Skip to content
AnalystLens

ResMed Annual Report, Year Ended Jun 30, 2006

Filing Date
Filed September 12, 2006
Period End
June 30, 2006
Securities
RMDRSMDF
In the record · 2016–202610-K1410-Q338-K85

RMD filed 14 annual reports (10-K), 33 quarterly reports (10-Q) and 85 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jan ’17Jan ’17
  2. Material agreement8-K · Jul ’19Jul ’19
  3. Leadership change8-K · Oct ’21Oct ’21
  4. Leadership change8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed September 12, 2006. Cited figures are marked; the original filing is the authoritative source.

ResMed Inc. reported fiscal 2006 (year ended June 30, 2006) net revenues of $607.0 milliona, up 43% from $425.5 million in fiscal 2005.

The filing attributes the growth to higher unit sales of flow generators, masks and accessories, incremental sales from acquisitions, and new products such as the Mirage Swift mask and the S8 flow generator. Excluding acquisitions and unfavorable currency movements, sales grew 32%. Gross profit rose to $376.9 millionb, but gross margin declined to 62% of revenue from 65%, which the company attributes to product and geographic mix and to stock-based compensation.

Income from operations increased to $131.3 millionc from $97.4 million, and net income rose to $88.2 million, or $1.16 per diluted share, from $64.8 million, or $0.91. Results include $15.3 million of stock-based compensation under SFAS 123(R), adopted July 1, 2005, and a $3.5 million one-time tax expense on the repatriation of $75 million of foreign earnings. The balance sheet strengthened during the year.

Holders of all $113.25 milliond of the 4% Convertible Subordinated Notes due 2006 converted them into about 3.74 million common shares, and total stockholders' equity increased to $738.1 million from $474.1 million. Cash and cash equivalents were $219.5 million and working capital was $381.3 million at June 30, 2006. Long-term debt was $116.2 million, consisting mainly of the new syndicated facility, and the company had a $75 million revolving loan with no amounts outstanding.

Capital expenditures were $102.7 million, mainly for a new research and development and manufacturing building in Sydney, Australia, and land in San Diego for a corporate headquarters. The filing describes a company that sells sleep-disordered breathing products in over 67 countries.

Approximately half of revenues come from outside the United States, and the company faces ongoing competition, reimbursement pressure, FDA regulatory requirements, a German tax audit, and patent litigation. The company has not paid cash dividends since its initial public offering and intends to retain earnings for operations and expansion.

02—Key points

Key Highlights

  1. Net revenues rose 43% to $607.0 million from $425.5 million; excluding acquisitions and unfavorable currency movements, sales grew 32%.
  2. Net income increased to $88.2 million, or $1.16 per diluted share, from $64.8 million, or $0.91 per diluted share in fiscal 2005.
  3. Gross margin declined to 62% of net revenue from 65%, reflecting product and geographic mix and stock-based compensation costs of $0.9 million in cost of sales.
  4. Stock-based compensation under SFAS 123(R) totaled $15.3 million, and a one-time $3.5 million tax expense was recorded on the repatriation of $75 million of foreign earnings.
  5. All $113.25 million of 4% convertible subordinated notes converted into about 3.74 million shares, eliminating that debt and reducing expected annual interest expense by about $2.2 million.
  6. Cash and cash equivalents reached $219.5 million and working capital $381.3 million at June 30, 2006, with a $75 million revolving loan undrawn.
  7. Capital expenditures were $102.7 million, mainly for a new Sydney research and development and manufacturing building and a San Diego site for a new corporate headquarters.

03—Questions

Frequently Asked Questions

  1. What drove ResMed's revenue growth in fiscal 2006?

    The filing attributes the increase to higher unit sales of flow generators, masks and accessories, plus incremental sales from acquisitions of Resprecare, Hoefner, Saime, PolarMed and Pulmomed. Management cites growing public and physician awareness of sleep-disordered breathing, sales force and marketing investment, and new products including the Mirage Swift mask and the S8 flow generator platform. Flow generator sales totaled $316.6 million, up 51%, and mask systems, motors and other accessories totaled $290.4 million, up 35%.

  2. Why did gross margin decline in fiscal 2006?

    Gross profit as a percentage of net revenue fell to 62% from 65%. The company attributes the decline to a higher proportion of flow generator sales, which carry lower margins than masks, a higher share of North and Latin American sales, which typically carry lower margins than international sales, and additional stock-based compensation costs.

  3. How did ResMed's capital structure change during the year?

    The 4% Convertible Subordinated Notes due 2006 were fully converted into about 3,737,593 common shares at a conversion price of $30.30 per share, removing $113.25 million of convertible debt. Long-term debt at year end was $116.2 million, mainly under a June 2006 Syndicated Facility Agreement with HSBC that includes Euro and U.S. dollar tranches. Total stockholders' equity rose to $738.1 million from $474.1 million.

  4. Does ResMed pay dividends, and what are the main risks mentioned in the filing?

    ResMed has not paid cash dividends since its initial public offering and does not intend to pay them in the foreseeable future, retaining earnings for business operations and expansion. Key risks cited include intense competition from firms with greater resources, dependence on home healthcare dealers and sleep clinics, reimbursement pressures, FDA and anti-kickback compliance, single-source component suppliers, foreign currency exposure, a German tax audit, and patent litigation.

04—Continue

← View all 10-K filings