002
-------- -------- -------- --------
Income from Operations, as reported $ 17,106 $ 12,571 $ 48,689 $ 39,204
Donation to Research Foundation - 1,000 - 1,000
Income from Operations, as adjusted $ 17,106 13,571 $48,689 40,204
-------- -------- -------- --------
Percentage change from previous year's
Income from Operations, as reported 36% 24%
-------- --------
Percentage change from previous year's
Income from Operations, as adjusted 26% 21%
-------- --------
Net Income, as reported 12,250 10,379 32,205 27,699
Donation to Research Foundation - 650 - 650
Gain on debt extinguishment - (1,853) (328) (1,853)
-------- -------- -------- --------
Net Income, as adjusted $ 12,250 $ 9,176 $ 31,877 $ 26,496
-------- -------- -------- --------
Percentage change from previous year's
Net Income, as reported 18% 16%
-------- --------
Percentage change from previous year's
Net Income, as adjusted 33% 20%
-------- --------
ResMed believes that the provision of these measures provides useful information
to investors in period-to-period evaluation of performance. Among other things,
the above measures may exclude such items as refinancing transactions, donations
to medical research foundations and other associated transactions outside the
Company's normal business operations. Management uses these measures internally
to evaluate the performance of the business, including to allocate resources and
to evaluate results relative to employee performance compensation targets.
Investors should consider these non-GAAP measures in addition to, not as a
substitute for, or as superior to, measures of financial performance prepared in
accordance with GAAP.