RMD ResMed Inc

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

CURRENT REPORT

Under Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

April 23, 2015

ResMed Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware		001-15317		98-0152841
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

9001 Spectrum Center Blvd.

San Diego, California 92123

(Address of Principal Executive Offices)

 

 

(858) 836-5000

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[    ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[    ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[    ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[    ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02. Disclosure of Results of Operations and Financial Condition.

On April 23, 2015 we issued the press release attached as Exhibit 99.1. It is incorporated into this report by reference. The press release describes the results of our operations for the quarter ended March 31, 2015.

Item 8.01. Other Events.

On April 23, 2015, we announced that our board of directors declared a cash dividend of US $0.28 per share of outstanding common stock. The dividend will be payable on June 18, 2015, with a record date of May 21, 2015. We will pay the dividend in US currency to holders of our common stock trading on the New York Stock Exchange (NYSE). We will pay the dividend to holders of CHESS Depositary Instruments (CDIs) trading on the Australian Securities Exchange (ASX) at an equivalent amount in Australian currency, based on the exchange rate on May 21, 2015, and reflecting the 10:1 ratio between CDIs and NYSE shares. The ex-dividend date will be May 19, 2015 for CDI holders and common stock holders. ResMed has received a waiver from the ASX’s settlement operating rules, which will allow us to defer processing conversions between its common stock and CDI registers from May 19, 2015 through May 21, 2015, inclusive.

Item 9.01. Financial Statements and Exhibits.

 

(d)

Exhibits

 

Exhibits:		Description of Document
99.1		Press Release dated April 23, 2015 regarding results of operations

 

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SIGNATURES

We have authorized the person whose signature appears below to sign this report on our behalf, in accordance with the Securities Exchange Act of 1934.

 

Date:   April 23, 2015				RESMED INC.
				(registrant)
				By:   /s/ Brett Sandercock
				Name: Brett Sandercock
				Its: Chief Financial Officer

 

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EXHIBIT INDEX

 

Exhibits:		Description of Document
99.1		Press Release dated April 23, 2015 regarding results of operations

Exhibit 99.1

 

ResMed Inc. Announces Results for the Third Quarter of Fiscal Year 2015

Revenue increased 6% to $422 million; up 13% on a constant currency basis

GAAP diluted earnings per share of $0.64, or non-GAAP earnings per share of $0.65

Operating cash flow of $90.9 million

Company repurchased 300,000 shares in the third quarter

San Diego, April 23, 2015 – ResMed Inc. (NYSE: RMD) today announced results for its quarter ended March 31, 2015. Revenue for the quarter was $422.5 million, a 6 percent increase compared to the quarter ended March 31, 2014 (a 13 percent increase on a constant currency basis). Net income was $91.0 million, an increase of 1 percent compared to the quarter ended March 31, 2014. Diluted earnings per share for the quarter were $0.64, an increase of 2 percent compared to the quarter ended March 31, 2014. Non-GAAP diluted earnings per share for the quarter were $0.65, a 2 percent increase compared to the quarter ended March 31, 2014.

“We are pleased to report excellent progress with our new product launches, as we continued to see double-digit revenue growth,” said Mick Farrell, ResMed’s chief executive officer. “Strong demand for our new flow generator launches in the U.S. and continued growth in our Asia Pacific and Europe regions drove our results in the quarter.

“We saw strong customer adoption of our range of new flow generators: the Astral, AirSense™ 10 and the recently launched AirCurve™ 10 series of cloud-connected bilevel devices. This quarter, we continued to build our informatics capabilities with the acquisition of Jaysec, a provider of cloud-based software solutions for the home medical equipment industry, as well as the integration of our AirView patient management system with leading informatics partners.” Farrell concluded, “We are executing on our long-term strategy: growing our core sleep disordered breathing market and investing in future opportunities in chronic obstructive pulmonary disease as well as cardio-respiratory conditions. Our innovative products and solutions improve patient outcomes, lower healthcare costs, and reduce the impact of chronic disease.”

Analysis of third quarter results

In the third quarter of fiscal year 2015, revenue in the Americas was $250.9 million, a 16 percent increase over the prior year’s quarter. Revenue in combined Europe and Asia Pacific was $171.6 million, a 6 percent decrease compared to the quarter ended March 31, 2014 (a 9 percent increase on a constant currency basis).

Gross margin in the third quarter was 59.5 percent, lower than the prior year, mainly due to declines in average selling prices, an unfavorable product and geographic mix, and an unfavorable impact from foreign exchange rate movements.

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Selling, general and administrative expenses were $116.3 million for the quarter, a 1 percent increase (a 10 percent increase on a constant currency basis) over the quarter ended March 31, 2014. SG&A expenses improved to 27.5 percent of revenue in the quarter, compared to 28.9 percent in the quarter ended March 31, 2014.

Research and development expenses were $27.0 million for the quarter, or 6.4 percent of revenue. R&D expenses decreased by 8 percent (a 4 percent increase on a constant currency basis) compared to the quarter ended March 31, 2014.

Operating profit for the quarter was $105.9 million and cash flow from operations was $90.9 million.

Amortization of acquired intangible assets was $2.2 million ($1.6 million, net of tax) during the quarter. Stock-based compensation costs incurred during the quarter of $11.7 million ($8.2 million, net of tax) consisted of expenses associated with employee equity grants, and the company’s employee stock purchase plan.

Share repurchase program

During the quarter, the company repurchased 300,000 shares at a cost of $20.3 million, as part of its ongoing capital management program.

Dividend program

The ResMed board of directors today declared a quarterly dividend of $0.28 per share. The dividend will have a record date of May 21, 2015, payable on June 18, 2015. The dividend will be paid in U.S. currency to holders of ResMed’s common stock trading on the New York Stock Exchange. Holders of Chess Depositary Instruments trading on the Australian Securities Exchange will receive an equivalent amount in Australian currency, based on the exchange rate on the record date, and reflecting the 10:1 ratio between CDIs and NYSE shares. The ex-dividend date will be May 19, 2015 for common stock holders and for CDI holders. ResMed has received a waiver from the ASX’s settlement operating rules, which will allow ResMed to defer processing conversions between its common stock and CDI registers from May 19, 2015 through May 21, 2015, inclusive.

Webcast details

ResMed will discuss its financial and business results and its business outlook on its webcast at 1:30 p.m. U.S. Pacific Standard Time today. The live webcast of the call can be accessed on ResMed’s website at www.resmed.com. Please allow extra time before the call to visit the website 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 after the live call on ResMed’s website. In addition, a telephone replay of the conference call will be available approximately two hours after the call by dialing 630-652-3042 (U.S.) and +1 630-652-3042 (international) and entering a passcode of 39335543. The telephone replay will be available until May 7, 2015.

About ResMed

The global team at ResMed (NYSE:RMD) is united in their commitment to changing lives with every breath. With more than 4,000 employees and a presence in over 100 countries, the company has been pioneering new and innovative devices and treatments for sleep-disordered breathing, chronic obstructive pulmonary disease, and other chronic diseases for more than 25 years. ResMed’s world-leading products and innovative solutions improve the quality of life for millions of patients worldwide, reduce the impact of chronic disease, and save healthcare costs. For more information about ResMed and its businesses, visit www.resmed.com or follow @resmed on Twitter.

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Safe harbor statement

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 ResMed’s projections of future revenue or earnings, expenses, new product development, new product launches and new markets for its 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. Additional risks and uncertainties are discussed in ResMed’s periodic reports on file with the U.S. Securities & Exchange Commission. ResMed does not undertake to update its forward-looking statements.

Investors:

Agnes Lee

Senior Director, Investor Relations

(858) 836-5971

investorrelations@resmed.com

News Media:

Alison Graves

Director, Global Corporate Communications

(858) 836-6789

news@resmed.com

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RESMED INC AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

 

		Three Months Ended March 31,								Nine Months Ended March 31,
		2015				2014				2015				2014
Net revenue			$422,497				$397,758				$1,225,848				$1,139,762
Cost of sales			171,066				145,970				473,882				411,234
Gross profit			251,431				251,788				751,966				728,528
Operating expenses:
Selling, general and administrative			116,336				115,101				349,377				328,172
Research and development			27,024				29,530				86,342				86,430
Amortization of acquired intangible assets			2,203				2,459				6,558				7,325
Total operating expenses			145,563				147,090				442,277				421,927
Income from operations			105,868				104,698				309,689				306,601
Other income (expenses), net:
Interest income (expense), net			4,761				6,015				15,765				19,182
Other, net			3,729				2,199				6,346				(1,340)
Total other income (expenses), net			8,490				8,214				22,111				17,842
Income before income taxes			114,358				112,912				331,800				324,443
Income taxes			23,375				22,943				66,376				66,908
Net income			$90,983				$89,969				$265,424				$257,535
Basic earnings per share			$0.65				$0.64				$1.89				$1.82
Diluted earnings per share			$0.64				$0.63				$1.86				$1.78
Basic shares outstanding			140,792				140,959				140,341				141,774
Diluted shares outstanding			142,813				143,375				142,614				144,758

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RESMED INC AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited - In thousands)

 

		March 31,				June 30,
		2015				2014
ASSETS
Current assets:
Cash and cash equivalents			$866,325				$905,730
Accounts receivable, net			345,485				359,593
Inventories			225,191				165,418
Prepayments, deferred income taxes and other current assets			115,769				125,468
Total current assets			1,552,770				1,556,209
Property, plant and equipment, net			384,160				434,277
Goodwill and other intangible assets, net			302,339				334,510
Deferred income taxes and other non-current assets			38,760				35,966
Total non-current assets			725,259				804,753
Total assets			$2,278,029				$2,360,962
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$70,900				$85,405
Accrued expenses			131,770				130,656
Deferred revenue			37,295				42,370
Income taxes payable			15,800				10,392
Deferred income taxes			639				717
Current portion of long-term debt			0				18
Total current liabilities			256,404				269,558
Non-current liabilities:
Deferred income taxes			8,831				10,716
Deferred revenue			14,184				16,352
Income taxes payable			1,754				5,318
Non-current portion of long-term debt			460,581				300,770
Total non-current liabilities			485,350				333,156
Total liabilities			741,754				602,714
Stockholders’ Equity:
Common stock			563				561
Additional paid-in capital			1,195,880				1,117,644
Retained earnings			1,927,958				1,780,396
Treasury stock			(1,388,623)				(1,291,910)
Accumulated other comprehensive income			(199,503)				151,557
Total stockholders’ equity			$1,536,275				$1,758,248
Total liabilities and stockholders’ equity			$2,278,029				$2,360,962

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RESMED INC AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited - In thousands)

 

		Nine Months Ended March 31,				Nine Months Ended March 31,
		2015				2014
Cash flows from operating activities:
Net income			$265,424				$257,535
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			55,310				53,631
Gain on disposal of business			(709)				-
Stock-based compensation costs			34,802				32,679
Foreign currency revaluation			(1,252)				(3,305)
Excess tax benefit from stock-based compensation arrangements			(20,738)				(11,388)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net			(14,814)				(12,873)
Inventories, net			(80,793)				(15,735)
Prepaid expenses, net deferred income taxes and other current assets			(3,487)				(4,020)
Accounts payable, accrued expenses and other liabilities			49,736				(20,839)
Net cash provided by operating activities			283,479				275,685
Cash flows from investing activities:
Purchases of property, plant and equipment			(50,266)				(54,210)
Patent registration costs			(7,109)				(5,691)
Business acquisitions, net of cash acquired			(26,956)				(3,172)
Investments in cost-method investments			(10,500)				(5,275)
Proceeds from sale of business			468				-
Purchases of foreign currency options			-				(1,337)
Payments on maturity of foreign currency contracts			(25,232)				(2,466)
Net cash used in investing activities			(119,595)				(72,151)
Cash flows from financing activities:
Proceeds from issuance of common stock, net			23,176				15,624
Excess tax benefit from stock-based compensation arrangements			20,738				11,388
Purchases of treasury stock			(103,295)				(169,398)
Payment of business combination contingent consideration			(458)				(1,117)
Proceeds from borrowings, net of borrowing costs			160,000				507,838
Repayment of borrowings			(1,527)				(415,029)
Dividends paid			(117,862)				(106,387)
Net cash (used in) / provided by financing activities			(19,228)				(157,081)
Effect of exchange rate changes on cash			(184,061)				16,062
Net increase / (decrease) in cash and cash equivalents			(39,405)				62,515
Cash and cash equivalents at beginning of period			905,730				876,048
Cash and cash equivalents at end of period			866,325				938,563

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Reconciliation of Non-GAAP Financial Measures (Unaudited)

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

The measure, “non-GAAP operating income” is reconciled with GAAP income from operations below:

 

		Three Months Ended Mar 31,								Nine Months Ended Mar 31,
			2015				2014				2015				2014
GAAP income from operations			105,868				104,698				309,689				306,601
Amortization of acquired intangible assets (A)			2,203				2,459				6,558				7,325
Non-GAAP operating income (excluding the impact of amortization of acquired intangible assets)			108,071				107,157				316,247				313,926

The measure, “non-GAAP net income” and “non-GAAP diluted earnings per share” are reconciled with GAAP net income and GAAP diluted earnings per share in the table below:

 

		Three Months Ended Mar 31,								Nine Months Ended Mar 31,
			2015				2014				2015				2014
GAAP net income			90,983				89,969				265,424				257,535
Amortization of acquired intangible assets, net of tax (A)			1,643				1,868				4,951				5,563
Non-GAAP net income (excluding the impact of amortization of acquired intangible assets)			92,626				91,837				270,375				263,098
Diluted shares outstanding			142,813				143,375				142,614				144,758
GAAP diluted earnings per share			$0.64				$0.63				$1.86				$1.78
Non-GAAP diluted earnings per share (excluding the impact of amortization of acquired intangible assets)			$0.65				$0.64				$1.90				$1.82

 

(A)	Management excludes amortization of acquired intangible assets from its evaluation of ongoing operations and believes investors benefit from excluding these charges to facilitate a more meaningful evaluation of current operating performance.

ResMed believes that presenting diluted earnings per share, excluding the impact of the amortization of acquired intangible assets is an additional measure of performance that investors can use to compare operating results between reporting periods.

Management uses non-GAAP information internally in planning, forecasting, and evaluating the results of operations in the current period and in comparing it to past periods. Management believes this information provides investors better insight in evaluating the Company’s performance from core operations and provides consistency in financial reporting. Our use of non-GAAP measures is intended to supplement, and not to replace, our presentation of net income and other GAAP measures. Like all non-GAAP measures, non-GAAP earnings are subject to inherent limitations because they do not include all the expenses that must be included under GAAP.

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