ResMed
Annual Report 2000

Plain-text annual report

RESMED A n n u a l R e p o r t 0 0 0 Innovators in Sleep and Respiratory Medicine Mission Statement ResMed is a leading developer, manufacturer, and marketer of products for the diagnosis and management of sleep-disordered breathing. ResMed operates through direct offices in the United States, the United Kingdom, Sweden, Singapore, New Zealand, Malaysia, Germany, France, and Australia, and through a network of distributors in over 40 other countries. ResMed is committed to advancing innovative technology in sleep and respiratory medicine and commercializing innovative products incorporating these technologies on a global basis. In reaching its goals, ResMed will at all times act ethically in dealing with both customers and employees. 1 Cover detail from “The Concert” by Salvatore Zofrea Contents Chairman’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 ResMed 2000 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Business Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Business Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Waking Up to Sleep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Product Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Manufacturing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Sales and Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Medical Advisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Shareholders’ Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Statements contained in this Annual Report, which are not historical facts, are “forward-looking” statements as contemplated by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied in the forward-looking statements. Such risks and uncertainties are more fully discussed in the Company's Annual Report on Form 10-K for its most recent fiscal year. 1 C h a i r m a n ’ s R e p o r t Fiscal 2000 completes ResMed’s 11th year of operations. It very likely a seminal factor in both stroke and was another impressive achievement for the ResMed team. cardiovascular disease. For years this had been suggested Revenues at $115.6 million represented an increase of 30% but this NEJM article showed that the latter is now most on a year over year basis; net income at $22.2 million probable given the dose-related connection between SDB represented an increase of 38% on a year over year basis. and hypertension. In addition, two further papers from the These are very robust results as well as very encouraging University of Toronto (Lavie et al, British Medical Journal, ones since the ratio of net income to revenues was an February 2000) and Johns Hopkins (Nieto et al, Journal of impressive 19.2%, indicative of a well-oiled machine. In the American Medical Association, April 2000) showed, in addition, the company’s gross margin was 68% for the full several thousand patients evaluated, a direct association year, a figure which is excellent for a manufacturing entity. between untreated SDB and hypertension, again These results reflect great teamwork indeed, and all those independent of relevant confounding factors. And a further who are playing in the ResMed gray and blue shirt deserve publication by Hu et al from Harvard (Journal of the a vote of thanks for their efforts. American College of Cardiologists, February 2000) showed, in a 10 year prospective study on nearly 72,000 female Last year I referred to Dr. William Dement’s Triumvirate of nurses—aged 40 to 65 years—that regular snoring was Health where sleep was defined as part of a trilogy which profoundly associated with an increased risk of stroke or included adequate nutrition and physical fitness. This year it heart attack (33% more likely after taking into account all has become even clearer that sleep is equally as important other known risk factors; and in the uncorrected data, a a part of wellbeing as nutrition and fitness. In the first six 100% greater likelihood of death in the snoring group). months of 2000 there were three seminal papers published in the medical literature linking sleep-disordered breathing These compelling recent data from reliable sources simply (SDB) with hypertension, independent of other relevant risk underline the comment made by Dr. Elliott Phillipson in an factors. One paper, published by Peppard and colleagues of editorial written over seven years ago in the NEJM, in which the University of Wisconsin in the New England Journal of he stated that untreated obstructive sleep apnea (OSA) was Medicine (NEJM) in May 2000 showed, in an eight year a major public health problem with an impact rivaling that of prospective study, that untreated SDB was dose-related to tobacco smoking. Dr. Phillipson’s message is suddenly hypertension; in other words, the severity of the SDB much clearer. But, as I stated last year, we still have a long correlated with the risk of developing hypertension. This way to go in educating both public and physicians about the was a landmark paper showing that untreated SDB was absolute importance of healthy sleep. In short, it is still our 2 mission to make people understand fully that it is conjunction with Professor Peter Disler at the further four centers in Germany. At the same time, time to wake up to sleep. University of Melbourne. In addition, Professor we have applied to the appropriate German I am writing this report from my office in our newly of Essen have now studied over 300 chronic to hear some good news on this front by the end Helmut Teschler and colleagues at the University authorities for reimbursement approval; we expect purchased building in Poway, just north of San stroke patients, about half of whom have been put of this calendar year. Diego. The building has 144,000 sq. ft of usable on nasal CPAP. There are two points of significant space. All warehousing and technical support in interest. First, Dr. Teschler has confirmed the very We have also started clinical studies at Oxford on the US has been consolidated in Poway and the high incidence of SDB in stroke patients, at over chronic CHF patients using AutoSet CS and sham accommodation is first class. The 120,000 sq. ft 50%. Second, in the first few months of treatment, controls. The study is being conducted by Sydney facility is also working very well and we compliance has been around 70%. These initial Professor John Stradling and Dr. Rob Davies at are surprised to learn that we may be needing results augur well for ResMed and our AutoSet T Churchill Hospital. Thus far five CHF patients out more office and other space far sooner than technology. Finally, Teschler and colleagues have of a planned 20 have been successfully put on expected. We have also moved into new facilities shown that fibrinogen levels, a key indicator of the AutoSet CS; compliance for the CS group has in both Germany and France; the latter two have probability of a second stroke, are significantly been almost three times that of the sham group. been leased whereas the two larger facilities in higher in patients with OSA. Other studies show We continue to remain excited about stroke and San Diego and Sydney have been purchased. We that treatment of OSA lowers fibrinogen levels. CHF opportunities and I hope to have some more have spent wisely and well on infrastructure in all This welcome news has now been accepted compelling news to report to you this time next these new facilities. for publication in the American Review of year about these two initiatives. Respiratory and Critical Care Medicine. We Last year I wrote about exciting new initiatives we continue to be excited about the potential for Our working relationship with Flaga, the were pursuing in stroke and congestive heart treating SDB in stroke. failure (CHF); we are more encouraged than ever manufacturer of Embla sleep diagnostic equipment, has continued to evolve positively. in these areas as we continue to investigate them. On the CHF front, our activities also continue to Flaga issued some more equity during the year to We have an exclusive relationship with the US make sense. The initially encouraging results raise operational monies and ResMed chose to National Stroke Association in the area of SDB; we using AutoSet CS in the acute CHF patients of maintain its initial equity percentage by buying have a similar relationship with the Australian Professor Teschler are being further confirmed in further shares in April. The value of our equity National Stroke Foundation where our current chronic studies at Essen; there are now 15 position has climbed more than three-fold based focus is on post-stroke patients in chronic patients on a long-term trial and the patients are on recent trading prices for Flaga shares. In rehabilitation. This work is being done in doing well. We intend to expand these studies to a addition, Flaga has developed a highly sensitive 3 and specific portable sleep diagnostic device, some 1000 delegates from around the globe were Australia, where virtually all of ResMed’s which incorporates AutoSet software in the in attendance. ResMed's autotitrating technology manufacturing is done; and second, to broaden analysis. The portability and ease of use of the was widely touted by global researchers as a very the equity base and make it easier for employees new diagnostic system known as the Embletta effective means of treating SDB. In particular, and others within Australia and the Asian time PDS will help expand opportunities for the Dr. Clifford Massie and Dr. Robert Hart of Chicago zone to trade in ResMed stock. Shares on the diagnosis of SDB by permitting accurate, presented prospective data from five US sleep ASX, known as CDIs, are traded at a ratio of 10 unattended diagnostic studies to be done at home centers showing statistically that in 31 patients the CDIs for each NYSE share. Since trading began and in hospital wards and rehabilitation settings. ResMed AutoSet T was superior to conventional on the ASX in November 1999, it is estimated that We expect to begin marketing the Embletta PDS in CPAP in compliance, sleep quality, and patient 35% of ResMed’s equity is now owned by the final quarter of this calendar year. energy levels in treating OSA. We also took the Australian-based institutions or residents. This opportunity to host many of the offshore visitors at figure is expected to grow significantly as the stock This year also saw the launch of the Ultra Mirage ResMed’s impressive North Ryde manufacturing is proving to be popular within the Australian masks and the ResMed S6 range. The Ultra is a facility. The congress was a great success for environment—particularly since the company has further development of our well regarded Mirage the company. masks; the Ultra was successfully launched in the now had 21 consecutive record quarters, since our original IPO, where we have bettered or equalled US in June and is being launched internationally in During the year ResMed changed from a NASDAQ First Call Consensus EPS estimates. We are August. The ResMed S6 CPAP devices are quieter listing to the New York Stock Exchange, under the proud of this achievement. than any other major commercially available ticker symbol RMD. The goal was to increase the CPAPs and, in addition, have improved flow and company’s profile, and that of sleep disorders in ResMed was highlighted in May 2000 in a pressure characteristics. Further, these devices are general, as well as reduce the volatility of the stock; circumspect article in the influential In Vivo among the most compact and lightest of CPAPs on the latter has yet to show any evidence of change magazine; we were also featured on Bloomberg the market. We remain very optimistic about these but ResMed’s profile and that of sleep disorders Television Asia-Pacific and, more recently, on newly launched sleep products. has certainly improved, although there is still much CNBC. Nevertheless, there is still a challenge In March, ResMed was the major sponsor of the to educate both public and physicians about the 6th World Congress on Sleep Apnea held at Fiscal 2000 also saw ResMed listed as an exempt inherent dangers associated with untreated SDB. work to be done in this regard. ahead for the global sleep community to continue Sydney’s Darling Harbour Convention Centre. The foreign listing on the Australian Stock Exchange meeting was hosted by Professor Colin Sullivan of (ASX). This was done primarily for two reasons. On the operations front, we have successfully the University of Sydney Medical School, and First, to provide greater visibility to the company in expanded the Oracle ERP into the US, Australia, 4 4 Germany, and France; within a few months all stand up above the crowd and be heard. We take (HMS) to become Vice Chairman of the Executive major ResMed facilities will be on the system. In these directives seriously and try to follow them Council of the HMS Division of Sleep Medicine. The addition, we have begun implementing World within ResMed. Class Manufacturing (WCM) at the Sydney plant. Executive Council is committed to building a home for sleep medicine within the Harvard medical The first area to benefit from WCM is the ResMed Once again I would like to thank all employees for faculty, with a further goal of developing a S6; the staff on the production line has taken to their inputs and efforts during the year, as well as generalized model for the teaching of sleep WCM like a duck to water. By the end of calendar for their teamwork. ResMed staff made this medicine. I look forward to taking part in this activity. 2000 we will have converted the bulk of our another great year. I would also like to thank the manufacturing operations to WCM. Board for their continuing support and strategic Finally, I'm also delighted to inform you that inputs. Once again the Medical Advisory Board Professor Colin Sullivan and I have been named ResMed is now at about 625 employees; we added (MAB), ably chaired by Professor Colin Sullivan, joint recipients of the KL Sutherland Memorial a substantial number of staff during the year across was very helpful in reviewing our research and medal for the year 2000. The medal is awarded bi- virtually all departments. We welcome these new development focus and making useful strategic annually by the Australian Academy of recruits and have high expectations of them. The suggestions, particularly as we reviewed our Technological Sciences and Engineering, the late Karl Bays, former Chairman and CEO of diagnostic and treatment options in the stroke and Australian Industrial Research Group, and the American Hospital Supply and later Co-Chairman CHF areas. In this vein, we added one more Australasian Institute of Mining and Metallurgy. In of Baxter Healthcare, was a respected leader in the person to the MAB, Professor Claudio Bassetti of this case the medal was awarded jointly for the healthcare industry. He was a man who was adept the University of Bern in Switzerland. Claudio is a invention (Colin) and global development and at conveying a vision in a succinct way. In one of neurologist with a substantial background in the marketing (myself) of nasal CPAP for the treatment his employee talks to Baxter financial managers he diagnosis and treatment of SDB in stroke. He will of obstructive sleep apnea. made four requests. The first was that one should shortly move to a Chair in Medicine at Zurich and try to simplify things. Simplification is actually hard recently spent time with Dr. Michael Aldrich in Thanks to all shareholders for your support during to achieve unless one really understands the studying SDB in stroke at the University of fiscal 2000. We are committed to the further issues and that was his point: one had to do one’s Michigan. We also acknowledge, with regret, the expansion of the field of SDB. It still remains time homework. Second, one should emphasize action untimely death of Dr. Aldrich, a pioneering to wake up to sleep. over analysis and remember that the main goal of neurologist in the field of sleep. all employees was to serve a customer. Third, one We are determined to make it happen. had to learn to trust people. Fourth, one needed to On another note, I am pleased to report that I have exercise personal and professional judgment and accepted an invitation from Harvard Medical School 5 Assets and Shareholders’ Equity Net Income per Common Share and Equivalent NOTE: Graphs based on consolidated financial data for the five-year period ended June 30, 2000. Shareholders’ Equity Assets 7 F i n a n c i a l S u m m a r y Net Revenue Income 6 Income from Operations Income before Income Taxes Net Income RESMED 2 0 0 0 H i g h l i g h t s September 2000 Ranked for second consecutive year by Fortune as one of America’s 100 Fastest-Growing Companies (Sept. issue) June 2000 Included for second year running in Business Week magazine's annual list of the 100 Hottest-Growth Companies ($25m to $500m annual sales) in the US, ranked number 58 above last year's 67 Received two Australian Technology Awards for Excellence; the first in the Development of Biotechnology, Pharmaceutical Technology, and Medical Instrumentation, and the second in the Globalization of Technology Pioneered in Australia ResMed S6 CPAP system released in US Ultra Mirage mask released in US May 2000 Entered into partnership with the US National Stroke Association to promote awareness of the high prevalence of SDB in stroke patients April 2000 Enhanced AutoSet T released Enhanced VPAP product range released 8 March 2000 2-for-1 stock split AutoScan sleep data management software released February 2000 Embla Sleep Recorder introduced January 2000 Purchased business activities of Einar Egnell AB (Swedish distributor) November 1999 Secondary listing of common stock on the Australian Stock Exchange (ASX) October 1999 ResControl multi-purpose clinical assistant product released September 1999 Listing transferred from NASDAQ to New York Stock Exchange (NYSE), trading under the symbol RMD Mirage Disposable Full Face mask released 9 B u s i n e s s O v e r v i e w ResMed’s overall focus is on improving the quality of As of June 2000, the company’s compound annual How it Started life for people with sleep-disordered breathing (SDB). growth rate was well in excess of market growth With a reputation for technological innovation, the rates: 35% for sales and 49% for net income, using When ResMed was formed in 1989, its primary company is a leading provider of medical devices for fiscal 1996 as a base. diagnosing, treating, and managing SDB. Extensive purpose was to commercialize a device for treating obstructive sleep apnea (OSA), a major subset of global presence and a clear focus on SDB and ResMed employs about 625 people and distributes SDB. Developed in 1981 by Professor Colin Sullivan related market opportunities have enabled ResMed to products in over 50 countries. The company is cash and colleagues at the University of Sydney, nasal create and maintain shareholder value. flow positive with no long-term debt. Revenues and continuous positive airway pressure (CPAP) provided Since first listing in June 1995, ResMed has met or years, making ResMed a robust and rapidly growing Since 1989, ResMed has maintained its focus on exceeded First Call Consensus earnings per share player within the SDB marketplace. SDB, which is gaining greater public and physician profits have increased steadily during the past nine the first successful noninvasive treatment for OSA. estimates for 21 consecutive quarters. ResMed is now listed on both the NYSE and ASX under the symbol RMD. awareness. Operations have grown dramatically through the introduction of a number of highly innovative product lines. ResMed Corp, Poway, CA reception 10 The Way Forward remains to be proven that SDB is a definite risk factor, a vast amount of evidence shows strong It is estimated that OSA affects at least 20 million links between SDB and both stroke and Americans, its prevalence being comparable to congestive heart failure. A recent publication in that of asthma or diabetes. However, awareness the New England Journal of Medicine has shown is low with only around 5% of sufferers being that the risk of developing hypertension, a major diagnosed and treated. Along with an increasing risk factor for cardiovascular and understanding of the morbidity and mortality cerebrovascular disease, is two to three times caused by SDB, this discrepancy has created higher in patients with OSA.4 one of the fastest growing segments of the respiratory industry. The incidence of COPD has risen dramatically in the past 30 years. Almost 16 million Americans ResMed’s core business has been developing now have COPD and it is ranked fourth among devices for diagnosing and treating OSA. leading causes of death in the US.5 However, the company is moving quickly into other areas of medicine affected by SDB, namely ResMed devices can improve the quality of life stroke, congestive heart failure (CHF), and and prolong life for these people. With chronic obstructive pulmonary disease (COPD). proprietary technology and partnerships with key ResMed(cid:146)s VPAPII ST-A players, the company is well positioned to Stroke is a major cause of disability and the third capitalize on this opportunity. highest cause of death in the Western world1. Nearly five million Americans are now living with 1 American Heart Association 2Bassetti et al. Sleep Vol. 22, No CHF1 and it is a leading cause of hospitalization 2, 1999; 217-223 3Lipkin. The Lancet Aug 1999 Vol.354 No in older adults. 9178 p531-532 4 Peppard et al. New Eng J of Med May 2000 Vol 342 No 19 p1378-1383 5American Lung Association Over 60% of stroke patients2 and around 60% of patients with heart failure have SDB.3 While it 11 B u s i n e s s S t r a t e g y Think Global; Act Local Expand and Deepen Geographic Presence ResMed was born global. From day one the company ResMed actively markets its products in over 50 countries operated in multiple countries. Today, products are to sleep clinics and home healthcare dealers. ResMed marketed and distributed in over 50 countries by direct intends to increase its sales and marketing efforts in all of employees as well as distributors with extensive its current markets as well as expand its presence in the knowledge and experience of local markets. This ensures cardiovascular and cerebrovascular sectors. that ResMed supplies the right products to the right markets—a key factor in the company’s business strategy. Increase Public and Clinical Awareness ResMed believes that the market for SDB products will increase in the future due to a number of factors ResMed intends to expand its existing promotional including increasing awareness of SDB, evidence activities in the awareness and prevalence of SDB and emerging showing that SDB is a risk factor for heart its treatment alternatives within three main groups: disease and stroke, and an increase in home-based treatment and diagnosis. ResMed’s strategy for the expansion of its business operations consists of the following key elements: (1) the population with predisposition to SDB (2) primary care physicians and specialists, such as cardiologists, neurologists, and pulmonologists (3) patient support groups. Continue Product Development and Innovation As part of this program, ResMed will continue its significant Clinical Education and Training programs— ResMed is committed to ongoing innovation in including the sponsorship of several international developing products for the diagnosis and treatment of symposia on different clinical effects of SDB, including its SDB. Since its founding, ResMed has been the leading cardiovascular and cerebrovascular implications. As well innovator in products designed to increase patient as providing a forum for exchange of ideas and comfort and encourage compliance with therapy. ResMed information for attending healthcare professionals, each believes that continued product development and conference has been published in CD-ROM format for innovation are key factors in its ongoing success. distribution. ResMed also intends to use its existing public relations and general marketing programs to further promote awareness of SDB to both physicians and the general public. 1212 Develop Alliances in Key Markets Expand into New Markets fields of stroke and neurology throughout the US and Canada. ResMed has developed alliances with both the As a strategic goal, ResMed believes in US National Stroke Association and the developing strong links to the medical community In addition, ResMed and other manufacturers Australian National Stroke Foundation to provide to identify new directions in treatment and are supporting a continuation of the Canadian further education about SDB in stroke patients to markets for its products. ResMed maintains close Positive Airway Pressure (CANPAP) trial. This is clinicians, patients and their families. The working relationships with a large number of providing further information on the effects of alliance with the US NSA will encompass prominent physicians to explore new medical positive airway pressure in Canadian patients educational materials for both clinicians and applications for its products and technology. with congestive heart failure and SDB. patients and audio conferences with nurses and physicians. In addition, ResMed will be As part of its research focus, ResMed maintains sponsoring an education symposium at the extensive external and internal research NSA's annual meeting on SDB and stroke in programs, including programs in the treatment of September 2000. ResMed is working closely with stroke, cardiac, and post-operative surgery key opinion leaders in the cardiology community patients. ResMed is working to educate both to improve awareness about SDB in CHF patients. physicians and patients about SDB risk factors The company is also looking at forming alliances post-stroke and looking at strategies to improve with companies that are already part of the outcomes and quality of life. The company is also cardiology market. actively working with key opinion leaders in the Global Distribution: ResMed products are exported for distribution in over 50 countries 13 W a k i n g u p t o s l e e p While the importance of physical fitness and good nutrition has been recognized for decades, the What is OSA? importance of sleep is only now being acknowledged. Approximately 10% of the population suffer from OSA to Sleep accounts for approximately one-third of our lives some degree. It can affect people at any age: from and a growing number of physicians believe that it should newborn babies through to adults of either sex. receive more attention from the medical community. You can(cid:146)t be healthy unless your sleep is healthy: the triumvirate of health proposed by Dr. William Dement, Director, Stanford Sleep Disorders Clinic and Research Center, Stanford University, US sleep People with OSA repeatedly stop breathing during sleep due to a temporary collapse of the upper airway (an obstructive apnea). A sufferer can stop breathing for ten seconds or more, sometimes several hundred times during six to eight hours of sleep. good nutrition Breathing recommences when the brain realizes there is a lack of oxygen and alerts the body to wake up. These wake-ups are brief and rarely remembered. Consequently most sufferers are only diagnosed after someone, usually a partner, hears them while they sleep and realizes something is seriously wrong. The audible cycle will usually be one of loud snoring, followed by silence as the physical fitness Researchers have linked sleep-related illnesses to airway blocks, followed by gasping as the sufferer starts to hypertension, stroke, congestive heart failure, breathe again. depression, and an overall decreased quality of life. The main symptoms of OSA are heavy snoring, apneas, The consequences of SDB can severely affect health and and excessive daytime sleepiness due to severely mortality—yet awareness among primary care physicians disrupted sleep. Other more serious consequences is low. This means that getting properly diagnosed can include depression, high blood pressure, serious heart present a challenge for many people. Patients often find conditions, sexual problems, memory lapses, morning themselves treated for other conditions when the cause headaches, and intellectual deterioration. of their symptoms lies in their sleep. 14 ResMed(cid:146)s S6 CPAPdevice delivers continuous positive pressure through an UltraMirage mask to keep the airway open during sleep Usually, a family physician will refer patients with pressure acts like an "air splint" to keep the CPAP systems. Smaller, lighter, and significantly symptoms of OSA to a sleep specialist. upper airway open. Positive airway pressure is quieter than other major commercially available Diagnosis is made following an overnight sleep not a cure, but a noninvasive therapy for CPAPs, the ResMed S6 is the company’s study, either at a sleep clinic or at the patient’s managing OSA; in order to be fully effective, it premier fixed-pressure CPAP. home. Respiratory parameters, heart rate, and must be used on a nightly basis. blood oxygen levels are monitored to determine the presence and severity of OSA. Nasal CPAP (continuous positive airway Stroke How Does Treatment Work? pressure) delivers continuous pressure at a fixed level, which is determined during an overnight Stroke is an injury to the brain caused by an sleep study. It has proven highly successful over interruption to its blood supply. It occurs when a the past decade and has helped hundreds of blood vessel bringing oxygen to the brain bursts Treating OSA involves delivering positive airway thousands of sufferers worldwide. This year or is clogged by a blood clot or other particle. pressure through a small nasal mask. The ResMed introduced the ResMed S6 range of Deprived of oxygen, nerve cells die within 15 minutes and cannot be replaced. This means that the reduces pressure-related side-effects, and can lead to parts of the body controlled by the affected nerve cells increased compliance with therapy. may no longer function properly. Risk factors for stroke include high blood pressure, atrial fibrillation (a type of AutoSet T records detailed data while it treats the patient. irregular heartbeat), smoking, high cholesterol, and Sleep physicians and therapists can monitor this excess weight. How Does Treatment Work? Positive airway pressure technology has evolved in information to ensure therapy is effective for the patient. It also eliminates the need for a second night in a sleep lab to determine the appropriate pressure, or even follow-up testing as a patient’s pressure needs change over time. recent years with the introduction of ResMed’s Ideal for patients with OSA, AutoSet T is also appropriate revolutionary AutoSet T device. AutoSet T automatically for treating OSA in stroke patients. This is because adjusts the amount of pressure delivered to suit the AutoSet T adapts to the dynamic changes that occur in patient’s needs as they vary throughout the night SDB during recovery from stroke. according to sleep stage, body position, and other factors. The patient receives only the amount of pressure ResMed is in the process of conducting further clinical required for effective therapy. This improves comfort, trials to demonstrate an improvement in functional outcomes in post-stroke patients using AutoSet T. ResMed(cid:146)s AutoSet CS systems undergoing a soak test where they are run continuously for several hours prior to final testing and release. 16 Congestive Heart Failure CHF is a disease in which the heart fails to pump enough blood to meet the needs of the other organs in the body. It can result from narrowed arteries that supply blood to the heart muscle, heart attack, high blood pressure, disease of the heart muscle itself, heart defects present at birth, and infection of the heart valves and/or heart muscle. Around 60% of patients with CHF have SDB. Of these, 36% manifest a serious condition known as Cheyne-Stokes Respiration (CSR), 12% manifest with OSA, and the rest manifest a combination of central and obstructive abnormal breathing.1 With CSR, also known as periodic breathing, a person's breathing continually cycles between underbreathing (may stop altogether) and overbreathing. Daytime CSR is associated with extremely poor survival,2 while CSR during sleep is also associated with greatly shortened life expectancy.3 AutoSet CS respiratory therapy No respiratory therapy AutoSet CS at work: Top line shows patient breathing. Middle line shows AutoSet CS pressure delivery. When AutoSet CS therapy is applied, patient breathing is normalized and regular. When therapy ceases, patient returns to CSR or periodic breathing. 17 How Does Treatment Work? obstruction to the airflow in and out of the lungs. high inspiratory pressure levels or for patients People with COPD may eventually require with impaired breathing ability who need Preliminary study results from Canada, Australia, supplementary oxygen and have to rely on mechanical ventilatory assistance. and the United States have shown that CPAP mechanical ventilatory assistance. can significantly improve left ventricular ejection Recent studies show that almost all patients on fraction4 (which is a measure of cardiac function), In the later stages of COPD, the heart may be bilevel therapy experience air leaking out of the as well as reduce hospital admissions and affected. Eventually death occurs when the lungs mouth.9 In this situation, bilevel systems cannot improve quality of life in CHF patients.5 However, and heart can no longer supply oxygen to the reliably sense the patient's breathing patterns. nasal CPAP is poorly tolerated by these patients. body’s organs and tissues. ResMed VPAP bilevel systems solve this problem ResMed has developed new technology for patients with CHF and CSR. The AutoSet CS How Does Treatment Work? device automatically adjusts pressure on a with an exclusive IPAP Max feature, which enables the systems to remain in sync. with the patient's own breathing. The VPAP II ST-A also has built-in audio and visual alarms, which breath-by-breath basis, delivering varying Around 1.2 million Americans are on long-term activate when pressure is too high, too low, or if degrees of ventilatory assistance to stabilize oxygen therapy, and approximately one-third of there is a power failure. breathing and reduce CSR. Patient tolerance is these patients suffer from daytime hypercapnia the key factor for compliance and the (high carbon dioxide levels), which is associated AutoSet CS has a number of features designed with poor outcomes. The main cause of this to improve tolerance. Clinical trials have shown hypercapnia is nocturnal hypoventilation, which AutoSet CS provides better control of CSR than can be treated with bilevel ventilatory assistance.8 other forms of respiratory therapy.6,7 ResMed’s VPAP (Variable Positive Airway Pressure) systems, deliver comfortable bilevel Chronic Obstructive Pulmonary Disease therapy. The systems provide higher pressure while the patient breathes in and lower pressures COPD is a group of diseases, the most common while the patient breathes out. Breathing out being chronic bronchitis and emphysema. The against a lower pressure makes treatment more common characteristic of COPD diseases is comfortable, particularly for patients who need 1 Lipkin. The Lancet Aug 1999 Vol.354 No 9178 p531-532 2 Andreas et al. Am J Cardiology 1996; 78:1260-1264 3 Hanly PJ, Zuberi-Khokhar NS. Am J Respir Crit Care Med 1996 Jan; 153(1):272-6 4 Bradley et al. J Cardiac Failure, 1996 Sep; 2(3): 223-240 5 Bradley. Sleep 1996; 19(10):S232-255 6 Teschler et al. Am J Respir Crit Care Med 1999; 159 part 2 (No 3):A249 7 Teschler, et al. Publication in review 8 Sivasothy et al. Eur Respir J 1998; 11:34-40 9 Meyer, TJ, et al. Sleep Jul 1997, 20 (7) 561-9. 18 In August 1993, Kay Walsh took a short In August 1993, Kay Walsh took a short nap and awoke with sleep paralysis nap and awoke with sleep paralysis and the frightening experience of and the frightening experience of wakeful dreaming. Startled by this wakeful dreaming. Startled by this experience and plagued by constant experience and plagued by constant fatigue, Kay went to see her doctor. fatigue, Kay went to see her doctor. He placed her on anti-depressant He placed her on anti-depressant medication, attributing her tiredness medication, attributing her tiredness to anxiety and depression. to anxiety and depression. Over the next two years, Kay Over the next two years, Kay became steadily more exhausted became steadily more exhausted and started experiencing memory and started experiencing memory lapses. Additionally, her work began lapses. Additionally, her work began to suffer. Employed as an educator, to suffer. Employed as an educator, Kay was placed under observation Kay was placed under observation as a disciplinary action. Again she as a disciplinary action. Again she sought medical advice. The first doctor sought medical advice. The first doctor tested for Attention Deficit Disorder (ADD). tested for Attention Deficit Disorder (ADD). A second doctor gave her a test for short-term A second doctor gave her a test for short-term memory loss while a third ordered an MRI to check for memory loss while a third ordered an MRI to check for a brain tumor. During the MRI exam, Kay stopped a brain tumor. During the MRI exam, Kay stopped breathing and choked three times. Still undiagnosed, she breathing and choked three times. Still undiagnosed, she lost her job. lost her job. In June 1996, Kay saw a television show on sleep disorders In June 1996, Kay saw a television show on sleep disorders and was amazed by what she heard. They were describing and was amazed by what she heard. They were describing her condition. She was subsequently tested for OSA and her condition. She was subsequently tested for OSA and prescribed CPAP therapy. Today Kay is active again. In 1998, prescribed CPAP therapy. Today Kay is active again. In 1998, she started the San Diego A.W.A.K.E support group. “Waking up she started the San Diego A.W.A.K.E support group. “Waking up in the morning and feeling fantastic and knowing I'm going to be in the morning and feeling fantastic and knowing I'm going to be able to do everything I want in the day, is one of the greatest able to do everything I want in the day, is one of the greatest blessings of my life,” she stated. blessings of my life,” she stated. Kay Walsh Coordinator for San Diego A.W.A.K.E, Kay Walsh Coordinator for San Diego A.W.A.K.E, a support group for sleep disorders. a support group for sleep disorders. 19 Other ResMed Products Its small size also makes it extremely easy and seal and minimize air leaks. The cushion complies convenient to transport. with body movement and eliminates the need for ResMed markets devices for the diagnosis, tight headgear to form a secure seal. titration, and treatment of SDB in sleep clinics, In addition, ResMed manufactures air delivery hospitals, and patients’ homes. These portable systems that include nasal masks, headgear, and Typically, patients replace mask cushions around systems give sleep clinics and specialists the tubing to connect the system to the patient. The twice a year and headgear every three to six means to expand their capabilities and increase comfort of these systems is vital to ensuring that months. Bubble Masks are available in sizes patient throughput. patients comply with their therapy. designed to fit a wide variety of different faces. The AutoSet Portable II Plus with AutoSet Clinical Released in 1997, ResMed’s Mirage mask either as replacement products or with other III software is used to diagnose OSA in sleep system has become popular with patients and manufacturers’ devices. ResMed also clinics, hospitals, or patients’ homes. The system clinicians due to its superior comfort and fit. This manufactures the Bubble Mask on an OEM basis They are sold independently of ResMed systems, records all relevant respiratory data, which can year ResMed released the Ultra Mirage mask for one of its competitors. then be downloaded to a computer for review and system, which has built on the success of the print out. Mirage mask with added features to further enhance patient comfort and ease of use. Accessories In February, ResMed introduced Flaga’s portable Embla Sleep Recorder, which can carry out a full ResMed’s Mirage Full Face mask provides an To enhance patient comfort, convenience, and sleep diagnosis equivalent to that performed effective method of applying mechanical compliance, ResMed markets a variety of other during an overnight stay in a sleep laboratory. ventilatory assistance and can be used to address products and accessories. These products mouth-breathing problems in conventional bilevel include humidifiers, such as the SULLIVAN Later this year ResMed will introduce Flaga’s or CPAP therapy. A disposable nasal mask and HumidAire heated humidifier, which connect to Embletta PDS (Portable Diagnostic System). The disposable Mirage Full Face mask are the CPAP and VPAP systems to humidify the air Embletta PDS is a pocket-size digital recording manufactured for the hospital market. delivered to the patient. Their use prevents the device for diagnosing OSA. The complete system drying of nasal passages, which can cause is extremely easy to use and is actually worn by ResMed also sells cushions, frames, and discomfort. Other optional accessories include the patient. Because the Embletta is battery headgear separately. A patented Bubble Cushion, carry bags and breathing circuits. powered, there is no external power source and made from a thin, soft silicone membrane, readily no long wires for the patient to get tangled up in. conforms to the patient’s facial contours to form a 20 Phil Lodge awoke to a chorus of forceful, impatient car horns that left him simultaneously startled and chagrined. Somewhat disoriented, it took him a moment to realize that he had fallen asleep behind the wheel of his car—again. "I took as many precautions as I could," says Lodge. “Still, there were times when I nodded off behind the wheel no matter what I tried." Phil Lodge exhibited many of the symptoms of sleep apnea and would fall asleep behind the wheel of his car and in meetings with colleagues and clients. However, it took almost two years for physicians to correctly diagnose his sleep apnea. Now 48, Lodge has been benefiting from CPAP therapy every night for more than four years. "I noticed an improvement literally overnight," he exclaims. "The first night I used the machine was the first night in years that I was able to get eight solid hours of restful sleep." He also noted that he hasn't had a daytime sleepiness episode since he started therapy. When recalling the difficulties he encountered in obtaining an accurate diagnosis of his condition, Lodge suggests that the severe and potentially dangerous side effects of OSA warrant an aggressive public information campaign. "We have programs and interventions for drugs, alcohol and other illnesses—we need one for obstructive sleep apnea." Phil Lodge, Regional Sales Manager for a US packaging company P r o d u c t D e v e l o p m e n t ResMed is committed to an ongoing program of product ResMed’s marketing staff, direct sales force, advancement and development. Currently, product manufacturers’ representatives, patients, and network of development efforts continue to be focused on AutoSet distributors also identify new product ideas. Typically, technology, improved CPAP, VPAP, and mask systems, ResMed’s internal development staff then perform new and manufacturing cost-reduction programs. Applications product development. The company has multiple of the AutoSet technology are being applied not only to collaborative arrangements with researchers in tertiary the clinical area of OSA, but also to SDB associated institutions around the world such as the University of with stroke, congestive heart failure, and forms of Sydney Medical School, as well as at other medical respiratory insufficiency. faculties such as Brown University, Edinburgh University, Oxford University, University of California San Diego, and ResMed consults with physicians at major medical the University of Essen. In the three fiscal years ended centers throughout the world to identify technology trends June 30, 2000, 1999 and 1998, the company spent in the treatment of SDB. Some of these physicians $8,499,000, $6,542,000 and $4,994,000 respectively, on currently serve on ResMed’s Medical Advisory Board. research and development. ResMed(cid:146)s custom-built breathing machine accurately simulates breathing patterns to test mask and flow generator function 22 M a n u f a c t u r i n g O p e r a t i o n s ResMed’s principal manufacturing facilities are located in Sydney, Australia. The manufacturing operations consist of assembly and testing of devices, molding of mask cushions, and printed circuit board assembly. Of the numerous raw materials, parts, and components purchased for the assembly of therapeutic and diagnostic sleep disorder products, most are off-the-shelf items available from multiple vendors. ResMed generally manufactures to its internal sales forecasts and fills orders as received. As a result, the company generally has no significant backlog of orders for its products. A quality control group performs tests at various steps in the manufacturing cycle to ensure compliance with the company’s specifications. ResMed is continually striving to maximize its manufacturing throughput and minimize overheads. ResMed embraces World Class Manufacturing (WCM) techniques with its ResMed S6 CPAP production line 23 S a l e s a n d M a r k e t i n g Using a network of distributors, independent Europe ResMed markets its products in most major manufacturers’ representatives, and its direct sales force, European countries. It has fully owned subsidiaries in the ResMed currently markets its products in over 50 United Kingdom, Sweden, Germany, and France, and countries. ResMed tailors its marketing approach to each uses independent distributors to sell its products in other national market, based on regional awareness of SDB as areas of Europe. These distributors have been selected a health problem, physician referral patterns, consumer in each country based on their knowledge of respiratory preferences, and local reimbursement policies. medicine and their commitment to SDB therapy. In each North America In the United States, ResMed’s marketing manager is responsible for direct national sales. In activities are conducted through a field sales organization addition, a consultant in Switzerland assists in sales and comprised of direct employees and manufacturer marketing efforts for selected European countries. country in which ResMed has a subsidiary, a local senior representatives. The United States field sales organization markets and sells products to more than ResMed’s Executive Vice President coordinates all 3,000 home healthcare dealer branch locations European distributors and, in conjunction with local throughout the United States. ResMed also promotes and management, the direct sales activity in Europe. Sales in markets its products directly to sleep clinics. Patients Europe accounted for 35%, 34%, and 35% of ResMed’s diagnosed with OSA and prescribed CPAP treatment are total net revenues for the fiscal years ended June 30, typically referred by the diagnosing sleep clinic to a home 2000, 1999, and 1998, respectively. healthcare dealer to fill the prescription. The home healthcare dealer, in consultation with the referring Australia/Rest of World Marketing in Australia and the physician, will assist the patient in selecting the rest of the world is the responsibility of the Executive equipment, fit the patient with the appropriate mask, and Vice President based in Sydney, Australia. Sales in set the flow generator to the prescribed pressure level. Australia and the rest of the world accounted for 11%, ResMed’s Canadian and Latin American sales are 9%, and 13% of the company’s total net revenues for the conducted through independent distributors. Sales in fiscal years ended June 30, 2000, 1999, and 1998, North America accounted for 54%, 57%, and 52% of the respectively. company’s total net revenues for the fiscal years ended June 30, 2000, 1999, and 1998, respectively. 24 The final stage: 25 ResMed products are packed prior to shipment M e d i c a l A d v i s o r y B o a r d ResMed’s international Medical Advisory Board (MAB) Sleep Research Society. He is on the editorial board of consists of physicians and scientists specializing in the field Sleep Medicine and Swiss Archives of Neurology and of SDB. Members meet as a group twice a year with Psychiatry, and has produced over 100 publications. members of ResMed’s senior management and members of its research and marketing departments, to advise the company on technology trends in SDB and other developments in sleep disorders medicine. MAB members are also available to consult on an as-needed basis with senior management of the company. In alphabetical order, MAB members include: Peter Farrell (center front) with ResMed’s Claudio Bassetti, MD, PhD, is currently Associate Professor at the University of Bern, where he is also the Professor Bassetti is a leader in studying the implications of SDB on stroke. Michael Coppola , MD, is a leading pulmonary critical care and sleep disorders physician in private practice in Massachusetts. He is an attending physician at Baystate Medical Center and Mercy Hospital in Springfield, MA and a Fellow of the American College of Chest Physicians. He is Chairman of the Massachusetts Sleep Breathing Disorders Society. He is also the Medical Director of Winmar Diagnostics, an SDB specialty company, and Associate Clinical Professor of Medicine at Tufts University School of Medicine. Terence M.Davidson , MD, FACS, is Professor of Surgery in the Division of Otolaryngology—Head and Neck Surgery at the University of California, San Diego, School of Medicine. He is Section Chief of Head and Neck Surgery at the Veterans Administration San Diego Healthcare System and Associate Dean for Continuing Medical Education at the University of California at San Diego. He is also Director of the UCSD Head and Neck Surgery Sleep Neurological Director of the University Sleep Laboratory. He Clinic in La Jolla, CA. will shortly move to a full Chair at the University of Zurich. A member of the American Academy of Neurology and the American Sleep Disorders Association, Professor Bassetti is also a member of the scientific board of the European Neil J.Douglas, MD, FRCP, is Professor of Respiratory and Sleep Medicine, University of Edinburgh, an Honorary Consultant Physician, Royal Infirmary of Edinburgh and Director of the Scottish National Sleep Laboratory. He is Medical Advisory Board (Lto R) Neil Douglas, B. Tucker Woodson, Terence Davidson, Helmut Teschler, Michael Coppola, Colin Sullivan (absent: Claudio Bassetti, Nicholas Hill, Barry Make, J. Woodrow Weiss) 26 d Dean of the Royal College of Physicians of Colin Sullivan , MD, PhD, FRACP, FAA, is J.Woodrow Weiss , MD, is Associate Professor Edinburgh and Vice Chairman of the UK Royal Chairman of the MAB and the inventor of nasal of Medicine and Co-Chairman of the Division of Colleges Committee of CME Directors, and a CPAP for treating obstructive sleep apnea. He is Sleep Medicine at Harvard Medical School, as well member of the Working Party on Sleep Apnea of Professor of Medicine and Director of the David as Chief, Pulmonary & Critical Care Medicine, the Royal College of Physicians of London. He is a Read Research Laboratory and Director of the Beth Israel Deaconess Medical Center, Boston past Chairman of the British Sleep Society and Australian Centre for Advanced Medical MA. Dr. Weiss is an internationally recognized past Secretary of the British Thoracic Society. He Technology at the Sydney University Medical researcher in sleep disorders medicine. has published over 200 papers on breathing School. during sleep. He is head of the Centre for Respiratory Failure Associate Professor of Otolaryngology and B.Tucker Woodson, MD, FACS, is an Nicholas Hill , MD, is Professor of Medicine at and Sleep Disorders, as well as a thoracic Communication Sciences at the Medical College Brown University and Director of Critical Care physician at the Royal Prince Alfred Hospital. He is of Wisconsin. He is a Fellow of the American Services at Rhode Island Hospital and Pulmonary also Academic head of the Pediatric Sleep Academy of Otolaryngology—Head and Neck Medicine at Miriam Hospital, both in Providence. Laboratory, New Children’s Hospital, and Sydney Surgery and the American College of Surgeons. He is a Fellow of the American College of Chest Children’s Hospital. Professor Sullivan is a Fellow Dr. Woodson is the Director of the Medical Physicians and a member of the Planning of the Royal Australian College of Physicians and College of Wisconsin/Froedert Memorial Committee for the American Thoracic Society. His Fellow of the Australian Academy of Science. He Lutheran Hospital Center for Sleep. He is active main research interests are in the acute and continues to contribute to ResMed’s innovation, on multiple committees for the American Academy chronic applications of noninvasive positive product development, and clinical testing. of Sleep Medicine and American Academy of pressure ventilation for treating lung disease. Helmut Teschler, PhD, MD, is Associate Barry J.Make, MD, is Director, Emphysema Professor and head of the Department of Center and Pulmonary Rehabilitation National Respiratory Medicine and Sleep Medicine, Jewish Medical and Research Center, and Ruhrlandklinik, Medical Faculty, University of Professor of Pulmonary Sciences and Critical Care Essen, Germany. He is a Fellow of each of the Medicine of the University of Colorado School of following associations: German Pneumology Medicine. He has served on numerous national Society, American Thoracic Society, European and international committees for respiratory and Respiratory Society, and American Sleep cardiovascular diseases. His research and clinical Disorders Association. He is an internationally work has resulted in a large number of recognized researcher in respiratory medicine and publications on mechanisms, treatment, and sleep disorders medicine. rehabilitation of chronic respiratory disease. Otolaryngology. His initial surgical training was with Dr. Fujita, the pioneer of uvulopalatopharyngo- plasty to treat OSA. He has developed a research and teaching interest in improving surgical management of sleep apnea, notwithstanding his being a strong proponent of nasal CPAP therapy. 27 S t o c k h o l d e r s ’ I n f o r m a t i o n Annual Meeting of Shareholders The annual meeting of shareholders will be held on Monday, November 6, 2000 at 3.00pm at ResMed Corp, 2 0 0 0 1 9 9 9 H I G H L O W H I G H L O W Quarter One 17.19 11.82 13.19 9.25 Quarter Two 23.13 12.75 23.62 10.59 14040 Danielson St, Poway CA 92064-6857 USA. Quarter Three 39.62 20.34 25.72 11.50 Market for the Company(cid:146)s Common Stock and Related Shareholders Matters Quarter Four 38.06 22.00 18.56 9.87 The company’s shares are traded on the New York Stock Form 10-K Exchange (primary listing) and the Australian Stock Copies of the ResMed, Inc annual report on Form 10-K, Exchange under the symbol RMD. Previously ResMed as filed with the Securities and Exchange Commission, was listed on the NASDAQ-AMEX national stock market are available upon request without charge. Please under the symbol RESM. The Company began trading on address written requests to Walter Flicker, Corporate the national over-the-counter market on June 2, 1995. Secretary, ResMed Inc, 14040 Danielson St, Poway, The Company does not intend to pay cash dividends with respect to its common stock in the foreseeable future. High and low closing sale price information for the CA 92064-6857 USA. Shareholder Inquiries company’s common stock for the applicable quarters Contact Walter Flicker, Corporte Secretary, Resmed Inc, R e s M e d o ff i c e s as shown. United States ResMed Corp 14040 Danielson St Poway CA92064-6857 Tel: +1 (858) 746 2400 or 1 (800) 424 0737 14040 Danielson St, Poway, CA 92064-6857 USA Tel: 858 746 2400 or 800 424 0737 (using international access code +1 if outside US). United Kingdom Sweden Singapore ResMed (UK) Limited ResMed Sweden AB ResMed Singapore Pte Ltd 67B Milton Park Abingdon Oxon OX14 4RX Industrigatan 2 461 37 Trollh(cid:228)ttan 150 Kampong Ampat #06-06 KACentre 368324 Fax: +1 (858) 746 2900 Fax: +44 (1235) 831 336 Fax: +46 520 397 15 Tel: +44 (1235) 862 997 Tel: +46 520 420110 Tel: +65 284 7177 Fax: +65 284 7787 28 reception@resmed.com reception@resmed.co.uk reception@resmed.se reception@resmed.com.sg Company Information on the World Wide Web ResMed has a World Wide Website containing details about the Company, its products, OSA, and information for sleep professionals, as well as the latest Company news releases. You can visit the web site at http://www.resmed.com. Other Financial Data Security analysts and institutional investors are invited to contact Peter C. Farrell PhD, President, Tel: 858 746 2400 or 800 424 0737 (using international access code + 1 if outside US), Christopher G. Roberts PhD, Executive Vice President, Tel: +61 2 9886 5000 and Adrian M. Smith, Vice President, Finance and Chief Financial Officer, Tel: +61 2 9886 5000. Transfer Agent and Registrar Legal Counsel ResMed lists on the NYSE 30 September 1999 Inquiries regarding transfer requirements, lost certificates and changes of address should be directed to: Latham and Watkins, 650 Town Centre Drive, Costa Mesa, CA 92626. American Stock Transfer and Trust Company 40 Wall Independent Auditors Street, New York, NY 10005. Tel: +1 718 921 8275. KPMG LLP, 750B Street, Suite 3000, San Diego, CA 92101. New Zealand ResMed NZ Ltd PO Box 51-048 Pakuranga, Auckland Malaysia Germany ResMed Malaysia Sdn Bhd ResMed GmbH & Co. KG France ResMed SA Australia ResMed Ltd Unit 4.04, Wisma BICMA Rudolfstra(cid:223)e 10 Parc de la BandonniŁre 2, 97 Waterloo Road Lot 2, Jalan 243/51A 46100 Petaling Jaya D-41068 M(cid:246)nchengladbach rue Maurice Audibert 69800 Saint Priest North Ryde NSW 2113 Tel: +61 (2) 9886 5000 Tel: +0800 737 633 (NZ toll free) Tel: +60 3 7877 9099 Telefon: +49 02161 / 3521-0 Tel: +33 (0) 437 251 251 or 1 800 658 189 Fax: +0800 737 634 (NZ toll free) Fax: +60 3 7877 6099 Telefax: +49 02161 / 3521-299 Fax: +33 (0) 437 251 260 Fax: +61 (2) 9889 1483 enquiries@resmed.co.nz reception@resmed.com.my reception@resmed.de reception@resmed.fr reception@resmed.com.au B o a r d o f D i r e c t o r s 3030 Chairman of The Board Dr. Peter C. Farrell President, Chief Executive Officer, ResMed, Inc. Directors Donagh McCarthy Formerly President Renal Management Strategies Inc., an affiliate of Baxter Healthcare Corporation. Currently consulting in the healthcare field Gary W. Pace PhD President and Chief Executive Officer, RTP Pharma, Inc. (a biopharmaceutical research corporation) Michael A. Quinn Formerly CEO of a medical device company. Director of listed and unlisted companies Dr. Christopher G. Roberts Executive Vice President, ResMed, Inc. Officers Name Position Mark Abourizk Vice President, Intellectual Property and Legal Affairs (Asia Pacific) Dr. Michael Berthon-Jones Vice President, Clinical Research Don Darkin David D'Cruz Norman DeWitt Walter Flicker Vice President, Product Development Vice President, Quality Assurance and Regulatory Affairs General Counsel Corporate Secretary Robert Frater PhD Vice President, Innovation Elliott Glick Curt Kenyon Brett Lenthall William Nicklin Ron Richard Vice President, US Operations Vice President, US Sales & Marketing Vice President, Information Systems Vice President, Manufacturing Vice President, US Marketing Klaus Schindhelm PhD Vice President, Operations Adrian Smith Vice President, Finance and Chief Financial Officer Deirdre Stewart PhD Vice President, New Business Development and Clinical Education and Training Jonathan Wright PhD Vice President, Global New Business ResMed Board of Directors (Lto R) Donagh McCarthy, Michael Quinn, Peter Farrell, Chris Roberts, Gary Pace 31 Te n Ye a r F i n a n c i a l S u m m a r y (In thousands, except per share data) Y e a r e n d e d J u n e 3 0 2 0 0 0 1 9 9 9 1 9 9 8 1 9 9 7 1 9 9 6 1 9 9 5 1 9 9 4 1 9 9 3 1 9 9 2 1 9 9 1 Net revenues 115,615 88,627 66,519 49,180 34,562 23,501 13,857 7,650 3,356 1,635 Income from operations 33,138 25,255 17,363 8,327 3,595 2,787 1,289 637 Income before income taxes 34,166 24,577 16,112 11,087 6,561 3,781 1,831 1,205 Net income 22,226 16,102 10,611 7,465 4,503 2,833 1,232 846 (95) 315 315 (409) (115) (115) Basic earnings per share Diluted earnings per share 0.74 0.69 0.55 0.52 0.37 0.35 0.26 0.26 0.16 0.16 0.19 0.16 0.10 0.09 0.09 0.06 0.04 (0.02) 0.02 (0.01) A s a t J u n e 3 0 2 0 0 0 1 9 9 9 1 9 9 8 1 9 9 7 1 9 9 6 1 9 9 5 1 9 9 4 1 9 9 3 1 9 9 2 1 9 9 1 Working capital 47,550 32,529 32,759 34,395 30,844 27,354 5,010 2,589 1,501 1,166 Long-term debt – – – 274 578 787 386 163 218 262 Shareholders(cid:146)Equity 93,972 71,647 50,773 44,625 38,986 28,867 5,630 2,895 1,689 1,257 Total Assets 115,594 89,889 64,618 54,895 47,299 35,313 9,608 5,173 2,886 2,004 32 33 ResMed Corp, Poway, CA Nomura Jafco invests 96 ResMed Priess GmbH & Co established in Germany ResCare group incorporates as Delaware Corporation ResMed SAestablished in France 90, 91, 92 93, 94, 95 Business 90First sales in Europe Medtronic, Inc. invests $1 million for North American & European distribution rights Australian Government National Procurement Development Grant Medtronic distribution agreement terminated Direct distribution to USAmarket 91 92 New Products 90 91 APD1E CPAPdevice APD2 CPAPdevice Bubble Mask - Series 2 Hygroscopic Passive Humidifier 92 HC100 active humidifier Awards 90 91 92 Austrade International Business Development Grant Australian Chamber Manufactures Small Business Achievement Award Austrade International Business Achievement Austrade Exporter of the Year Awards Finalist Business 93 94 95 Company name changed to ResMed Lists on NASDAQ, raising US$24 million New Products 93 Bubble Mask - Series 3 Constant CPAP(Germany) ResCap headgear SULLIVAN III CPAPdevice 94 AutoSet Clinical device Bubble Mask - Series 3 Infant Mask SmartStart SULLIVAN IV CPAPdevice VPAPbilevel device 95 Alert CPAPdevice AutoSet Portable device Modular Mask frame Pediatric CPAPdevice SCAN software SULLIVAN V CPAPdevice UCU (Universal Control Unit) Awards 95 Australian State Exporter of the Year Award 34 ResMed S6 Elite 96, 97 Business 97 Liquid silicone manufacturing assets of TQR Pty Ltd acquired Awarded $2 million competitive Government R & D Grant NSW State Government offers financial assistance for the expansion of Sydney manufacturing plant Acquires Innovmedics for direct distribution in SE Asia New Products 96 Comfort device ResCap II headgear VPAPII bilevel device 97 AutoSet Portable II HumidAire active humidifier Mirage mask SCAN 2.0 UCU 2 Awards 97 Dr. Peter Farrell receives David Dewhurst Award for significant contributions to biomedical engineering Named by Deloitte & Touche as one of the Technology Fast 500(received again in 1998) Ranked 172 by ForbesMagazine in the 200 Best Small Companies in America Australian Venture Capital Award (Best Expansion Phase Investee Company category) AutoSet T ResControl Embla Elite UltraMirage mask 98, 99 Business 2000 Business 98 Construction of new Australian premises begins 00 Begins trading on the New York Stock Exchange (NYSE) 3 year agreement signed with Invacare Corp. for distribution of selected products in the US 2-for-1 stock split announced 99 Critical Care Concepts Inc. (3Ci) - US primary hospital sales and distribution partner Acquires holding in Flaga hf becoming US distributor of Embla sleep diagnostic equipment New Products 98 AutoSet Clinical II device AutoSet Portable II Plus device VPAPII ST-A& VPAPMAX bilevel devices 99 AutoSet T& AutoSet PDS devices Mirage Full Face mask ResControl Awards 98 Dr. Peter Farrell named San Diego(cid:146)s Entrepreneur of the Year in Health Sciences Ranked 63 by ForbesMagazine in the 200 Best Small Companies in America Wins NSW Exporter of the Year Award across all industry categories 99 Ranked 67 by Business Weekas one of the 100 Hottest-Growth Companies($25m to $500m annual sales) in the US Ranked 94 by Fortuneas one of America(cid:146)s 100 Fastest-Growing Companies Secondary listing of common stock on the Australian Stock Exchange (ASX) 2-for-1 stock split Enters into partnership with US National Stroke Association Purchases business activities of Swedish distributor Einar Egnell AB New Products 00 S6 CPAPsystem UltraMirage mask Enhanced AutoSet T Enhanced VPAP AutoScan Embla Sleep Recorder Mirage Disposable Full Face mask Awards 00 Ranked 58 in Business Weekas one of the 100 Hottest-Growth Companies($25m to $500m annual sales) in the US Wins two Australian Technology Awards for excellence; the first in the Development of Biotechnology, Pharmaceutical Technology and Medical Instrumentation, and the second in the globalization of technology pioneered in Australia Ranked 96 by Fortuneas one of America(cid:146)s 100 Fastest-Growing Companies (Sept. issue) AutoScan, AutoSet, AutoSet CS, AutoSet T, AutoView, AutoVPAP, Bubble Cushion, Bubble Mask, HumidAire, IPAP Min, Mirage, ResCap, ResControl, ResMed, SCAN, SmartStart, S6, SULLIVAN, Ultra Mirage, VPAP, and VPAP MAX are trademarks of ResMed Ltd. 35 RESMED Trollh(cid:228)ttan Sydney Singapore San Diego Oxford M(cid:246)nchengladbach Lyon Kuala Lumpur Auckland 

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