ResMed Inc Announces Record Financial Results

San Diego, CA - Aug. 8, 2001

ResMed Inc announced record revenue and net income results for the quarter and year ended June 30, 2001. ResMed is a leading developer, manufacturer, and marketer of medical equipment for the diagnosis and treatment of sleep-disordered breathing, selling its products in 60 countries.

Quarterly Results

Net income for the quarter increased 35% to $8.3 million from $6.2 million, or to $0.25 per share (on a diluted basis) from $0.19 per share, compared to the June 2000 quarter. Income from operations for the quarter was $13.2 million, compared to $8.9 million for the same period in fiscal 2000, an increase of 48%. Company revenue for the quarter was $47.0 million, an increase of 49% over year ago figures. Excluding MAP Medizin-Technologie GmbH ("MAP"), revenues for the quarter increased by 31% over the prior year period.

The improved quarterly net income reflected higher levels of sales in all global markets when compared to fiscal 2000.

Selling, general and administration costs for the quarter were $15.3 million, an increase of $5.2 million, over the same period in fiscal 2000. The increase in gross SG&A related primarily to an expansion of selling and administration personnel to meet expanding opportunities in the sleep disordered breathing market and included a full quarter of SG&A costs from MAP.

Research and development expenditure, at approximately 7% of net revenues, increased during the three months ended June 30, 2001 to $3.2 million from $2.5 million in the quarter ended June 30, 2000. The increase of 28% in research and development outlays reflected ResMed's continuing innovation within its product portfolio as well as an ongoing commitment to clinical research and product development, particularly in the evolving stroke and congestive heart failure markets.

Inventories of $30.0 million were comparable with March 2001 levels and accounts receivable days sales outstanding (DSO) at 60 days improved by 7 days during the quarter.

Year End Results

Company revenues for fiscal 2001 were $155.2 million, an increase of 34% over the year ended June 30, 2000. Net income, before acquisition expenses, for the year was $29.9 million or $0.89 per share, on a diluted basis, compared with net income of $22.2 million or $0.69 per share for the same period in fiscal 2000. Net income, before acquisition expenses, increased by 34%, while EPS, on a diluted basis, improved by 29% over the same period. After allowing for the non-recurring write-off of $17.7 million of in-progress MAP research and development and a restructuring charge of $0.6 million to close MAP's French operations, ResMed's net income for fiscal 2001 was $11.6 million or $0.35 per share (on a diluted basis).

Management Comments

Peter C. Farrell, Ph.D., Chairman and Chief Executive Officer, expressed considerable satisfaction with the Company's performance. "These record profit and revenue results for the June quarter and fiscal year 2001 reflect ResMed's continuing robust sales and profit growth which now stretch to 25 consecutive quarters. Domestic sales increased by 27% over the June 2000 quarter to a record $22.3 million, reflecting very healthy domestic demand for our sleep-disordered breathing (SDB) products, including ongoing improvement in domestic bilevel device revenues. International sales, excluding MAP, also increased by an impressive 35% over the June 2000 quarter despite an adverse impact of $1.3 million from devaluation of international currencies, notably the Euro and Australian dollar, compared with the same period in fiscal 2000. Excluding the Euro impact, in local currency terms, international sales increased by 45%.

"We are also very encouraged by the reduction in DSOs by 7 days to 60 days as well our progress in product development; we are well advanced in the trials of new mask interfaces and flow generators which we expect to deliver into the marketplace later this calendar year. In addition, the integration of MAP is proceeding as planned. Revenues are where we had anticipated them to be and we have already closed MAP's French operations. Also during the quarter we raised $180 million through a convertible note issue, including an over allotment of $30 million, received after June 30. The funds were raised on three continents under favorable terms in a somewhat difficult market. The proceeds were partially used to pay off the MAP acquisition and will provide investment flexibility for the company going forward.

"Finally, we continue to make welcome progress with our focus on treating SDB/sleep apnea in both stroke and congestive heart failure (CHF) populations. There are now 9 centers in Germany using AutoSet CS on some 100 CHF patients and we have also started CHF activities in both France and the UK using AutoSet CS. We are also accelerating our plans for diagnosing SDB/sleep apnea in stroke patients who are recovering in rehabilitation facilities. A more complete update on these initiatives will be given later in the year."