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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

______________________________________________________________________________________________

FORM 10-Q

 

______________________________________________________________________________________________

(Mark One)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

 

 

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______to _______

Commission File Number: 001-15317

______________________________________________________________________________________________

ResMed Inc.

(Exact name of registrant as specified in its charter)

______________________________________________________________________________________________

Delaware

(State or other jurisdiction of incorporation or organization)

98-0152841

(I.R.S. Employer Identification No.)

9001 Spectrum Center Blvd.

San Diego, CA 92123

United States of America

(Address of principal executive offices, including zip code)

(858) 836-5000

(Registrant’s telephone number, including area code)

 

______________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.004 per share

RMD

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    

Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large Accelerated Filer

x

  

Accelerated Filer

 

¨

Non-Accelerated Filer

 

¨  

  

Smaller Reporting Company

 

¨

Emerging Growth Company

¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   x

At October 25, 2021, there were 145,723,142 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 SUBSIDIARIES

Index

Part I

Financial Information

3

Item 1

Financial Statements

3

Condensed Consolidated Balance Sheets (Unaudited)

3

Condensed Consolidated Statements of Operations (Unaudited)

4

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

5

Condensed Consolidated Statements of Changes in Equity (Unaudited)

6

Condensed Consolidated Statements of Cash Flows (Unaudited)

8

Notes to the Condensed Consolidated Financial Statements (Unaudited)

9

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4

Controls and Procedures

29

Part II

Other Information

30

Item 1

Legal Proceedings

30

Item 1A

Risk Factors

30

  

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 3

Defaults Upon Senior Securities

30

Item 4

Mine Safety Disclosures

30

  

Item 5

Other Information

30

Item 6

Exhibits

31

Signatures

32

 

2


Table of Contents

PART I – FINANCIAL INFORMATION

Item 1

Item 1. Financial Statements

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

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

September 30,
2021

June 30,
2021

Assets

Current assets:

Cash and cash equivalents

$

276,149 

$

295,278 

Accounts receivable, net of allowances of $29,917 and $32,138
  at September 30, 2021 and June 30, 2021, respectively

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; none issued

-

-

Common stock, $0.004 par value, 350,000,000 shares authorized;
  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

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 

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

3


Table of Contents

PART I – FINANCIAL INFORMATION

Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

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

Three Months Ended
September 30,

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 

 0


See the accompanying notes to the unaudited condensed consolidated financial statements.

4


Table of Contents

PART I – FINANCIAL INFORMATION

Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In US$ and in thousands)

Three Months Ended
September 30,

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 

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

5


Table of Contents

PART I – FINANCIAL INFORMATION

Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(In US$ and in thousands)

Common Stock

Additional
Paid-in

Treasury Stock

Retained

Accumulated
Other
Comprehensive

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 


See the accompanying notes to the unaudited condensed consolidated financial statements.

6


Table of Contents

PART I – FINANCIAL INFORMATION

Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(In US$ and in thousands)

Common Stock

Additional
Paid-in

Treasury Stock

Retained

Accumulated
Other
Comprehensive

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 

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

7


Table of Contents

PART I – FINANCIAL INFORMATION

Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In US$ and in thousands)

Three Months Ended
September 30,

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