SAN DIEGO, May 5 /PRNewswire-FirstCall/ -- ResMed Inc. today announced record revenue and income results for the quarter ended March 31, 2005. Revenue for the quarter was $108.5 million, a 19% increase over the quarter ended March 31, 2004. For the March 31, 2005 quarter, income from operations and net income, both excluding the impact of restructuring expenses described below, were $28.6 million and $18.9 million, an increase of 27% and 26% respectively. Diluted earnings per share, excluding the impact of restructuring expenses, for the quarter ended March 31, 2005 were $0.52, an increase of 21%, compared to the March 2004 quarter. Net income for the current quarter was $17.9 million or $0.50 per diluted share including after-tax restructuring expenses of $1.0 million. Gross margin was 65%.
Selling, general and administration (SG&A) costs for the quarter were $34.4 million, an increase of $6.2 million over the same period in fiscal 2004. 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. SG&A expenditure as a percentage of revenue was 32% in the March quarter compared to 31% in the same period in fiscal 2004.
Research and development expenditure, at approximately 7% of revenues, increased 6% during three months ended March 31, 2005, to $7.2 million from $6.9 million in the quarter ended March 31, 2004. The increase reflects ResMed's continuing commitment to clinical research and product development. ResMed intends to continue to spend approximately 7% of revenues on R&D during the rest of the fiscal year 2005.
For the nine months ended March 31, 2005, revenues were $300.1 million, an increase of 22% over the $246.4 million for the nine months ended March 31, 2004. For the nine months ended March 31, 2005, income from operations and net income, both excluding the impact of restructuring expenses and foundation donations were $78.6 million and $52.3 million, an increase of 28% and 25% respectively. Net income for the nine months ended March 31, 2005 was $49.2 million or $1.38 per diluted share including after tax restructuring expenses of $2.8 million.
Restructuring expenses incurred during the quarter ended March 31, 2005 of $1.6 million ($1.0 million net of tax) consisted of expenses associated with the previously-announced integration of the Company's German operations.
With the financial information included in this press release, the Company is providing a tabular reconciliation of GAAP operating income and GAAP net income with operating income, and net income, excluding the impact of restructuring expenses and excluding the impact of the donation to the foundation, for the three month and nine month periods ended March 31, 2005 and 2004.
Inventory at $75.5 million, increased by $10.6 million compared to December 2004 levels reflecting management's decision to increase inventory levels to support increased sales volumes together with a specific inventory build associated with the introduction of the S8, ResMed's new flow generator. Accounts receivable days sales outstanding, at 70 days, increased compared to the December 2004 quarter of 66 days.
Peter C. Farrell PhD, Chairman and Chief Executive Officer, commented, "ResMed's sales and profit growth in the third quarter of fiscal 2005 are an encouraging indication of our continued success in expanding the market for our sleep disordered breathing products. Domestic sales increased by 29% over the March 2004 quarter to $57.9 million, reflecting favorable market conditions and strong demand for our new Mirage Swift patient interface. International sales increased by 9% over the March 2005 quarter, to $50.6 million, reflecting acceptable growth in most markets, offset by German results. German revenues were impacted by the previously-announced integration of our German operations, which has caused some administrative delays in order processing. Excluding Germany and the impact of acquisitions of Resprecare and Hoefner, international sales increased 16% for the quarter, reflecting solid growth in the rest of Europe and Asia. Our operating cash flow for the March quarter was $10.9 million, lower than the previous quarter, primarily reflecting increases in working capital, particularly inventory and accounts receivable."
Dr. Farrell continued, "In the March quarter we were pleased to introduce our S8 Escape flow generator, one of the smallest devices on the market. The Escape launch in the U.S. is the beginning of a phased launch of the new S8 flow generator platform, which we expect to continue over the next 12 months. During the quarter, we also expanded our international operations with the acquisition of Hoefner Medizintechnik GmbH, our distributor in Bavaria, Germany. We continue to evaluate additional opportunities for international expansion. Our newly announced acquisition of Saime SA, a leader in ventilatory products and technology in Europe, positions us to capitalize on the attractive market opportunities in both non-invasive ventilation and sleep-disordered breathing in Europe. By the end of the fiscal year, we expect to have completed integration of our German operations and to be selling a complete line of ventilation products into the European homecare market."
About ResMed
ResMed is a leading manufacturer of medical equipment for the treatment and management of sleep-disordered breathing and other respiratory disorders. We are dedicated to developing innovative products to improve the lives of those who suffer from these conditions and to increasing awareness among patients and healthcare professionals of the potentially serious health consequences of untreated sleep-disordered breathing. For more information on ResMed, visit http://www.resmed.com/.
ResMed will host a conference call at 1:30 p.m. U.S. Pacific Daylight Time (USPDT) today to discuss these quarterly results. Individuals wishing to access the conference call may do so via ResMed's Web site at http://www.resmed.com/ or by dialing (800) 510-9834 (domestic) or +1 (617) 614-3669 (international) and entering conference I.D. No. 95374372. Please allow extra time prior to the call to visit the Web site and download the streaming media player (Windows Media Player) required to listen to the Internet broadcast. The online archive of the broadcast will be available approximately 90 minutes after the live call and will be available for two weeks. A telephone replay of the conference call is available by dialing (888) 286-8010 (domestic) and +1 (617) 801-6888 (international) and entering conference I.D. No. 39008246.
Further information can be obtained by contacting Hillary Theakston at ResMed Inc. San Diego (858) 746-2610; Brett Sandercock at ResMed Limited Sydney on (+61 2) 9886-5406; or by visiting the Company's multilingual Web site at http://www.resmed.com/.
Statements contained in this release that are not historical facts are "forward-looking" statements as contemplated by the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including statements regarding the Company's future revenue, earnings or expenses, new product development and new markets for the Company's products, are subject to risks and uncertainties, which could cause actual results to materially differ from those projected or implied in the forward-looking statements. Those risks and uncertainties are discussed in the Company's Annual Report on Form 10-K for its most recent fiscal year and in other reports the Company files with the US Securities & Exchange Commission. Those reports are available on the Company's Web site.
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, 2005 2004 2005 2004 Net revenue $108,454 $91,277 $300,080 $246,447 Cost of sales 38,159 33,727 104,996 89,315 Gross profit 70,295 57,550 195,084 157,132 Operating expenses: Selling, general and administrative 34,449 28,201 94,582 76,153 Donation to Foundation -- -- 500 500 Research and development 7,240 6,858 21,901 19,641 Restructuring expenses 1,579 -- 4,505 -- Total operating expenses 43,268 35,059 121,488 96,294 Income from operations 27,027 22,491 73,596 60,838 Other income (expenses), net Interest income (expense), net 9 (437) (471) (1,199) Other, net (340) 211 370 1,442 Total other income (expenses), net (331) (226) (101) 243 Income before income taxes 26,696 22,265 73,495 61,081 Income taxes 8,819 7,236 24,288 19,652 Net income $17,877 $15,029 $49,207 $41,429 Basic earnings per share $0.52 $0.45 $1.44 $1.23 Diluted earnings per share(1) $0.50 $0.43 $1.38 $1.18 Diluted earnings per share excluding the impact of restructuring expenses and donation(1) & (2) $0.52 $0.43 $1.47 $1.19 Basic shares outstanding 34,482 33,639 34,127 33,651 Diluted shares outstanding(1) 37,745 35,055 37,324 35,063 (1) See reconciliation of Basic and Diluted Earning per Share in table at end of press release. (2) See reconciliation of non-GAAP financial measures in table at end of press release. ResMed Inc. & Subsidiaries Consolidated Balance Sheets (Unaudited) (In US$ thousands except share and per share data) March 31, June 30, 2005 2004 Assets Current assets: Cash and cash equivalents $136,700 $128,907 Marketable securities - available for sale 37,949 12,021 Accounts receivable, net 89,109 67,242 Inventories 75,459 55,797 Deferred income taxes 15,859 7,041 Prepaid expenses and other current assets 8,421 6,821 Total current assets 363,497 277,829 Property, plant and equipment, net 170,013 147,268 Goodwill and Intangibles 131,190 110,889 Other assets 9,602 8,173 Total Non current assets 310,805 266,330 Total assets $674,302 $544,159 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $23,261 $18,574 Accrued expenses 31,294 22,591 Income taxes payable 19,459 8,470 Deferred revenue 11,730 8,759 Current portion of deferred profit on sale leaseback 442 2,197 Total current liabilities 86,186 60,591 Non Current Liabilities: Deferred revenue 10,863 8,819 Convertible subordinated notes 113,250 113,250 Total Non-current liabilities 124,113 122,069 Total liabilities 210,299 $182,660 Stockholders' Equity: Common Stock 139 135 Additional paid-in capital 170,867 132,875 Retained earnings 266,863 217,656 Treasury stock (41,405) (30,440) Accumulated other comprehensive income 67,539 41,273 Total stockholders' equity 464,003 361,499 Total liabilities and stockholders' equity $674,302 $544,159 Reconciliation of Non-GAAP Financial Measures (Unaudited) (Dollars in thousands except per share amounts) In managing its business, ResMed makes use of certain non-GAAP financial measures in evaluating the Company's results of operations. The measure, "operating income, excluding the impact of restructuring expenses and donation to foundation," is reconciled with GAAP operating income in the table below: Three Months Ended Nine Months Ended March 31, March 31, 2005 2004 2005 2004 GAAP operating income 27,027 22,491 73,596 60,838 Restructuring expenses 1,579 -- 4,505 -- Donation to Foundation -- -- 500 500 Operating income, excluding the impact of restructuring expenses and donation to foundation 28,606 22,491 78,601 61,338 The measure, "net income, excluding the impact of restructuring expenses and donation to foundation," is reconciled with GAAP net income in the table below: Three Months Ended Nine Months Ended March 31, March 31, 2005 2004 2005 2004 GAAP net income 17,877 15,029 49,207 41,429 Restructuring expenses, net of tax 1,011 -- 2,816 -- Donation to foundation, net of tax -- -- 310 310 Net income, excluding the impact of restructuring expenses and donation to foundation 18,888 15,029 52,333 41,739 Diluted shares outstanding 37,745 35,055 37,324 35,063 Diluted earnings per share, excluding the impact of restructuring expenses and donation to foundation $0.52 $0.43 $1.47 $1.19 ResMed believes that presenting diluted earnings per share, excluding the impact of restructuring expenses and donation to foundation, is an additional measure of performance that investors can use to compare operating results between reporting periods. Management of the Company uses this information in evaluating the Company's results of operations and believes that this information also provides investors better insight in evaluating the Company's earnings performance from core operations. The events giving rise to these restructuring expenses and donation to foundation are not associated with the Company's normal operating business and are expected to result in future market opportunities, cost savings, and other benefits. Reconciliation of Basic and Diluted Earnings per Share (Unaudited) (Dollars in thousands except per share amounts) Three Months Ended Nine Months Ended March 31, March 31, 2005 2004 2005 2004 Numerator: Net Income $17,877 $15,029 $49,207 $41,429 Adjustment for interest and deferred borrowing costs, net of income tax effect(1) 821 -- 2,464 -- Net income, used in calculating diluted earnings per share $18,698 $15,029 $51,671 $41,429 Adjustment for restructuring expenses 1,011 -- 2,816 -- Adjustment for Donation to foundation -- -- 310 310 Net income, used in calculating diluted earnings per share, excluding the impact of restructuring expenses and donation to foundation 19,709 15,029 54,797 41,739 Denominator: Basic weighted-average common shares outstanding 34,482 33,639 34,127 33,651 Effect of dilutive securities: Stock options 1,394 1,416 1,328 1,412 Convertible subordinated notes(1) 1,869 -- 1,869 -- Diluted potential common shares 3,263 1,416 3,197 1,412 Diluted weighted average shares 37,745 35,055 37,324 35,063 Basic earnings per share $0.52 $0.45 $1.44 $1.23 Diluted earnings per share $0.50 $0.43 $1.38 $1.18 Diluted earnings per share, excluding the impact of restructuring expenses and donation to foundation $0.52 $0.43 $1.47 $1.19 (1) Diluted earnings per share has been calculated after adjusting the numerator (net income) by $821,000 and $2,464,000 for the three months and nine months ended March 31, 2005, respectively, for the effect of assumed conversion of our convertible notes.
ResMed Inc.CONTACT: Hillary Theakston of ResMed Inc. San Diego, +1-858-746-2610, orBrett Sandercock of ResMed Limited Sydney, (+61 2) 9886-5406
Web site: http://www.resmed.com/