ResMed reports record financials

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Sunday, February 9, 2003

February 10, 2003

SAN DIEGO - ResMed tallied record revenue and operating profits for the quarter and six months ended December 31, 2002. Revenue for the quarter was $65.3 million, an increase of 33% over a year ago. Net operating profit for the quarter increased by 20% to $16.1 million. Net income for the quarter increased 18% to $10.4 million from $8.8 million

Selling, general and administration (SG&A) costs for the quarter were $20.9 million, an increase of $6.2 million over the same period in fiscal 2001. The increase in gross SG&A related primarily to an increase in selling and administration personnel to meet expanding opportunities in the sleep-disordered breathing market, the inclusion of Servo Magnetics Inc (SMI) and litigation costs associated with outstanding patent infringement lawsuits against competitors. SG&A expenditure as a percentage of revenue was 32% in the December quarter compared to 30% for the same period in fiscal 2001. Excluding legal costs, SG&A, as a percentage of revenue, was 31%.

Research and development expenditure, at 7.4% of revenues, increased during the three months ended December 31, 2002 to $4.8 million from $3.6 million in the quarter ended December 31, 2001.

For the six months ended December 31, 2002 company revenues were $123.9 million, an increase of 30% over the $95.1 million for the six months ended December 31, 2001. Net income for the six months was $20.0 million, compared with net income of $17.3 million for the same period in fiscal 2001. Net income increased by 15% over the prior year period.

Inventories of $45.4 million were flat this quarter compared to the September 2002 quarter. Accounts receivable days sales outstanding at 68 days represent an improvement of four days, compared to the September 2002 quarter.

During the quarter, the company repurchased $5 million face value of its convertible subordinated notes. The purchase price of the notes was $4.8 million including $0.1 million in accrued interest. On extinguishment, the company recognized a gain of $0.1 million after taxes. The debt repurchase represents part of ResMed's ongoing capital management activities. In addition, the company repurchased approximately 55,000 of its shares during the quarter, for $1.6 million.

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