ResMed Annual Report 2000

FY2000 Annual Report · ResMed

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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.

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.

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

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

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

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

F i n a n c i a l

S u m m a r y

Net Revenue

Income

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

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

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

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

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

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.

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

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.

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.

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.

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.

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

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

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

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.

The final stage:

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)

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.

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

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

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

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

(409)

(115)

Basic earnings per share

Diluted earnings per share

0.74

0.69

0.55

0.52

0.37

0.35

0.26

0.16

0.19

0.16

0.10

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

ResMed Corp, Poway, CA

Nomura Jafco invests

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

New Products

APD1E CPAPdevice

APD2 CPAPdevice

Bubble Mask - Series 2

Hygroscopic Passive Humidifier

HC100 active humidifier

Awards

Austrade International Business
Development Grant

Australian Chamber Manufactures Small
Business Achievement Award

Austrade International Business
Achievement

Austrade Exporter of the Year
Awards Finalist

Business

Company name changed to ResMed

Lists on NASDAQ, raising US$24 million

New Products

Bubble Mask - Series 3

Constant CPAP(Germany)

ResCap headgear

SULLIVAN III CPAPdevice

AutoSet Clinical device

Bubble Mask - Series 3

Infant Mask

SmartStart

SULLIVAN IV CPAPdevice

VPAPbilevel device

Alert CPAPdevice

AutoSet Portable device

Modular Mask frame

Pediatric CPAPdevice

SCAN software

SULLIVAN V CPAPdevice

UCU (Universal Control Unit)

Awards

Australian State Exporter of the Year Award

ResMed S6 Elite

96, 97

Business

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

Comfort device

ResCap II headgear

VPAPII bilevel device

AutoSet Portable II

HumidAire active humidifier

Mirage mask

SCAN 2.0

UCU 2

Awards

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

Construction of new Australian premises begins

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

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

AutoSet Clinical II device

AutoSet Portable II Plus device

VPAPII ST-A& VPAPMAX bilevel devices

AutoSet T& AutoSet PDS devices

Mirage Full Face mask

ResControl

Awards

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

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

S6 CPAPsystem

UltraMirage mask

Enhanced AutoSet T

Enhanced VPAP

AutoScan

Embla Sleep Recorder

Mirage Disposable Full Face mask

Awards

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.

RESMED

Trollh(cid:228)ttan

Sydney

Singapore

San Diego

Oxford

M(cid:246)nchengladbach

Lyon

Kuala Lumpur

Auckland