SAN DIEGO, Nov. 8 /PRNewswire-FirstCall/ -- ResMed Inc today announced revenue and income results for the quarter ended September 30, 2004. Revenue for the quarter was $87.7 million, a 20% increase over the quarter ended September 30, 2003. Income from operations, excluding the impact of $2.0 million in restructuring expenses described below, and net income, excluding the impact of restructuring expenses, for the September 30, 2004 quarter increased to $22.9 million and $15.1 million respectively, an increase of 21% and 23%. Diluted earnings per share, excluding the impact of restructuring expenses, for the quarter ended September 30, 2004 was $0.43, an increase of 23%, compared to the September 2003 quarter. Net income for the current quarter was $13.9 million or $0.39 per diluted share including after-tax restructuring expenses of $1.2 million. Gross margin was 64%, consistent with the June 2004 quarter.
Selling, general and administration (SG&A) costs for the quarter were $26.7 million, an increase of $4.5 million or 20%, 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 30% in the September quarter, consistent with the same period in fiscal 2004.
Research and development expenditure, approximately 8% of revenues, increased 13% during the three months ended September 30, 2004 to $6.8 million, from $6.0 million in the quarter ended September 30, 2003. The increase reflects ResMed's continuing commitment to clinical research and product development, particularly in the evolving cardiovascular area, as well as a stronger Australian dollar. ResMed intends to continue to spend approximately 8% of revenues on R&D during the rest of fiscal year 2005.
Restructuring expenses incurred during the quarter ended September 30, 2004 of $2.0 million ($1.2 million net of tax) consisted of expenses associated with the Company's decision to integrate the operations of ResMed Germany, based in Moenchengladbach, and MAP, based in Munich, into a single operating unit based in Munich. The Company estimates that it will incur total restructuring expenses of $4.5 million ($2.7 million net of tax). This $4.5 million includes the $2.0 million recognized during the quarter ended September 30, 2004. The Company expects to incur the remaining restructuring expenses over the course of fiscal year 2005. 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.
Inventory, at $61.1 million, reflects a return to normal production levels following the successful relocation of the Sydney manufacturing facility in the June 2004 quarter. Accounts receivable days sales outstanding, at 70 days, were comparable to the September 2003 quarter.
Peter C. Farrell, PhD, Chairman and Chief Executive Officer, commented, "These strong financial results for the September quarter of fiscal 2005 reflect ResMed's continuing sales and profit growth. Operating cash flow increased by 32% to $16.6 million, compared to $12.6 million in the September quarter last year. Domestic sales increased by an extremely robust 32% over the September 2004 quarter to $45.6 million, reflecting continued healthy domestic demand for our sleep-disordered breathing products. International sales increased by 10% over the September 2003 quarter, to $42.1 million, reflecting growth in our major markets, and a stronger Euro, offset by lower sales in Japan. Reduced sales to Japan were primarily due to an unanticipated delay in introducing a new bilevel product into Japan. Excluding sales to the Japanese market, international sales increased by 24%."
Dr. Farrell further commented, "We continue to make good progress on the cardiovascular and bariatric surgery fronts, which were reflected in our strong domestic growth."
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. U.S. Pacific Standard Time 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) 901-5213 (domestic) or +1 (617) 786-2962 (international) and entering conference I.D. No. 23102063. 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. 99358385.
Further information can be obtained by contacting Hillary Theakston at ResMed Inc, San Diego, (858) 746-2610; Adrian Smith at ResMed Limited, Sydney on +61 (2) 9886-5407; 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 differ materially from those projected or implied in the forward-looking statements. Those risks and uncertainties are discussed in the Company's Annual Report on Form 10-K for its most recent fiscal year and in other reports the Company files with the U.S. Securities & Exchange Commission. Those reports are available on the Company's Web site.
ResMed Inc and Subsidiaries Consolidated Statements of Income (unaudited) (In US$ thousands, except per share data) Three Months Ended September 30, 2004 2003 Net revenue $87,733 $72,878 Cost of sales 31,322 25,720 Gross profit 56,411 47,158 Operating expenses: Selling, general and administrative 26,664 22,187 Research and development 6,819 6,017 Restructuring expenses 1,968 -- Total operating expenses 35,451 28,204 Income from operations 20,960 18,954 Other income (expense), net: Interest income (expense), net (321) (394) Other, net 31 (652) Total other income (expense), net (290) (1,046) Income before income taxes 20,670 17,908 Income taxes 6,744 5,659 Net income $13,926 $12,249 Basic earnings per share $0.41 $0.36 Diluted earnings per share $0.39 $0.35 Diluted earnings per share excluding the $0.43 $0.35 impact of restructuring expenses(1) Basic shares outstanding 33,888 33,649 Diluted shares outstanding 35,258 35,089 (1) See reconciliation of non-GAAP financial measures in table at end of press release. ResMed Inc And Subsidiaries Consolidated Balance Sheets (In US$ thousands except share and per share data) September 30, June 30, 2004 2004 Assets (unaudited) Current assets: Cash and cash equivalents $141,620 $128,907 Marketable securities - available for sale 2,744 12,021 Accounts receivable, net 68,752 67,242 Inventories 61,142 55,797 Deferred income taxes 8,536 7,041 Prepaid expenses and other current assets 6,774 6,821 Total current assets 289,568 277,829 Property, plant and equipment, net of accumulated depreciation 154,130 147,268 Patents, net of accumulated amortization 5,307 4,814 Goodwill 107,487 106,075 Other assets 8,612 8,173 Total assets $565,104 $544,159 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $17,945 $18,574 Accrued expenses 24,981 22,591 Income taxes payable 10,382 8,470 Deferred revenue 9,325 8,759 Current portion of deferred profit on sale and leaseback 1,663 2,197 Total current liabilities 64,296 60,591 Non current liabilities: Deferred revenue 9,271 8,819 Convertible subordinated notes 113,250 113,250 Total non-current liabilities 122,521 122,069 Total liabilities $186,817 $182,660 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 100,000,000 135 135 shares authorized; issued and outstanding 33,858,518 at September 30, 2004 and 33,858,272 at June 30, 2004 (excluding 1,127,459 and 886,369 shares held as Treasury Stock respectively) Additional paid-in capital 136,642 132,875 Retained earnings 231,582 217,656 Treasury stock (41,405) (30,440) Accumulated other comprehensive income 51,333 41,273 Total stockholders' equity 378,287 361,499 Total liabilities and stockholders' equity $565,104 $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," is reconciled with GAAP operating income in the table below:
Three Months Ended September 30, 2004 2003 GAAP operating income 20,960 18,954 Restructuring expenses 1,968 -- Operating income, excluding the impact of restructuring expenses 22,928 18,954
The measure, "net income, excluding the impact of restructuring expenses," is reconciled with GAAP net income in the table below:
Three Months Ended September 30, 2004 2003 GAAP net income 13,926 12,249 Restructuring expenses, net of tax 1,192 -- Net income, excluding the impact of 15,118 12,249 restructuring expenses Diluted shares outstanding 35,258 35,089 Diluted earnings per share, excluding the impact of restructuring expenses $0.43 $0.35
ResMed believes that presenting diluted earnings per share, excluding the impact of restructuring expenses, 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 are not associated with the Company's normal operating business and are expected to result in future market opportunities, cost savings, and other benefits.
ResMed IncCONTACT: Hillary Theakston of ResMed Inc, San Diego, +1-858-746-2610, orAdrian Smith of ResMed Limited, Sydney, +61 (2) 9886-5407
Web site: http://www.resmed.com/
