01—Abstract
Summary
Summary of the 10-K filed August 21, 2009. Cited figures are marked; the original filing is the authoritative source.
ResMed Inc. reported fiscal year 2009 (ended June 30, 2009) net revenues of $920.7 milliona, up from $835.4 million in fiscal 2008, an increase of 10%.
Excluding unfavorable foreign currency movements, sales rose 15%. Gross profit increased to $553.8 millionb, with gross margin at 60% compared with 59% a year earlier. Net income was $146.4 million, or $1.90 per diluted share, versus $110.3 million, or $1.40 per diluted share, in fiscal 2008.
The filing attributes the margin improvement mainly to the weaker Australian dollar against the U.S. dollar, favorable product mix, and manufacturing and supply chain savings. Growth was strongest in North and Latin America, where net revenue rose 20% to $493.4 millionc, driven by awareness of sleep-disordered breathing and new products such as the S8 II flow generator and Swift LT mask. Sales outside North and Latin America were essentially flat in reported dollars at $427.3 million, though international sales grew 10% excluding currency effects.
Operating cash flow was $238.9 milliond, and cash and cash equivalents ended the year at $415.7 million. The company repurchased 1,826,307 shares for $65.7 million during the year and adopted a new authorization for up to 10.0 million shares.
Total long-term debt was $161.7 million, all at variable interest rates. The filing also notes that the Syndicated Facility's $50 million Tranche D loan must be repaid by September 30, 2009, and it discloses ongoing matters including a German tax audit and a University of Sydney intellectual property lawsuit.
02—Key points
Key Highlights
- Net revenues rose 10% to $920.7 million in fiscal 2009 from $835.4 million, and rose 15% excluding unfavorable foreign currency movements.
- Net income increased to $146.4 million, or $1.90 per diluted share, from $110.3 million, or $1.40 per diluted share.
- Gross profit grew to $553.8 million, with gross margin improving to 60% from 59%, helped by the weaker Australian dollar, product mix, and manufacturing savings.
- North and Latin America revenue grew 20% to $493.4 million, while revenue outside North and Latin America was $427.3 million, up 0.4% in reported dollars.
- Operating cash flow was $238.9 million, and cash and cash equivalents ended at $415.7 million.
- The company repurchased 1,826,307 shares for $65.7 million and authorized a new program for up to 10.0 million shares.
- Research and development spending was $63.1 million, or 7% of revenue, and the company employs approximately 2,900 people and sells in over 70 countries.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, ResMed kept $0.16.
- Revenue$920.7M100.0%
- Cost of revenue−$366.9M39.9%
- Gross profit$553.8M60.1%
- Operating costs−$363.5M39.5%
- Operating income$190.3M20.7%
- Interest, other & tax−$43.9M4.8%
- Net income$146.4M15.9%
Where FY2009 revenue went
$920.7M- Cost of revenue: $366.9M, 40% of revenue
- SG&A: $289.9M, 31% of revenue
- Net income: $146.4M, 16% of revenue
- R&D: $63.1M, 6.8% of revenue
- Other operating costs: $10.6M, 1.1% of revenue
- Interest, other & tax: $43.9M, 4.8% of revenue
Kept 16% as net incomeOther operating costs $10.6M · 1.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed August 21, 2009Financial Statements
| Revenue | $920.74M |
| Cost of Revenue | $366.93M |
| Gross Profit | $553.80M |
| R&D Expenses | $63.06M |
| SG&A Expenses | $289.88M |
| Operating Expenses | $363.49M |
| Operating Income | $190.31M |
| Net Income | $146.45M |
| EPS (Basic) | $0.97 |
| EPS (Diluted) | $0.95 |
| Shares Outstanding (Basic) | 151.26M |
| Shares Outstanding (Diluted) | 154.23M |
05—Questions
Frequently Asked Questions
What drove ResMed's revenue growth in fiscal 2009?
Net revenue increased by $85.3 million, or 10%, attributed to higher unit sales of flow generators, masks and accessories. Growth was driven by greater public and physician awareness of sleep-disordered breathing and new products including the S8II flow generator, VPAP Auto 25, VPAP S, Swift LT nasal pillows mask and Mirage Quattro full-face mask. Currency movements reduced revenue by approximately $40.3 million.
How did currency movements affect ResMed's results?
Movements in international currencies against the U.S. dollar reduced revenue by approximately $40.3 million in fiscal 2009. The weaker Australian dollar contributed to higher gross margin because the majority of manufacturing labor and overhead is denominated in Australian dollars. Foreign currency movements also reduced cash and cash equivalents by $36.9 million.
Does ResMed pay dividends or return capital to shareholders?
ResMed has not paid cash dividends since its initial public offering and does not currently intend to pay them in the foreseeable future. Instead, it returned capital through share repurchases, buying 1,826,307 shares for $65.7 million during fiscal 2009.
What are the main risks flagged in the filing?
The filing highlights intense competition from companies with greater resources, dependence on home healthcare dealers and sleep clinics, uncertain third-party reimbursement, and regulatory compliance including FDA requirements. It also cites reliance on single-source suppliers, product liability exposure, and international operations. The April 2007 voluntary recall of approximately 300,000 S8 flow generators, which carried an initial estimated cost of $59.7 million, is also discussed.
How is ResMed's debt structured?
Total long-term debt including current maturities was $161.7 million at June 30, 2009, all subject to variable interest rates. The revolving facility had $64.1 million outstanding against a $65 million commitment, and the Syndicated Facility included a USD 50 million Tranche D loan due by September 30, 2009. The company stated it was in compliance with its debt covenants.
06—Continue