RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)

(In US$ and in thousands, except per share data)



	Three Months Ended March 31,				Nine Months Ended March 31,				Three Months Ended ‎December 31,				Six Months Ended ‎December 31,
	2019		2018		2019		2018		2019		2018		2019		2018
Net revenue	$	662,228	$	591,634	$	1,901,608	$	1,716,566	$	736,157	$	651,100	$	1,417,213	$	1,239,380
Cost of sales (excluding amortization of acquired intangible assets)		270,318		247,339		782,874		716,874

Cost of sales										296,975		267,369		572,976		512,556
Amortization of acquired intangible assets										12,052		9,199		25,488		16,154
Total cost of sales										309,027		276,568		598,464		528,710
Gross profit		391,910		344,295		1,118,734		999,692		427,130		374,532		818,749		710,670
Operating expenses:

Selling, general and administrative		164,529		147,893		473,410		443,559		171,422		161,579		338,862		308,881
Research and development		47,610		37,434		129,513		115,492		49,943		43,111		97,976		81,902
Amortization of acquired intangible assets		22,794		11,673		51,501		34,772		8,556		6,641		13,599		12,553
Restructuring expenses		-		10,922		-		10,922
Litigation settlement expenses										(600)		-		(600)		-
Acquisition related expenses		-		-		6,123		-		-		6,123		-		6,123
Total operating expenses		234,933		207,922		660,547		604,745		229,321		217,454		449,837		409,459
Income from operations		156,977		136,373		458,187		394,947		197,809		157,078		368,912		301,211
Other income (loss), net:
Interest income		415		4,228		2,014		13,677		202		678		650		1,600
Interest expense		(12,413)		(7,719)		(23,608)		(22,873)		(10,220)		(7,487)		(21,212)		(11,195)
Loss attributable to equity method investments (note 6)		(5,996)		-		(9,371)		-
Loss attributable to equity method investments (note 5)										(6,924)		(3,375)		(13,786)		(3,375)
Other, net		(1,054)		(2,739)		(4,140)		(5,357)		(2,115)		(621)		(5,225)		(3,086)
Total other income (loss), net		(19,048)		(6,230)		(35,105)		(14,553)		(19,057)		(10,805)		(39,573)		(16,056)
Income before income taxes		137,929		130,143		423,082		380,394		178,752		146,273		329,339		285,155
Income taxes		32,513		20,018		87,291		174,617		18,198		21,634		48,637		54,778
Net income	$	105,416	$	110,125	$	335,791	$	205,777	$	160,554	$	124,639	$	280,702	$	230,377
Basic earnings per share (note 11)	$	0.74	$	0.77	$	2.35	$	1.44	$	1.11	$	0.87	$	1.95	$	1.61
Diluted earnings per share (note 11)	$	0.73	$	0.76	$	2.33	$	1.43	$	1.10	$	0.86	$	1.93	$	1.60
Dividend declared per share	$	0.37	$	0.35	$	0.74	$	1.05	$	0.39	$	0.37	$	0.78	$	0.74
Basic shares outstanding (000's)		143,316		142,898		142,907		142,688		144,212		142,923		143,966		142,796
Diluted shares outstanding (000's)		144,333		143,985		144,344		143,895		145,575		144,349		145,479		144,418

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(In US$ and in thousands)



	Common Stock			Additional Paid-in		Treasury Stock			Retained		Accumulated Other Comprehensive				Common Stock			Additional ‎Paid-in		Treasury Stock			Retained		Accumulated ‎Other ‎ Comprehensive
	Shares	Amount		Capital		Shares	Amount		Earnings		Income (Loss)		Total		Shares	Amount		Capital		Shares	Amount		Earnings		Income (Loss)		Total
Balance, June 30, 2018	184,316	$	571	$	1,450,821	(41,636)	$	(1,600,412)	$	2,432,328	$	(224,328)	$	2,058,980
Balance, June 30, 2019															185,491	$	575	$	1,511,473	(41,836)	$	(1,623,256)	$	2,436,410	$	(253,009)	$	2,072,193
Common stock issued on exercise of options	12		-		513	-		-		-		-		513	110		-		5,609	-		-		-		-		5,609
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	2		-		(141)	-		-		-		-		(141)	4		-		(327)	-		-		-		-		(327)
Common stock issued on employee stock purchase plan	-		-		-	-		-		-		-		-
Treasury stock purchases	-		(1)		-	(200)		(22,844)		-		-		(22,845)
Stock-based compensation costs	-		-		12,476	-		-		-		-		12,476	-		-		13,256	-		-		-		-		13,256
Other comprehensive income	-		-		-	-		-		-		(12,872)		(12,872)	-		-		-	-		-		-		(37,576)		(37,576)
Net income	-		-		-	-		-		105,737		-		105,737	-		-		-	-		-		120,148		-		120,148
Cumulative effect of change in accounting standards	-		-		-	-		-		(188,798)		-		(188,798)
Dividends declared	-		-		-	-		-		(52,794)		-		(52,794)	-		-		-	-		-		(56,052)		-		(56,052)
Balance, September 30, 2018	184,330	$	570	$	1,463,669	(41,836)	$	(1,623,256)	$	2,296,473	$	(237,200)	$	1,900,256
Balance, September 30, 2019															185,605	$	575	$	1,530,011	(41,836)	$	(1,623,256)	$	2,500,506	$	(290,585)	$	2,117,251
Common stock issued on exercise of options	36		-		1,263	-		-		-		-		1,263	117		-		6,498	-		-		-		-		6,498
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	623		2		(27,343)	-		-		-		-		(27,341)	576		3		(40,764)	-		-		-		-		(40,761)
Common stock issued on employee stock purchase plan	129		1		10,575	-		-		-		-		10,576	137		-		12,190	-		-		-		-		12,190
Treasury stock purchases	-		-		-	-		-		-		-		-	-		-			-		-		-		-		-
Stock-based compensation costs	-		-		12,541	-		-		-		-		12,541	-		-		14,057	-		-		-		-		14,057
Other comprehensive income	-		-		-	-		-		-		(13,117)		(13,117)	-		-		-	-		-		-		44,467		44,467
Net income	-		-		-	-		-		124,639		-		124,639	-		-		-	-		-		160,554		-		160,554
Dividends declared	-		-		-	-		-		(52,773)		-		(52,773)	-		-		-	-		-		(56,150)		-		(56,150)
Balance, December 31, 2018	185,118	$	573	$	1,460,705	(41,836)	$	(1,623,256)	$	2,368,339	$	(250,317)	$	1,956,044
Common stock issued on exercise of options	55		-		2,896	-		-		-		-		2,896
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	9		-		(330)	-		-		-		-		(330)
Common stock issued on employee stock purchase plan	-		-		-	-		-		-		-		-
Treasury stock purchases	-		-		-	-		-		-		-		-
Stock-based compensation costs	-		-		12,828	-		-		-		-		12,828
Other comprehensive income	-		-		-	-		-		-		(2,501)		(2,501)
Net income	-		-		-	-		-		105,416		-		105,416
Dividends declared	-		-		-	-		-		(53,024)		-		(53,024)
Balance, March 31, 2019	185,182	$	573	$	1,476,099	(41,836)	$	(1,623,256)	$	2,420,731	$	(252,818)	$	2,021,329
Balance, December 31, 2019															186,435	$	578	$	1,521,992	(41,836)	$	(1,623,256)	$	2,604,910	$	(246,118)	$	2,258,106

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(In US$ and in thousands)


	Common Stock			Additional Paid-in		Treasury Stock			Retained		Accumulated Other Comprehensive				Common Stock			Additional Paid-in		Treasury Stock			Retained		Accumulated Other Comprehensive
	Shares	Amount		Capital		Shares	Amount		Earnings		Income (Loss)		Total		Shares	Amount		Capital		Shares	Amount		Earnings		Income (Loss)		Total
Balance, June 30, 2017	183,261	$	569	$	1,379,130	(41,086)	$	(1,546,611)	$	2,316,237	$	(189,059)	$	1,960,266
Balance, June 30, 2018															184,316	$	571	$	1,450,821	(41,636)	$	(1,600,412)	$	2,432,328	$	(224,328)	$	2,058,980
Common stock issued on exercise of options															12		-		513	-		-		-		-		513
Common stock issued on vesting of restricted stock units, net of shares withheld for tax															2		-		(141)	-		-		-		-		(141)
Treasury stock purchases															-		(1)		-	(200)		(22,844)		-		-		(22,845)
Stock-based compensation costs															-		-		12,476	-		-		-		-		12,476
Other comprehensive income															-		-		-	-		-		-		(12,872)		(12,872)
Net income															-		-		-	-		-		105,738		-		105,738
Cumulative effect of change in accounting ‎standards															-		-		-	-		-		(188,799)		-		(188,799)
Dividends declared															-		-		-	-		-		(52,794)		-		(52,794)
Balance, September 30, 2018															184,330	$	570	$	1,463,669	(41,836)	$	(1,623,256)	$	2,296,473	$	(237,200)	$	1,900,256
Common stock issued on exercise of options	78		-		4,682	-		-		-		-		4,682	36		-		1,263	-		-		-		-		1,263
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	11		-		(195)	-		-		-		-		(195)	623		2		(27,343)	-		-		-		-		(27,341)
Common stock issued on employee stock purchase plan	-		-			-		-		-		-		-	129		1		10,575	-		-		-		-		10,576
Treasury stock purchases	-		-			-		-		-		-		-	-		-			-		-		-		-		-
Stock-based compensation costs	-		-		11,959	-		-		-		-		11,959	-		-		12,541	-		-		-		-		12,541
Other comprehensive income	-		-			-		-		-		36,389		36,389	-		-		-	-		-		-		(13,117)		(13,117)
Net income	-		-			-		-		86,125		-		86,125	-		-		-	-		-		124,639		-		124,639
Dividends declared	-		-			-		-		(49,698)		-		(49,698)	-		-		-	-		-		(52,773)		-		(52,773)
Balance, September 30, 2017	183,350	$	569	$	1,395,576	(41,086)	$	(1,546,611)	$	2,352,664	$	(152,670)	$	2,049,528
Common stock issued on exercise of options	394		1		7,427	-		-		-		-		7,428
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	186		1		(13,659)	-		-		-		-		(13,658)
Common stock issued on employee stock purchase plan	148		1		8,652	-		-		-		-		8,653
Treasury stock purchases	-		-		-	(100)		(8,541)		-		-		(8,541)
Stock-based compensation costs	-		-		11,997			-		-		-		11,997
Other comprehensive income	-		-		-	-		-		-		4,450		4,450
Net income	-		-		-	-		-		9,527		-		9,527
Dividends declared	-		-		-	-		-		(49,856)		-		(49,856)
Balance, December 31, 2017	184,078	$	572	$	1,409,993	(41,186)	$	(1,555,152)	$	2,312,335	$	(148,220)	$	2,019,528
Common stock issued on exercise of options	19		-		3,006	-		-		-		-		3,006
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	13		-		(862)	-		-		-		-		(862)
Common stock issued on employee stock purchase plan	-		-		-	-		-		-		-		-
Treasury stock purchases	-		(1)		-	(200)		(19,356)		-		-		(19,357)
Stock-based compensation costs	-		-		11,890	-		-		-		-		11,890
Other comprehensive income	-		-		-	-		-		-		(7,393)		(7,393)
Net income	-		-		-	-		-		110,125		-		110,125
Dividends declared	-		-		-	-		-		(49,973)		-		(49,973)
Balance, March 31, 2018	184,110	$	571	$	1,424,027	(41,386)	$	(1,574,508)	$	2,372,487	$	(155,613)	$	2,066,964
Balance, December 31, 2018															185,118	$	573	$	1,460,705	(41,836)	$	(1,623,256)	$	2,368,339	$	(250,317)	$	1,956,044

See the accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents



PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

(1) Summary of Significant Accounting Policies

Organization and Basis of Presentation

ResMed Inc. (referred to herein as “we”, “us”, “our” or the “Company”) is a Delaware corporation formed in March 1994 as a holding company for the ResMed Group. Through our subsidiaries, we design, manufacture and market equipment for the diagnosis and treatment of sleep-disordered breathing and other respiratory disorders, including obstructive sleep apnea. Our manufacturing operations are located in Australia, Singapore, Malaysia, France, China and the United States. Major distribution and sales sites are located in the United States, Germany, France, the United Kingdom, Switzerland, Australia, Japan, China, Finland, Norway and Sweden.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and the rules of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending June 30, ~~2019.~~2020.

The condensed consolidated financial statements for the three and ~~nine~~six months ended ~~March~~December 31, 2019 and ~~March~~December 31, 2018 are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the year ended June 30, ~~2018.~~2019.

Revenue Recognition

We adopted Accounting Standard Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” on July 1, 2018. We account for a contract with a customer when there is a legally enforceable contract, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. We have determined that we have two operating segments, which are the sleep and respiratory disorders sector of the medical device industry (“Sleep and Respiratory Care”) and the supply of business management software-as-a-service to out-of-hospital health providers (“SaaS”). Our Sleep and Respiratory Care revenue relates primarily to the sale of our products that are therapy-based equipment. Some contracts include additional performance obligations such as the provision of extended warranties and data for patient monitoring. Our SaaS revenue relates to the provision of software access with ongoing support and maintenance services as well as professional services such as training and consulting.

Disaggregation of revenue

~~The following table summarizes~~See note 2 – Segment Information for our net revenue disaggregated by segment, product and region for the three and ~~nine~~six months ended ~~March~~December 31, 2019 ~~compared to March 31, 2018 (in millions):~~and 2018.

Three Months Ended
March 31,

Nine Months Ended
March 31,

2019

2018

2019

2018
U.S., Canada and Latin America

Devices

$
181.3

$
168.1

$
540.2

$
499.7
Masks and other

168.7

149.4

494.8

443.7
Total Sleep and Respiratory Care

$
350.0

$
317.5

$
1,035.0

$
943.4
Software as a Service

79.9

39.9

190.6

116.6
Total

$
429.9

$
357.4

$
1,225.6

$
1,060.0





Combined Europe, Asia and other markets

Devices

$
155.2

$
160.1

$
463.0

$
451.8
Masks and other

77.1

74.1

213.0

204.8
Total Sleep and Respiratory Care

$
232.3

$
234.2

$
676.0

$
656.6





Global revenue

Devices

$
336.5

$
328.2

$
1,003.2

$
951.5
Masks and other

245.8

223.5

707.8

648.5
Total Sleep and Respiratory Care

$
582.3

$
551.7

$
1,711.0

$
1,600.0
Software as a Service

79.9

39.9

190.6

116.6
Total

$
662.2

$
591.6

$
1,901.6

$
1,716.6

~~Table of Contents~~

~~PART I – FINANCIAL INFORMATION~~

~~Item 1~~

~~RESMED INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Performance obligations and contract balances

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied; generally, this occurs with the transfer of risk and/or control of our products are provided at a point in time. For products in our Sleep and Respiratory Care business, we transfer control and recognize a sale when products are shipped to the customer in accordance with the contractual shipping terms. For our SaaS business, revenue associated with professional services are recognized as they are provided. We defer the recognition of a portion of the consideration received when performance obligations are not yet satisfied. Consideration received from customers in advance of revenue recognition is classified as deferred revenue. Performance obligations resulting in deferred revenue in our Sleep and Respiratory Care business relate primarily to extended warranties on our devices and the provision of data for patient monitoring. Performance obligations resulting in deferred revenue in our SaaS business relate primarily to the provision of software access with maintenance and support over an agreed term and material rights associated with future discounts upon renewal of some SaaS contracts. Generally, deferred revenue will be recognized over a period of one year to five years. The following table summarizes our contract balances ~~at March 31, 2019 and June 30, 2018~~ (in thousands):


	December 31, ‎2019		June 30, ‎2019		Balance sheet caption
Contract assets
Accounts receivable, net	$	528,039	$	528,484	Accounts receivable, net
Unbilled revenue, current		7,792		9,834	Prepaid expenses and other current assets
Unbilled revenue, non-current		5,186		4,592	Prepaid taxes and other non-current assets

Contract liabilities
Deferred revenue, current		(92,950)		(88,667)	Deferred revenue (current liabilities)
Deferred revenue, non-current		(86,140)		(81,143)	Deferred revenue (non-current liabilities)

Table of Contents

March 31,
2019

June 30,
2018

Balance sheet caption
Contract assets

Accounts receivable, net

$
511,403

$
483,681

Accounts receivable, net
Unbilled revenue, current

10,443

13,342

Prepaid expenses and other current assets
Unbilled revenue, non-current

3,825

2,973

Prepaid taxes and other non-current assets

Contract liabilities

Deferred revenue, current

(82,288)

(60,828)

Deferred revenue (current liabilities)
Deferred revenue, non-current

(76,703)

(71,596)

Deferred revenue (non-current liabilities)



PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

Transaction price determination

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. In our Sleep and Respiratory Care segment, the amount of consideration received and revenue recognized varies with changes in marketing incentives (e.g., rebates, discounts, free goods) and returns offered to customers and their customers. When we give customers the right to return eligible products and receive credit, returns are estimated based on an analysis of historical experience. However, returns of products, excluding warranty-related returns, are infrequent and insignificant. We adjust the estimate of revenue at the earlier of when the most likely amount of consideration can be estimated, the amount expected to be received changes, or when the consideration becomes fixed.

We offer our Sleep and Respiratory Care customers cash or product rebates based on volume or sales targets measured over quarterly or annual periods. We estimate rebates based on each customer’s expected achievement of its targets. In accounting for these rebate programs, we reduce revenue ratably as sales occur over the rebate period by the expected value of the rebates to be returned to the customer. Rebates measured over a quarterly period are updated based on actual sales results and, therefore, no estimation is required to determine the reduction to revenue. For rebates measured over annual periods, we update our estimates on a quarterly basis based on actual sales results and updated forecasts for the remaining rebate periods. We also offer discounts to both our Sleep and Respiratory Care as well as our SaaS customers as part of normal business practice and these are deducted from revenue when the sale occurs.

Many of our Sleep and Respiratory Care contracts have a single performance obligation which is the shipment of our therapy-based equipment. However, when the Sleep and Respiratory Care or SaaS contract has multiple performance obligations, we generally use an observable price to determine the stand-alone selling price by reference to pricing and discounting practices for the specific product or service when sold separately to similar customers. Revenue is then allocated proportionately, based on the determined stand-alone selling price, to the performance obligation.

~~Accounting and practical expedient elections~~

We have elected to account for shipping and handling activities associated with our Sleep and Respiratory Care segment as a fulfillment cost within cost of sales, and record shipping and handling costs collected from customers in net revenue. We have also elected for all taxes assessed by government authorities that are imposed on and concurrent with revenue-producing transactions, such as sales and value added taxes, to be excluded from revenue. We have adopted two practical expedients including the “right to invoice” practical expedient, which allows us to recognize revenue in the amount of the invoice when it corresponds directly with the value of performance completed to date and which is relevant for some of our SaaS contracts. The second practical expedient adopted permits relief from considering a significant financing component when the payment for the good or service is expected to be one year or less.

~~Table of Contents~~

~~PART I – FINANCIAL INFORMATION~~

~~Item 1~~

~~RESMED INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Provision for Warranty

We provide for the estimated cost of product warranties on our Sleep and Respiratory Care products at the time the related revenue is recognized. We determine the amount of this provision by using a financial model, which takes into consideration actual historical expenses and potential risks associated with our different products. We use this financial model to calculate the future probable expenses related to warranty and the required level of the warranty provision. Although we engage in product improvement programs and processes, our warranty obligation is affected by product failure rates and costs incurred to correct those product failures. Should actual product failure rates or estimated costs to repair those product failures differ from our estimates, we would be required to revise our estimated warranty provision.

New Accounting Pronouncements

(a) Recently issued accounting standards not yet adopted

ASU No. 2017-04 “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”

In January 2017, the FASB issued Accounting Standards Update No. 2017-04 (ASU 2017-04) “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. This guidance is effective for us beginning in the fourth quarter of fiscal year June 30, 2020 and early adoption is permitted. We currently perform a Step 0, or qualitative impairment, assessment for our Reporting Units, which we expect to continue and, therefore, anticipate that the adoption of ASU 2017-04 will not have a material impact on our consolidated financial statements.

(b) Recently adopted accounting pronouncements

ASU No. 2016-02, “Leases”

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (Topic 842). Under the new guidance, lessees are required to recognize a right-of-use asset (“ROU”) and a lease liability on the balance sheet for all leases, other than those that meet the definition of a short-term lease. This update will establish a lease asset and lease liability by lessees for those leases classified as operating under current GAAP. Leases ~~will be~~are classified as either operating or finance under the new guidance. Operating leases ~~will~~ result in straight-line expense in the income statement, similar to ~~current~~prior operating ~~leases,~~lease treatment, and finance leases ~~will~~ result in more expense being recognized in the earlier years of the lease term, similar to ~~current~~prior capital ~~leases.~~lease treatment. For lessors, the update ~~will~~ more closely ~~align~~aligns lease accounting to comparable guidance in the new revenue standards described.

~~The~~10

Table of Contents



PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

Effective, July 1, 2019, we adopted the new standard ~~is effective for us beginning in the first quarter of the year ending June 30, 2020 and early application is permitted. ASU 2016-02 will be adopted~~ on a modified retrospective transition ~~basis. There is~~basis for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In addition, we elected the package of practical expedients permitted under the transition guidance to not reassess (1) whether any expired or existing contracts are, or contain, leases, (2) the lease classification for expired or existing leases, and (3) initial direct costs for existing leases. In preparation for and upon adoption of this guidance, we have designed and operated internal controls over its implementation, which includes a ~~practical expedient available that would permit~~system solution for lease administration, accounting and disclosures of financial information surrounding our leasing arrangements.

The adoption of the guidance on July 1, 2019 resulted in the recognition of ROU assets of $77.6 million and lease liabilities of $81.3 million, which all related to operating leases. The ROU assets were lower than the lease liabilities due to the derecognition of deferred rent balances of $3.7 million. We did not recognize any ~~leases that existed at~~adjustment to the ~~date of adoption to continue to be accounted for~~comparative period presented in the financial statements in accordance with ~~the previous GAAP, ASC 840. We are still evaluating whether we will adopt this practical expedient.~~

~~We formed an implementation team during the year ended June 30, 2018 to oversee~~our adoption ~~of the new standard.~~method. The implementation team has established a project plan, collected copies of our lease agreements, implemented procedures to identify embedded leases and commenced a global education program regarding the new standard. There are a number of steps in the team’s project plan that remain to be completed including: reviewing system outputs from lease data entry and balance calculations, evaluating the impact, and working through required changes to systems, business processes and controls to support the adoption of the new leases standard. While the formal impact assessment is ongoing, we expect this amendment will affect the way we account for operating leases where we are the lessee (as described above), require reassessment of how we account for revenue where we are the lessor and will result in increased disclosures for all lease arrangements. We are still evaluating the impact the standard will have on our financial statements.

~~(b) Recently adopted accounting pronouncements~~

~~ASU No. 2014-09, “Revenue from Contracts with Customers”~~

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Since its initial release, the FASB has issued several amendments to the standard, which include clarification of accounting guidance related to identification of performance obligations, intellectual property licenses, and principal vs. agent considerations. ASU 2014-09 and all subsequent amendments (collectively, the “new revenue recognition standards”) replaced most existing revenue recognition guidance in U.S. GAAP during the current quarter when it became effective. The guidance also requires improved disclosures on the nature, amount, timing, and uncertainty of revenue that is recognized.

~~Effective July 1, 2018, we adopted the new revenue recognition standards and applied its provisions to all contracts using the modified retrospective method. Application of the new provisions~~ did not have a material impact on our ~~financial~~condensed consolidated statements ~~and no cumulative-effect adjustment was calculated or recognized. The comparative information has not been restated; however, if it were there would be no change in~~of income.

In our Form 10-K for the ~~accounting treatment. Refer to~~year ended June 30, 2019, we estimated that the ~~“Revenue Recognition” section above for further details about our revenue recognition following~~ adoption of the guidance would result in the recognition of additional ROU assets and lease liabilities for operating leases of approximately $60.0 million to $70.0 million as of July 1, 2019. This range excluded the impact of our evaluation of lease terms, several contracts that may contain an embedded lease and the final assessment of the lease discount rates. During the quarter ended September 30, 2019, we finalized all remaining implementation work and the increase from our estimate of $60.0 million to $70.0 million to the opening balance of $77.6 million was primarily driven by our determination that we were reasonably certain to exercise extension options at some of our major sites, partially offset by our final discount rates generally being lower than the preliminary rate of 3.5% that was used when calculating our estimated balance upon adoption.

See note 9 - Leases for further disclosures related to our leases under the new ~~revenue recognition standards.~~guidance.

Within our condensed consolidated statements of income for the three and six months ended December 31, 2019 and 2018, cost of sales has been adjusted to include amortization of acquired intangible assets directly applicable to revenue. As a result, gross profit now includes amortization of acquired intangible assets relating to cost of sales and operating expenses have been reduced by this amount. There was no impact on income from operations, income before taxes or net income, as a result of this reclassification. The adjustments to the previously reported amounts are not material.

The table below presents a reconciliation of amortization of acquired intangible assets by income statement caption summing to total amortization of acquired intangible assets as previously reported (in thousands):


	Three Months Ended		Six Months Ended
	December 31, 2018
Amortization of intangible assets related to cost of sales	$	9,199	$	16,154
Amortization of intangible assets related to operating expenses		6,641		12,553
Total	$	15,840	$	28,707

The table below presents a reconciliation of gross profit as previously reported adjusted for the amortization of acquired intangible assets now included in cost of sales (in thousands):


	Three Months Ended		Six Months Ended
	December 31, 2018
Gross profit as previously reported	$	383,731	$	726,824
Amortization of intangible assets related to cost of sales		(9,199)		(16,154)
Gross profit	$	374,532	$	710,670

Table of Contents



PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

~~ASU No. 2016-01, "Financial Instruments - Overall"~~(2) Segment Information

~~In January 2016,~~

We have quantitatively and qualitatively determined that we operate in two operating segments, which are the ~~FASB issued ASU No. 2016-01, "Financial Instruments - Overall" (Topic 825-10).~~Sleep and Respiratory Care segment and the SaaS segment.

We evaluate the performance of our segments based on net sales and income from operations. The ~~amendments address certain aspects~~accounting policies of ~~recognition, measurement, presentation,~~the segments are the same as those described in note 1 of our consolidated financial statements included in our Form 10-K for the year ended June 30, 2019. Segment net sales and disclosure of financial instruments, and require equity investments, other than equity-method investments, to be measured at fair value with changes in fair value recognized through net income. The amendments also simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment for impairment quarterly at each reporting period. We adopted ASU 2016-01 during the quarter ended September 30, 2018 and elected to apply the practical expedient for measuring equity investments thatsegment income from operations do not ~~have readily determinable fair market. Based~~include inter-segment profits and revenue is allocated to a geographic area based on where the products are shipped to or where the services are performed.

Certain items are maintained at the corporate level and are not allocated to the segments. The non-allocated items include corporate headquarters costs, stock-based compensation, amortization expense from acquired intangibles, acquisition related expenses, interest income, interest expense and other, net. We neither discretely allocate assets to our ~~elections,~~operating segments, nor does our strategic equity investments that do not have readily determinable fair values are measured at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for identifiable or similar investmentsChief Operating Decision Maker evaluate the operating segments using discrete asset information.

The table below presents a reconciliation of ~~the same issuer. The measurement alternative was applied prospectively~~net revenues and ~~the adoption of ASU 2016-01 did not result in an adjustment to retained earnings.~~

~~ASU No. 2016-16, “Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory”~~

In October 2016, the FASB issued Accounting Standard Update ASU No. 2016-16, “Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory” (Topic 740). Under the new guidance, an entity is required to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. ASU 2016-16 became effective during the three months ended September 30, 2018 and is required to be adopted on a modified retrospective basis, with a cumulative-effect adjustment recorded directly to retained earnings for intra-entity transfers that occur before the adoption date. Accordingly, we recognized the following reclassifications upon adoptionnet operating profit by reportable segments (in thousands):

Balance Sheet Caption

As reported balance
June 30, 2018

Adoption of
ASU 2016-16 Increase/(Decrease)

Revised balance
July 1, 2018
Assets

Prepaid expenses and other current assets

$
124,634

$
(28,947)

$
95,687
Prepaid taxes and other non-current assets

273,710

(156,406)

117,304
Deferred income taxes

53,818

(3,445)

50,373
Equity

Retained Earnings

2,432,328

(188,798)

2,243,530


	Three Months Ended ‎December 31,				Six Months Ended ‎December 31,
	2019		2018		2019		2018
Revenue by segment
Total Sleep and Respiratory Care	$	649,451	$	587,894	$	1,243,617	$	1,128,708

Software as a Service		87,363		65,235		175,698		112,701
Deferred revenue fair value adjustment		(657)		(2,029)		(2,102)		(2,029)
Total Software as a Service		86,706		63,206		173,596		110,672
Total	$	736,157	$	651,100	$	1,417,213	$	1,239,380

Net operating profit by segment
Sleep and Respiratory Care	$	230,097	$	196,542	$	428,260	$	372,244
Software as a Service		21,339		17,061		45,135		32,384
Total	$	251,436	$	213,603	$	473,395	$	404,628

Reconciling items
Corporate costs	$	32,962	$	32,533	$	63,894	$	66,558
Amortization of acquired intangible assets		20,608		15,840		39,087		28,707
Litigation settlement expenses		(600)		-		(600)		-
Acquisition related expenses		-		6,123		-		6,123
Deferred revenue fair value adjustment		657		2,029		2,102		2,029
Interest income		(202)		(678)		(650)		(1,600)
Interest expense		10,220		7,487		21,212		11,195
Loss attributable to equity method investments		6,924		3,375		13,786		3,375
Other, net		2,115		621		5,225		3,086
Income before income taxes	$	178,752	$	146,273	$	329,339	$	285,155

~~(2) Inventories~~

~~Inventories were comprised~~

(3) Supplemental Balance Sheet Information

Components of selected captions in the consolidated condensed balance sheets consisted of the following ~~at March 31, 2019 and June 30, 2018~~ (in thousands):



	March 31, 2019		June 30, 2018
Inventories					December 31, ‎2019		June 30, ‎2019
Raw materials	$	79,944	$	75,415	$	98,047	$	80,861
Work in progress		2,479		2,453		2,063		2,256
Finished goods		237,507		190,833		277,674		266,524
Total inventories	$	319,930	$	268,701	$	377,784	$	349,641

~~(3) Property, Plant and Equipment~~


Property, Plant and Equipment	December 31, ‎2019		June 30, ‎2019
Property, plant and equipment, at cost	$	947,877	$	898,975
Accumulated depreciation and amortization		(539,513)		(511,515)
Property, plant and equipment, net	$	408,364	$	387,460

~~Property, plant and equipment were comprised of the following as of March 31, 2019 and June 30, 2018 (in thousands):~~

March 31,
2019
��
June 30,
2018
Machinery and equipment

$
256,797

$
239,671
Computer equipment

170,620

155,069
Furniture and fixtures

51,510

51,045
Vehicles

7,390

7,399
Clinical, demonstration and rental equipment

91,133

92,229
Leasehold improvements

33,677

32,169
Land

52,735

54,089
Buildings

224,482

229,193

888,344

860,864
Accumulated depreciation and amortization

(505,848)

(474,314)
Property, plant and equipment, net

$
382,496

$
386,550

~~Table of Contents~~

Table of Contents



PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

Other Intangible Assets	December 31, ‎2019		June 30, ‎2019
Developed/core product technology	$	379,470	$	401,842
Accumulated amortization		(173,797)		(157,651)
Developed/core product technology, net		205,673		244,191
Customer relationships		277,222		273,114
Accumulated amortization		(69,320)		(68,630)
Customer relationships, net		207,902		204,484
Other intangibles		177,770		176,351
Accumulated amortization		(110,484)		(103,076)
Other intangibles, net		67,286		73,275
Total other intangibles, net	$	480,861	$	521,950

~~(4) Goodwill~~

~~A reconciliation of changes in our goodwill by reportable segment is as follows (in thousands):~~

Nine Months Ended March 31, 2019

Sleep and
Respiratory Care

SaaS

Total
Balance at the beginning of the period

$
464,157

$
604,787

$
1,068,944
Business acquisition

182,159

697,260

879,419
Foreign currency translation adjustments

(9,227)

-

(9,227)
Balance at the end of the period

$
637,089

$
1,302,047

$
1,939,136

~~(5) Other Intangible Assets~~

~~Other intangible assets were comprised of the following as of March 31, 2019 and June 30, 2018 (in thousands):~~

March 31,
2019

June 30,
2018
Developed/core product technology

$
334,366

$
205,149
Accumulated amortization

(141,780)

(115,237)
Developed/core product technology, net

192,586

89,912
Trade names

77,596

48,832
Accumulated amortization

(23,512)

(16,868)
Trade names, net

54,084

31,964
Non-compete agreements

4,232

3,288
Accumulated amortization

(2,632)

(2,283)
Non-compete agreements, net

1,600

1,005
Customer relationships

309,618

118,084
Accumulated amortization

(62,626)

(48,157)
Customer relationships, net

246,992

69,927
Patents

94,359

91,708
Accumulated amortization

(73,171)

(69,332)
Patents, net

21,188

22,376
Total other intangibles, net

$
516,450

$
215,184

Intangible assets consist of developed/core product technology, trade names, non-compete agreements, customer relationships, and patents, which we amortize over the estimated useful life of the assets, generally between two ~~and~~years to fifteen years. There are no expected residual values related to these intangible assets.

~~(6)~~(4) Goodwill

A reconciliation of changes in our goodwill by reportable segment is as follows (in thousands):


	Six Months Ended December 31, 2019
	Sleep and ‎Respiratory Care		SaaS		Total
Balance at the beginning of the period	$	616,965	$	1,239,484	$	1,856,449
Adjustment to fair values of preliminary purchase price allocations		526		16,282		16,808
Foreign currency translation adjustments		(2,610)		-		(2,610)
Balance at the end of the period	$	614,881	$	1,255,766	$	1,870,647

(5) Investments

~~Investments whereby we do not~~We have ~~significant influence or control over the investee are accounted for initially at cost. These~~a number of equity investments ~~include our holdings~~ in privately held ~~service and research~~ companies that are ~~not exchange traded and therefore not supported with observable market prices. We have determined that these investments do not have readily determinable fair values~~unconsolidated entities and are ~~therefore revalued only when there are observable price~~recorded in the non-current balance of other assets on the consolidated condensed balance sheets. The following table shows a reconciliation of the changes in ~~orderly transactions for identifiable or similar investments of the same issuer. We also estimate the fair value~~all of our ~~equity~~ investments to assess whether impairment losses shall be recorded using Level 3 inputs. However, these investments are valued by reference to their net asset values that can be market supported and unobservable inputs including future cash flows. During the nine months ended March 31, 2019 and 2018, we recognized $8.8 million and $3.6 million, respectively, of impairment losses related to our equity investments, which was recorded in other, net. The carrying amount of all investments at March 31, 2019 and June 30, 2018, was $49.1 million and $41.2 million, respectively. (in thousands):


	Six Months Ended ‎December 31,
	2019		2018
Equity method investments
Balance at the beginning of the period	$	21,667	$	-
Investments		17,500		25,000
Loss attributable to equity method investments		(13,786)		(3,375)
Carrying value of equity method investments		25,381		21,625

Non-marketable securities
Balance at the beginning of the period	$	30,436	$	41,226
Investments		4,341		2,967
Impairment of investments		(5,419)		(2,959)
Carrying value of non-marketable securities		29,358		41,234

Total investments in unconsolidated entities	$	54,739	$	62,859

Equity investments whereby we have significant influence but not control over the investee, and are not the primary beneficiary of the investee’s activities, are accounted for under the equity method. Under this method, we record our share of gains or losses attributable to equity method investments. ~~The carrying amount~~

Non-marketable equity securities consist of ~~these~~ investments in privately held companies without readily determinable fair values, and are reported at ~~March 31, 2019 and March 31, 2018 was $15.6 million and $0.0, respectively.~~cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. We estimate the fair value of our equity investments using Level 3 inputs to assess whether impairment losses shall be recorded.

Table of Contents



PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

We have determined that the fair value of our investments exceed their carrying values. Investments are included in the non-current balance of other assets on the condensed consolidated balance sheets. The following table shows a reconciliation of the changes in all of our investments during the nine months ended March 31, 2019 and March 31, 2018 (in thousands):

Nine Months Ended
March 31,
Investments

2019

2018
Balance at the beginning of the period

$
41,226

$
38,324
Investments

31,092

6,445
Impairment of investments

(8,801)

(3,620)
Loss attributable to equity method investments

(9,371)

-
Disposal of investments

(5,000)

-
Balance at the end of the period

$
49,146

$
41,149

~~(7)~~(6) Income Taxes

In accordance with ASC 740 Income Taxes, each interim reporting period is considered integral to the annual period, and tax expense is measured using an estimated annual effective tax rate. An entity is required to record income tax expense each quarter based on its annual effective tax rate estimated for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, adjusted for discrete taxable events that occur during the interim period.

Our income tax returns are based on calculations and assumptions subject to audit by various tax authorities. In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws. We regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes. Any final assessment resulting from tax audits may result in material changes to our past or future taxable income, tax payable or deferred tax assets, and may require us to pay penalties and interest that could materially adversely affect our financial results.

In connection with the audit by the Australian Taxation Office (“ATO”) for the tax years 2009 to 2013, we received Notices of Amended Assessments in March 2018. Based on these assessments, the ATO asserted that we owe $151.7 million in additional income tax and $38.4 million in accrued interest, of which $75.9 million was paid in April 2018 under a payment arrangement with the ATO. In June 2018, we received a notice from the ATO claiming penalties of 50% of the additional income tax that was assessed or $75.9 million. ~~We do not agree with the ATO’s assessments and continue to believe we are more likely than not to be successful in defending our position. As of March~~At December 31, 2019, we ~~have~~ recorded a receivable in prepaid taxes and other non-current assets for the amount paid as we ultimately expect this will be refunded by the ATO. ~~We are~~The ATO is currently ~~under audit by the ATO for the~~auditing tax years 2014 to ~~2017.~~2018. We do not agree with the ATO’s assessments and continue to believe we are more likely than not to be successful in defending our position.

On December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118 (“SAB 118”), Income Tax Accounting Implications of the Tax Cuts and Jobs Act directing taxpayers to consider the impact of the U.S. legislation as “provisional” when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. Effective December 31, 2018, the accounting relating to the impact of U.S. legislation was no longer considered provisional. However, further adjustments could be required as a result of future legislation, amended tax returns, or tax examinations of the years impacted by the calculation. During the three months ended March 31, 2019, we recorded additional tax expense of $3.3 million, which related to final treasury regulations issued and temporary guidance published during the quarter and $4.5 million during the nine months ended March 31, 2019. During the three and nine months ended March 31, 2018, we recorded additional tax expense of $5.4 million and $132.2 million, respectively, relating to changes in U.S. tax legislation.

~~(8)~~(7) Product Warranties

Changes in the liability for warranty costs, which is included in accrued expenses in our condensed consolidated balance sheets ~~for the nine months ended March 31, 2019 and March 31, 2018,~~ are as follows (in thousands):



	Nine Months Ended March 31,				Six Months Ended ‎December 31,
	2019		2018		2019		2018
Balance at the beginning of the period	$	19,227	$	19,558	$	19,625	$	19,227
Warranty accruals for the period		11,601		13,041		6,776		7,832
Warranty costs incurred for the period		(10,790)		(13,135)		(6,191)		(7,253)
Foreign currency translation adjustments		(405)		485		76		(431)
Balance at the end of the period	$	19,633	$	19,949	$	20,286	$	19,375

(8) Debt

~~Table of Contents~~

~~PART I – FINANCIAL INFORMATION~~

~~Item 1~~

~~RESMED INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(9)~~ Debt

~~Debt at March 31, 2019 and June 30, 2018~~ consisted of the following (in thousands):



	March 31, 2019		June 30, 2018		December 31, ‎2019		June 30, ‎2019
Short-term debt	$	12,367	$	12,000	$	12,000	$	12,012
Deferred borrowing costs		(21)		(534)		(16)		(20)
Short-term debt, net		12,346		11,466		11,984		11,992
		-				-
Long-term debt	$	1,327,000	$	272,000	$	1,292,000	$	1,262,000
Deferred borrowing costs		(3,651)		(2,012)		(4,491)		(3,139)
Long-term debt, net	$	1,323,349	$	269,988	$	1,287,509	$	1,258,861
Total debt	$	1,335,695	$	281,454	$	1,299,493	$	1,270,853

Credit Facility

On April 17, 2018, we entered into an amended and restated credit agreement (the “Revolving Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger, joint book runner, swing line lender and letter of credit issuer, and Westpac Banking Corporation, as syndication agent, joint lead arranger and joint book runner. The ~~Amended and Restated~~Revolving Credit Agreement, among other things, provided a senior unsecured revolving credit facility of $800.0 million, with an uncommitted option to increase the revolving credit facility by an additional $300.0 million.

Additionally, on April 17, 2018, ResMed Limited entered into a Syndicated Facility Agreement (the “Term Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger and joint book runner, and Westpac Banking Corporation, as syndication agent, joint lead arranger and joint book runner. The Term Credit Agreement, among other things, provides ResMed Limited a senior unsecured term credit facility of $200.0 million.

Table of Contents



PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

(9) Leases

We determine whether a contract is, or contains, a lease at inception. ROU assets represent our right to use an underlying asset during the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. We use our incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments. ROU assets also include any lease payments made at or before lease commencement and any initial direct costs incurred, and exclude any lease incentives received.

We determine the lease term as the non-cancellable period of the lease, and may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less are not recognized on the balance sheet. Some of our leases include variable lease payments that are based on costs incurred or actual usage, or adjusted periodically based on an index or a rate. Our leases do not contain any residual value guarantees and we do not account for lease and non-lease components as a single lease component. Operating leases are included in operating lease right-of-use assets and operating lease liabilities on our consolidated condensed balance sheets.

We lease certain office space, warehouses and distribution centers, manufacturing facilities, vehicles, and equipment with remaining lease terms ranging from less than 1 year to 13 years, some of which include options to extend or terminate the leases.

Operating lease costs for the three and six months ended December 31, 2019 were $6.4 million and $12.4 million, respectively. Short-term and variable lease costs were not material for the three and six months ended December 31, 2019.

Supplemental balance sheet information related to operating leases was as follows (in thousands, except lease term and discount rate):


	December 31, ‎2019
Operating lease ROU assets	$	96,745

Operating lease liabilities, current portion		20,038
Operating lease liabilities, non-current portion		79,458
Total operating lease liabilities	$	99,496

Weighted-average remaining lease term (years)		7.4
Weighted-average discount rate		2.86	%

Future minimum lease payments under non-cancellable leases as of December 31, 2019 and for the periods ending June 30 of the years indicated below were as follows (in thousands):


In $000’s	Total		2020		2021		2022		2023		2024		2025		Thereafter
Minimum lease payments	$	114,513	$	11,747	$	20,482	$	16,022	$	13,025	$	9,952	$	8,202	$	35,083
Less: imputed interest		(15,017)
Total lease liabilities	$	99,496

As of December 31, 2019, we had additional operating lease commitments of $35.4 million for manufacturing facilities and office space that have not yet commenced. These leases will commence during the year ended June 30, 2020 and 2021 with lease terms of 2 years to 11 years.

Disclosures related to periods prior to adopting the new lease guidance

We lease certain facilities and equipment under operating leases expiring at various dates. Most of the operating leases contain renewal options. Total expense for all operating leases was $23.4 million, $21.1 million, and $20.1 million for the years ended June 30, 2019, 2018, and 2017, respectively.

Future minimum lease payments (including interest) under non-cancellable operating leases at June 30, 2019 were as follows (in thousands):


			Fiscal Years Ending June 30
In $000’s	Total		2020		2021		2022		2023		2024		Thereafter
Operating leases	$	98,013	$	23,500	$	17,161	$	12,403	$	9,478	$	7,916	$	27,555

(10) Stockholders’ Equity

Common Stock.Since the inception of our share repurchase programs and through MarchDecember 31, 2019, we have repurchased a total of 41.8 million shares for an aggregate of $1.6 billion. We have temporarily suspended our share repurchase program due to recent acquisitions. Accordingly, we did not repurchase any shares during the three months ended MarchDecember 31, 2019. During the ninesix months ended March

Table of Contents



PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

December 31, 2019,2018, we repurchased 200,000 shares at an aggregate purchase price of $22.8 million and during the nine months ended March 31, 2018, we repurchased 300,000 shares at an aggregate purchase price of $27.9 million.under our share repurchase program. Shares that are repurchased are classified as treasury stock pending future use and reduce the number of shares outstanding used in calculating earnings per share. There is no expiration date for this program, and the program may be accelerated, suspended, reinstated, delayed or discontinued at any time at the discretion of our board of directors. At MarchDecember 31, 2019, 12.9 million additional shares can be repurchased under the approved share repurchase program.

Preferred Stock. In April 1997, the board of directors designated 2.0 million shares of our $0.01 par value preferred stock as Series A Junior Participating Preferred Stock. NoNaN shares were issued or outstanding at ~~March~~December 31, 2019 and June 30, ~~2018.~~2019.

Stock Options and Restricted Stock Units. We have granted stock options and restricted stock units to personnel, including officers and directors, in accordance with the amended and restated ResMed Inc. 2009 Incentive Award Plan (as amended and restated, the “2009 Plan”). The options have expiration dates of seven years from the date of grant and the options and restricted stock units vest over one year to four years.

At ~~March~~December 31, 2019, the maximum number of shares of our common stock authorized for issuance under the 2009 Plan was 51.1 million shares. The number of securities remaining available for future issuance under the 2009 Plan at ~~March~~December 31, 2019 was ~~16.3~~15.0 million.

The following table summarizes option activity during the ~~nine~~six months ended ~~March~~December 31, 2019:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years	Options		Weighted ‎Average ‎Exercise ‎Price		Weighted ‎Average ‎Remaining ‎Contractual ‎Term in Years
Outstanding at beginning of period		1,205,826	$	60.48	4.4		1,260,114	$	72.91	4.4
Granted		306,842		102.12			162,180		146.34
Exercised		(103,100)		46.41			(226,773)		53.39
Forfeited		(183)		52.02			(4,342)		110.19
Outstanding at end of period		1,409,385	$	70.57	4.4		1,191,179	$	86.49	4.8
Exercise price of granted options	$	102.12				$	146.34
Options exercisable at end of period		848,075	$	57.65			753,219	$	69.96

The following table summarizes the activity of restricted stock units during the ~~nine~~six months ended ~~March~~December 31, 2019:



	Restricted Stock Units		Weighted Average Grant-Date Fair Value		Weighted Average Remaining Contractual Term in Years	Restricted ‎Stock ‎Units		Weighted ‎Average ‎Grant-Date ‎Fair Value		Weighted ‎Average ‎Remaining ‎Contractual ‎Term in Years
Outstanding at beginning of period		1,644,754	$	62.90	1.6		1,446,170	$	77.21	1.6
Granted		758,775		99.13			359,704		140.87
Vested		(902,467)		57.41
Vested*							(861,256)		60.48
Performance factor adjustment							272,195		-
Expired / cancelled		(38,277)		66.76			(16,146)		80.37
Forfeited		(823)		66.76			(5,023)		80.37
Outstanding at end of period		1,461,962	$	77.06	1.9		1,195,644	$	102.36	2.0

Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, we offer participants the right to purchase shares of our common stock at a discount during successive offering periods. During the ~~nine~~six months ended ~~March~~December 31, 2019 and ~~March~~December 31, 2018, we issued ~~129,000~~137,000 and ~~148,000~~129,000 shares to our employees associated with the ESPP, respectively. At ~~March~~December 31, 2019, the number of shares remaining available for future issuance under the ESPP is ~~2.4~~2.1 million shares.

At the annual meeting of our stockholders in November 2018, our stockholders approved an amendment and restatement to the 2009 Plan to increase the number of shares of common stock that may be issued or transferred pursuant to awards under the 2009 Plan by 2.0 million shares, from 4.2 million to 6.2 million shares. The amendment also renamed the plan as “the ResMed Inc. 2018 Employee Stock Purchase

~~Plan,” and extended the term by ten years, so that the plan expires on November 15, 2028. The amendment became effective August 17, 2018, the date it was adopted by our board of directors.~~

Basic earnings per share is computed by dividing the net income available to common stockholders by the weighted average number of shares of common stock outstanding. For purposes of calculating diluted earnings per share, the denominator includes both the weighted average number of shares of common stock outstanding and the number of dilutive common stock equivalents such as stock options and restricted stock units.

In the normal course of business, we are subject to routine litigation incidental to our business. While the results of this litigation cannot be predicted with certainty, we believe that their final outcome will not, individually or in aggregate, have a material adverse effect on our consolidated financial statements taken as a whole.

As described in note 76 – Income Taxes, we received Notices of Amended Assessments from the ATO for the tax years 2009 to 2013. Based on these assessments, the ATO asserted that we owe $151.7 million in additional income tax and $38.4 million in accrued interest, of which $75.9 million was paid in April 2018 under a payment arrangement with the ATO. In June 2018, we received a notice from the ATO claiming penalties of 50% of the additional income tax that was assessed, or $75.9 million. At September 30, 2018, we recorded a receivable in prepaid taxes and other non-current assets for the amount paid as we ultimately expect this will be refunded by the ATO. We do not agree with the ATO’s assessments and we continue to believe we are more likely than not to be successful in defending our position. However, if we are not successful, we will not receive a refund of the amount paid in April 2018 and we would be required to pay the remaining additional income tax, accrued interest and penalties, which would be recorded as income tax expense. ~~We are~~The ATO is currently ~~under audit by the ATO for the~~auditing tax years 2014 to ~~2017.~~ 2018.

In connection with the recent change in U.S. Tax ~~Act~~laws and the analysis of historical tax filings, we identified an administrative oversight in our prior year tax filing relating to a gain on an internal legal entity reorganization. We have applied for relief from the U.S. Internal Revenue Service (“IRS”) and have amended the related tax returns required to correct the administrative oversight, which would indefinitely defer the recognition of this gain. We believe it is more likely than not that we will be granted this relief and therefore, have not recorded a reserve in relation to this matter ~~during~~for the ~~nine~~six months ended ~~March~~December 31, 2019.

We use independent financing institutions to offer some of our customers financing for the purchase of some of our products. Under these arrangements, if the customer qualifies under the financing institutions’ credit criteria and finances the transaction, the customers repay the financing institution on a fixed payment plan. For some of these arrangements, the customer’s receivable balance is with recourse, either limited or full, whereby we are responsible for repaying the financing company should the customer default. We record a contingent provision, which is estimated based on historical default rates. This is applied to receivables sold with recourse and is recorded in accrued expenses.

The following table summarizes the amount of receivables sold with recourse ~~during the nine months ended March 31, 2019 and March 31, 2018~~ (in thousands):

On November 13, 2018, we completed the acquisition of 100% of the shares in MatrixCare, Inc. and its subsidiaries (“MatrixCare”), a provider of software solutions for skilled nursing, life plan communities, senior living and private duty, for base purchase consideration paid of $750.0 million. This acquisition has been accounted for as a business combination using purchase accounting and included in our consolidated financial statements from November 13, 2018. The acquisition was paid for using borrowings under our revolving credit facility.

We ~~have not finalized~~completed the purchase price allocation in relation to this acquisition as certain appraisals associated with the valuation of intangible assets and income tax positions are not yet complete. We do not believe that the completion of this work will materially modify the preliminary purchase price allocation. We expect to complete our purchase price allocation during the quarter ~~ending June 30,~~ended December 31, 2019. The cost of the acquisition was allocated to the assets acquired and liabilities assumed based on estimates of their fair values at the date of acquisition. The goodwill recognized as part of the acquisition is reflected in the Software as a Service segment and is not deductible for tax purposes. It mainly represents the synergies that are unique to our combined businesses and the potential for new products and services to be developed in the future.

The ~~preliminary~~ fair values of assets acquired and liabilities assumed, and the estimated useful lives of intangible assets acquired are as follows (in thousands):

A reconciliation of the base consideration to the net consideration is as follows (in thousands):

1819

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PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

Other acquisitions

During the ~~three and nine months~~year ended March 31, 2019, revenues of $30.2 million and $45.6 million, respectively, and losses from operations of $1.5 million and $2.6 million, respectively, related to MatrixCare were included in the unaudited condensed consolidated statement of comprehensive income. The loss from operations for the three and nine months ended March 31, 2019 was negatively impacted by $6.1 million and $9.1 million, respectively, of amortization of acquired intangible assets and fair value purchase price adjustments relating to deferred revenue of $2.2 million and $4.3 million, respectively, to deferred revenue. Excluding the impact of these items, revenue for the three and nine months ended March 31, 2019 was $32.4 million and $49.9 million, respectively, and income from operations was $6.7 million and $10.8 million, respectively.

The acquisition is considered a material business combination and accordingly unaudited pro forma information presented below for the three and nine months ended March 31, 2019 and March 31, 2018, include the effects of pro forma adjustments as if the acquisition of MatrixCare occurred on July 1, 2017. MatrixCare results are reflected in our consolidated results for the three months ended March 31, 2019 and as such, no adjustment is required for this period. The pro forma results were prepared using the acquisition method of accounting and combine our historical results and MatrixCare’s for the three and nine months ended March 31, 2019 and 2018, including the effects of the business combination, primarily amortization expense related to the fair value of identifiable intangible assets acquired, interest expense associated with the financing obtained by us in connection with the acquisition, and the elimination of incurred acquisition-related costs.

The pro forma financial information presented below is not necessarily indicative of the results of operations that would have been achieved if the acquisition occurred at the beginning of the earliest period presented, nor is it intended to be a projection of future results.

Unaudited Proforma Consolidated Results

(In thousands, except per share information)

Three Months Ended
March 31,

Nine Months Ended
March 31,

2019

2018

2019

2018
Revenue

$
662,228

$
620,933

$
1,947,096

$
1,803,685
Net income

$
105,416

$
106,583

$
334,302

$
192,445
Basic earnings per share

$
0.74

$
0.75

$
2.34

$
1.35
Diluted earnings per share

$
0.73

$
0.74

$
2.32

$
1.34

~~The unaudited pro forma consolidated results for the three and nine months ended March 31, 2019 and March 31, 2018 reflect primarily the following pro forma pre-tax adjustments:~~

Net amortization expense related to the fair value of identifiable intangible assets acquired of $0.0 million and $3.1 million for the three months ended March 31, 2019 and 2018, respectively, and $1.3 million and $10.6 million for the nine months ended March 31, 2019 and 2018, respectively.

Net interest expense associated with debt that was issued to finance the acquisition of $0.0 million and $3.1 million for the three months ended March 31, 2019 and 2018, respectively, and $2.6 million and $9.7 million for the nine months ended March 31, 2019 and 2018, respectively.

~~Elimination of pre-tax acquisition-related costs incurred by ResMed and MatrixCare of $0.0 million and $16.7 million for the three and nine months ended March 31, 2019, respectively.~~

Net income tax expense of $0.0 million and $1.5 million for the three months ended March 31, 2019 and 2018, respectively, and $1.4 million and $5.9 million for the nine months ended March 31, 2019 and 2018, respectively.

~~Other acquisitions~~

~~During the nine months ended March 31,~~June 30, 2019, we ~~have~~also completed the following acquisitions:

On July 6, 2018, we completed the acquisition of 100% of the shares in Healthcarefirst Holding Company (“HealthcareFirst”), a provider of software solutions and services for home health and hospice agencies, for a total purchase consideration of $126.3 million.

~~On October 15, 2018, we completed the acquisition of 100% of the shares in HB Healthcare, a homecare provider in South Korea.~~

~~On December 11, 2018, we completed the acquisition of assets in Interactive Health Network, a provider of integrated clinical and financial management software solution for long-term care companies.~~

On December 13, 2018, we completed the acquisition of assets in Apacheta, a provider of cloud-based SaaS software that manages the medical equipment delivery process for home medical equipment dealers.

On January 6, 2019, we completed the acquisition of Propeller Health, a digital therapeutics company providing connected health solutions for people living with chronic obstructive pulmonary disease and asthma, for a total purchase consideration of $242.9 million, which adjusts for cash acquired and debt assumed at the time of acquisition.

~~Table~~On July 6, 2018, we completed the acquisition of ~~Contents~~100% of the shares in HEALTHCAREfirst Holding Company (“HEALTHCAREfirst”), a provider of software solutions and services for home health and hospice agencies, for a total purchase consideration of $126.3 million.

On October 15, 2018, we completed the acquisition of 100% of the shares in HB Healthcare, a homecare provider in South Korea.

~~PART I – FINANCIAL INFORMATION~~

~~Item 1~~

~~RESMED INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

On December 11, 2018, we completed the acquisition of assets in Interactive Health Network, a provider of integrated clinical and financial management software solution for long-term care companies.

On December 13, 2018, we completed the acquisition of assets in Apacheta, a provider of cloud-based SaaS software that manages the medical equipment delivery process for home medical equipment dealers.

On January 6, 2019, we completed the acquisition of Propeller Health, a digital therapeutics company providing connected health solutions for people living with chronic obstructive pulmonary disease and asthma, for a total purchase consideration of $242.9 million, which adjusts for cash acquired and debt assumed at the time of acquisition. We previously held a non-controlling interest in Propeller Health’s outstanding shares. As a result of the acquisition, we recognized a fair value gain of $1.9 million in other income during the year ended June 30, 2019 associated with the previous equity investment.

These acquisitions have been accounted for as business combinations using purchase accounting and are included in our consolidated financial statements from the acquisition dates. These acquisitions, individually and collectively, are not considered a material business combination and accordingly pro forma information is not provided. The acquisitions were funded by drawing on our existing credit facility and through cash on-hand.

We have ~~not~~ completed the purchase price allocation in relation to ~~these acquisitions and expect to complete this during the quarter ending June 30, 2019. We do not believe that the completion~~all of ~~this work will materially modify the preliminary purchase price allocation for~~ these acquisitions. The cost of the share acquisitions was allocated to the assets acquired and liabilities assumed based on estimates of their fair values at the date of acquisition. The goodwill recognized as part of these acquisitions, which is predominantly not deductible for tax purposes, mainly represents the synergies that are unique to our combined businesses and the potential for new products and services to be developed in the future. Goodwill from these acquisitions has been reflected in the Software as a Service segment except for the goodwill resulting from the HB Healthcare and Propeller Health acquisitions, which have been recorded in the Sleep and Respiratory Care segment.

The fair values of assets acquired and liabilities assumed of all other acquisitions described above, excluding MatrixCare, and the estimated useful lives of intangible assets acquired are as follows (in thousands):


	~~Preliminary~~Final		Intangible ‎assets - ‎useful life
Current assets	$	~~31,648~~	31,648
Property, plant and equipment		~~2,289~~	2,290
~~Trade names~~Deferred tax assets		~~10,838~~	5,211	~~10 years~~
~~Non-compete~~Trade names		~~1,000~~	7,828	3	10 years
~~Developed technology~~Non-compete		~~49,600~~	1,000		3 years
Developed technology		48,280		5 to 6 years
Customer relationships		~~48,052~~	53,712		5 to 15 years
Goodwill		~~312,246~~	287,469
Assets acquired	$	~~455,673~~	437,438
Current liabilities		~~(6,310)~~	(7,648)
Deferred revenue		~~(3,619)~~	(3,619)
Deferred tax liabilities		~~(21,774)~~	(2,367)
Debt assumed		~~(35,104)~~	(35,104)
Total liabilities assumed	$	~~(66,807)~~	(48,738)
Net assets acquired	$	~~388,866~~	388,700

During the ~~nine~~six months ended ~~March~~December 31, 2019 we ~~recorded $6.1 million in acquisition related~~did 0t record any material acquisition-related expenses and ~~did not have material acquisition related expenses~~ during the ~~nine months ended March 31, 2018.~~

~~Table of Contents~~

~~PART I – FINANCIAL INFORMATION~~

~~Item 1~~

~~RESMED INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~(14) Segment Information~~

~~We have determined that we have two operating segments, which are the Sleep and Respiratory Care segment and the SaaS segment. However, prior to the three~~six months ended December 31, 2018, we ~~had previously determined the SaaS segment was not material to our global operations in terms~~recorded acquisition-related expenses of revenue and profit, and therefore this had not been separately reported as a segment. Following our recent acquisitions, we have quantitatively and qualitatively reassessed our segment reporting and determined the SaaS segment is material to the group.$6.1 million.

We evaluate the performance of our segments based on net sales and income from operations. The accounting policies of the segments are the same as those described in note 1 of our consolidated financial statements included in our Form 10-K for the year ended June 30, 2018, except for revenue recognition, which is described in note - 1 Summary of Significant Accounting Policies. Segment net sales and segment income from operations do not include inter-segment profits.

~~The table below presents information about our reportable segments (in millions):~~

Three Months Ended
March 31,

Nine Months Ended
March 31,

2019

2018

2019

2018
Revenue by segment

Devices

$
336.5

$
328.2

$
1,003.2

$
951.5
Masks and other

245.8

223.5

707.8

648.5
Total Sleep and Respiratory Care

$
582.3

$
551.7

$
1,711.0

$
1,600.0
Software as a Service

82.2

39.9

194.9

116.6
Deferred revenue fair value adjustment*

(2.3)

-

(4.3)

-
Total Software as a Service

79.9

39.9

190.6

116.6
Total

$
662.2

$
591.6

$
1,901.6

$
1,716.6





Net operating profit by segment

Sleep and Respiratory Care

$
190.2

$
173.8

$
562.5

$
480.7
Software as a Service

20.5

14.1

52.7

40.3
Total

$
210.7

$
187.9

$
615.2

$
521.0





Reconciling items

Corporate costs

$
28.6

$
29.0

$
95.1

$
80.3
Amortization of acquired intangible assets

22.8

11.7

51.5

34.8
Restructuring expenses

-

10.9

-

10.9
Acquisition related expenses

-

-

6.1

-
Deferred revenue fair value adjustment*

2.3

-

4.3

-
Interest income

(0.4)

(4.2)

(2.0)

(13.7)
Interest expense

12.4

7.7

23.6

22.9
Loss attributable to equity method investments

6.0

-

9.4

-
Other, net

1.1

2.7

4.1

5.4
Income before income taxes

$
137.9

$
130.1

$
423.1

$
380.4

* The deferred revenue fair value adjustment is a purchase price accounting adjustment related to MatrixCare which was acquired on November 13, 2018.

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PART I – FINANCIAL INFORMATION	Item 2

RESMED INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Note Regarding ~~Forward-Looking~~Forward-Looking Statements

This report contains or may contain certain forward-looking statements and information that are based on the beliefs of our management as well as estimates and assumptions made by, and information currently available to, our management. All statements other than statements regarding historical facts are forward-looking statements. The words “believe,” “expect,” “intend,” “anticipate,” “will continue,” “will,” “estimate,” “plan,” “future” and other similar expressions, and negative statements of such expressions, generally identify forward-looking statements, including, in particular, statements regarding ~~projections~~expectations of future revenue or earnings, expenses, new product development, new product launches, new markets for our products, litigation, and tax outlook. These forward-looking statements are made in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements reflect the views of our management at the time the statements are made and are subject to a number of risks, uncertainties, estimates and assumptions, including, without limitation, and in addition to those identified in the text surrounding such statements, those identified in our annual report on Form 10-K for the fiscal year ended June 30, ~~2018~~2019 and elsewhere in this report.

In addition, important factors to consider in evaluating such forward-looking statements include changes or developments in healthcare reform, social, economic, market, legal or regulatory circumstances, changes in our business or growth strategy or an inability to execute our strategy due to changes in our industry or the economy generally, the emergence of new or growing competitors, the actions or omissions of third parties, including suppliers, customers, competitors and governmental authorities and various other factors. If any one or more of these risks or uncertainties materialize, or underlying estimates or assumptions prove incorrect, actual results may vary significantly from those expressed in our forward-looking statements, and there can be no assurance that the forward-looking statements contained in this report will in fact occur.

Before deciding to purchase, hold or sell our common stock, you should carefully consider the risks described in our annual report on Form 10-K for the fiscal year ended June 30, ~~2018,~~2019, in addition to the other cautionary statements and risks described elsewhere in this report and in our other filings with the Securities and Exchange Commission (“SEC”), including our subsequent reports on Forms 10-Q and 8-K. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business. If any of these known or unknown risks or uncertainties actually occurs with material adverse effects on us, our business, financial condition and results of operations could be seriously harmed. In that event, the market price for our common stock will likely decline and you may lose all or part of your investment.

‎

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PART I – FINANCIAL INFORMATION	Item 2

RESMED INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The following is an overview of our results of operations for the three and ~~nine~~six months ended ~~March~~December 31, 2019. Management’s discussion and analysis of financial condition and results of operations is intended to help the reader understand ~~the~~our results of operations and financial ~~condition of ResMed Inc.~~condition. Management’s discussion and analysis is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and notes included in this report.

We are a global leader in the development, manufacturing, distribution and marketing of medical devices and cloud-based software applications that diagnose, treat and manage respiratory disorders, including sleep disordered breathing (“SDB”), chronic obstructive pulmonary disease, neuromuscular disease and other chronic diseases. SDB includes obstructive sleep apnea and other respiratory disorders that occur during sleep. Our products and solutions are designed to improve patient quality of life, reduce the impact of chronic disease and lower healthcare costs as global healthcare systems continue to drive a shift in care from hospitals to the home and lower cost settings. Our cloud-based software digital health applications, along with our devices, are designed to provide connected care to improve patient outcomes and efficiencies for our customers.

Since the development of continuous positive airway pressure therapy, we have expanded our business by developing or acquiring a number of products and solutions for a broader range of respiratory disorders including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, portable oxygen concentrators and cloud-based software informatics solutions to manage patient outcomes and customer and provider business processes. Our growth has been fueled by geographic expansion, our research and product development efforts, acquisitions and an increasing awareness of SDB and respiratory conditions like chronic obstructive pulmonary disease as significant health concerns.

We are committed to ongoing investment in research and development and product enhancements. During the three months ended ~~March~~December 31, 2019, we invested ~~$47.6~~$49.9 million on research and development activities with a continued focus on the development and commercialization of new, innovative products and solutions that improve patient outcomes, create efficiencies for our customers and help physicians and providers better manage chronic disease and lower healthcare costs. Due to multiple acquisitions, including Brightree in April 2016, HEALTHCAREfirst in July 2018 and MatrixCare in November 2018, our operations now include out-of-hospital software platforms designed to support the professionals and caregivers who help people stay healthy in the home or care setting of their choice. These platforms comprise our SaaS business. These products, our cloud-based remote monitoring and therapy management system, and a robust product pipeline, should continue to provide us with a strong platform for future growth.

We have determined that we have two operating segments, which are the sleep and respiratory disorders sector of the medical device industry (“Sleep and Respiratory Care”) and the supply of business management software-as-a-service to out-of-hospital health providers (“SaaS”).

During the three months ended ~~March~~December 31, 2019, our net revenue increased by ~~12%~~13% compared to the three months ended ~~March~~December 31, 2018. Gross margin was ~~59.2%~~58.0% for the three months ended ~~March~~December 31, 2019 compared to ~~58.2%~~57.5% for the three months ended ~~March~~December 31, 2018. Diluted earnings per share for the three months ended ~~March~~December 31, 2019 was ~~$0.73~~$1.10 per share, compared to ~~$0.76~~$0.86 per share for the three months ended ~~March~~December 31, 2018.

At ~~March~~December 31, 2019, our cash and cash equivalents totaled ~~$146.5~~$204.1 million, our total assets were ~~$4.1~~$4.4 billion and our stockholders’ equity was ~~$2.0~~$2.3 billion.

In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we provide certain financial information on a “constant currency basis”, which is in addition to the actual financial information presented. In order to calculate our constant currency information, we translate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period. However, constant currency measures should not be considered in isolation or as an alternative to U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP.

In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present the following non-GAAP measures as a complement to financial results prepared in accordance with U.S. GAAP: gross profit and gross margin. The non-GAAP financial measures presented herein should not be considered in isolation or as a substitute for operating income and net income prepared in accordance with GAAP.

‎

Table of Contents


PART I – FINANCIAL INFORMATION	Item 2

RESMED INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net Revenue for the Three Months Ended ~~March~~December 31, 2019

Net revenue for the three months ended ~~March~~December 31, 2019 increased to ~~$662.2~~$736.2 million from ~~$591.6~~$651.1 million for the three months ended ~~March~~December 31, 2018, an increase of ~~$70.6~~$85.1 million or ~~12%~~13% (a ~~15%~~14% increase on a constant currency basis). The following table summarizes our net revenue disaggregated by segment, product and region for the three months ended ~~March~~December 31, 2019 compared to ~~March~~December 31, 2018 (in millions):


	Three Months Ended March 31,								Three Months Ended December 31,
	2019		2018		% Change		Constant Currency*		2019		2018		% Change		Constant Currency*
U.S., Canada and Latin America
Devices	$	181.3	$	168.1	8	%			$	203.5	$	186.5	9	%
Masks and other		168.7		149.4	13					204.5		172.0	19
Total Sleep and Respiratory Care	$	350.0	$	317.5	10				$	408.0	$	358.5	14
Software as a Service		79.9		39.9	101					86.7		63.2	37
Total	$	429.9	$	357.4	20				$	494.7	$	421.7	17
Combined Europe, Asia and other markets
Devices	$	155.2	$	160.1	(3)	%	3	%	$	162.3	$	156.2	4	%	6	%
Masks and other		77.1		74.1	4		12			79.2		73.2	8		11
Total Sleep and Respiratory Care	$	232.3	$	234.2	(1)		6		$	241.5	$	229.4	5		8
Global revenue
Devices	$	336.5	$	328.2	3	%	6	%	$	365.8	$	342.7	7	%	8	%
Masks and other		245.8		223.5	10		13			283.7		245.2	16		16
Total Sleep and Respiratory Care	$	582.3	$	551.7	6		9		$	649.5	$	587.9	10		11
Software as a Service		79.9		39.9	101		101			86.7		63.2	37		37
Total	$	662.2	$	591.6	12		15		$	736.2	$	651.1	13		14

*Constant currency numbers exclude the impact of movements in international currencies.

Sleep and Respiratory Care

Net revenue for the three months ended ~~March~~December 31, 2019 was ~~$582.3~~$649.5 million, an increase of ~~6% over~~10% compared to net revenue for the ~~prior year quarter.~~three months ended December 31, 2018. Movements in international currencies against the U.S. dollar negatively impacted net revenues by approximately ~~$17.1~~$5.5 million for the three months ended ~~March~~December 31, 2019. Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended ~~March~~December 31, 2019 increased ~~by 9%~~11% compared to the three months ended ~~March~~December 31, 2018. The increase in net revenue was primarily attributable to an increase in unit sales of our devices and masks.

Net revenue in U.S., Canada and Latin America for the three months ended ~~March~~December 31, 2019 increased to ~~$350.0~~$408.0 million from ~~$317.5~~$358.5 million for the three months ended ~~March~~December 31, 2018, an increase of ~~$32.5~~$49.5 million or ~~10%~~14%. The increase iswas primarily due to an increase in unit sales of our devices ~~masks~~ and ~~accessories, partially offset by a decline in average selling prices.~~masks.

Net revenue in combined Europe, Asia and other markets ~~decreased~~increased for the three months ended ~~March~~December 31, 2019 to ~~$232.3~~$241.5 million from ~~$234.2~~$229.4 million for the three months ended ~~March~~December 31, 2018, ~~a decrease~~an increase of ~~$1.9~~$12.1 million or ~~1% (a 6%~~5% (an 8% increase on a constant currency basis). The constant currency increase in sales in combined Europe, Asia and other markets ~~predominantly reflects~~was primarily due to an increase in unit sales of our devices and masks.

Net revenue from devices for the three months ended December 31, 2019 increased to $365.8 million from $342.7 million for the three months ended December 31, 2018, an increase of $23.1 million or 7%, including an increase of 9% in the United States, Canada and Latin America and an increase of 4% in combined Europe, Asia and other markets (a 6% increase on a constant currency basis). Excluding the impact of foreign currency movements, device sales for the three months ended December 31, 2019 increased by 8%.

Net revenue from masks and ~~accessories, partially offset~~other for the three months ended December 31, 2019 increased to $283.7 million from $245.2 million for the three months ended December 31, 2018, an increase of $38.5 million or 16%, including an increase of 19% in the United States, Canada and Latin America and an increase of 8% in combined Europe, Asia and other markets (an 11% increase on a constant currency basis). Excluding the impact of foreign currency movements, masks and other sales increased by ~~a decline in unit sales of devices and average selling prices.~~16%, compared to the three months ended December 31, 2018.

Software as a Service

Net revenue from our SaaS business for the three months ended ~~March~~December 31, 2019 was ~~$79.9~~$86.7 million, an increase of ~~101%~~37% compared to the three months ended ~~March~~December 31, 2018. The increase was predominantly due to ~~our acquisitions of~~revenue attributable to MatrixCare, ~~and HealthcareFirst,~~ which ~~were~~we acquired on November 13, ~~2018 and July 6, 2018, respectively, and MatrixCare contributed $37.3 million in net revenue for the three months ended March 31, 2019.~~2018.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net Revenue for ~~Nine~~the Six Months Ended ~~March~~December 31, 2019

Net revenue for the ~~nine~~six months ended ~~March~~December 31, 2019 increased to ~~$1,901.6~~$1,417.2 million from ~~$1,716.6~~$1,239.4 million for the ~~nine~~six months ended ~~March~~December 31, 2018, an increase of ~~$185.0~~$177.8 million or ~~11%~~14% (a ~~12%~~15% increase on a constant currency basis). The following table summarizes our net revenue disaggregated by segment, product and region for the ~~nine~~six months ended ~~March~~December 31, 2019 compared to ~~March~~December 31, 2018 (in millions):


	Nine Months Ended March 31,								Six Months Ended December 31,
	2019		2018		% Change		Constant Currency*		2019		2018		% Change		Constant Currency*
U.S., Canada and Latin America
Devices	$	540.2	$	499.7	8	%			$	390.4	$	358.9	9	%
Masks and other		494.8		443.7	12					387.8		326.1	19
Total Sleep and Respiratory Care	$	1,035.0	$	943.4	10				$	778.2	$	685.0	14
Software as a Service		190.6		116.6	63					173.6		110.7	57
Total	$	1,225.6	$	1,060.0	16				$	951.8	$	795.7	20
Combined Europe, Asia and other markets
Devices	$	463.0	$	451.8	2	%	6	%	$	314.2	$	307.9	2	%	5	%
Masks and other		213.0		204.8	4		9			151.2		135.8	11		15
Total Sleep and Respiratory Care	$	676.0	$	656.6	3		7		$	465.4	$	443.7	5		8
Global revenue
Devices	$	1,003.2	$	951.5	5	%	7	%	$	704.6	$	666.8	6	%	7	%
Masks and other		707.8		648.5	9		11			539.0		461.9	17		18
Total Sleep and Respiratory Care	$	1,711.0	$	1,600.0	7		9		$	1,243.6	$	1,128.7	10		11
Software as a Service		190.6		116.6	63		63			173.6		110.7	57		57
Total	$	1,901.6	$	1,716.6	11		12		$	1,417.2	$	1,239.4	14		15

*Constant currency numbers exclude the impact of movements in international currencies.

Sleep and Respiratory Care

Net revenue for the ~~nine~~six months ended ~~March~~December 31, 2019 was ~~$1,711.0~~$1,243.6 million, an increase of ~~7% over~~10% compared to net revenue for the ~~prior year.~~six months ended December 31, 2018. Movements in international currencies against the U.S. dollar negatively impacted net ~~revenue~~revenues by approximately ~~$28.8~~$14.5 million ~~during~~for the ~~nine~~six months ended ~~March~~December 31, 2019. Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the ~~nine~~six months ended ~~March~~December 31, 2019 increased 9%by 11% compared to the ~~nine~~six months ended ~~March~~December 31, 2018. The increase in net revenue was primarily attributable to an increase in unit sales of our devices and masks.

~~For~~Net revenue in U.S., Canada and Latin America for the ~~nine~~six months ended ~~March~~December 31, 2019 ~~net revenue~~increased to $778.2 million from ~~sales of devices increased by 5% compared to~~$685.0 million for the ~~nine~~six months ended ~~March~~December 31, 2018, ~~driven by~~ an increase of $93.2 million or 14%. The increase was primarily due to an increase in unit sales of our devices and masks.

Net revenue in combined Europe, Asia and other markets increased for the six months ended December 31, 2019 to $465.4 million from $443.7 million for the six months ended December 31, 2018, an increase of $21.7 million or 5% (an 8% increase on a constant currency basis). The constant currency increase in ~~North~~sales in combined Europe, Asia and other markets was primarily due to an increase in unit sales of our devices and masks.

Net revenue from devices for the six months ended December 31, 2019 increased to $704.6 million from $666.8 million for the six months ended December 31, 2018, an increase of $37.8 million or 6%, including an increase of 9% in the United States, Canada and Latin America and an increase of 2% in combined Europe, Asia and other markets (a 6%5% increase inon a constant currency ~~terms)~~basis). ~~For~~Excluding the ~~nine~~impact of foreign currency movements, device sales for the six months ended ~~March~~December 31, 2019 ~~net~~increased by 7%.

Net revenue from masks and other ~~accessories increased by 9% compared to~~for the ~~nine~~six months ended ~~March~~December 31, 2019 increased to $539.0 million from $461.9 million for the six months ended December 31, 2018, ~~driven by~~ an increase of ~~12%~~$77.1 million or 17%, including an increase of 19% in ~~North~~the United States, Canada and Latin America and ~~a 4%~~an increase of 11% in combined Europe, Asia and other markets (a 9%15% increase inon a constant currency ~~terms)~~basis). Excluding the impact of foreign currency movements, masks and other sales increased by 18%, compared to the six months ended December 31, 2018.

Software as a Service

Net revenue from our SaaS business for the ~~nine~~six months ended ~~March~~December 31, 2019 was ~~$190.6~~$173.6 million, an increase of ~~63%~~57% compared to the ~~nine~~six months ended ~~March~~December 31, 2018. The increase was predominantly due to ~~our acquisitions of~~revenue attributable to MatrixCare ~~and HealthcareFirst,~~ which ~~were~~was acquired on November 13, ~~2018~~2018.

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Management’s Discussion and ~~July 6, 2018, respectively,~~Analysis of Financial Condition and ~~contributed $66.7 million~~Results of Operations

Gross Profit and Gross Margin

The amortization of acquired intangible assets relating to developed technology was adjusted within our condensed consolidated statements of income for the ~~nine~~three and six months ended ~~March~~December 31, ~~2019.~~2019 and 2018, from operating expenses to cost of sales. As a result, gross profit now includes amortization of acquired intangible assets relating to cost of sales and operating expenses are reduced by this amount. There was no impact on income from operations, income before taxes or net income, as a result of this reclassification. The adjustments to the previously reported amounts are not material.

~~Gross Profit~~The table below presents a reconciliation of gross profit as previously reported adjusted for the amortization of acquired intangible assets now included in cost of sales (in thousands):


	Three Months Ended		Six Months Ended
	December 31, 2018
Gross profit as previously reported	$	383,731	$	726,824
Amortization of intangible assets related to cost of sales		(9,199)		(16,154)
Gross profit	$	374,532	$	710,670

Gross profit increased for the three months ended ~~March~~December 31, 2019 to ~~$391.9~~$427.1 million from ~~$344.3~~$374.5 million for the three months ended ~~March~~December 31, 2018, an increase of ~~$47.6~~$52.6 million or 14%. Gross margin, which is gross profit as a percentage of net revenue, for the three months ended ~~March~~December 31, 2019 was ~~59.2%~~58.0% compared to ~~58.2%~~57.5% for the three months ended ~~March~~December 31, 2018.

Gross profit increased for the ~~nine~~six months ended ~~March~~December 31, 2019 to ~~$1,118.7~~$818.7 million from ~~$999.7~~$710.7 million for the ~~nine~~six months ended ~~March~~December 31, 2018, an increase of ~~$119.0~~$108.1 million or ~~12%~~15%. Gross ~~profit as a percentage of net revenue~~margin for the ~~nine~~six months ended ~~March~~December 31, 2019 was ~~58.8%~~57.8% compared to ~~58.2%~~57.3% for the ~~nine~~six months ended ~~March~~December 31, 2018.

The increase in gross ~~margins~~margin for the three and ~~nine~~six months ended ~~March~~December 31, 2019 and 2018 was primarily due to a favorable product mix, manufacturing and procurement efficiencies and a favorable impact from our MatrixCare acquisition, ~~and favorable product mix,~~ partially offset by declines in average selling prices.

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~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased for the three months ended ~~March~~December 31, 2019 to ~~$164.5~~$171.4 million from ~~$147.9~~$161.6 million for the three months ended ~~March~~December 31, 2018, an increase of ~~$16.6~~$9.8 million or ~~11%~~6%. Selling, general and administrative expenses were favorably impacted by the movement of international currencies against the U.S. dollar, which decreased our expenses by approximately ~~$7.9~~$2.4 million, as reported in U.S. dollars. Excluding the impact of foreign currency movements, selling, general and administrative expenses for the three months ended ~~March~~December 31, 2019 increased by ~~17%~~8% compared to the three months ended ~~March~~December 31, 2018. ~~Selling, general and administrative expenses, as~~As a percentage of net revenue, selling, general and administrative expenses were 23.3% for the three months ended December 31, 2019, compared to 24.8% for the three months ended ~~March~~December 31, ~~2019, compared to 25.0% for the three months ended March 31,~~ 2018.

The constant currency increase in selling, general and administrative expenses was primarily due to additional expenses associated with the consolidation of recent acquisitions. Excluding the incremental selling, general and administrative expenses attributed to our recent acquisitions, selling, general and administrative expenses for the three months ended ~~March~~December 31, 2019 increased by 6%2% in constant currency terms.

Selling, general and administrative expenses increased for the ~~nine~~six months ended ~~March~~December 31, 2019 to ~~$473.4~~$338.9 million from ~~$443.6~~$308.9 million for the ~~nine~~six months ended ~~March~~December 31, 2018 an increase of ~~$29.9~~$30.0 million or 7%10%. The selling, general and administrative expenses were favorably impacted by the movement of international currencies against the U.S. dollar, which decreased our expenses by approximately ~~$13.2~~$5.8 million, as reported in U.S. dollars. Excluding the impact of foreign currency movements, selling, general and administrative expenses for the ~~nine~~six months ended ~~March~~December 31, 2019 increased by ~~10%~~12% compared to the ~~nine~~six months ended ~~March~~December 31, 2018. ~~Selling, general and administrative expenses, as~~As a percentage of net revenue, selling, general and administrative expenses were ~~24.9%~~23.9% for the ~~nine~~six months ended ~~March~~December 31, 2019, compared to ~~25.8%~~24.9% for the ~~nine~~six months ended ~~March~~December 31, 2018.

The constant currency increase in selling, general and administrative expenses was primarily due to additional expenses associated with the consolidation of recent acquisitions. Excluding the incremental selling, general and administrative expenses attributed to our recent acquisitions, selling, general and administrative expenses for the ~~nine~~six months ended ~~March~~December 31, 2019 increased by 5%4% in constant currency terms.

Research and Development Expenses

Research and development expenses increased for the three months ended ~~March~~December 31, 2019 to ~~$47.6~~$49.9 million from ~~$37.4~~$43.1 million for the three months ended ~~March~~December 31, 2018, an increase of ~~$10.2~~$6.8 million, or ~~27%~~16%. Research and development expenses were favorably impacted by the movement of international currencies against the U.S. dollar, which decreased our expenses by approximately ~~$1.8~~$0.9 million for the three months ended ~~March~~December 31, 2019, as reported in U.S. dollars. Excluding the impact of foreign currency movements, research and

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

development expenses increased by ~~32%~~18% compared to the three months ended ~~March~~December 31, 2018. ~~Research and development expenses, as~~As a percentage of net revenue, research and development expenses were ~~7.2%~~6.8% for the three months ended ~~March~~December 31, 2019, compared to ~~6.3%~~6.6% for the three months ended ~~March~~December 31, 2018.

The increase in research and development expenses in constant currency terms was primarily due to additional expenses associated with the consolidation of recent acquisitions. Excluding the incremental research and development expenses attributed to our recent acquisitions, research and development expenses for the three months ended ~~March~~December 31, 2019 increased by 6%4% in constant currency terms.

Research and development expenses increased for the ~~nine~~six months ended ~~March~~December 31, 2019 to ~~$129.5~~$98.0 million from ~~$115.5~~$81.9 million for the ~~nine~~six months ended ~~March~~December 31, 2018, an increase of ~~$14.0~~$16.1 million, or ~~12%~~20%. ~~The research~~Research and development expenses were favorably impacted by the movement of international currencies against the U.S. dollar, which decreased our expenses by approximately ~~$4.7~~$2.1 million for the ~~nine~~six months ended ~~March~~December 31, 2019, as reported in U.S. dollars. Excluding the impact of foreign currency movements, ~~our~~ research and development expenses increased by ~~16%~~22% compared to the ~~nine~~six months ended ~~March~~December 31, 2018. ~~Research and development expenses, as~~As a percentage of net revenue, research and development expenses were ~~6.8%~~6.9% for the ~~nine~~six months ended ~~March~~December 31, 2019, compared to 6.6% for the six months ended ~~March~~December 31, ~~2018, compared to 6.7% for the nine months ended March 31,~~ 2018.

The increase in research and development expenses in constant currency terms was primarily due to additional expenses associated with the consolidation of recent acquisitions. Excluding the incremental research and development expenses attributed to our recent acquisitions, research and development expenses for the ~~nine~~six months ended ~~March~~December 31, 2019 increased by 4%3% in constant currency terms.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets for the three months ended ~~March~~December 31, 2019 totaled ~~$22.8~~$20.6 million compared to ~~$11.7~~$15.8 million for the three months ended ~~March~~December 31, 2018. Amortization of acquired intangible assets for the ~~nine~~six months ended ~~March~~December 31, 2019 totaled ~~$51.5~~$39.1 million compared to ~~$34.8~~$28.7 million for the ~~nine~~six months ended ~~March~~December 31, 2018. The increase in amortization expense was attributable to our recent acquisitions, in particular MatrixCare ~~HealthcareFirst~~ and Propeller Health.


	Three Months Ended		Six Months Ended
	December 31, 2018
Amortization of intangible assets related to cost of sales	$	9,199	$	16,154
Amortization of intangible assets related to operating expenses		6,641		12,553
Total	$	15,840	$	28,707

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~~RESMED INC. AND SUBSIDIARIES~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Total Other Income (Loss), Net

Total other income (loss) ~~income,~~, net for the three months ended ~~March~~December 31, 2019 was a loss of ~~$19.0~~$19.1 million compared to a loss of ~~$6.2~~$10.8 million for the three months ended ~~March~~December 31, 2018. The increase ~~in loss~~ was due ~~primarily~~ to an increase in interest expense to ~~$12.4 million and a decrease in interest income to $0.5~~$10.2 million for the three months ended ~~March~~December 31, 2019 compared to ~~interest expense of $7.7 million and interest income of $4.2~~$7.5 million for the three months ended ~~March~~December 31, 2018.

Total other (loss) income, net for the nine months ended March 31, 2019 was a loss of $35.1 million compared to a loss of $14.6 million for the nine months ended March 31, 2018. The increase in loss was due primarily to a reduction in interest income to $2.0 million for the nine months ended March 31, 2019 compared to interest income to $13.7 million for the nine months ended March 31, 2018.

We also recorded losses attributable to equity method investments ~~or impairments of investments~~ for the three ~~and nine~~ months ended ~~March~~December 31, 2019 of ~~$11.8~~$6.9 million ~~and $18.2 million respectively,~~ compared to ~~$1.4 million and $3.6~~$3.4 million for the three ~~and nine~~ months ended ~~March~~December 31, 2018. The losses relate to our joint venture with Verily and is accounted for using the equity method, whereby we recognize our share of the joint venture’s losses.

Total other income (loss), net for the six months ended December 31, 2019 was a loss of $39.6 million compared to a loss of $16.1 million for the six months ended December 31, 2018. The increase was due to an increase in interest expense to $21.2 million for the six months ended December 31, 2019 compared to $11.2 million for the six months ended December 31, 2018. We also recorded losses attributable to equity method investments for the six months ended December 31, 2019 of $13.8 million compared to $3.4 million for the six months ended December 31, 2018. The losses relate to our joint venture with Verily and is accounted for using the equity method, whereby we recognize our share of the joint venture’s losses.

Income Taxes

Our effective income tax rate for the three and ~~nine~~six months ended ~~March~~December 31, 2019 was ~~23.6%~~10.2% and ~~20.6%~~14.8%, respectively, as compared to ~~15.4%~~14.8% and ~~45.9%~~19.2% for the three and ~~nine~~six months ended ~~March 31, 2018, respectively.~~

On December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118 (“SAB 118”), Income Tax Accounting Implications of the Tax Cuts and Jobs Act directing taxpayers to consider the impact of the U.S. legislation as “provisional” when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. Effective December 31, 2018, ~~the accounting relating~~respectively. Our effective tax rate was impacted by windfall tax benefits related to the ~~impact~~vesting or settlement of ~~U.S. legislation was no longer considered provisional. However, further adjustments could be required as a result of future legislation, amended~~employee share-based awards, which reduced our income tax ~~returns, or tax examinations of the years impacted~~expenses by ~~the calculation. During the three months ended March 31, 2019, we recorded additional tax expense of $3.3~~$20.3 million ~~which related to final treasury regulations issued~~ and ~~temporary guidance published during the quarter and $4.5~~$22.1 million, ~~during the nine months ended March 31, 2019. During~~for the three and ~~nine~~six months ended ~~March~~December 31, 2019, respectively, as compared to $12.9 million and $13.4 million for the three and six months ended December 31, 2018, ~~we recorded additional tax expense of $5.4 million and $132.2 million, respectively, relating to recent changes in U.S. tax legislation.~~

respectively. Our effective ~~income~~ tax rate was also affected by changes in the geographic mix of our earnings.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Singapore ~~and Malaysia~~ operations operate under certain tax holidays and tax incentive programs that will expire in whole or in part at various dates through June 30, 2030. As a result of recent changes in U.S. tax ~~legislation,~~laws, we treated all non-U.S. historical earnings as taxable during the year ended June 30, 2018. Therefore, future ~~repatriation~~repatriations of cash held by our non-U.S. subsidiaries will generally not be subject to U.S. federal ~~tax, if repatriated.~~income tax.

Finally, in connection with the audit by the Australian ~~Taxation~~Tax Office ~~(“ATO”~~(the “ATO”) for the tax years 2009 to 2013, we received Notices of Amended Assessments in March 2018. Based on these assessments, the ATO asserted that we owe $151.7 million in additional income tax and $38.4 million in accrued interest, of which $75.9 million was paid in April 2018 under a payment arrangement with the ATO. At September 30, 2018, we have recorded a receivable in prepaid taxes and other non-current assets for the amount paid as we ultimately expect this will be refunded by the ATO. In June 2018, we received a notice from the ATO claiming penalties of 50% of the additional income tax that was assessed or $75.9 million. We do not agree with the ATO’s assessments and continue to believe we are more likely than not to be successful in defending our position. ~~We are~~The ATO is currently ~~under audit by the ATO for the~~auditing tax years 2014 to ~~2017.~~2018.

Net Income and Earnings per Share

As a result of the factors above, our net income for the three months ended ~~March~~December 31, 2019 was ~~$105.4~~$160.6 million compared to net income of ~~$110.1~~$124.6 million for the three months ended ~~March~~December 31, 2018, ~~a decrease~~an increase of 4%29% over the three months ended ~~March~~December 31, 2018. Our net income for the ~~nine~~six months ended ~~March~~December 31, 2019 was ~~$335.8~~$280.7 million compared to net income of ~~$205.8~~$230.4 million for the ~~nine~~six months ended ~~March~~December 31, 2018, an increase of ~~63%~~22% over the ~~nine~~six months ended ~~March~~December 31, 2018.

Our diluted earnings per share for the three months ended ~~March~~December 31, 2019 were ~~$0.73~~$1.10 per diluted share compared to ~~$0.76~~$0.86 for the three months ended ~~March~~December 31, 2018. Our diluted earnings per share for the ~~nine~~six months ended ~~March~~December 31, 2019 were ~~$2.33~~$1.93 per diluted share compared to ~~$1.43~~$1.60 for the ~~nine~~six months ended ~~March~~December 31, ~~2018~~2018.

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~~RESMED INC. AND SUBSIDIARIES~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Liquidity and Capital Resources

As of ~~March~~December 31, 2019 and June 30, ~~2018,~~2019, we had cash and cash equivalents of ~~$146.5~~$204.1 million and ~~$188.7~~$147.1 million, respectively. Working capital was ~~$639.7~~$800.4 million and ~~$554.5~~$589.4 million at ~~March~~December 31, 2019 and June 30, ~~2018,~~2019, respectively.

As of ~~March~~December 31, 2019, we had $1.3 billion of borrowings compared to $1.3 billion of borrowings at June 30, 2019.

As of December 31, 2019 and June 30, ~~2018,~~2019, our cash and cash equivalent balances held within the United States amounted to ~~$50.9~~$68.3 million and ~~$36.9~~$33.6 million, respectively. Our remaining cash and cash equivalent balances at ~~March~~December 31, 2019 and June 30, ~~2018,~~2019, were ~~$95.6~~$135.8 million and ~~$151.8~~$113.5 million, respectively. Our cash and cash equivalent balances are held at highly rated financial institutions.

During the year ended June 30, 2018, as a result of changes in U.S. ~~legislation,~~tax laws, we treated all non-U.S. historical earnings as taxable, ~~for U.S. federal tax purposes,~~ which resulted in additional tax expense ~~that is~~of $126.9 million which was payable over the ~~next seven~~proceeding eight years. As of March 31, 2019, we recorded $12.0 million and $126.0 million in income taxes payable and long-term income taxes payable, respectively, in relation to this change in U.S. legislation. Future repatriationTherefore, future repatriations of cash held by our non-U.S. subsidiaries will generally not be subject to U.S. federal income tax. On June 14, 2019, the U.S. Treasury Department issued final and temporary regulations relating to the repatriation of non-U.S. earnings, which would subject certain amounts of non-U.S. earnings to U.S. taxation upon repatriation.

Our non-U.S. earnings are indefinitely reinvested, and therefore, we do not provide for U.S. income tax ~~if repatriated. As~~on these earnings. In the event we ~~evaluate~~were to provide for such taxes, we would recognize deferred taxes of approximately $201.2 million in U.S. federal deferred income taxes and $5.3 million in U.S. state deferred income taxes in the ~~impact of U.S. tax legislation and the future cash needs of our global operations, we may revise the amount of foreign earnings considered to be permanently reinvested outside the United States.~~consolidated financial statements.

Inventories at ~~March~~December 31, 2019 were ~~$319.9~~$377.8 million, an increase of ~~$51.2~~$28.1 million or ~~19%~~8% from the June 30, ~~2018~~2019 balance of ~~$268.7~~$349.6 million. The increase in inventories was required to support our revenue growth.

Accounts receivable at ~~March~~December 31, 2019 were ~~$511.4~~$528.0 million, ~~an increase~~a decrease of ~~$27.7~~$0.5 million or 6%0% compared to the June 30, ~~2018,~~2019, balance of ~~$483.7~~$528.5 million. ~~The increase in accounts receivable is primarily due to the impact of recent acquisitions.~~ Accounts receivable days outstanding of 6964 days at ~~March~~December 31, 2019, were ~~the same as~~lower than days outstanding of 67 days at June 30, ~~2018.~~2019. Our allowance for doubtful accounts as a percentage of total accounts receivable at ~~March~~December 31, 2019, was 4.8%, compared to ~~3.8%~~4.5% at June 30, ~~2018.~~ 2019.

Effective, July 1, 2019, we adopted the Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (Topic 842). As of December 31, 2019 and, in accordance with the new guidance, we have recognized a right-of-use asset (“ROU”) of $96.7 million and a lease liability of $99.5 million on the balance sheet for all operating leases, other than those that meet the definition of a short-term lease.

During the ~~nine~~six months ended ~~March~~December 31, 2019, we generated cash of ~~$317.2~~$232.3 million from operations compared to ~~$375.6~~$177.6 million for the ~~nine~~six months ended ~~March~~December 31, 2018. The ~~lower level of~~increase in cash generated from operations during the ~~nine~~six months ended ~~March~~December 31, 2019, as compared to the six months ended December 31, 2018 was primarily due to the increase in ~~income tax payments which increased to $211.8 million during the nine months ended March 31, 2019 from $75.1 million during the nine months ended March 31, 2018.~~operating profit. Movements in foreign currency exchange rates during the ~~nine~~six months ended ~~March~~December 31, 2019, had the effect of ~~decreasing~~increasing our cash and cash equivalents by ~~$5.8~~$0.8 million, as reported in U.S. dollars.

Table of Contents


PART I – FINANCIAL INFORMATION	Item 2

RESMED INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

We have temporarily suspended our share repurchase program due to recent acquisitions. Accordingly, we did not repurchase any shares during the three and six months ended ~~March~~December 31, 2019. During the ~~nine~~six months ended ~~March~~December 31, ~~2019,~~2018, we repurchased 200,000 shares of our common stock at an aggregate purchase price of $22.8 million under our share repurchase ~~program compared to 300,000 shares of our common stock at an aggregate purchase price of $27.9 million during the nine months ended March 31, 2018.~~program.In addition, during the ~~nine~~six months ended ~~March~~December 31, 2019 and 2018, we paid dividends to holders of our common stock totaling ~~$158.6~~$112.2 million and ~~$149.5~~$105.6 million, respectively.

Capital expenditures for the ~~nine~~six months ended ~~March~~December 31, 2019 and 2018, amounted to ~~$46.5~~$47.8 million and ~~$45.0~~$31.4 million, respectively. The capital expenditures for the ~~nine~~six months ended ~~March~~December 31, 2019, primarily reflected investment in production tooling, leasehold improvements, equipment and machinery, and computer hardware and software. At ~~March~~December 31, 2019, our balance sheet reflects net property, plant and equipment of ~~$382.5~~$408.4 million compared to ~~$386.6~~$387.5 million at June 30, ~~2018.~~ 2019.

Contractual Obligations

Details of contractual obligations at ~~March~~December 31, 2019, are as follows (in thousands):



			Payments Due by March 31,														Payments Due by December 31,
In $000’s	Total		2020		2021		2022		2023		2024		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter
Debt		1,339,367		12,352		12,015		12,000		12,000		1,291,000		-	$	1,304,000	$	12,000	$	12,000	$	12,000	$	768,000	$	-	$	500,000
Interest on debt		194,297		48,374		47,920		47,478		47,035		3,490		-		232,276		42,013		42,013		42,013		30,187		16,725		59,325
Operating leases		96,796		24,521		17,686		12,544		9,627		8,334		24,084		129,201		23,882		19,932		16,194		12,617		10,626		45,950
Capital leases		41		41		-		-		-		-		-
Purchase obligations		306,544		304,960		1,584		-		-		-		-		326,012		325,807		113		92		-		-		-
Total	$	1,937,045	$	390,248	$	79,205	$	72,022	$	68,662	$	1,302,824	$	24,084	$	1,991,489	$	403,702	$	74,058	$	70,299	$	810,804	$	27,351	$	605,275

Details of other commercial commitments at ~~March~~December 31, 2019, are as follows (in thousands):



			Amount of Commitment Expiration Per Period														Amount of Commitment Expiration Per Period
In $000’s	Total		2020		2021		2022		2023		2024		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter
Standby letter of credit	$	10,609	$	3,637	$	136	$	12	$	-	$	-	$	6,824	$	12,945	$	3,773	$	11	$	-	$	353	$	-	$	8,808
Guarantees*		6,629		45		141		19		20		15		6,389		6,730		175		23		14		22		21		6,475
Total	$	17,238	$	3,682	$	277	$	31	$	20	$	15	$	13,213	$	19,675	$	3,948	$	34	$	14	$	375	$	21	$	15,283

* The above guarantees mainly relate to requirements under contractual obligations with insurance companies transacting with our German subsidiaries and guarantees provided under our facility leasing obligations.

On April 17, 2018, we entered into an amended and restated credit agreement ~~(the~~(as amended from time to time, the “Revolving Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger, joint book runner, swing line lender and letter of credit issuer, and Westpac Banking Corporation, as syndication agent, joint lead arranger and joint book runner. The ~~Amended and Restated~~Revolving Credit Agreement, among other things, provided a senior unsecured revolving credit facility of $800.0 million, with an uncommitted option to increase the revolving credit facility by an additional $300.0 million.

On November 5, 2018, we entered into a first amendment to the Revolving Credit Agreement to, among other things, increase the size of our senior unsecured revolving credit facility from $800.0 million to $1.6 billion, with an uncommitted option to increase the revolving credit facility by an additional $300.0 million.

Our obligations under the Revolving Credit Agreement are guaranteed by certain of our direct and indirect U.S. subsidiaries, and ResMed Limited’s obligations under the Term Credit Agreement are guaranteed by us and certain of our direct and indirect U.S. subsidiaries. The Revolving Credit Agreement and Term Credit Agreement contain customary covenants, including, in each case, a financial covenant that requires that we maintain a maximum leverage ratio of funded debt to EBITDA (as defined in the Revolving Credit Agreement and Term Credit Agreement, as applicable). The entire principal amounts of the revolving credit facility and term credit facility, and, in each case, any accrued but unpaid interest may be declared immediately due and payable if an event of default occurs, as defined in the Revolving Credit Agreement and the Term Credit Agreement, as applicable. Events of default under the Revolving Credit Agreement and the Term Credit Agreement include, in each case, failure to make payments when due, the occurrence of a default in the performance of any covenants in the respective agreements or related documents, or certain changes of control of us, or the respective guarantors of the obligations borrowed under the Revolving Credit Agreement and Term Credit Agreement.


Large ~~accelerated filer~~Accelerated Filer	☒x	Accelerated ~~filer~~Filer	☐¨
~~Non-accelerated filer~~Non-Accelerated Filer	☐ ¨	Smaller ~~reporting company~~Reporting Company	☐¨
Emerging ~~growth company~~Growth Company	☐¨


Part I	Financial Information	3

~~Item 1~~	~~Financial Statements~~	3

Item 1	Financial Statements	3

	Condensed Consolidated Balance Sheets (Unaudited)	3


	Condensed Consolidated Statements of Income (Unaudited)	4


	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5


	Condensed Consolidated Statements of Changes in Equity (Unaudited)	6


	Condensed Consolidated Statements of Cash Flows (Unaudited)	8


	Notes to the Condensed Consolidated Financial Statements (Unaudited)	9


Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
		21

Item 3	Quantitative and Qualitative Disclosures About Market Risk	31

~~Item 4~~	~~Controls and Procedures~~	33

~~Part II~~Item 4	~~Other Information~~Controls and Procedures	34
		33
~~Item 1~~	~~Legal Proceedings~~	34

~~Item 1A~~Part II	~~Risk Factors~~Other Information	34

Item 21	Legal Proceedings	34

Item 1A	Risk Factors	34

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	34


Item 3	Defaults Upon Senior Securities	35

~~Item 4~~	~~Mine Safety Disclosures~~	35
Item 4	Mine Safety Disclosures	35
~~Item 5~~	~~Other Information~~	35

Item 65	~~Exhibits~~Other Information	36
		35

Item 6	~~Signatures~~Exhibits	36

	Signatures	37



	March 31, 2019		June 30, 2018		December 31, ‎2019		June 30, ‎2019
Assets
Current assets:
Cash and cash equivalents	$	146,513	$	188,701	$	204,095	$	147,128
Accounts receivable, net of allowance for doubtful accounts of $25,543 and $19,258 at March 31, 2019 and June 30, 2018, respectively		511,403		483,681
Inventories (note 2)		319,930		268,701
Accounts receivable, net of allowance for doubtful accounts of $26,854 and $25,171 ‎ at December 31, 2019 and June 30, 2019, respectively						528,039		528,484
Inventories (note 3)						377,784		349,641
Prepaid expenses and other current assets		124,850		124,634		190,567		120,113
Total current assets		1,102,696		1,065,717		1,300,485		1,145,366
Non-current assets:
Property, plant and equipment, net (note 3)		382,496		386,550		408,364		387,460
Operating lease right-of-use assets (note 9)						96,745		-
Goodwill (note 4)		1,939,136		1,068,944		1,870,647		1,856,449
Other intangible assets, net (note 5)		516,450		215,184
Other intangible assets, net (note 3)						480,861		521,950
Deferred income taxes		32,015		53,818		32,889		45,478
Prepaid taxes and other non-current assets		125,733		273,710		163,948		150,979
Total non-current assets		2,995,830		1,998,206		3,053,454		2,962,316
Total assets	$	4,098,526	$	3,063,923	$	4,353,939	$	4,107,682
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	124,466	$	92,723	$	114,322	$	115,725
Accrued expenses		191,130		185,805		217,847		266,359
Operating lease liabilities, current (note 9)						20,038		-
Deferred revenue		82,288		60,828		92,950		88,667
Income taxes payable (note 7)		52,739		160,427
Short-term debt, net (note 9)		12,346		11,466
Income taxes payable (note 6)						42,904		73,248
Short-term debt, net (note 8)						11,984		11,992
Total current liabilities		462,969		511,249		500,045		555,991
Non-current liabilities:
Deferred revenue		76,703		71,596		86,140		81,143
Deferred income taxes		87,312		13,084		27,709		11,380
Operating lease liabilities, non-current (note 9)						79,458		-
Other long-term liabilities		865		924		2,062		2,058
Long-term debt, net (note 9)		1,323,349		269,988
Long-term income taxes payable (note 7)		125,999		138,102
Long-term debt, net (note 8)						1,287,509		1,258,861
Long-term income taxes payable (note 6)						112,910		126,056
Total non-current liabilities		1,614,228		493,694		1,595,788		1,479,498
Total liabilities		2,077,197		1,004,943		2,095,833		2,035,489
Commitments and contingencies (note 12)
Stockholders’ equity: (note 10)
Preferred stock, $0.01 par value, 2,000,000 shares authorized; none issued		-		-
Common stock, $0.004 par value, 350,000,000 shares authorized; 185,182,206 issued and 143,345,972 outstanding at March 31, 2019 and 184,315,866 issued and 142,679,632 outstanding at June 30, 2018		573		571
Preferred stock, $0.01 par value, 2,000,000 shares authorized; NaN issued						-		-
Common stock, $0.004 par value, 350,000,000 shares authorized; ‎ 186,434,945 issued and 144,598,711 outstanding at December 31, 2019 and ‎ 185,491,064 issued and 143,654,830 outstanding at June 30, 2019						578		575
Additional paid-in capital		1,476,099		1,450,821		1,521,992		1,511,473
Retained earnings		2,420,731		2,432,328		2,604,910		2,436,410
Treasury stock, at cost, 41,836,234 shares at March 31, 2019 and 41,636,234 shares at June 30, 2018		(1,623,256)		(1,600,412)
Treasury stock, at cost, 41,836,234 shares at December 31, 2019 and June 30, 2019						(1,623,256)		(1,623,256)
Accumulated other comprehensive loss		(252,818)		(224,328)		(246,118)		(253,009)
Total stockholders’ equity		2,021,329		2,058,980		2,258,106		2,072,193
Total liabilities and stockholders’ equity	$	4,098,526	$	3,063,923	$	4,353,939	$	4,107,682



	Nine Months Ended March 31,				Six Months Ended ‎December 31,
	2019		2018		2019		2018
Cash flows from operating activities:
Net income	$	335,791	$	205,777	$	280,702	$	230,377
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		108,203		88,256		77,077		66,453
Amortization of right-of-use-assets						12,323		-
Stock-based compensation costs		37,856		35,933		27,309		25,011
Loss attributable to equity method investments (note 6)		9,371		-
Impairment of equity investments (note 6)		8,801		3,620
Gain on previously held equity interest		(1,909)		-
Loss attributable to equity method investments (note 5)						13,786		3,375
Impairment of equity investments (note 5)						5,419		2,959
Changes in fair value of business combination contingent consideration		(272)		383		(7)		(272)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable		(1,482)		(39,421)		(275)		32,366
Inventories		(55,002)		(11,146)		(28,294)		(30,570)
Prepaid expenses, net deferred income taxes and other current assets		(17,453)		(72,332)		(66,818)		(26,922)
Accounts payable, accrued expenses and other		(106,671)		164,540		(88,927)		(125,190)
Net cash provided by operating activities		317,233		375,610		232,295		177,587
Cash flows from investing activities:
Purchases of property, plant and equipment		(46,507)		(44,961)		(47,771)		(31,425)
Patent registration costs		(6,556)		(6,743)		(4,871)		(4,643)
Business acquisitions, net of cash acquired		(951,565)		(482)
Purchases of investments (note 6)		(31,092)		(6,445)
Proceeds (payments) on maturity of foreign currency contracts		3,902		(4,667)
Business acquisitions, net of cash acquired (note 13)						(3,423)		(739,249)
Purchases of investments (note 5)						(21,841)		(27,967)
Payments on maturity of foreign currency contracts						1,064		(3,127)
Net cash used in investing activities		(1,031,818)		(63,298)		(76,842)		(806,411)
Cash flows from financing activities:
Proceeds from issuance of common stock, net		15,346		24,074		24,297		12,784
Taxes paid related to net share settlement of equity awards		(27,880)		(14,471)		(41,091)		(27,340)
Purchases of treasury stock		(22,844)		(27,897)		-		(22,844)
Payments of business combination contingent consideration		(648)		(205)		(302)		(430)
Proceeds from borrowings, net of borrowing costs		1,414,230		120,000		730,000		1,091,230
Repayment of borrowings		(541,394)		(390,000)		(700,012)		(352,798)
Dividends paid		(158,592)		(149,527)		(112,202)		(105,567)
Net cash provided by (used in) financing activities		678,218		(438,026)		(99,310)		595,035
Effect of exchange rate changes on cash		(5,821)		8,060		824		(5,444)
Net increase (decrease) in cash and cash equivalents		(42,188)		(117,654)		56,967		(39,233)
Cash and cash equivalents at beginning of period		188,701		821,935		147,128		188,701
Cash and cash equivalents at end of period	$	146,513	$	704,281	$	204,095	$	149,468
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds	$	211,816	$	75,119	$	141,948	$	192,497
Interest paid	$	23,608	$	22,873	$	21,212	$	11,195
Fair value of assets acquired, excluding cash	$	400,804	$	290	$	3,000	$	343,470
Liabilities assumed		(320,923)		-		-		(298,554)
Goodwill on acquisition		879,419		247		-		695,353
Deferred payments		(7,568)		(55)		423		(852)
Fair value of contingent consideration		(167)		-		-		(168)
Cash paid for acquisition	$	951,565	$	482
Cash paid for acquisitions					$	3,423	$	739,249



	Nine Months Ended March 31,				Six Months Ended ‎December 31,
	2019		2018		2019		2018
Total receivables sold:
Full recourse	$	28,846	$	16,125	$	-	$	18,993
Limited recourse		70,847		56,302		59,338		41,329
Total	$	99,693	$	72,427	$	59,338	$	60,322


☒x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


☐¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934




Balance Sheet Caption	As reported balance June 30, 2018		Adoption of ASU 2016-16 Increase/(Decrease)		Revised balance July 1, 2018
Assets
Prepaid expenses and other current assets	$	124,634	$	(28,947)	$	95,687
Prepaid taxes and other non-current assets		273,710		(156,406)		117,304
Deferred income taxes		53,818		(3,445)		50,373
Equity
Retained Earnings		2,432,328		(188,798)		2,243,530



	March 31, 2019		��	June 30, 2018
Machinery and equipment	$	256,797		$	239,671
Computer equipment		170,620			155,069
Furniture and fixtures		51,510			51,045
Vehicles		7,390			7,399
Clinical, demonstration and rental equipment		91,133			92,229
Leasehold improvements		33,677			32,169
Land		52,735			54,089
Buildings		224,482			229,193
		888,344			860,864
Accumulated depreciation and amortization		(505,848)			(474,314)
Property, plant and equipment, net	$	382,496		$	386,550



	Nine Months Ended March 31, 2019
	Sleep and Respiratory Care		SaaS		Total
Balance at the beginning of the period	$	464,157	$	604,787	$	1,068,944
Business acquisition		182,159		697,260		879,419
Foreign currency translation adjustments		(9,227)		-		(9,227)
Balance at the end of the period	$	637,089	$	1,302,047	$	1,939,136


	~~Preliminary~~		~~Intangible~~ ~~assets -~~ ~~useful life~~
~~Current assets~~	$	~~50,707~~
~~Property, plant and equipment~~		~~4,401~~
~~Trade names~~		~~18,000~~		~~7 years~~
~~Developed technology~~		~~82,000~~		~~7 years~~
~~Customer relationships~~		~~145,000~~		~~15 years~~
~~Goodwill~~		~~567,173~~
~~Assets acquired~~	$	~~867,281~~
~~Current liabilities~~		~~(14,968)~~
~~Deferred revenue~~		~~(17,642)~~
~~Deferred tax liabilities~~		~~(70,102)~~
~~Debt assumed~~		~~(151,665)~~
~~Total liabilities assumed~~	$	~~(254,377)~~
~~Net assets acquired~~	$	~~612,904~~


	Preliminary as of ‎June 30, 2019		Adjustments		Final		Intangible ‎assets - ‎useful life
Current assets	$	50,325	$	-	$	50,325
Property, plant and equipment		4,401		-		4,401
Trade names		18,000		-		18,000		7 years
Developed technology		133,000		-		133,000		7 years
Customer relationships		114,000		2,000		116,000		15 years
Goodwill		517,995		5,664		523,659
Assets acquired	$	837,721	$	7,664	$	845,385
Current liabilities		(13,751)		(255)		(14,006)
Deferred revenue		(18,339)		(166)		(18,505)
Deferred tax liabilities		(41,570)		(7,243)		(48,813)
Debt assumed		(151,665)		-		(151,665)
Total liabilities assumed	$	(225,325)	$	(7,664)	$	(232,989)
Net assets acquired	$	612,396	$	-	$	612,396


Base consideration	$	750,000
Cash acquired		~~15,576~~ 15,873
Debt assumed		(151,665)
Net working capital and other adjustments		~~(1,007)~~ (1,812)
Net consideration	$	~~612,904~~ 612,396


Unaudited Proforma Consolidated Results
(In thousands, except per share information)
	Three Months Ended March 31,				Nine Months Ended March 31,
	2019		2018		2019		2018
Revenue	$	662,228	$	620,933	$	1,947,096	$	1,803,685
Net income	$	105,416	$	106,583	$	334,302	$	192,445
Basic earnings per share	$	0.74	$	0.75	$	2.34	$	1.35
Diluted earnings per share	$	0.73	$	0.74	$	2.32	$	1.34



	U.S.		Canadian	Chinese	U.S.		Canadian	Chinese
	Dollar	Euro	Dollar	Yuan	Dollar	Euro	Dollar	Yuan
	(USD)	(EUR)	(CAD)	(CNY)	(USD)	(EUR)	(CAD)	(CNY)
AUD Functional:
Assets	284,950	154,131	-	30,745	476,357	124,187	-	36,930
Liability	(224,127)	(119,211)	-	(2,670)	(270,651)	(104,477)	-	(583)
Foreign Currency Hedges	(55,000)	(39,273)	-	(20,860)	(210,000)	(33,681)	-	(22,978)
Net Total	5,823	(4,353)	-	7,215	(4,294)	(13,971)	-	13,369
USD Functional:
Assets	-	-	18,070	-	-	-	21,457	-
Liability	-	-	(5,124)	-	-	-	-	-
Foreign Currency Hedges	-	-	(14,991)	-	-	-	(15,430)	-
Net Total	-	-	(2,045)	-	-	-	6,027	-
SGD Functional:
Assets	475,716	179,074	-	13	611,623	239,775	-	12
Liability	(181,509)	(53,036)	-	-	(324,377)	(54,723)	-	-
Foreign Currency Hedges	(288,000)	(125,672)	-	-	(273,000)	(168,405)	-	-
Net Total	6,207	366	-	13	14,246	16,647	-	12



				Fair Value Assets / (Liabilities)					Fair Value Assets / (Liabilities)
Foreign Exchange Contracts	Year 1	Year 2	Total	March 31, 2019	June 30, 2018	Year 1	Year 2	Total	December 31, ‎2019	June 30, ‎2019
AUD/USD
Contract amount	55,000	-	55,000	100	(140)	210,000	-	210,000	4,647	202
Ave. contractual exchange rate	AUD 1 = USD 0.7085		AUD 1 = USD 0.7085			AUD 1 = ‎USD 0.6879		AUD 1 = ‎USD 0.6879
AUD/Euro
Contract amount	72,935	22,441	95,376	(3)	(1,286)	78,589	22,454	101,043	1,087	(124)
Ave. contractual exchange rate	AUD 1 = Euro 0.6511	AUD 1 = Euro 0.6300	AUD 1 = Euro 0.6460			AUD 1 = ‎Euro 0.6245	AUD 1 = ‎Euro 0.6400	AUD 1 = ‎Euro 0.6279
SGD/Euro
Contract amount	125,672	-	125,672	205	(939)	168,405	-	168,405	66	40
Ave. contractual exchange rate	SGD 1 = Euro 0.6491		SGD 1 = Euro 0.6491			SGD 1 = ‎Euro 0.6618		SGD 1 = ‎Euro 0.6618
SGD/USD
Contract amount	288,000	-	288,000	(3,046)	(309)	273,000	-	273,000	2,913	71
Ave. contractual exchange rate	SGD 1 = USD 0.7405		SGD 1 = USD 0.7405			SGD 1 = ‎USD 0.7359		SGD 1 = ‎USD 0.7359
AUD/CNY
Contract amount	20,860	-	20,860	(81)	(17)	22,978	-	22,978	164	(15)
Ave. contractual exchange rate	AUD 1 = CNY 4.79		AUD 1 = CNY 4.79			AUD 1 = ‎CNY 4.8950		AUD 1 = ‎CNY 4.8950
USD/CAD
Contract amount	14,991	-	14,991	221	(8)	15,430	-	15,430	(133)	(66)
Ave. contractual exchange rate	USD 1 = CAD 1.3148		USD 1 = CAD 1.3148			USD 1 = ‎CAD 1.3075		USD 1 = ‎CAD 1.3075


	~~2.1~~3.1		Agreement and Plan of Merger, dated November 5, 2018, by and among ResMed Operations Inc., Evolved Sub, Inc., ResMed Inc., OPE LGI Holdings Limited, in its capacity as the agent acting on behalf of the holders of common stock of MatrixCare Holdings, Inc., and MatrixCare Holdings, Inc.. (Incorporated by reference to Exhibit 2.1 to ResMed Inc.’s Current Report on Form 8-K, filed with the SEC on November 8, 2018)*

	~~3.1~~		First Restated Certificate of Incorporation of ResMed Inc., as amended. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2013)
	3.2
	~~3.2~~		Fifth Amended and Restated Bylaws of ResMed Inc. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K/A filed on September 17, 2012)
	31.1
	~~31.1~~		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2
	~~31.2~~		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32
	32		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101
	~~101~~		The following financial statements from ResMed Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~March~~December 31, 2019, filed on ~~May 2, 2019,~~January 30, 2020, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, (v) the Notes to the Condensed Consolidated Financial Statements.


/s/ MICHAEL J. FARRELL
Michael J. Farrell
Chief executive officer
(Principal Executive Officer)


/s/ BRETT A. SANDERCOCK
Brett A. Sandercock
Chief financial officer
(Principal Financial Officer)