ResMed Inc. Announces Results for the Fourth Quarter of Fiscal Year 2017

Contacts:

For Investors

For News Media

Agnes Lee

Alison Graves

O: 858-836-5971

O: 858-836-6789

[email protected] 

[email protected]

ResMed Inc and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

Three Months Ended

Twelve Months Ended

June 30,

June 30,

2017

2016

2017

2016

Net revenue

$

556,686

$

518,647

$

2,066,737

$

1,838,713

Cost of sales

232,910

217,560

859,922

775,020

Astral field safety notification expenses ⁽¹⁾

-

-

5,070

-

SERVE-HF accrual release ⁽¹⁾

-

(402)

-

(2,804)

Gross profit

323,776

301,489

1,201,745

1,066,497

Operating expenses:

Selling, general and administrative

147,940

133,929

553,968

482,593

Research and development

36,706

34,380

144,467

118,651

Restructuring expenses ⁽¹⁾

-

-

12,358

6,914

Litigation settlement expenses ⁽¹⁾

-

-

8,500

-

Acquisition related expenses ⁽¹⁾

-

1,914

10,076

5,464

Amortization of acquired intangible assets ⁽¹⁾

11,769

12,629

46,578

23,923

Total operating expenses

196,415

182,852

775,947

637,545

Income from operations ⁽¹⁾

127,361

118,637

425,798

428,952

Other income (expenses), net:

Interest income (expense), net

(3,310)

(2,374)

(11,151)

5,654

Other, net

(2,428)

1,168

4,096

4,960

Total other income (expenses), net

(5,738)

(1,206)

(7,055)

10,614

Income before income taxes

121,623

117,431

418,743

439,566

Income taxes excluding ASU 2016-09 ⁽²⁾

22,194

35,572

82,530

98,329

Income taxes relating to ASU 2016-09 ⁽²⁾

(2,184)

(1,267)

(6,071)

(11,172)

Total income taxes

20,010

34,305

76,459

87,157

Net income ⁽¹⁾

$

101,613

$

83,126

$

342,284

$

352,409

Basic earnings per share ⁽²⁾

$

0.72

$

0.59

$

2.42

$

2.51

Diluted earnings per share ⁽²⁾

$

0.71

$

0.59

$

2.40

$

2.49

Non-GAAP diluted earnings per share ^{(1) (2)}

$

0.77

$

0.74

$

2.82

$

2.68

Basic shares outstanding

142,019

140,551

141,360

140,242

Diluted shares outstanding ⁽²⁾

143,119

141,654

142,453

141,669

(1)

See the reconciliation of non-GAAP financial measures in the table at the end of the press release.

(2)

As a result of the adoption of ASU 2016-09 "Improvements to Employee Share-Based Payment Accounting" during the quarter ended June 30, 2016 we now recognize an income tax impact relating to share-based payment transactions. The income taxes for the three and twelve months ended June 30, 2016 have been restated to reflect the adoption of the standard as the benefit was previously recorded as a reduction to Additional Capital.   

ResMed Inc And Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited - In thousands)

June 30,

June 30,

2017

2016

ASSETS

Current assets:

Cash and cash equivalents

$

821,935

$

731,434

Accounts receivable, net

450,530

382,086

Inventories

268,319

224,456

Prepayments and other current assets

103,219

81,743

Total current assets

1,644,003

1,419,719

Property, plant and equipment, net

394,241

384,276

Goodwill

1,064,874

1,059,245

Other intangibles, net

261,800

299,808

Deferred income taxes and other non-current assets

103,569

93,657

Total non-current assets

1,824,484

1,836,986

Total assets

$

3,468,487

$

3,256,705

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:

Accounts payable

92,763

92,571

Accrued expenses

186,295

156,805

Deferred revenue

51,918

50,009

Income taxes payable

29,150

39,166

Short-term debt

-

299,438

Total current liabilities

360,126

637,989

Non-current liabilities:

Deferred income taxes

13,822

9,061

Deferred revenue

53,235

40,281

Other long term liabilities

2,427

1,211

Long-term debt

1,078,611

873,332

Total non-current liabilities

1,148,095

923,885

Total liabilities

1,508,221

1,561,874

STOCKHOLDERS' EQUITY:

Common stock

569

563

Additional paid-in capital

1,379,130

1,303,238

Retained earnings

2,316,237

2,160,299

Treasury stock

(1,546,611)

(1,546,611)

Accumulated other comprehensive income

(189,059)

(222,658)

Total stockholders' equity

$

1,960,266

$

1,694,831

Total liabilities and stockholders' equity

$

3,468,487

$

3,256,705

ResMed Inc And Subsidiaries

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

Twelve Months

June 30,

2017

2016

Cash flows from operating activities:

Net income

$

342,284

$

352,409

Adjustment to reconcile net income to cash provided by operating activities:

Depreciation and amortization

112,157

86,849

Impairment of long-lived asset

-

2,815

Stock-based compensation costs

45,925

46,408

Changes in fair value of business combination contingent consideration

10,076

(2,986)

Payment of business combination contingent consideration

(8,460)

-

Impairment of cost-method investments

1,955

750

Changes in operating assets and liabilities, net of effect of acquisitions:

Accounts receivable, net

(63,604)

(27,307)

Inventories, net

(41,599)

30,492

Prepaid expenses, net deferred income taxes and other current assets

(19,257)

12,121

Accounts payable, accrued expenses and other

34,576

46,382

Net cash provided by operating activities

414,053

547,933

Cash flows from investing activities:

Purchases of property, plant and equipment

(62,219)

(58,534)

Patent registration costs

(9,257)

(9,295)

Business acquisitions, net of cash acquired

(7,274)

(1,041,864)

Investments in cost-method investments

(6,464)

(8,965)

Proceeds from sale of business

-

468

Proceeds / (Payments) on maturity of foreign currency contracts

3,324

(7,564)

Net cash used in investing activities

(81,890)

(1,125,754)

Cash flows from financing activities:

Proceeds from issuance of common stock, net

30,161

27,694

Purchases of treasury stock

-

(102,058)

Payment of business combination contingent consideration

(11,682)

(1,228)

Proceeds from borrowings, net of borrowing costs

450,000

1,140,000

Repayment of borrowings

(545,000)

(283,694)

Dividends paid

(186,346)

(168,130)

Net cash (used in) / provided by financing activities

(262,867)

612,584

Effect of exchange rate changes on cash

21,205

(20,578)

Net increase / (decrease) in cash and cash equivalents

90,501

14,185

Cash and cash equivalents at beginning of period

731,434

717,249

Cash and cash equivalents at end of period

$

821,935

$

731,434

Reconciliation of Non-GAAP Financial Measures (Unaudited)

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

The measure, "non-GAAP income from operations" is reconciled with GAAP income from operations below:

Three Months Ended

Twelve Months Ended

June 30,

June 30,

2017

2016

2017

2016

GAAP income from operations

$

127,361

$

118,637

$

425,798

$

428,952

Deferred revenue fair value adjustment ^(A)

-

2,332

-

2,332

SERVE-HF accrual release ^(A)

-

(402)

-

(2,804)

Astral battery field safety notification expenses ^(A)

-

-

5,070

-

Restructuring expenses ^(A)

-

-

12,358

6,914

Litigation settlement expenses ^(A)

-

-

8,500

-

Acquisition related expenses ^(A)

-

1,914

10,076

5,464

Amortization of acquired intangible assets ^(A)

11,769

12,629

46,578

23,923

Non-GAAP income from operations

$

139,130

$

135,110

$

508,380

$

464,781

Three Months Ended

Twelve Months Ended

June 30,

June 30,

2017

2016

2017

2016

GAAP net income

$

101,613

$

83,126

$

342,284

$

352,409

Deferred revenue fair value adjustment ^(A)

-

1,478

-

1,478

SERVE-HF accrual release, net of tax ^(A)

-

(281)

-

(1,963)

Astral battery field safety notification expenses ^(A)

-

-

3,549

-

Restructuring expenses, net of tax ^(A)

-

-

8,295

5,204

Litigation settlement expenses, net of tax ^(A)

-

-

5,392

-

Acquisition related expenses ^(A)

-

1,393

10,076

4,943

Amortization of acquired intangible assets, net of tax ^(A)

7,999

8,794

31,679

17,366

Cumulative ASU 2016-09 income tax benefit not reflected in the quarter ended June 30, 2016 ^(A)

-

9,905

-

-

Non-GAAP net income ^(A)

$

109,612

$

104,415

$

401,275

$

379,437

Diluted shares outstanding

143,119

141,654

142,453

141,669

GAAP diluted earnings per share

$

0.71

$

0.59

$

2.40

$

2.49

Non-GAAP diluted earnings per share ^(A)

$

0.77

$

0.74

$

2.82

$

2.68

^(A)

ResMed adjusts for the impact of the Astral battery field safety notification expenses, release of SERVE-HF accrual, restructuring expenses, litigation settlement expenses, one-time deferred revenue fair value adjustment acquisition related expenses and amortization of acquired intangible assets from their evaluation of ongoing operations and believes investors benefit from adjusting these items to facilitate a more meaningful evaluation of current operating performance.

ResMed believes that non-GAAP diluted earnings per share is an additional measure of performance investors can use to compare operating results between reporting periods. ResMed 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. ResMed believes this information provides investors better insight in evaluating ResMed's performance from core operations and provides consistent 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.