ResMed
Annual Report 2005

Plain-text annual report

global action global success ANNUAL REPORT 2005 Around the clock and across the globe, ResMed employees are working to help millions of patients who suffer from sleep-disordered breathing (SDB) and other respiratory disorders. ResMed(cid:146)s team is focused on developing innovative therapies that increase patient comfort and convenience while improving health. ResMed is also committed to increasing education and awareness of the serious health consequences of untreated SDB among the millions of patients who remain undiagnosed. Our employees know that medicine doesn(cid:146)t stop when the lights go out, and neither does our mission to educate and innovate. Forward-looking statement Statements in this Annual Report that are not historical facts are "forward-looking" statements under the US Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our future revenue, earnings, or expenses; new product development; and new markets for our products. Forward-looking statements are subject to risks and uncertainties that could cause our actual results to materially differ from the results the forward-looking statements project or imply. Some of those uncertainties are: our ability to compete successfully in our market; foreign currency exchange rate movements, tariffs, and other risks that affect our global operations; the regulatory environment; and the willingness of third-party payors to reimburse for the sale of our products. The Annual Report on the Form 10-K for our most recent fiscal year discusses the risks and uncertainties. Other reports that we file with the US Securities & Exchange Commission also discuss them. Those reports are available on our website. 2 / ResMed Annual Report 2005 M U NITED STATES U NITE D KIN G D O W IT Z E R L A S D N N E D E W S A I N P S E P O R S I N G A N E W Z E A L A N D N E T H E R L A N D S M A L A Y S I A J A PA N H O N G KO N G G E R M A N Y F R A N C E FINLAND AUSTRIA AUSTRALIA C O N T E N T S 4 FINANCIAL HIGHLIGHTS 6 CHAIRMAN(cid:146)S REPORT 10 TESTIMONIAL 12 ZARAGOZA 14 CHICAGO 16 OXFORD 18 SYDNEY 20 PARIS 22 HONG KONG 24 TOKYO 26 MUNICH 28 NEW YORK 30 MEDICAL ADVISORY BOARD 32 FINANCIAL SUMMARY 34 CORPORATE GOVERNANCE AND BOARD OF DIRECTORS ResMed Annual Report 2005 / 3 F I N A N C I A L H I G H L I G H T S The quarter ending June 30, 2005 marked our 41st quarter of growth reporting $425.5 million in fiscal year 2005 revenue, an increase of 25% over fiscal year 2004 revenues. Excluding the incremental revenue contribution from acquisitions, revenue was $414.0 million, an increase of 22%. Excluding the impact of restructuring expenses and acquisition related costs, net income for the year was $73.8 million or $2.06 per share, an increase of 29% compared with net income of $57.3 million or $1.63 per share for fiscal year 2004. Operating income was $108.6 million, an increase of 27% over the prior year. 4 / ResMed Annual Report 2005 Income from operations Income before income taxes Assets Shareholders(cid:146) equity 1 . 4 7 7 6 . 8 0 1 9 . 7 0 1 . 4 5 8 7 . 4 8 . 2 7 6 . 1 7 6 6 . 4 5 . 2 1 5 . 5 5 4 . 3 4 4 . 2 9 4 5 . 6 9 5 4 . 1 4 7 4 . 2 6 7 3 . 5 1 6 3 . 1 8 8 2 . 4 6 8 2 9 . 2 9 1 4 . 0 0 1 01 02 03 04 05 01 02 03 04 05 INCOME (excludes acquisition and restructure related expenses) $M ASSETS AND SHAREHOLDERS(cid:146) EQUITY $M 8 . 3 7 . 3 7 5 . 7 5 4 5 . 5 2 4 6 0 2 . . 3 9 3 3 . 6 3 7 2 . 1 4 0 2 . 2 5 5 1 3 6 1 . 3 3 1 . 0 1 1 . 9 8 0 . . 5 7 3 . 9 9 2 01 02 03 04 05 01 02 03 04 05 01 02 03 04 05 NET REVENUE $M DILUTED EARNING PER SHARE NET INCOME (excludes acquisition and restructure (excludes acquisition and related expenses) restructure related expenses) $ $M ResMed Annual Report 2005 / 5 C H A I R M A N (cid:146) S R E P O R T Every hour of every day, ResMed employees around the world are working to help the millions of people suffering from breathing disorders, primarily those that occur during sleep. This year’s annual report provides a snapshot of the many activities of ResMed’s team that are aimed at delivering the best therapy to patients. It has been said that business success depends upon three key fundamentals(cid:151)people, products and profits(cid:151)and that without a good team, the other two just aren’t possible. This year our team made tremendous progress in our mission to educate the medical community and the public about sleep-disordered breathing (SDB), to strengthen our global operations, and to deliver the very best products to our SDB patients. 6 / ResMed Annual Report 2005 Peter Farrell reflects on another successful financial year Let’s start with results. It’s outcomes that Continued product quality and matter. And ResMed has again delivered innovation record performance on both top and bottom lines in fiscal year 2005. For fiscal 2005, we reported $425.5 million in revenues, an increase of 25% over 2004 revenues. Net income, excluding the impact of restructuring expenses and acquisition related expenses for the year, rose 29% to $73.8 million, representing 17% of our revenues. Diluted earnings per share, excluding the impact of restructuring expenses and acquisition related expenses, were $2.06, an increase of 26% over the $1.63 we reported last year. Operating Our reputation for product quality and innovation is critical in maintaining and expanding our strong market position. Patients rely on our high-quality products, and our global customers continue to expect innovative technologies and systems. Fiscal year 2005 has been a banner year for new product introductions at ResMed. We launched a brand new patient interface, the Mirage Swift(cid:153) Nasal Pillows System, and rolled out our new compact flow generator platform, the S8(cid:153). income was $108.6 million, an increase The Mirage Swift Nasal Pillows interface has of 27% over the prior year. Total operating cash flow for fiscal year 2005 was $71.1 million, resulting in cash and cash equivalents of $142.2 million at the end of fiscal year 2005. The strength of the balance sheet is also reflected by an increase of 27% in total current assets to $360.2 million; total assets were $774.1 million. Shareholders’ equity increased 31% to $474.1 million from $361.5 million in the prior year, reflecting excellent growth in shareholder value. been our most successful product launch in recent years and has become our biggest seller in masks in only ten months. This product met with incredible demand in the market, challenging us to increase manufacturing capacity much faster than anticipated. Our manufacturing team responded quickly and we were able to meet the high demand. The Mirage Swift Nasal Pillows has been well received by clinicians and patients alike for its ease of use. Patients enjoy its comfort and unobtrusiveness and many ResMed Annual Report 2005 / 7 C H A I R M A N (cid:146) S R E P O R T ( c o n t i n u e d ) consider it to be the leading product in the S8 AutoSet(cid:153) model, we will be able to In addition, ResMed invests in educating nasal pillows category. Products like the increase adoption in our core market. primary care physicians and specialists on Mirage Swift not only improve comfort and Although we are still relatively early into the the connection between SDB and other increase patient compliance, but also allow launch of this platform, the fact that we have serious medical conditions, such as the risk our customers to run their businesses more initially increased the average selling price of peri-operative deaths, type 2 diabetes, efficiently and manage their patients more (ASP) in this price-sensitive category is a effectively. Our continued commitment to truly encouraging indication of this product’s innovation has allowed us to bring patients potential to increase our competitive position and customers revolutionary new products, of the S8 platform and the Mirage Swift like the Mirage Swift. Nasal Pillows System. We believe ResMed In March, we received further validation of offers the most compact, reliable and user- our quality leadership when Frost & Sullivan friendly system on the market. stroke, congestive heart failure and hypertension. By partnering with sleep specialists to educate their physician colleagues on the importance of treating SDB, we hope our industry can overcome the unfortunate lack of formal sleep education in medical schools. For example, in March, The Archives of Internal Medicine awarded us with their 2005 Sleep Therapy Product Quality Leadership of the Year Award for our world-class S7(cid:153) flow generator. We received the award at MedTrade West in April, which coincided with the launch of our S8 Escape(cid:153). We were delighted to be recognized for our commitment to product quality as we inaugurated our new generation of high- quality flow generators. More important than industry awards, the S8 has received acclaim from both patients and customers. Arguably, this has been the best-received Increasing education and published a study demonstrating that CPAP awareness Education and awareness have always been critical in our mission to increase the diagnosis and treatment of SDB. Since ResMed was founded in 1989, we have been dedicated to addressing the challenge of untreated SDB by increasing awareness among both the general public and physicians. We have established ResMed Foundations in both Australia and the United treatment successfully lowered post-prandial glucose levels in type 2 diabetics. We have long recognized the connection between diabetes and SDB, but it is finally gaining public recognition and we hope to see that recognition grow with additional data. We need to continue to educate the medical community and the public about SDB and the serious impact it has on diabetes and other medical conditions. States to help lift the veil of ignorance Expanding international operations device launch in the company’s history. about the serious consequences of Comments from customers and feedback untreated SDB and its major subset, In May, we significantly expanded our international operations by acquiring Saime from the sales team suggest that, in obstructive sleep apnea (OSA). We are also SA, a French ventilation company with a addition to exceeding the expectations of funding a public relations program (together strong product and technology platform and our existing customers, the S8 is creating with other industry participants) in several a very competitive position in the European inroads into new accounts. As we roll out countries to publicize the dangers of ventilation market. The addition of Saime has the HumidAire 3i(cid:153) humidifier and the undiagnosed SDB/OSA. bolstered our distribution strength in Europe 8 / ResMed Annual Report 2005 and has augmented our ventilation offering manufacturing capabilities, as well as the Performance by providing a range of products across the positive working environment. Expansion ventilation spectrum. In July, we made and improvement of our core operations another addition to our rapidly expanding will help us continue to address the unmet ventilation business with the acquisition of clinical needs of SDB with high-quality, PulmoMed Medizinisch-technische Gar(cid:228)ete high-performance products. GmbH, the leading ventilation homecare distributor in Austria. The acquisitions of Saime and PulmoMed will accelerate our penetration of the high-growth European ventilation market, which will be an exciting area to watch in the future. In Germany, we are marshalling our resources by combining our operations in Martinsried (near Munich) and M(cid:246)nchengladbach to more efficiently address the tremendous opportunities in the German market. We also expanded our international operations with the acquisition of H(cid:246)fner Medizintechnik GmbH, our distributor in Bavaria, Germany, and with the acquisition of Resprecare, our exclusive distributor in the Netherlands. As we continue to grow our global presence, we are committed to strengthening our core operations. In February, we were pleased to welcome New South Wales Premier, Mr Bob Carr, to the official grand opening of our Norwest manufacturing facility. Our guests were understandably impressed with our increased capacity and high-tech People In the past year we made some important organizational changes to provide further focus on innovation and quality, as well as to keep driving the business. Kieran Gallahue was promoted to President and COO of ResMed Global and spent most of fiscal year 2005 in Sydney refining ResMed’s manufacturing and product development activities. In addition, we enhanced our global focus and increased our regional agility and responsiveness by appointing Keith Serzen to COO for the Americas, naming Adrian Smith as COO for Europe, promoting Paul Eisen to Senior Vice President, ResMed Asia Pacific, consolidating our worldwide Product Development organization under the leadership of Don Darkin, and creating Applied Research, a new worldwide organization led by Klaus Schindhelm that is focused on long-term product innovation. Wall Street has taken notice of our financial performance and our history of delivering growth to our shareholders. ResMed has made the list of BusinessWeek’s Best Small Companies in six of the last seven years, based on our three-year results in sales growth, earnings growth and return on invested capital. In addition, for the eighth consecutive year, Forbes magazine named ResMed one of the 200 Best Small Companies in America. In fiscal year 2005, we were ranked 29th on Forbes list of the 200 Best Small Companies in America. We were also named on Fortune’s 2004 list of America’s 100 Fastest-Growing Companies. We are fortunate to have all three key ingredients for success: we have great products, fantastic people, and we have delivered consistent profits. More importantly, we’ve made a difference in the lives of countless people with breathing disorders. And that is perhaps our most satisfying achievement. Peter Farrell Chairman and Chief Executive Officer ResMed Annual Report 2005 / 9 T E S T I M O N I A L (cid:147)I am a victim of ignorance(cid:148) Steve Newman CEO of Pegasus Failing health Diagnosis and treatment Sharing the benefits I had sleep apnea and was completely ResMed sent me home to be tested on an Most of my working life has been centered unaware of it. But my health clearly ApneaLink(cid:153), and afterward I was diagnosed around the mining industry and my indicated something was wrong. I used to with sleep apnea. They gave me a trial on experiences started me thinking about how suffer badly from asthma. My allergies an AutoSet Spirit(cid:153) device with a HumidAire many other people may be operating heavy were so bad I couldn(cid:146)t visit Sydney without 2i(cid:153) and a Mirage Activa(cid:153) Nasal Mask. machinery or making safety decisions while breaking out in a rash. I had been It was only two weeks from the time I suffering from sleep apnea. What danger hospitalized with blood clots and I(cid:146)d also walked into the immunologist(cid:146)s office until are they posing to their workmates? What been treated for heart and lung conditions. I was actually on treatment at home. danger are they posing to themselves? I(cid:146)m I saw multiple specialists and underwent multiple tests, but couldn(cid:146)t find any answers. Meanwhile, everything in my life was suffering(cid:151)my health, my family and my work. Constant fatigue Rapid improvement I noticed a difference in alertness within one week. Within one month my anxiety levels had decreased, and within three months the blood clots that I had been tackling for more than a year had I was always tired(cid:151)I had no energy. disappeared. Within six months I was off all I struggled to wake up in the morning. asthma medication. At this point I no I would get to lunchtime, but after that I longer take any allergy medication at all. was more likely to be asleep on the desk. I(cid:146)m far more alert at work now(cid:151)even my I had memory loss and I was finding myself colleagues have noticed a difference. And becoming vague. I(cid:146)d begun to feel we have peaceful nights at home. keen to look at doing something to address the impact of OSA on safety in the mining industry. After the way that ResMed(cid:146)s products and customer care turned my life around, I want everyone to have the benefit of this wonderful technology. depressed and anxious. And of course, there was the snoring. My wife hadn(cid:146)t quite moved into another room, but the kids had certainly complained. At times I(cid:146)d actually jump out of bed, feeling like I was choking. One day I took my daughter to an immunologist. After talking to my daughter he started questioning me. He told me he (cid:147)How many other people may be operating heavy machinery or making safety decisions while suffering from sleep apnea?(cid:148) suspected I was suffering from sleep apnea Steve Newman, Chief Executive Officer (CEO), Pegasus, Singleton, Australia. and referred me to ResMed in Newcastle. 10 / ResMed Annual Report 2005 ResMed Annual Report 2005 / 11 Z A R A G O Z A 1 6 . 3 0 At 4:30 pm in Zaragoza, Spain, a doctor discusses how SDB is linked to a range of serious, even life- threatening diseases. Research confirms the links: a ten-year study1 by Dr Jose Marin from the Hospital Universitario Miguel Servet in Zaragoza compared the health outcomes for SDB patients receiving CPAP treatment to outcomes for patients who did not receive treatment. The findings, published in The Lancet this year, are alarming: men who were not treated for their severe OSA had a greater risk of cardiovascular events, such as myocardial infarction or stroke, than men of similar age and health who received CPAP treatment. And there were twice as many deaths among the untreated patients as in the group treated with CPAP. 12 / ResMed Annual Report 2005 SDB is linked to a range of chronic diseases SDB is a term that covers respiratory The disorder is associated with high rates diseases occurring during sleep. SDB of morbidity and mortality.1-6 The New affects around 20% of the adult England Journal of Medicine long ago population2, making it as widespread as compared SDB to the public health crisis asthma or diabetes. The most common presented by cigarette smoking.8 The form of SDB is OSA, a condition where the tremendous negative impact on associated airway temporarily collapses, preventing medical conditions means healthcare breathing. These events are called apneas professionals must take measures to and can occur hundreds of times a night, identify patients at risk of SDB and help severely disrupting sleep and putting strain them receive treatment as early as on the cardiovascular system. OSA causes possible. Diagnosis and treatment are a variety of symptoms ranging from critical to improving treatment outcomes excessive daytime sleepiness (in itself for patients struggling with other life- dangerous when driving or operating threatening illnesses. machinery is involved) to depression, memory lapses, morning headaches and sexual dysfunction. ResMed continues to support research focused on improving our understanding of SDB and its effective treatment. In addition to Dr Marin(cid:146)s study (shown left), By promoting awareness throughout the numerous investigations across the world medical profession of the latest clinical have shown that there is a significant research about the health risks associated relationship between SDB and serious with SDB, we are making significant health conditions. Up to 70% of patients progress in improving the lives of patients who have suffered a stroke also have SDB, around the world. while up to 60% of congestive heart failure patients, 37% of hypertension patients, 70% of morbidly obese patients and 60% of diabetic patients also have SDB. 3-7 (cid:147)Research into SDB has experienced an incredible growth in recent years. One of the most important results is work that demonstrates consistently that OSA is a risk factor in cardiovascular disease1 and the incidence of death in those patients.(cid:148) Dr J M Montserrat, Clinic Hospital, Barcelona ResMed Annual Report 2005 / 13 C H I C A G O 0 9 . 3 0 14 / ResMed Annual Report 2005 Positive airway pressure treatment improves health outcomes in a range of chronic diseases Dr Babu(cid:146)s study (shown right) is part of a morbid obesity. For instance, SDB patients worldwide research effort demonstrating who receive effective treatment experience how positive airway pressure treatment a significant decrease in blood pressure can improve the overall health and quality during sleep and wakefulness.2 Studies of life of SDB patients who suffer from have also shown that patients who receive certain chronic diseases, such as diabetes. effective treatment have improved heart Positive airway pressure is a noninvasive, function and reduced cardiovascular strain.3 highly effective treatment for SDB. It The evidence that positive airway pressure involves wearing a nasal or full face mask, treatment can improve outcomes for these or nasal pillows connected to a portable patient groups is especially significant airflow generator device that delivers air at because of the high prevalence of SDB positive pressure. The air pressure acts like among patients with these conditions and an (cid:145)air splint(cid:146) to keep the upper airway the high percentage of SDB sufferers who open and unobstructed, allowing normal remain undiagnosed and untreated. These breathing during sleep. Air delivery may facts strongly suggest the need for SDB either be constant, as in continuous screening in all patients with these positive airway pressure (CPAP), or it may comorbidities. By offering patients a automatically adjust to the patient(cid:146)s needs simple, low-cost screening test like as they change throughout the night, as in ApneaLink, healthcare professionals like automatic positive airway pressure (APAP). Dr Babu can reduce the negative impact In addition to the positive outcomes for diabetic patients, positive airway pressure treatment has also been shown to positively impact patients with hypertension, cardiovascular disease and that SDB has on their patients(cid:146) treatment outcomes and help their patients improve treatment of significant their overall health. While positive airway pressure treatment provides a means to manage SDB, research consistently shows that it is most beneficial when used for a period of four hours or more every night. This emphasizes the need for patients to comply with their therapy. To enhance patient compliance, we offer quality devices and masks for maximum comfort and convenience, we provide a variety of compliance tools to make therapy as effective as possible, and we also offer educational support for patients and clinicians. At 9:30 am in Chicago, a clinician explains to a diabetic patient how to use ResMed(cid:146)s ApneaLink, a pocket-sized device for screening SDB in the patient(cid:146)s home. Recent research highlights the importance of SDB screening in diabetes sufferers. Dr Ambika Babu and her research team in Chicago recently investigated the relationship between SDB and diabetes.1 They showed that treating SDB in patients with type 2 diabetes can help lower post-meal glucose levels. These results (cid:147)support the hypothesis that SDB in patients with impaired glucose tolerance, or impaired fasting glucose levels, might prevent or delay progression to diabetes.(cid:148)1 So diabetic patients with SDB are not only able to manage their diabetes more effectively, but also may improve their condition overall with SDB treatment. ResMed Annual Report 2005 / 15 O X F O R D 1 5 . 3 0 It’s 3:30 pm in Oxford and Beccy Mullins is welcoming another new patient for a device and mask-fitting consultation at the ResMed Centre for Healthy Sleep. As manager of the center, Beccy and her team strive to provide a comfortable environment to educate patients about their treatment. 16 / ResMed Annual Report 2005 ResMed provides assistance and support to sleep apnea patients worldwide In the 14 direct-to-patient centers around sleep apnea. Membership is free and the world, patients can be taken along a provides services such as answers to comprehensive pathway that starts with an commonly asked questions about hour-long consultation and offers education treatment and equipment and patient on sleep apnea and treatment, initial access to individual pressure settings mask-fitting and cleaning tips, weekly and treatment data. Patients can also telephone support and ongoing find details regarding insurance issues. appointments. Worldwide, ResMed offers numerous This private service is the only one of its services to provide a solid network of kind in the UK, and we believe it will set support for sleep apnea patients. the standard for implementing positive sleepVantage and MyResMed.com give airway pressure treatment. Many patients the help they need, when they customers have asked for a fitting service need it. Beccy’s staff at the UK Centre for before purchasing equipment, and future Healthy Sleep make sure patients start centers are being opened in key European their therapy with the tools and confidence cities to address growing awareness of they need to stay compliant. These are sleep apnea and the subsequent demand just a few examples of our continuing for products and services. efforts to ensure patient therapy is simple, comfortable and effective. Resources to simplify therapy The ResMed UK office has also introduced a program known as sleepVantage(cid:153) (www.sleepVantage.com.au). Developed in Australia, sleepVantage has been immensely helpful for thousands of patients. It provides a popular customer support telephone line enabling patients to call in for advice and support from a staff of trained professionals. Patients in some countries also benefit from MyResMed.com, which supplies patients with a wealth of information about ResMed Annual Report 2005 / 17 S Y D N E Y 0 0 . 3 0 ResMed manufacturing processes meet growing demands ResMed(cid:146)s move to Norwest Business Park Our expansion accompanies growing contributed to a 34% increase in production recognition of our success as an Australian since last year. The Norwest expansion is manufacturer. Last year we received the just one way we(cid:146)ve adapted to the growing Large Manufacturer Australian Export Award demands on our production capacity. and the 2004 Premier(cid:146)s Exporter of the Year Although the majority of production work is Award based on the quality of our export based in Sydney, we(cid:146)re now manufacturing marketing strategy, strength of the company in California, Paris and Munich. We(cid:146)ve also infrastructure, level and sustainability of augmented our quality control processes export sales, and after-sales service. These with the adoption of the Six Sigma Lean awards complement our more recent receipt program. Six Sigma Lean has enabled us of the 2005 Frost & Sullivan Product Quality to enhance customer focus, reduce product Leadership Award, in recognition of our defects, maximize output and ensure the dedication to quality and product reliability. highest quality possible for our products. Altogether, these awards attest to our ResMed(cid:146)s world-class product offering is excellence as a manufacturer of high-quality made possible by our strong commitment products and the soundness of our business not only to quality, but also to research and practices as a whole. Our investment in development. Historically we have invested R&D, the expansion of the Norwest facility 6(cid:150)8% of annual revenues to stay at the and our adoption of Six Sigma Lean quality forefront of technological innovation and processes are all examples of measures product design. Our success in developing we(cid:146)ve taken to ensure we meet the growing innovative new products is partly reflected demands of our marketplace. As our night- in our patent portfolio of 414 granted shift workers at the Norwest facility can tell patents, with 105 granted in the 12-month you, world-class manufacturing is more than period ending June 30, 2005. just a job(cid:151)it(cid:146)s a way of life. (cid:147)We(cid:146)ve got to get our health professionals thinking more about the impact of sleep disorders on the general health of our population,(cid:148) remarked New South Wales State Premier, Mr Bob Carr, during the official opening of the new manufacturing center at ResMed Campus, Norwest. The Premier(cid:146)s comments reflect an appreciation of the findings of Wake Up Australia: The Value of Healthy Sleep, a report released by the economic analysis group Access Economics. The report asserts unequivocally that undiagnosed sleep disorders have a significant impact on the Australian economy in terms of work- related injuries, depression, motor vehicle accidents and medical costs. In this regard, ResMed(cid:146)s new manufacturing facility has not only had a positive impact on the local business community, but on the Australian economy as a whole. ResMed helps reduce the social and economic impacts of untreated sleep apnea as we continue to promote education, research and development, and cost-effective solutions for the management of sleep apnea all over the world. 18 / ResMed Annual Report 2005 At 12:30 am, the night shift has been at work for two and a half hours at ResMed(cid:146)s new campus in Sydney(cid:146)s Norwest Business Park. ResMed Annual Report 2005 / 19 PA R I S 1 6 . 3 0 At 4:30 pm, ResMed Paris(cid:146) Philippe Chalvignac, Director, Research and Development, proudly displays some of the products that have contributed to Saime(cid:146)s reputation for high quality, differentiated ventilation products. With this year(cid:146)s acquisition of Saime, ResMed offers one of the most ResMed now offers a more complete solution for ventilation For many years, ResMed has specialized with the new ElisØe(cid:153) line of respiratory in noninvasive therapy for respiratory insufficiency devices developed by Saime, problems ranging from snoring to we can now meet the needs of a broader emphysema. Now, with the acquisition of group of patients. the French company Saime SA, we have extended our range to include devices for higher-dependency patients. This broader range provides different modes of treatment and offers more solutions for different disease states. We(cid:146)re now better equipped to provide ventilation products Treatment for life ResMed(cid:146)s AutoSet CS 2(cid:153)* is a bilevel ventilator device designed to treat Cheyne- Stokes respiration (CSR), a distinctive pattern of breathing often found in patients with congestive heart failure. The device automatically adjusts to deliver varying degrees of ventilatory assistance to stabilize breathing and reduce CSR. Clinical trials have shown that AutoSet CS treatment improves cardiac function1 and enhances quality of life.2 Professor Marie-Pia d(cid:146)Ortho from the H(cid:244)pital Henri Mondor in Paris is one of the authors of a recently published paper3 that compared outcomes for patients with CSR who are treated with a standard CPAP device to those treated with the AutoSet CS 2. "Within six months, treatment with the AutoSet CS 2 brought about a greater improvement in patient condition in terms of decreased apneas, a marked increase in quality of life, and improvement in cardiac performance," says Professor d’Ortho. This increasing body of research is leading cardiologists and pulmonologists to prescribe AutoSet CS 2 for their patients. * not available for sale in the US comprehensive product for the millions of people suffering from ranges on the market, combining ventilation and monitoring. 20 / ResMed Annual Report 2005 long-term lung diseases around the world. The addition of Saime’s expertise leverages a nine-year relationship between Saime and ResMed. The acquisition also gives us a valuable manufacturing and R&D base close to Paris, and enhances our existing worldwide distribution and marketing network. Worldwide, the market for ventilation devices in homes and hospitals is growing rapidly as people are becoming more aware that ventilators can improve their disease states safely and effectively. Improvements in technology have also made ventilation devices more adaptable and versatile, and therefore ideal for treating a wider variety of respiratory disorders. Our VPAP(cid:153) III series provides a complete solution for the unique needs of respiratory patients with built-in features that manage leak automatically and adjust to patients’ individual therapy requirements. Combined ResMed Annual Report 2005 / 21 H O N G K O N G 2 2 . 3 0 22 / ResMed Annual Report 2005 The S8 and Mirage Swift treatment system(cid:151)a winning combination The ResMed Hong Kong facility recently For patients who experience side effects received its first stock of Mirage Swift from their therapy, our humidifiers provide Nasal Pillows systems. Patients have heated humidification to eliminate responded enthusiastically to the extra congestion, dryness and irritation. The comfort and flexibility of the new patient HumidAire 2i(cid:153) and HumidAire 3i(cid:153) are easy interface. The lightweight Mirage Swift sits to fill and clean, and integrate fully with unobtrusively on the face, yet still provides ResMed flow generators. Patients can a secure seal for effective air delivery. choose their preferred level of At 10:30 pm in Hong Kong, a patient enjoys the comfort and convenience of one of the smallest treatment systems on the market. The Mirage Swift Nasal Pillows System and S8 flow generator combination provides a highly portable, user-friendly therapy system that is comfortable, effective Similarly, the new S8 series of compact flow generators received glowing market acceptance when it was launched in the US this year. The S8 Escape is the first standard CPAP system with a (cid:145)Personal Assistant,(cid:146) which simplifies therapy by guiding patients through data downloads and notifying them when it(cid:146)s time to call their provider, replace their mask or change their air filter. humidification for maximum comfort. The ResMed advantage Hong Kong might be small in size but it has and versatile. a population of nearly seven million. The people of Hong Kong have a life expectancy of over 81 years and a high literacy rate of 93.5%. On this crowded patch of land, competition in all areas is vigorous. ResMed is currently the only SDB manufacturer with direct representation in A range of products to meet Hong Kong and has established a firm patient needs In addition to our new Mirage Swift and S8 product lines, ResMed offers a variety of products to fit diverse patient needs. Our Mirage(cid:153) series of nasal interfaces includes full face masks, nasal masks and nasal pillows. All ResMed nasal interfaces feature our world-famous Mirage cushion technology, renowned for its excellent comfort and seal. ResMed sells a complete line of flow generators, including the S7(cid:153) and S8 CPAP devices. To address comfort, presence by providing complete therapy systems to improve patients(cid:146) lives. The combination of our high-quality products and our excellent service has made us the top choice for many of Hong Kong(cid:146)s hospital sleep labs, as well as their patients. By offering patient-focused solutions like the S8 and Mirage Swift, we meet patients(cid:146) unique needs without compromising their treatment. compliance and efficacy, we have developed With automatic international power-switching, 12/24 VDC power input and a fully automatic positive airway pressure devices that monitor the patient(cid:146)s airway and continuously adjust the pressure to the amount needed.1-4 ResScan(cid:153) Data Card, patients using the S8 can enjoy more freedom without compromising their therapy. ResMed Annual Report 2005 / 23 T O K YO 2 3 . 3 0 At 11:30 pm in Tokyo, a clinician in a local sleep laboratory examines data from a patient(cid:146)s overnight sleep study. ResMed provides a complete range of solutions for healthcare professionals to help them manage their patient(cid:146)s long-term treatment effectively and efficiently. 24 / ResMed Annual Report 2005 ResMed provides a complete clinical solution The Japanese are willing to invest in Increasing awareness quality healthcare. ResMed(cid:146)s comprehensive approach to sleep apnea therapy appeals to the Japanese appreciation of excellence. Our complete solutions help healthcare professionals manage their patients effectively and efficiently, improving patients(cid:146) health while carefully managing costs. Clinical solutions We provide cost-effective clinical solutions like the ResScan Data Card, available on the new S8 series of flow generators. ResScan enables clinicians to monitor their patients(cid:146) therapy remotely. Treatment data is loaded from the S8 device onto a data card, which the patient then returns by mail to their clinician. Clinicians can even adjust patient prescription settings without having to make home visits. In the US, the ResTraxx(cid:153) wireless solution provides a web-based compliance monitoring system so clinicians can monitor patient compliance remotely and maximize their efficiencies by focusing on patients requiring intervention. In addition, the Boomerang(cid:153) Inventory Management System (IMS) allows businesses to simplify their record keeping and minimize errors. As in many countries, awareness of the dangers of OSA is still very limited in Japan. However, the situation is gradually improving as cases are brought to the public(cid:146)s attention. One example of this is the Shinkansen (Bullet train) incident around 18 months ago where a young 32-year-old train driver fell asleep at the controls. Fortunately, the computer system shut down and the train eventually slowed down. With over 1,000 people on the train this had the potential to be the world(cid:146)s worst transportation disaster. The driver was tested and subsequently diagnosed with sleep apnea. In Japan, ResMed recently initiated a series of media programs targeting patients and clinicians to raise awareness about sleep apnea. We have established a solid infrastructure with sleep labs and distribution channels to support patients through the diagnosis process. Once patients like the young train driver are diagnosed, they work with healthcare professionals who have access to numerous tools and devices to provide them with the best treatment possible for a complete therapy solution. ResMed Annual Report 2005 / 25 M U N I C H 1 6 . 3 0 26 / ResMed Annual Report 2005 At 4:30 pm, the ResMed Call Center in Munich, Germany, is operating at capacity. The new call center is one part of our global customer service network, providing direct support to patients. The team is organized by area of expertise, ensuring maximum efficiency and speed of response. ResMed provides excellent customer care As at our other call centers, Munich groups are ready to provide support and representatives are committed to delivering service customer needs. superior customer service. In Germany, the customers are primarily patients, and ResMed representatives offer support on a variety of issues, from answering questions about therapy, to negotiating with insurance companies to obtain the best possible outcomes for patients. This approach reflects the way Germany’s healthcare system is structured and illustrates how ResMed adapts to regional considerations in our various locations. Combining resources The improved efficiency of the Munich Call Center accompanies a progression toward leaner, more focused operations in ResMed Germany. On January 1, 2005, the existing ResMed Germany facility combined resources with the ResMed MAP group in Munich in order to improve efficiencies and take advantage of opportunities for future expansion. ResMed acquired MAP in 2001 and now the merger of the two offices places ResMed in a strong position in the German market. The locally based marketing and technical ResMed Germany has also established a Research and Development Center of Excellence, where resources will be focused on the development of new and innovative solutions for sleep apnea patients and their healthcare providers. ResMed Germany has already made a significant contribution to promoting screening of sleep apnea with the development of the microMESAM(cid:153) single- channel screening device, or ApneaLink, as it’s known outside Germany. This easy-to- use device helps identify patients at risk of sleep apnea and facilitates the diagnosis process so that patients can be placed on therapy quickly and start experiencing relief from their condition as early as possible. Overall, ResMed Germany is a model of our customer-focused approach. As representatives at the Munich Call Center know, helping patients effectively requires a commitment to service and excellence. Our products and business strategy reflect that commitment worldwide, as we continually strive to provide customers with the products and support they need. Consumer marketing: "Darling, you snore!" This is the slogan for a series of events that ResMed Germany hosted throughout the country between June and September 2005. All of ResMed’s customers were invited by personal invitation and via the 180 OSA patient support groups in Germany. The events included lectures on sleep apnea and sessions on mask fitting, mask service and maintenance. They also gave customers the chance to talk to sleep apnea experts and local politicians to discuss their available treatment options. This campaign is one of ResMed’s many consumer marketing initiatives dedicated to patient needs and concerns. ResMed Annual Report 2005 / 27 N E W YO R K 1 0 . 3 0 At 10:30 am, a ResMed territory representative calls on one of New York(cid:146)s premier sleep labs to explain ResMed(cid:146)s promise: to deliver reliable products, quality systems and complete solutions for lasting results. This is our commitment to our customers all over the world and forms the basis of our new Lasting Results campaign. 28 / ResMed Annual Report 2005 Lasting Results(cid:151)long-term benefits for patients and professionals Lasting Results stresses the importance of design, technological innovation and long-term results for SDB patients and for product reliability. the professionals who serve those patients. As a partner to our professional customers, ResMed continually strives to develop complete solutions to help healthcare providers deliver the best possible patient care while growing their business into the future. With nearly 100 sales representatives throughout the Americas, we work cooperatively with homecare dealers, clinicians and physicians to improve the lives of SDB patients and improve their own business results. We offer clinical systems designed to promote compliance, facilitate patient management and reduce costs for sleep therapy businesses. We have also developed a Building for the future ResMed also invests in the future of the sleep industry by promoting awareness about the serious health risks of untreated SDB. We support numerous physician and patient education initiatives and regularly exhibit at medical conferences to help build relationships between sleep professionals and other medical specialists. Further, we have formed strategic alliances with companies like Guidant and Cardinal Health to market our products to a wider audience. In addition, we have joined efforts with other industry participants to fund a public awareness campaign that will number of products to help sleep therapy grow the industry as a whole. professionals generate new and repeat revenues. By helping our partners improve their businesses, we are helping to ensure that they have the resources to provide SDB patients with high-quality care. A focus on quality ResMed(cid:146)s commitment to quality is a vital part of delivering Lasting Results to SDB patients and our professional customers. With ResMed(cid:146)s high-quality, reliable products, patients receive maximum benefit from their treatment, and These efforts have brought phenomenal results in terms of sales growth, earnings growth and return on invested capital. ResMed has made the list of BusinessWeek(cid:146)s Best Small Companies in six of the last seven years. ResMed has also been recognized by Forbes for eight consecutive years and in October 2004 we were ranked 29th on the Forbes list of the 200 Best Small Companies in America. In addition, we were also named by healthcare professionals do not have to Fortune magazine(cid:146)s 2004 list of America(cid:146)s worry about product failure. As recipients 100 Fastest-Growing Companies. The of the 2005 Frost & Sullivan Product recognition we have received is a direct Quality Leadership Award, we are reflection of our commitment to quality and recognized in the industry for superior the value we provide to patients and medical professionals alike. ResMed Annual Report 2005 / 29 M E D I C A L A D V I S O R Y B O A R D Specialist SDB advice from eminent international scientists and physicians Claudio Bassetti, MD, is a neurologist with both the American College of Cardiology and the American Society of expertise in general neurology, stroke and sleep Echocardiography. Dr DeMaria is currently Editor-in-Chief of the Journal medicine. He is a leader in studying the of the American College of Cardiology and has authored or co-authored implications of SDB on stroke and is Head of over 400 peer reviewed publications. the Neurology Outpatient Clinic and Vice-Chairman of the Neurology Department at University Hospital, Zurich. Dr Bassetti has published over 120 peer reviewed papers. He is a board member of the European Neurological Society, the European Sleep Research Society and the World Association of Sleep Medicine. Neil J Douglas, MD, DSc, FRCP, is Chairman of the Medical Advisory Board and 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 the Michael Coppola, MD, is a leading pulmonary, current President of the Royal College of Physicians of Edinburgh, past critical care and sleep disorders physician and is Chairman of the British Sleep Society and past Secretary of the British President of Springfield Medical Associates, a multi- Thoracic Society. Dr Douglas has published over 200 papers on specialty medical group in Springfield, breathing during sleep. Massachusetts. He is an attending physician at Baystate Medical Center and Mercy Hospital and a Fellow of the American College of Chest Physicians. Dr Coppola is also the Medical Director of Sleep Ave LLC, a SDB specialty company with sites in Massachusetts, Louisiana and Texas, and Associate Clinical Professor of Medicine at Tufts University School of Medicine. Nicholas Hill, MD, is Professor of Medicine at Tufts University School of Medicine and Chief, Pulmonary, Critical Care, and Sleep Division,Tufts- New England Medical Center in Boston. He is a Fellow and Immediate past Chair of the Home Care Network as well as a member of the Terence M Davidson, MD, FACS, is Network Steering Committee for the American College of Chest Professor of Surgery in the Division of Physicians. For the American Thoracic Society, Dr Hill is Immediate Past Otolaryngology(cid:151)Head and Neck Surgery at the Chair of the Program Committee for the Critical Care Assembly as well University of California, San Diego School of as a member of the Planning Committee. Dr Hill’s main research Medicine. He is Section Chief of Head and Neck interests are in the acute and chronic applications of noninvasive Surgery at the Veterans Administration, San Diego positive pressure ventilation (NPPV) for treating lung disease as well as Healthcare System, and Associate Dean for Continuing Medical the pathogenesis and therapy of pulmonary hypertension. Education at the University of California, San Diego. Dr Davidson is also director of clinical operations for the UCSD Sleep Medicine Center based at the University of California, School of Medicine, San Diego, California. Anthony N DeMaria, MD, is Professor of Medicine and Director of the Sulpizio Family Barry J Make, MD, is Director of the Emphysema Center and Pulmonary Rehabilitation National Jewish Medical and Research Center, and Professor of Pulmonary Sciences and Critical Care Medicine of the University of Colorado School of UCSD Cardiovascular Center. He is a Diplomat on Medicine. He has served on numerous national and the American Board of Internal Medicine and is international committees for respiratory diseases. Dr Make’s research board certified by the Subspecialty Board in and clinical investigations have resulted in a large number of publications cardiovascular disease. He is past President of on mechanisms, treatment and rehabilitation of chronic respiratory 30 / ResMed Annual Report 2005 disorders. He is Editor of the Journal of Chronic Obstructive Pulmonary He is Associate Dean (International), Faculty of Medicine, at the Disease. His areas of focus are long-term noninvasive ventilation and University of Sydney and also serves on the Council of the Endocrine chronic obstructive pulmonary diseases, including emphysema. Society of Australia. Ralph Pascualy, MD, is Director of the Jonathan R L Schwartz, MD, is a Clinical Swedish Sleep Medicine Institute in Seattle, one Professor of Medicine at the University of of the largest sleep diagnostic and treatment Oklahoma Health Sciences Center and medical facilities in the United States. He has 20 years of director of the Integris Sleep Disorders Centers of experience in the clinical practice of sleep Oklahoma. He is board certified in sleep disorders medicine and clinical research. He has developed medicine, internal medicine, pulmonary disease innovative programs in the clinical screening for sleep apnea, CPAP and critical care medicine. He has served as principal investigator in compliance programs and others to bring sleep medicine services to numerous research studies regarding SDB, as well as other sleep other medical subspecialties. Barbara Phillips, MD, MSPH, FCCP, is Professor of Pulmonary, Critical Care and Sleep Medicine at the University of Kentucky College of Medicine. She directs the Sleep Center, Sleep Clinics, and Sleep Fellowship at the Samaritan disorders. He has authored a number of articles regarding sleep disorders and their therapy, and has been named on the Best Doctors in America list from 2001 to the present. Helmut Teschler, MD, is Professor of Medicine and Head of the Department of Respiratory Medicine, High Dependency Unit, and Sleep Center in Kentucky. Dr Phillips serves as a Center of Sleep Medicine at the Ruhrlandklinik, board member of the National Sleep Foundation, and on the Health Medical Faculty, University of Essen, Germany. He and Science Policy Committee of the American College of Chest is a Fellow of each of the following associations: Physicians. She has been a recipient of a Sleep Academic Award from German Pneumology Society, American Thoracic Society, European the National Institutes of Health, President of the American Board of Respiratory Society, and American Sleep Disorders Association. He is Sleep Medicine, and a member of the Advisory Board to the National also President-Elect of the German Pneumology Society. Center of Sleep Disorders Research. Her research interests are the epidemiology of SDB and sleep disorders in the aged. Bruce Robinson, MD, is an Endocrinologist and Head of the Cancer Genetics Laboratory in the Kolling Institute. He is also Head of the Division of Medicine at the Royal North Shore B Tucker Woodson, MD, FACS, is Professor of Otolaryngology and Communication Sciences at the Medical College of Wisconsin, a Diplomat of the American Academy of Sleep Medicine, and a Fellow of the American Academy of Otolaryngology-Head and Neck Surgery and the Hospital. Professor Robinson graduated from the American College of Surgeons. He is the Director of the Medical University of Sydney in 1980 and then undertook College of Wisconsin/Froedert Memorial Lutheran Hospital Sleep studies for a Masters of Science degree. His further molecular research Disorders Program. Dr Woodson is the American Board of work was performed at the Brigham and Women’s Hospital and the Otolaryngology’s representative to the American Board of Sleep Children’s Hospital, Harvard Medical School from 1986 to 1989 and he Medicine. He also regularly participates on multiple national was awarded a Doctorate of Medicine from the University of Sydney in committees including the American Academy of Sleep Medicine and 1990. He has developed the Cancer Genetics Laboratory since 1990. the American Academy of Otolaryngology. ResMed Annual Report 2005 / 31 FINANCIAL SUMMARY It(cid:146)s outcomes that count Our common stock commenced trading on June 2, 1995 on the NASDAQ National Market, under the symbol RESM. On September 30, 1999, we transferred our primary listing to the New York Stock Exchange (NYSE) under the symbol RMD. On November 25, 1999, we listed on the Australian Stock Exchange, also under the symbol RMD. The following table sets out, for the fiscal periods indicated, the high and low closing prices for the common stock as reported by the New York Stock Exchange. As of August 23, 2005, there were 54 holders of record of our common stock. We have not paid any cash dividends on our common stock since its initial public offering and we do not currently intend to pay cash dividends in the foreseeable future. We anticipate that all of our earnings and other cash resources, if any, will be retained for the operation and expansion of our business and for general corporate purposes. QUARTERLY LOWS AND HIGHS FOR 2004 AND 2005 2005 2004 Quarter One, ended September 30 Quarter Two, ended December 31 Quarter Three, ended March 31 Quarter Four, ended June 30 HIGH $51.50 $51.10 $60.50 $66.28 YEARS ENDED JUNE 30 IN THOUSANDS EXCEPT PER SHARE DATA 05 04 03 02 01 00 339,338 273,570 204,076 155,156 115,615 Net revenues Income from operations Income before income taxes Net income Basic EPS Diluted EPS Working capital Non-current long-term debt Shareholders(cid:146) equity Total assets 425,505 108,643 107,916 73,849 (cid:134) (cid:134) (cid:134) 2.15 (cid:134) 2.06 (cid:134) 141,659 58,934 474,065 774,146 85,361 84,668 57,284 1.70 1.63 222,230 113,250 361,499 549,151 67,240 67,127 45,729 1.38 1.33 191.322 113,250 286,433 459,595 51,159 54,592 37,506 1.17 1.10 44,269 45,541 29,857 0.96 0.89 * * * * * 33,138 34,166 22,226 0.74 0.69 LOW $43.90 $43.46 $49.81 $56.30 99 88,627 25,255 24,577 16,102 0.55 0.52 HIGH $43.98 $46.49 $47.95 $51.56 LOW $38.58 $38.05 $40.69 $44.84 98 66,519 17,363 16,112 10,611 0.37 0.35 97 49,180 8,327 11,087 7,465 0.26 0.26 96 34,562 3,595 6,561 4,503 0.16 0.16 142,809 144,272 47,550 32,529 32,759 34,395 30,844 123,250 150,000 (cid:151) 192,930 100,366 93,972 376,191 288,090 115,594 (cid:151) 71,647 89,889 (cid:151) 50,773 64,618 274 44,625 54,895 578 38,986 47,299 *Numbers after MAP acquisition are: Income from operations 26,042; Income before income taxes 27,314; Net income 11,630; Basic EPS 0.37; Diluted EPS 0.35 (cid:134)Numbers including acquisition and restructure related expenses are: Income from operations 97,353; Income before income taxes 96,626; Net income 64,785; Basic EPS 1.89, Diluted EPS 1.82 32 / ResMed Annual Report 2005 Transfer agent and registrar requirements of the Securities Act and any Annual meeting of Inquiries regarding transfer requirements, lost certificates, and changes of address should be directed to either of the following: American Stock Transfer and Trust Company 59 Maiden Lane New York, NY 10038 Tel: +1 718 921 8275 Computershare, Level 3 60 Carrington Street Sydney, NSW 2000 Tel: +61 2 8234 5000 other applicable securities laws. shareholders Legal counsel Latham and Watkins 650 Town Center Drive, Suite 2000 Costa Mesa, CA 92626 USA Independent auditors KPMG LLP 750 B Street, Suite 3000 San Diego, CA 92101 USA The annual meeting of shareholders will be held on Friday November 18, 2005, at 10 am at The ASX Auditorium, 20 Bridge Street, Sydney, NSW Australia. Shareholder and investor Form 10-K Convertible notes inquiries inquiries Copies of the ResMed The indenture trustee for the notes is American Stock Transfer and Trust Company. Inquiries regarding the notes should be directed to: American Stock Transfer and Trust Company 59 Maiden Lane New York, NY 10038 Tel: +1 718 921 8275 The notes and the common stock issuable upon conversion of the notes (the Securities) were not registered under the Securities Act or any other state or foreign securities laws at the time of issue. The Securities were subsequently registered for resale under Securities Act (Registration No. 333-70500) effective October 9, 2001; and consequently, the Securities may be resold in accordance with the prospectus that is part of the registration statement by the selling security holders(cid:146) names in the prospectus or a supplement to the prospectus. Other sales of the Securities may only be made in compliance with the registration requirements of the Securities Act and all other applicable securities laws, or pursuant to an exemption from, or in a transaction not subject to, the registration ResMed has a website containing details Inc annual report on about the company, its products, SDB, and information for sleep professionals, as well as the latest company news releases. You can visit the website at www.resmed.com. To directly receive copies of company news and other investor information, please contact: Hillary Theakston Director, Investor Relations, ResMed Inc 14040 Danielson Street Poway, CA 92064-6857 USA Tel: +1 858 746 2400 Fax: +1 858 746 2830 Form 10-K, as filed with the Securities and Exchange Commission, are available upon request without charge. Address written requests to: Hillary Theakston Director Investor Relations email: investorrelations@resmed.com ResMed Inc 14040 Danielson Street Poway, CA 92064-6857 USA Security analysts and institutional investors are invited to contact: Adrian M. Smith Chief Financial Officer and Chief Operating Officer, Europe Tel: +61 2 9886 5000 or Hillary Theakston Director, Investor Relations, ResMed Inc Tel +1 858 746 2400 ResMed Annual Report 2005 / 33 CORPORATE GOVERNANCE AND BOARD OF DIRECTORS We have adopted corporate governance guidelines. Those guidelines, our code of business conduct and ethics, and the charters of the board(cid:146)s committees, are available at our website: www.resmed.com. We have said this before: in the end, fundamentals count. And all the structures and procedures in the world cannot substitute for character. There can be no compromise when it comes to ethics and integrity. There is no alternative in the long run in business (or any pursuit for that matter) to being ethical and having integrity. It is the (cid:145)sine qua non(cid:146)(cid:151)the indispensable element of any business. Peter Farrell Donagh McCarthy Gary Pace Michael Quinn Christopher Roberts Richard Sulpizio 34 / ResMed Annual Report 2005 Ron Taylor John Wareham currently a member of Qualcomm Board Paris References and CEO and President of MediaFLO, USA Inc, a Qualcomm subsidiary. The primary job of our board of directors is Michael Quinn (1, 3) Zaragoza References to oversee management(cid:146)s actions in CEO of Innovation Capital and formerly CEO representing the best interests of our of a medical device company and co-founder shareholders and other stakeholders. Our of NYSE listed environmental company. board members are independent. Of our eight members, only one(cid:151)Dr Peter Farrell, Chairman and Chief Executive Officer(cid:151)is a current employee of the company. The three committees of our board(cid:151)Audit, Compensation, and Nominating and Corporate Governance(cid:151)are composed entirely of board members who are independent under strict definitions of that term. But our directors are more than simply independent. Each brings to the table unique Christopher Roberts CEO and President, Cochlear Limited, Chairman, Research Australia and Council Member of NHMRC (National Health and Medical Research Council). Richard Sulpizio (2, 3) Retired, Past President of Qualcomm Inc., talent, experience, and judgment. Collectively, Ron Taylor (2, 3) they are a strong body of advisors. Sits on the board of Watson Board of Directors References 1 Audit Committee 2 Compensation Committee 3 Nominating and Corporate Governance Committee Pharmaceuticals, Inc. and WestCoast Hospitality Corporation, is Chairman of the Board of three privately-held companies: 3ECompany, EMN8 Corporation and bold number denotes committee chair Asteres, Inc. and is a Director of Aethon. Board of Directors Peter Farrell Chairman and CEO, ResMed Inc. Donagh McCarthy (1, 2, 3) Currently consulting with Pharmedium Healthcare Inc., a privately held pharmacy services business. Formerly President and CEO, Protiveris Inc. and President, Baxter Renal Division North America. Gary Pace (2, 3) Chairman, QRxPharma and former CEO of a number of bio-pharmaceutical research and development companies. John Wareham (1, 3) Former chairman, president and CEO of Beckman Coulter, Inc. and Chairman of Steris Corporation. Executive officers Peter Farrell: Chairman and CEO, ResMed Inc Kieran Gallahue: President, ResMed Global Adrian Smith: Chief Financial Officer and Chief Operating Officer, Europe Keith Serzen: Chief Operating Officer, Americas Paul Eisen: Senior Vice President, Asia Pacific David Pendarvis: Senior Vice President, Global Organizational Development and General Counsel 1 Marin, J et al. Lancet. 2005; 365:1046(cid:150)53. 2 Young, et al. Am J Respir Crit Care Med. 2002; 165:1217(cid:150)1239. 3 Bassetti C et al. Sleep. 1999; 22(2):217(cid:150)223. 4 Lipkin. Lancet. 1999; 1993; 354:531(cid:150)32. 5 Sjostrom et al. Thorax. 2002; 57:602(cid:150)607. 6 O’Keefe et al. Obes Surg. 2004; 14:23(cid:150)6. 7 ResNick et al. Diabetes Care. 2003; 26:702(cid:150)9. 8 Philppson E. N Engl J Med. 1993; 29;328:1271(cid:150)3. Chicago References 1 Babu, A et al. Arch Intern Med. 2005; 165:447(cid:150)452. 2 Becker H. Circulation. 2003; 107:68(cid:150)73. 3 Kaneko Y. N Engl J Med. 2003, 348:1233(cid:150)41. 1 Sch(cid:228)dlich, S et al. Z Kardiol 2004; 93:454(cid:150)62. 2 T(cid:246)pfer et al. Pneumologie 2004; 58:28(cid:150)32. 3 Philippe, C et al. Heart Online. 2005; doi:10.1136/hrt.2005.060038. Hong Kong References 1 Hukins C. Sleep. 2004; 27:1512(cid:150)7. 2 Resta O. Monaldi Arch Chest Dis. 2004; 61:153(cid:150)6. 3 Massie C Am J. Respir Crit Care Med. 2003; 167:20(cid:150)3. 4 Teschler H, Eur Respir J. 2000; 15:990(cid:150)5. Trademarks ApneaLink, AutoSet, AutoSet CS 2, AutoSet Spirit, Boomerang, Elisee, Escape, HumidAire 2i, HumidAire 3i, microMESAM, Mirage, Mirage Activa, Mirage Swift, ResLink, ResScan, ResTraxx, S6 S7, S8, sleepVantage and VPAP III are our trademarks. Activa, AutoSet, AutoSet CS, Humidaire, Humidaire 2i, Humidaire 2iC, Mirage and VPAP are registered in the US Patent and Trademark Office. '2005 ResMed Inc ResMed Annual Report 2005 / 35 United States World Headquarters ResMed Inc 14040 Danielson Street Poway CA 92064-6857 USA Tel: +1 858 746 2400 or 1 800 424 0737 (US toll free) Fax: +1 858 746 2900 reception@resmed.com ResMed Canoga Park Servo Magnetics, Inc. 6660 Variel Avenue Canoga Park CA 91303 Tel: +1 818 346-3113 Fax: +1 818 346-3182 United Kingdom ResMed (UK) Ltd 65 Milton Park Abingdon Oxfordshire OX14 4RX UK Tel: +44 (1235) 862 997 Fax: +44 (1235) 831 336 reception@resmed.co.uk Switzerland ResMed Schweiz AG Viadukstra(cid:223)e 40 CH-4051 Basel Switzerland Tel: +41 61 307 9711 Fax: +41 61 307 9722 info@resmed.ch Sweden ResMed Sweden AB Industrigatan 2 S-461 37 Trollh(cid:228)ttan Sweden Tel: +46 520 420 110 Fax: +46 520 397 15 reception@resmed.se Spain ResMed Spain SL C/Arturo Soria, 245 28033 Madrid Spain Tel: +34 93 590 8154 Fax: +34 93 590 8153 angelo@resmed.es Singapore ResMed Singapore Pte Ltd 238A Thomson Road #12-03/04 Novena Square Tower A Singapore 307684 Tel: +65 6284 7177 Fax: +65 6284 7787 reception@resmed.com.sg New Zealand ResMed NZ Ltd PO Box 51-048 Pakuranga Auckland New Zealand Tel: +64 274 737 633 or 0800 737 633 (NZ toll free) Fax: +64 9 239 0193 or 0800 737 634 (NZ toll free) reception@resmed.co.nz Netherlands ResMed Nederland BV Badhuisweg 77 2587 CD Den Haag Netherlands Tel: +31 70 358 6263 Fax: +31 70 358 4333 receptiondh@resmed.nl Malaysia ResMed Malaysia Sdn Bhd Suite E-10-20 Plaza Mon(cid:146)t Kiara No. 2 Jalan 1/70C Mon(cid:146)t Kiara 50480 Kuala Lumpur Malaysia Tel: +60 3 6201 7177 Fax: +60 3 6201 2177 reception@resmed.com.my Japan ResMed Japan 17F, Fukokuseimei Building 2-2-2, Uchisaiwai-cho Chiyoda-ku Tokyo 100-0011 Japan Tel: +81 3 3592 9555 Fax: +81 3 3592 9555 Hong Kong ResMed Hong Kong Ltd Room 1714, Miramar Tower 132-134 Nathan Road Tsim Sha Tsui Hong Kong Tel: +852 2366 0707 Fax: +852 2366 4546 reception@resmed.com.hk Germany ResMed GmbH & Co. KG Fraunhoferstra(cid:223)e 16 82152 Martinsried Germany Tel: +49 89/99 01-00 or 0800 2 777 000 (Germany toll free) Fax: +49 89/99 01-1 055 reception@resmed.de H(cid:246)fner Medizintechnik GmbH Gro(cid:223)e Bauerngasse 58 91315 H(cid:246)chstadt/Aisch, Germany Tel: +49 9 193 63 310 medizintechnik@hoefner.de Take Air Medical Handels-GmbH Oskar-Schulze-Stra(cid:223)e 7 28832 Achim, Germany Tel: +49 4 21 48 99 30 Fax: +49 4 21 48 99 310 info@take-air.de France ResMed SA Parc de la BandonniŁre 2 rue Maurice Audibert 69800 Saint-Priest, France Tel: +33 437 251 251 Fax: +33 437 251 260 reception@resmed.fr ResMed Paris 25 rue de l(cid:146)Etain 77176 Savigny le Temple France Tel: +33 1 6419 1111 Fax: +33 1 6441 8130 Finland ResMed Finland Oy Etel(cid:228)inen Salmitie 2 02430 Masala Finland Tel: +358 9 8676 820 Fax: +358 9 8676 8222 reception@resmed.fi Austria ResMed Austria GmbH Purtscherstra(cid:223)e 18 9500 Villach Austria Tel: +43 4242 430 830 Fax: +43 4242 430 830-4 reception@resmed.at Pulmomed Medizinisch-technische Ger(cid:228)te GmbH Hauptstra(cid:223)e 138 A-1140 Vienna, Austria Tel: +43 1 803 47 00 Fax: +43 1 803 48 00 info@pulmomed.com Australia ResMed Ltd (Administration) 97 Waterloo Road North Ryde NSW 2113 Australia Tel: +61 2 9886 5000 or 1800 658 189 (Aust toll free) Fax: +61 2 9878 0120 reception@resmed.com.au ResMed Ltd (Manufacturer) 1 Elizabeth MacArthur Drive Bella Vista NSW 2153 Australia Tel: +61 2 8884 1000 or 1 800 658 189 (Aust toll free) Fax: +61 2 8883 3114 reception@resmed.com.au Global leaders in sleep and respiratory medicine www.resmed.com 10921/1 05 09 

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