ResMed Annual Report 2005

FY2005 Annual Report · ResMed

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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

U NITED STATES
U NITE D KIN G D O
W IT Z E R L A

A I N

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

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

4
8

2
7
6

1
7
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

INCOME

(excludes acquisition and restructure

related expenses)

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

NET REVENUE

DILUTED EARNING PER SHARE

NET INCOME

(excludes acquisition and restructure

(excludes acquisition and

related expenses)

restructure related expenses)

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

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)

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

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

66,519

17,363

16,112

10,611

0.37

0.35

49,180

8,327

11,087

7,465

0.26

34,562

3,595

6,561

4,503

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

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

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