ResMed Inc Announces Financial Results for the Quarter and Six Months Ended December 31, 2007

Friday, February 8, 2008 General News
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SAN DIEGO, Feb. 7 ResMed Inc. (NYSE: RMD) todayannounced revenue and income results for the quarter ended December 31, 2007.Revenue for the quarter was $202.7 million, a 14% increase over the quarterended December 31, 2006. For the current quarter, income from operations andnet income were $36.8 million and $26.9 million. GAAP diluted earnings pershare for the quarter ended December 31, 2007 was $0.34. Non-GAAP earningsper share, which excludes restructuring costs, stock-based compensationexpenses and the amortization of acquired intangible assets, was $0.41. Grossmargin was 60% for the quarter ended December 31, 2007.

SG&A costs were $67.6 million for the quarter, an increase of$10.3 million or 18% over the same period in fiscal 2007. SG&A costs were33% of revenue in the December 2007 quarter, compared to 32% in the sameperiod in fiscal 2007. The increase in SG&A was primarily due to the additionof selling and administration personnel and related expenses necessary tosupport our sales growth. The increase in SG&A was also due to the netappreciation of international currencies against the U.S. dollar.

R&D expense during the quarter was $14.9 million, or approximately 7% ofrevenue. R&D expenses increased 24% year over year and are expected to beapproximately 7% of net revenue through fiscal year 2008. The increase inresearch and development outlays reflects ResMed's continuing commitment toinnovation within its product portfolio, as well as an ongoing commitment toclinical research and product development. The increase in R&D was also dueto the net appreciation of international currencies against the U.S. dollar.

Amortization of acquired intangibles of $1.9 million ($1.3 million net oftax) incurred during the quarter ended December 31, 2007, consisted ofamortization of assets associated with our acquisitions of Resprecare,Hoefner, Saime, PolarMed and Pulmomed. Stock-based compensation costsincurred during the quarter ended December 31, 2007, of $5.3 million($4.0 million net of tax) consisted of expenses associated with stock optionsgranted to employees and with our employee stock purchase plan.

For the six months ended December 31, 2007 revenues were $388.4 million,an increase of 14% over the $342.0 million for the six months endedDecember 31, 2006. For the six months ended December 31, 2007, income fromoperations and net income were $68.6 million and $51.0 million. GAAP dilutedearnings per share for the six months ended December 31, 2007 were $0.65 perdiluted share.

Inventory, at $166.4 million, decreased by $0.7 million compared to thequarter ended September 2007. Accounts receivable days sales outstanding, at75 days, decreased by 4 days compared to the quarter ended September 2007.

Kieran T. Gallahue, President and Chief Executive Officer, commented, "Inthe second quarter of fiscal 2008, overall Americas sales were $100.2 million,an increase of 7% over the prior year quarter. Sales outside of the Americastotaled $102.5 million, an encouraging 21% increase over the prior yearquarter. Cash flow from operations for the December quarter was $18.9 millionand, without recall costs, cash flow would have been a robust $31.2 million."

Mr. Gallahue continued, "As expected, Q2 was a difficult quarter in theAmericas as we bridged the gap to new product introductions over the secondhalf of the fiscal year. Looking forward, we are encouraged by theopportunities for growth, as we recently released a next generation nasalmask, the Mirage Micro(TM), which sets a new standard for size and comfort.We also launched a new bilevel device, the VPAP(TM) Auto, which represents ourfirst bilevel in the smaller S8(TM) flow generator platform and incorporatesour new motor technology, including the Easy-Breathe waveform."

"In addition, we are planning to release an updated version of our S8 flowgenerator platform for th

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