What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-08-12 compared with 2021-08-17 · 370 added, 263 removed, 811 unchanged (44% of the section changed)

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dollars) on our significant foreign-currency-denominated financial assets by legal entity functional currency as of June 30, 2022 (in thousands):

(EUR) Canadian

(CAD) Chinese

AUD Functional:

Net Assets/(Liabilities) 105,745 (50,884) — 16,913

Foreign Currency Hedges (60,000) 31,397 — (11,941)

Net Total 45,745 (19,487) — 4,972

USD Functional:

Foreign Currency Hedges

EURO Functional:

Net Assets/(Liabilities) — — 15,619 —

Foreign Currency Hedges — — (19,423) —

Net Total — — (3,804) —

SGD Functional:

Net Assets/(Liabilities) 373,198 14,852 — 882

Foreign Currency Hedges (385,000) — — —

AND SUBSIDIARIES

Quantitative and Qualitative Disclosures About Market and Business Risks

Net Total (11,802) 14,852 — 882

The table below provides information about our foreign currency derivative financial instruments and presents the information in U.S.

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The table summarizes information on instruments and transactions that are sensitive to foreign currency exchange rates, including foreign currency call options, collars and forward contracts held at June 30, 2022.

The table presents the notional amounts and weighted average exchange rates by contractual maturity dates for our foreign currency derivative financial instruments.

The table presents the notional amounts and weighted average exchange rates by contractual maturity dates for our

PART II Item 7A

AND SUBSIDIARIES

Quantitative and Qualitative Disclosures About Market and Business Risks

foreign currency derivative financial instruments.

These notional amounts generally are used to calculate payments to be exchanged under the options contracts (in thousands, except exchange rates):

Fair Value Assets / (Liabilities)

Foreign Exchange Contracts

Foreign Exchange Contracts Year 1 Year 2 Total June 30,

2022 June 30,

Contract amount 60,000 — 60,000 (190) (652)

contractual exchange rate

contractual exchange rate USD 1 =

AUD 0.6928 USD 1 =

Contract amount 88,959 15,699 104,658 (413) 1,172

contractual exchange rate

‎ Euro 0.6307

‎ Euro 0.6700

‎ Euro 0.6382

contractual exchange rate AUD 1 =

EUR 0.6867 AUD 1 =

EUR 0.6800 AUD 1 =

Contract amount 20,931 — 20,931 71 (88)

contractual exchange rate

‎ Euro 0.6379

contractual exchange rate SGD 1 =

Euro 0.7117 — SGD 1 =

Contract amount 385,000 — 385,000 (1,172) (177)

contractual exchange rate

contractual exchange rate SGD 1 =

USD 0.7216 SGD 1 =

Contract amount 11,941 — 11,941 (37) (130)

contractual exchange rate

contractual exchange rate AUD 1 =

CNY 4.6449 AUD 1 =

Contract amount — — — — 169

contractual exchange rate

contractual exchange rate USD 1 =

Contract amount 19,423 — 19,423 (46) (44)

contractual exchange rate

contractual exchange rate USD 1 =

CAD 1.2902 USD 1 =

Interest Rate Risk

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The interest rate on these notes is fixed and not subject to fluctuation.

Proceeds from the issuance and sale of the notes were used to repay borrowings under the revolving credit facility.

Inflationary factors such as increases in the cost of our products, freight, overhead costs or wage rates may adversely affect our operating results.

Sustained inflationary pressures in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses as a percentage of net revenue if we are unable to offset such higher costs through price increases.

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(a) Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm ( KPMG LLP , San Diego, CA , Auditor Firm ID:

Consolidated Balance Sheets as of June 30, 202 2 and 202 1

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Quarterly Financial Information (unaudited)—The quarterly results for the years ended June 30, 2022 and 2021 are summarized below (in thousands, except per share amounts):

Quarter Second

Quarter Third

Quarter Fourth

Quarter Fiscal

Net revenue $ 904,015 $ 894,874 $ 864,500 $ 914,737 $ 3,578,127

Gross profit 506,289 504,318 491,197 522,506 2,024,311

Net income 203,613 201,751 179,012 195,061 779,437

Basic earnings per share 1.40 1.38 1.22 1.33 5.34

Diluted earnings per share 1.39 1.37 1.22 1.33 5.30

Quarter Second

Quarter Third

Quarter Fourth

Quarter Fiscal

Net revenue $ 751,944 $ 800,011 $ 768,767 $ 876,103 $ 3,196,825

Gross profit 438,661 462,483 447,258 490,696 1,839,100

Net income (loss) 178,372 179,514 (78,481) 195,098 474,505

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Diluted earnings (loss) per share 1.22 1.23 (0.54) 1.33 3.24

Basic earnings per share

Diluted earnings per share

the amounts for each quarter are computed independently and, due to the computation formula, the sum of the four quarters may not equal the year.

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To the Stockholders and Board of Directors

‎ ResMed Inc.:

Opinion on the Consolidated Financial Statements

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated August 11, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

The Company has changed its method of accounting for leases as of July 1, 2019 due to the adoption of the FASB’s Accounting Standards Codification Topic 842, Leases .

Basis for Opinion

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the uncertain tax position related to Australian Tax Office audits

As discussed in Note 14 to the consolidated financial statements, the Company’s tax filings in Australia for the years 2009 through 2018 (the Audit Period) are under audit by the Australian Tax Office (ATO).

The Company believes it is more likely than not (greater than a 50% likelihood) that its tax position would be upheld in litigation.

However, the Company is engaged

Evaluation of goodwill triggering events

As discussed in Notes 2(i) and 5 to the consolidated financial statements, the Company’s goodwill balance was $1,936 million as of June 30, 2022.

The Company performs goodwill impairment testing on an annual basis and whenever events or changes in circumstances indicate that the carrying value of a reporting unit, including goodwill, might exceed the fair value of the reporting unit.

In the current year, the Company performed qualitative, or Step 0, assessments to determine whether there was a greater than 50 percent likelihood that the fair value of each reporting unit was less than its carrying value.

After completing Step 0, the Company determined that goodwill was not more likely than not impaired and, therefore, no Step 1, or quantitative assessment, was necessary.

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in advanced discussions with the ATO to settle the dispute for the entire Audit Period and has recorded $395.3 million of gross unrecognized tax benefits, adjusted for tax credits and deductions of $146.6 million.

We identified the evaluation of the uncertain tax position and related tax credits and deductions related to the ATO audits as a critical audit matter.

This critical audit matter required challenging auditor judgment due to the nature and the complexity of the applicable tax laws and regulations and involved tax professionals with specialized skills and knowledge.

We identified the evaluation of goodwill triggering events as a critical audit matter.

The evaluation of potential triggering events, including macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, market capitalization and events specific to the entity and reporting units, required a higher degree of auditor judgment.

These potential triggering events could have a significant effect on the Company’s Step 0 assessment and the determination of whether further quantitative analysis of goodwill impairment was required.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the uncertain tax position related to the ATO audits, including the gross unrecognized tax benefits and related tax credits and deductions.

We involved tax professionals with specialized skills and knowledge, who assisted in:

 reading notices, assessments, and other correspondence between the Company and the ATO in connection with the Audit Period

 evaluating the Company’s analysis of the applicable tax laws with the facts, assumptions, and representations made by the Company

 recalculating the Company’s determination of the gross unrecognized tax benefits and the related tax credits and deductions

 inquiring of third-party legal and tax advisors about the Company’s determination to adjust the gross unrecognized tax benefit related to the ATO audits for certain tax credits and deductions.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the evaluation of goodwill impairment.

This included a control related to the Company’s assessment of potential goodwill triggering events.

We evaluated the Company’s Step 0 assessment for its reporting units by:

• considering macroeconomic conditions including gross domestic product, labor market, and inflation by key regions around the world for negative indicators

• evaluating information from analyst reports in the enterprise software and sleep and respiratory care industries, which were compared to industry and market considerations used by the Company

• analyzing information including changes in the costs of raw materials and labor, the financial performance of the reporting units, the Company’s market capitalization, and other entity and reporting-unit specific events.

We have served as the Company’s auditor since 1994.

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August 11, 2022

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June 30, 2022 and 2021

(In thousands, except share and per share data)

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

2022 June 30,

Current assets:

Cash and cash equivalents $ 273,710 $ 295,278

Accounts receivable, net of allowances of $ 32,138 and $ 28,508

‎ at June 30, 2021 and June 30, 2020, respectively

Accounts receivable, net of allowances of $ 23,259 and $ 32,138 at June 30, 2022 and June 30, 2021, respectively

575,950 614,292

Inventories (note 4) 743,910 457,033

Prepaid taxes

Prepaid expenses and other current assets

Prepaid expenses and other current assets (note 4) 337,908 208,154

Total current assets 1,931,478 1,574,757

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Total non-current assets 3,164,375 3,153,368

Total assets $ 5,095,853 $ 4,728,125

Liabilities and Stockholders’ Equity

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Common stock, $ 0.004 par value, 350,000,000 shares authorized;

‎ 187,484,592 issued and 145,648,358 outstanding at June 30, 2021 and

‎ 186,723,407 issued and 144,887,175 outstanding at June 30, 2020

188,246,955 issued and 146,410,721 outstanding at June 30, 2022 and 187,484,592 issued and 145,648,358 outstanding at June 30, 2021

Additional paid-in capital 1,682,432 1,622,199

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( 1,623,256 ) ( 1,623,256 )

( 1,623,256 )

Accumulated other comprehensive loss ( 312,747 ) ( 193,487 )

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See accompanying notes to consolidated financial statements.

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Years Ended June 30, 2022, 2021 and 2020

(In thousands, except per share data)

June 30, 2021

June 30, 2020

June 30, 2019

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

June 30, 2022 June 30, 2021 June 30, 2020

Net revenue - Sleep and Respiratory Care products $ 3,177,298 $ 2,823,235 $ 2,602,381

Net revenue - Software as a Service 400,829 373,590 354,632

Net revenue 3,578,127 3,196,825 2,957,013

Cost of sales - Sleep and Respiratory Care products 1,365,421 1,177,309 1,067,967

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Total cost of sales 1,553,816 1,357,725 1,239,227

Gross profit 2,024,311 1,839,100 1,717,786

Selling, general, and administrative 739,372 670,387 676,689

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Restructuring expenses (note 17) — 8,673 —

Litigation settlement expenses (note 20)

Acquisition related expenses (note 18)

Litigation settlement expenses — — ( 600 )

Total operating expenses 1,024,025 935,422 908,127

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Other income (loss), net:

Interest income

Interest expense

Interest (expense) income, net ( 22,312 ) ( 23,627 ) ( 39,356 )

Loss attributable to equity method investments (note 6) ( 8,486 ) ( 11,205 ) ( 25,058 )

Other, net (note 13)

Gain (loss) on equity investments (note 6) ( 12,202 ) 14,515 ( 14,519 )

Other, net 3,197 301 2,362

Total other income (loss), net ( 39,803 ) ( 20,016 ) ( 76,571 )

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Income taxes (note 13) 181,046 409,157 111,414

Net income $ 779,437 $ 474,505 $ 621,674

Basic earnings per share (note 12) $ 5.34 $ 3.27 $ 4.31

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Dividend declared per share $ 1.68 $ 1.56 $ 1.56

Basic shares outstanding (000's)

Diluted shares outstanding (000's)

Basic shares outstanding (000's) 146,066 145,313 144,338

Diluted shares outstanding (000's) 147,043 146,451 145,652

See accompanying notes to consolidated financial statements.

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Years Ended June 30, 2022, 2021 and 2020

(In US$ thousands)

Other comprehensive (loss) income:

(In US$ and in thousands)

2022 2021 2020

Net income $ 779,437 $ 474,505 $ 621,674

Other comprehensive income (loss):

Foreign currency translation (loss) gain adjustments ( 119,260 ) 90,495 ( 30,973 )

1 unchanged sentence

See accompanying notes to consolidated financial statements.

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Years ended June 30, 2022, 2021 and 2020

(In thousands)

Treasury Stock

(In US$ and in thousands)

Common Stock Additional

Capital Treasury Stock Retained

Earnings Accumulated

Comprehensive

Income (Loss)

Income (Loss) Total

Shares Amount Shares Amount

Balance, June 30, 2019

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Common stock issued on employee stock purchase plan (note 11) 265 1 28,196 — — — — 28,197

Treasury stock purchases

Stock-based compensation costs — — 57,100 — — — — 57,100

Other comprehensive income (loss) — — — — — — ( 30,973 ) ( 30,973 )

Cumulative effect of change in accounting standards

Dividends declared

Net income — — — — — 621,674 — 621,674

Dividends declared ($ 1.56 per common share)

— — — — — ( 225,093 ) — ( 225,093 )

Balance, June 30, 2020

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Other comprehensive income (loss) — — — — — — 90,495 90,495

Dividends declared

Net income — — — — — 474,505 — 474,505

Cumulative effect adjustment from adoption of the credit loss standard, net of tax — — — — — ( 1,143 ) — ( 1,143 )

Dividends declared ($ 1.56 per common share)

— — — — — ( 226,713 ) — ( 226,713 )

Balance, June 30, 2021

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Other comprehensive income (loss) — — — — — — ( 119,260 ) ( 119,260 )

Cumulative effect adjustment from adoption of the credit loss standard, net of tax

Dividends declared

Net income — — — — — 779,437 — 779,437

Dividends declared ($ 1.68 per common share)

— — — — — ( 245,341 ) — ( 245,341 )

Balance, June 30, 2022

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See accompanying notes to consolidated financial statements.

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Years ended June 30, 2022, 2021 and 2020

(In thousands)

June 30, 2021

June 30, 2020

June 30, 2019

(In US$ and in thousands)

June 30, 2022 June 30, 2021 June 30, 2020

Cash flows from operating activities:

Net income $ 779,437 $ 474,505 $ 621,674

Adjustment to reconcile net income to net cash provided by operating activities:

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Restructuring expenses (note 17) — 8,673 —

Gain on previously held equity interest

Changes in fair value of business combination contingent consideration — — ( 7 )

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Accounts receivable 19,346 ( 129,195 ) 54,383

Inventories ( 311,681 ) ( 21,954 ) ( 69,881 )

Prepaid expenses, net deferred income taxes and other current assets ( 168,109 ) ( 58,154 ) ( 58,999 )

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Purchases of investments (note 6) ( 20,724 ) ( 21,788 ) ( 31,616 )

Proceeds on maturity of foreign currency contracts

Proceeds from sale of investment (note 6) 6,802 — —

(Payments) / proceeds on maturity of foreign currency contracts ( 17,176 ) 19,219 ( 14,397 )

Net cash used in investing activities ( 229,918 ) ( 158,462 ) ( 179,861 )

( 1,075,706 )

Cash flows from financing activities:

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Taxes paid related to net share settlement of equity awards ( 52,406 ) ( 50,209 ) ( 46,061 )

Purchases of treasury stock

Payments of business combination contingent consideration — ( 3,500 ) ( 302 )

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Repayment of borrowings ( 166,000 ) ( 612,000 ) ( 1,284,012 )

( 1,284,012 )

Dividends paid ( 245,341 ) ( 226,713 ) ( 225,093 )

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Goodwill on acquisition 38,953 24,671 20,375

Previously held equity interest ( 4,078 ) — —

Deferred payments ( 3,067 ) 3,768 408

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See accompanying notes to consolidated financial statements.

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generally accepted accounting principles requires management estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes.

Certain prior period amounts have been reclassified to conform to the current period presentation.

Actual results could differ from management’s estimates.

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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.

generally, this occurs with the transfer of risk and/or control of our products 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.

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Our contracts do not contain significant financing components.

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Contract assets

Accounts receivable, net

Unbilled revenue, current

Prepaid expenses and other current assets

Unbilled revenue, non-current

Prepaid taxes and other non-current assets

Accounts receivable, net $ 575,950 $ 614,292 Accounts receivable, net

Unbilled revenue, current 25,692 10,893 Prepaid expenses and other current assets

Unbilled revenue, non-current 8,840 6,214 Prepaid taxes and other non-current assets

Contract liabilities

Deferred revenue, current

Deferred revenue (current liabilities)

Deferred revenue, non-current

Deferred revenue (non-current liabilities)

Deferred revenue, current ( 108,667 ) ( 109,611 ) Deferred revenue (current liabilities)

Deferred revenue, non-current ( 95,455 ) ( 91,496 ) Deferred revenue (non-current liabilities)

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.

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 our 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.

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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 participate in programs where we issue credits to our Sleep and Respiratory Care distributors when they are required to sell our products below negotiated list prices if we have preexisting contracts with the distributors' customers.

We reduce revenue for future credits at the time of sale to the distributor, which we estimate based on historical experience using the expected value method.

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.

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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.

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Notes to the Consolidated Financial Statements

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No single customer accounted for 10% or more of our total revenues for any of the periods presented.

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Notes to the Consolidated Financial Statements

(d) Fair Value of Financial Instruments

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We compute depreciation expense using the straight-line method over the estimated useful lives of the assets.

Useful lives are generally two years to ten years except for buildings which are depreciated over an estimated useful life of 40 years and leasehold improvements, which we amortize over the shorter of the useful life or the lease term.

Useful lives are generally two years to ten years except for buildings which are depreciated over an estimated useful life of forty years and leasehold improvements, which we amortize over the shorter of the useful life or the lease term.

We charge maintenance and repairs to expense as we incur them.

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Notes to the Consolidated Financial Statements

Depreciation expense for property, plant, and equipment was $ 81.0 million, $ 78.4 million, and $ 65.6 million for the years ended June 30, 2022, 2021 and 2020, respectively.

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We have no t identified any impairment of intangible assets during any of the periods presented.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

We conduct our annual review for goodwill impairment during the final quarter of the fiscal year.

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If a reporting unit’s fair value exceeds the carrying value, no further work is performed and no impairment charge is necessary.

During the annual reviews for the years ended June 30, 2021, 2020 and 2019, we completed a Step 0 or Qualitative assessment and determined it was more likely than not that the fair value of our reporting units exceeded their carrying amounts, including goodwill, and therefore goodwill was no t impaired.

During the annual reviews for the years ended June 30, 2022, 2021 and 2020, we completed a Step 0 or Qualitative assessment and determined it was more likely than not that the fair value of our reporting units exceeded their carrying amounts, including goodwill, and therefore goodwill was not impaired.

(j) Equity investments

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Non-marketable equity securities are reported at 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 assess non-marketable equity securities at least quarterly for impairment and consider qualitative and quantitative factors including the investee's financial metrics, product and commercial outlook and cash usage .

All gains and losses on marketable and non-marketable equity securities, realized and unrealized, are recognized in other, net on the consolidated statements of operations.

All gains and losses on marketable and non-marketable equity securities, realized and unrealized, are recognized in gain (loss) on equity investments as a component of other income (loss), net on the consolidated statements of operations.

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Notes to the Consolidated Financial Statements

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 as a component of other, net on the consolidated statements of operations.

Under this method, we record our share of gains or losses attributable to equity method investments as a component of other income (loss), net on the consolidated statements of operations.

(k) Research and Development

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We reflect gains and losses on transactions denominated in other than the functional currency of an entity in our results of operations.

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Notes to the Consolidated Financial Statements

(m) Foreign Exchange Risk Management

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Any interest and penalties related to uncertain tax positions are reflected in income tax expense.

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Notes to the Consolidated Financial Statements

(o) Provision for Warranty

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Customer receivables are charged against the allowance when they are deemed uncollectible.

Refer to Note 3(b) below for information regarding our adoption of the credit loss standard effective July 1, 2020 .

We are also contingently liable, within certain limits, in the event of a customer default, to independent financing companies in connection with customer financing programs.

We monitor the collection status of these installment receivables and provide for estimated losses separately under accrued expenses within our consolidated balance sheets based upon our historical collection experience with such receivables and a current assessment of our credit exposure.

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Notes to the Consolidated Financial Statements

(q) Impairment of Long-Lived Assets

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(3) New Accounting Pronouncements

(a) Recently issued accounting standards not yet adopted

2020-04 “Reference Rate Reform:

Facilitation of the Effects of Reference Rate Reform on Financial Reporting”

In March 2020, the FASB issued ASU No.

2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (Topic 848), which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The guidance is effective for us as of March 12, 2020 through December 31, 2022.

We will evaluate transactions or contract modifications occurring as a result of reference rate reform and determine whether to apply the optional guidance on an ongoing basis.

The ASU is currently not expected to have a material impact on our consolidated financial statements.

(b) Recently adopted accounting pronouncements

2016-13 “Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments”

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, “Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments” (Topic 326), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables.

The guidance was adopted effective July 1, 2020 using the modified retrospective approach.

We recognized the cumulative effect of adopting this guidance as an adjustment to the opening balance of retained earnings of $1.1 million, net of tax, related to our allowance for credit losses for accounts receivable.

The adoption of this ASU did not have a material impact on our consolidated financial statements.

2018-15 “Intangibles-Goodwill and Other-Internal-Use Software:

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”

In August 2018, the FASB issued ASU No.

2018-15, “Intangibles-Goodwill and Other-Internal-Use Software:

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (Subtopic 350-40), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The guidance was adopted effective July 1, 2020 and applied prospectively.

Under the new ASU, capitalized implementation costs are presented as other non-current assets on our consolidated balance sheets and within operating cash flows on our consolidated statements of cash flows.

The adoption of this ASU did not have a material impact on our consolidated financial statements.

Recently adopted accounting pronouncements

2021-08 “Business Combinations:

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”

In October 2021, the FASB issued ASU No.

2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (Topic 805), which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts.

This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value.

The guidance is effective for us beginning in the first quarter of the year ending June 30, 2024 and early adoption is permitted.

We elected to early adopt this standard in the second quarter of our fiscal year ending June 30, 2022.

Adoption of ASU 2021-08 did not have a material impact on our consolidated financial statements.

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Components of selected captions in the consolidated balance sheets consisted of the following as of June 30, 2022 and June 30, 2021 (in thousands):

Inventories 2022 2021

Raw materials $ 355,225 $ 155,419

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Total inventories $ 743,910 $ 457,033

Prepaid expenses and other current assets 2022 2021

Prepaid taxes $ 99,352 $ 72,409

Prepaid inventories 107,291 6,952

Other prepaid expenses and current assets 131,265 128,793

Total prepaid expenses and other current assets $ 337,908 $ 208,154

Property, plant and equipment 2022 2021

Machinery and equipment $ 390,634 $ 349,022

Computer equipment

Computer equipment and software 199,671 194,386

Furniture and fixtures 54,098 54,435

Vehicles and aircraft 19,231 5,959

Clinical, demonstration and rental equipment 105,440 110,620

Leasehold improvements 80,855 77,392

Land 51,864 54,458

Buildings 229,502 239,357

Property, plant and equipment, at cost $ 1,131,295 $ 1,085,629

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(5) Goodwill and Other Intangible Assets, net

For each of the years ended June 30, 2021 and June 30, 2020, we have no t recorded any goodwill impairments.

For each of the years ended June 30, 2022 and June 30, 2021, we have not recorded any goodwill impairments.

Changes in the carrying amount of goodwill is comprised of the following for the year ended June 30, 2022 (in thousands):

‎ Respiratory Care

Respiratory Care SaaS Total

Balance at the beginning of the period $ 633,183 $ 1,294,718 $ 1,927,901

2 unchanged sentences

Balance at the end of the period $ 641,724 $ 1,294,718 $ 1,936,442

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Other Intangible Assets

12 unchanged sentences

There are no expected residual values related to these intangible assets.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Amortization expense related to identified intangible assets for the years ended June 30, 2022 and June 30, 2021 was $ 70.7 million and $ 76.2 million, respectively.

2 unchanged sentences

Fiscal Years Ending June 30

2023 2024 2025 2026 2027

Estimated amortization expense $ 61,374 $ 57,594 $ 53,157 $ 47,902 $ 29,667

2 unchanged sentences

Measurement category 2022 2021

Fair value $ 9,167 $ 29,084

Measurement alternative 39,290 23,002

Equity method 9,918 17,154

Total $ 58,375 $ 69,240

The following table shows a reconciliation of the changes in our equity investments for the year ended June 30, 2022 (in thousands):

Non-marketable securities

Marketable securities

Equity method investments

Non-marketable securities Marketable securities Equity method investments Total

Balance at the beginning of the period $ 23,002 $ 29,084 $ 17,154 $ 69,240

Net additions (reductions) to investments (1)

11,775 ( 3,202 ) 1,250 9,823

Observable price adjustments on non-marketable equity securities 5,367 — — 5,367

Ongoing mark-to-market adjustments on marketable equity securities

Reclassifications (1)

Unrealized losses on marketable equity securities — ( 18,341 ) — ( 18,341 )

Realized gains on marketable and non-marketable equity securities 2,355 1,626 — 3,981

Impairment of investments ( 3,209 ) — — ( 3,209 )

Loss attributable to equity method investments — — ( 8,486 ) ( 8,486 )

Carrying value at the end of the period $ 39,290 $ 9,167 $ 9,918 $ 58,375

(1) During the year ended June 30, 2021, one of our investments, which was previously accounted for under the measurement alternative, completed its initial public offering which resulted in a change of accounting methodology to fair value.

(1) Net additions (reductions) to investments includes additions from purchases, reductions due to exits of securities, or reclassifications due to our acquisition of an investee in which we held a prior equity interest.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The following table shows a reconciliation of the changes in our equity investments for the year ended June 30, 2021(in thousands):

Non-marketable securities

Marketable securities

Equity method investments

Non-marketable securities Marketable securities Equity method investments Total

Balance at the beginning of the period $ 30,033 $ — $ 14,109 $ 44,142

Impairment of investments

Additions to investments 2,538 5,000 14,250 21,788

Observable price adjustments on non-marketable equity securities 1,000 — — 1,000

Unrealized gains on marketable equity securities — 13,515 — 13,515

Reclassifications (2)

( 10,569 ) 10,569 — —

Loss attributable to equity method investments — — ( 11,205 ) ( 11,205 )

Carrying value at the end of the period $ 23,002 $ 29,084 $ 17,154 $ 69,240

Net unrealized gains and losses recognized in the years ended June 30, 2021, 2020 and 2019 for equity investments in non-marketable and marketable securities still held as of those respective dates were a gain of $14.5 million, a loss of $14.5 million, and a loss of $15.0 million, respectively.

(2) During the year ended June 30, 2021, one of our investments, which was previously accounted for under the measurement alternative, completed its initial public offering which resulted in a change of accounting methodology to fair value.

Net unrealized gains and losses recognized in the years ended June 30, 2022, 2021 and 2020 for equity investments in non-marketable and marketable securities still held as of those respective dates were a loss of $ 16.2 million, a gain of $ 14.5 million, and a loss of $ 14.5 million, respectively.

(7) Accrued Expenses

4 unchanged sentences

Employee related costs 194,736 199,917

Liability on receivables sold with recourse (note 17)

Promotional and marketing 6,485 4,127

Accrued interest 7,983 8,338

1 unchanged sentence

Inventory in transit 11,554 7,146

Other 14,502 16,297

Total accrued expenses $ 344,722 $ 320,599

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(8) Product Warranties

6 unchanged sentences

Balance at the end of the period $ 25,889 $ 22,032

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Debt at June 30, 2022 and June 30, 2021 consists of the following (in thousands):

5 unchanged sentences

Long-term debt, net $ 765,325 $ 643,351

Total debt $ 775,241 $ 655,351

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 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.

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.

On June 29, 2022, we entered into a second amended and restated credit agreement (the “Revolving Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger, sole book runner, swing line lender and letter of credit issuer, Westpac Banking Corporation, as syndication agent and joint lead arranger, HSBC Bank USA, National Association, as syndication agent and joint lead arranger, and Wells Fargo Bank, National Association, as documentation agent.

The Revolving Credit Agreement, among other things, provided a senior unsecured revolving credit facility of $ 1,500.0 million, with an uncommitted option to increase the revolving credit facility by an additional amount equal to the greater of $ 1,000.0 million and 1.00 times the EBITDA (as defined in the Revolving Credit Agreement) for the trailing twelve-month measurement period.

The Revolving Credit Facility amends and restates that certain Amended and Restated Credit Agreement, dated as of April 17, 2018, among ResMed, MUFG Union Bank, N.A., Westpac Banking Corporation and the lenders party thereto which provided ResMed with a senior unsecured revolving credit facility in an aggregate amount of $ 1,600.0 million with an uncommitted option to increase such facility by an additional $ 300.0 million.

Additionally, on June 29, 2022, ResMed Pty Limited entered into a Second Amendment to the Syndicated Facility Agreement and First Amendment to Unconditional Guaranty 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, which amends that certain Syndicated Facility Agreement dated as of April 17, 2018.

The Term Credit Agreement, among other things, provides ResMed Pty a senior unsecured term credit facility of $ 200.0 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, and ResMed Pty Limited’s obligations under the Term Credit Agreement are guaranteed by us and certain of our direct and indirect U.S.

subsidiaries.

2 unchanged sentences

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.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Revolving Credit Agreement and Term Credit Agreement each terminate on April 17, 2023, when all unpaid principal and interest under the loans must be repaid.

The Revolving Credit Agreement and Term Credit Agreement each terminate on June 29, 2027, when all unpaid principal and interest under the loans must be repaid.

Amounts borrowed under the Term Credit Agreement will also amortize on a semi-annual basis, with a $ 5.0 million principal payment required on each such semi-annual amortization date.

The outstanding principal amounts will bear interest at a rate equal to LIBOR plus 0.75 % to 1.50 % (depending on the then-applicable leverage ratio) or the Base Rate (as defined in the Revolving Credit Agreement and the Term Credit Agreement, as applicable) plus 0.0 % to 0.50 % (depending on the then-applicable leverage ratio).

The outstanding principal amounts will bear interest at a rate equal to the Adjusted Term SOFR (as defined in the Revolving Credit Facility) plus 0.75 % to 1.50 % (depending on the then-applicable leverage ratio) or the Base Rate (as defined in the Revolving Credit Agreement and the Term Credit Agreement, as applicable) plus 0.0 % to 0.50 % (depending on the then-applicable leverage ratio).

At June 30, 2022, the interest rate that was being charged on the outstanding principal amounts was 3.00 %.

An applicable commitment fee of 0.100 % to 0.175 % (depending on the then-applicable leverage ratio) applies on the unused portion of the revolving credit facility.

An applicable commitment fee of 0.075 % to 0.150 % (depending on the then-applicable leverage ratio) applies

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

on the unused portion of the revolving credit facility.

As of June 30, 2022, we had $ 1.4 billion available for draw down under the revolving credit facility.

We are required to disclose the fair value of financial instruments for which it is practicable to estimate the value, even though these instruments are not recognized at fair value in the consolidated balance sheets.

As the Revolving Credit and Term Credit Agreements’ interest rate is calculated as LIBOR plus the spreads described above, its carrying amount is equivalent to its fair value as at June 30, 2021 and June 30, 2020, which was $ 158.0 million and $ 680.0 million, respectively.

As the Revolving Credit and Term Credit Agreements’ interest rate is calculated as Adjusted Term SOFR plus the spreads described above, its carrying amount is equivalent to its fair value as at June 30, 2022 and June 30, 2021, which was $ 280.0 million and $ 158.0 million, respectively.

Quoted market prices in active markets for identical liabilities based inputs (Level 2) were used to estimate fair value.

1 unchanged sentence

Our obligations under the Note Purchase Agreement and the Senior Notes are unconditionally and irrevocably guaranteed by certain of our direct and indirect U.S.

subsidiaries, including ResMed Corp., ResMed Motor Technologies Inc., Birdie Inc., Inova Labs, Inc., Brightree LLC, Brightree Home Health & Hospice LLC, Brightree Patient Collections LLC, ResMed Operations Inc., HEALTHCAREfirst Holding Company, HCF Holdco Company, HEALTHCAREfirst, Inc., CareFacts Information Systems, LLC and Lewis Computer Services, LLC, MatrixCare Holdings Inc., MatrixCare, Inc., Reciprocal Labs Corporation and ResMed SaaS Inc., under a Subsidiary Guaranty Agreement dated as of July 10, 2019.

subsidiaries.

The net proceeds from this transaction were used to pay down borrowings on our Revolving Credit Agreement.

12 unchanged sentences

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.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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.

4 unchanged sentences

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 14 years, some of which include options to extend or terminate the leases.

Operating lease costs were $ 35.5 million for the year ended June 30, 2021 and $ 26.5 million for the year ended June 30, 2020.

Short-term and variable lease costs were not material for the years ended June 30, 2021 and June 30, 2020.

Future lease payments under non-cancellable leases as of June 30, 2021 and for the periods ending June 30 of the years indicated below were as follows (in thousands):

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Operating lease costs for the years ended June 30, 2022, 2021 and 2020 were $ 35.3 million, $ 35.5 million and $ 26.5 million, respectively.

Short-term and variable lease costs were not material for the years ended June 30, 2022, 2021 and 2020.

Future lease payments under non-cancellable operating leases as of June 30, 2022 are as follows (in thousands):

Total 2023 2024 2025 2026 2027 Thereafter

Minimum lease payments $ 161,219 $ 25,488 $ 19,561 $ 16,617 $ 15,783 $ 15,254 $ 68,516

2 unchanged sentences

As of June 30, 2022, we had additional operating lease commitments of $ 0.7 million for office space that have not yet commenced.

These leases will commence during the year ended June 30, 2022 with lease terms of 2 years to 3 years.

These leases will commence during the year ended June 30, 2023 with lease terms of 1 year to 5 years.

The supplemental information related to operating leases for the years ended June 30, 2022 and June 30, 2021 was as follows (in thousands):

5 unchanged sentences

Right of use assets obtained in exchange for new lease liabilities:

$ 41,382 $ 36,130

(b) Leases where ResMed is the Lessor

2 unchanged sentences

When lease contracts also include the sale of masks and accessories, we allocate contract consideration to those items on a relative standalone price basis and recognize revenue when control transfers to the customer.

The components of lease revenue for the years ended June 30, 2021 and June 30, 2020 were as follows (in thousands):

The components of lease revenue for the years ended June 30, 2022, 2021 and 2020 were as follows (in thousands):

2022 2021 2020

Sales-type lease revenue $ 9,342 $ 9,758 $ 13,457

4 unchanged sentences

Prepaid taxes and other non-current assets 7,635 6,214

Total $ 14,108 $ 14,240

PART II Item 8

AND SUBSIDIARIES

1 unchanged sentence

Maturities of sales-type leases as of June 30, 2022 were as follows (in thousands):

Total 2023 2024 2025 2026 2027 Thereafter

Remaining lease payments $ 16,068 $ 6,757 $ 4,207 $ 2,057 $ 1,915 $ 1,132 —

5 unchanged sentences

The program allows us to repurchase shares of our common stock from time to time for cash in the open market, or in negotiated or block transactions, as market and business conditions warrant and subject to applicable legal requirements.

The 20.0 million shares the new program authorizes us to purchase are in addition to the shares we repurchased on or before February 21, 2014 under our previous programs.

The 20.0 million shares the program authorizes us to purchase are in addition to the shares we repurchased on or before February 21, 2014 under our previous programs.

There is no expiration date for this program, and the program may be accelerated, suspended, delayed or discontinued at any time at the discretion of our board of directors.

5 unchanged sentences

Preferred Stock.

In April 1997, our board of directors authorized 2,000,000 shares of $ 0.01 par value preferred stock.

In April 1997, our board of directors authorized 2.0 million shares of 0.01 par value preferred stock.

No such shares were issued or outstanding at June 30, 2022.

12 unchanged sentences

The number of securities remaining available for future issuance under the 2009 Plan at June 30, 2022 is 15.3 million.

The number of shares of our common stock available for issuance under the 2009 Plan will be reduced by (i) 2.8 shares for each one share of common stock delivered in settlement of any “full-value award,” which is any award other than a stock option, stock appreciation right or other award for which the holder pays the intrinsic value and (ii) one share for each share of common stock delivered in settlement of all other awards.

The number of shares of our common stock available for issuance under the 2009 Plan will be reduced by (i) 2.8 shares for each one share of common stock delivered in settlement of any “full-value award,” which is any award other than a stock option, stock appreciation right or other award for which the holder pays a purchase price and (ii) one share for each share of common stock delivered in settlement of all other awards.

The maximum number of shares, which may be subject to awards granted under the 2009 Plan to any individual during any calendar year, may not exceed 3 million shares of our common stock (except in a participant’s initial year of hiring up to 4.5 million shares of our common stock may be granted).

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

In certain regions, shares are withheld on behalf of employees to satisfy statutory tax withholding requirements upon exercise or vesting of awards.

3 unchanged sentences

Shares withheld by us as a result of the net settlement are not considered issued and outstanding and are added to the reserves of the 2009 Plan.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The total fair value of RSUs and PRSUs that vested during the years ended June 30, 2022, 2021 and 2020, was $ 65.5 million, $ 59.6 million and $ 56.8 million, respectively.

The following table summarizes the activity of RSUs, including PRSUs, during year ended June 30, 2022 (in thousands, except years and per share amounts):

‎ Contractual

Units Weighted

Fair Value Weighted

Term in Years

Outstanding at beginning of period 875 $ 145.19 1.5

Granted 288 259.46

Vested* ( 575 ) 113.85

Performance factor adjustment 175 —

Expired / cancelled

Forfeited ( 82 ) 184.30

Outstanding at end of period 681 $ 203.46 1.6

1 unchanged sentence

The following table summarizes option activity during the year ended June 30, 2022 (in thousands, except years and per share amounts):

‎ Contractual

Options Weighted

Price Weighted

Term in Years

Outstanding at beginning of period 1,060 $ 97.01 3.7

Granted 56 256.33

Exercised ( 177 ) 63.31

Forfeited ( 1 ) 110.19

Outstanding at end of period 938 $ 112.91 3.2

9 unchanged sentences

At June 30, 2022, the number of shares remaining available for future issuance under the ESPP is 1.5 million shares.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

During years ended June 30, 2022, 2021 and 2020, we issued 216,000 , 229,000 and 265,000 shares to our employees in two offerings and we recognized $ 11.0 million, $ 10.9 million and $ 8.0 million, respectively, of stock compensation expense associated with the ESPP.

5 unchanged sentences

We recognize the fair value as compensation expense using the straight-line method over the service period for awards expected to vest.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

We estimate the fair value of stock options granted under our stock option plans and purchase rights granted under the ESPP using the assumptions in the following tables.

3 unchanged sentences

Expected volatility is estimated based upon the historical volatility of ResMed stock.

We estimate the fair value of stock options granted under our stock option plans and purchase rights granted under the ESPP using the

following assumptions for the years ended June 30, 2021, 2020 and 2019:

We estimate the fair value of stock options granted under our stock option plans and purchase rights granted under the ESPP using the following assumptions for the years ended June 30, 2022, 2021 and 2020:

2022 2021 2020

Stock options:

3 unchanged sentences

Dividend yield 0.66 % 0.75 % 1.07 %

1.34 % - 1.46 %

Expected volatility 32 % 31 % 25 %

2 unchanged sentences

Weighted average risk-free interest rate 0.3 % 0.1 % 1.6 %

Expected life in years

Expected life in years 6 months 6 months 6 months

Dividend yield 0.63 % - 0.98 %

1 unchanged sentence

0.98 % - 1.42 %

1.40 % - 1.47 %

Expected volatility 20 % - 34 %

The following table summarizes the total stock-based compensation costs incurred and the associated tax benefit recognized during the years ended June 30, 2022, 2021 and 2020 (in thousands):

2022 2021 2020

Cost of sales $ 5,218 $ 4,153 $ 3,703

2 unchanged sentences

Stock-based compensation costs 65,257 63,927 57,559

Tax benefit ( 29,262 ) ( 23,346 ) ( 39,534 )

Stock-based compensation costs, net of tax benefit $ 35,995 $ 40,581 $ 18,025

3 unchanged sentences

We compute basic earnings per share 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.

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

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

common stock equivalents such as stock options and restricted stock units.

The weighted average number of outstanding stock options and restricted stock units not included in the computation of diluted earnings per share were 67,000 , 141,000 and 164,000 for the years ended June 30, 2022, 2021 and 2020, respectively, as the effect would have been anti-dilutive.

Basic and diluted earnings per share for the years ended June 30, 2022, 2021 and 2020 are calculated as follows (in thousands except per share data):

2022 2021 2020

Net income $ 779,437 $ 474,505 $ 621,674

Basic weighted-average common shares outstanding 146,066 145,313 144,338

4 unchanged sentences

Diluted earnings per share $ 5.30 $ 3.24 $ 4.27

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(13) Other, net

Other, net, in the consolidated statements of income is comprised of the following for the years ended June 30, 2021, 2020 and 2019 (in thousands):

Gain (loss) on foreign currency transactions and hedging, net

Unrealized gains (losses) on investments (note 6)

Total Other, net

(13) Income Taxes

Income before income taxes for the years ended June 30, 2022, 2021 and 2020, was taxed under the following jurisdictions (in thousands):

2022 2021 2020

$ ( 85,919 ) $ 71,867 $ 60,548

1,046,402 811,795 672,540

Income before income taxes $ 960,483 $ 883,662 $ 733,088

The provision for income taxes is presented below (in thousands):

2022 2021 2020

Federal $ 4,376 $ ( 115,109 ) $ 9,790

State 10,700 9,041 6,898

177,788 531,812 124,602

192,864 425,744 141,290

Federal ( 12,612 ) ( 22,791 ) ( 13,000 )

State ( 2,773 ) ( 4,205 ) ( 3,335 )

3,567 10,409 ( 13,541 )

( 11,818 ) ( 16,587 ) ( 29,876 )

Provision for income taxes $ 181,046 $ 409,157 $ 111,414

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S.

federal income tax rate of 21% for the years ended June 30, 2022, 2021 and 2020, to pretax income as a result of the following (in thousands):

2022 2021 2020

Taxes computed at statutory U.S.

rate $ 201,701 $ 185,569 $ 153,949

Increase (decrease) in income taxes resulting from:

State income taxes, net of U.S.

tax benefit 5,703 4,836 3,563

Research and development credit ( 17,517 ) ( 20,257 ) ( 13,595 )

1 unchanged sentence

Effect of non-U.S.

tax rates ( 4,384 ) ( 12,130 ) ( 20,935 )

Foreign tax credits ( 2,299 ) ( 7,210 ) ( 4,026 )

1 unchanged sentence

Uncertain tax position — 248,773 —

Transition tax

Other 8,278 17,859 5,938

Provision for income taxes $ 181,046 $ 409,157 $ 111,414

3 unchanged sentences

Net deferred tax asset $ 70,032 $ 68,585

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The components of our deferred tax assets and liabilities at June 30, 2022 and June 30, 2021, are as follows (in thousands):

2 unchanged sentences

Tax credit carry overs 7,723 13,753

Inventories 10,570 11,734

Provision for warranties 4,814 4,149

6 unchanged sentences

Lease liabilities 21,702 25,751

Other ( 3,395 ) ( 4,911 )

221,518 210,887

Less valuation allowance ( 13,572 ) ( 13,106 )

3 unchanged sentences

Right of use assets ( 20,345 ) ( 23,693 )

Property, plant and equipment ( 9,491 ) ( 940 )

Deferred tax liabilities ( 137,914 ) ( 129,196 )

Net deferred tax asset $ 70,032 $ 68,585

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of June 30, 2022, we had $ 19.8 million of U.S.

8 unchanged sentences

Tax Act”), we have treated all non-U.S.

historical earnings as taxable, which resulted in additional tax expense of $ 6.0 million during the year ended June 30, 2019, which related to final treasury regulations issued and temporary guidance published during the year and is payable over eight years .

historical earnings as taxable.

Therefore, future repatriation of cash held by our non-U.S.

12 unchanged sentences

Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets.

Based on all known facts and circumstances and current tax law, we believe the total amount of unrecognized tax benefits on June 30, 2022, is not material to our results of operations, financial condition or cash flows, and if recognized, would not have a material impact on our effective tax rate.

Our income tax returns are based on calculations and assumptions subject to audit by various tax authorities.

2 unchanged sentences

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.

On September 19, 2021, we concluded the settlement agreement with the Australian Taxation Office (“ATO”) in relation to the previously disclosed transfer pricing dispute for the tax years 2009 through 2018 (“ATO settlement”).

The ATO settlement fully resolved the dispute for all prior years, with no admission of liability and provides clarity in relation to certain future taxation principles.

The final net impact of the ATO settlement was $ 238.7 million, which represents a gross amount of $ 381.7 million, including interest and penalties of $ 48.1 million, and adjustments for credits and deductions of $ 143.0 million.

As a result of the ATO settlement and due to movements in foreign currencies, we recorded a benefit of $ 14.1 million within other comprehensive income, and a $ 4.1 million reduction of tax credits, which was recorded to income tax expense.

As a result of the ATO settlement, we reversed our previously recorded uncertain tax position.

On September 28, 2021, we remitted final payment to the ATO of $ 284.8 million, consisting of the agreed settlement amount of $ 381.7 million less prior remittances made to the ATO of $ 96.9 million.

Tax years 2018 to 2021 remain subject to future examination by the major tax jurisdictions in which we are subject to tax.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

We are under audit by the Australian Taxation Office (the “ATO”) for the years 2009 to 2018 (the “Audit Period”).

The audits primarily involve a transfer pricing dispute in which the ATO asserts we should have paid additional Australian taxes on income derived from our Singapore operations.

The ATO issued Notices of Amended Assessments for the tax years 2009 to 2013 seeking a total of $ 266.0 million, consisting of $ 151.7 million in additional income tax and $ 114.3 million in penalties and interest.

The 2014 to 2018 periods are still under audit and we have not yet received any Notices of Amended Assessments relative to those periods.

A total of $ 98.8 million in tax has been prepaid in relation to the Audit Period, which is consistent with ATO procedural audit practice.

We are engaged in advanced discussions with the ATO to settle the dispute for the entire Audit Period.

Given the stage of those discussions, during the year ended June 30, 2021, we recorded $ 395.3 million of gross unrecognized tax benefits, including $ 47.5 million of accrued interest and penalties.

This amount reflects our estimate of the potential tax liability and is subject to change.

Included in the balance of uncertain tax positions as of June 30, 2021 were $ 248.7 million of net unrecognized tax benefits that, if recognized, would reduce the effective income tax rate in future periods.

This amount represents the $ 395.3 million of gross unrecognized tax, adjusted for tax credits and deductions of $ 146.6 million.

If the matter were to progress to litigation, we continue to believe we are more likely than not to be successful in defending our position.

If we are not successful in litigation, we will be required to pay some or all of the additional income tax, accrued interest and penalties, including potential additional amounts relating to the 2014 to 2018 periods.

The timing and resolution of the ATO audits are inherently uncertain, and the amounts we might ultimately pay or receive in credits and deductions, if any, upon resolution of issues raised by the ATO may differ materially from the amounts accrued.

Although it is expected that the amount of unrecognized tax benefits may change in the next 12 months, an estimate of the range of the possible change cannot be made.

Outside the ATO audit described above, tax years 2017 to 2020 remain subject to future examination by the major tax jurisdictions in which we are subject to tax.

(14) Segment Information

1 unchanged sentence

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 2 – significant accounting policies.

The accounting policies of the segments are the same as those described in note 2 – Summary of Significant Accounting Policies.

Segment net sales and segment income from operations do not 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 including stock-based compensation, amortization expense of acquired intangibles, restructuring expenses, litigation settlement expenses, acquisition related expenses, deferred revenue fair value adjustment, net interest expense, loss attributable to equity method investments, and other, net.

The non-allocated items include corporate headquarters costs including stock-based compensation, amortization expense of acquired intangibles, restructuring expenses, litigation settlement expenses, deferred revenue fair value adjustment, net interest expense (income), loss attributable to equity method investments, gains and losses on equity investments, and other, net.

We neither discretely allocate assets to our operating segments, nor does our Chief Operating Decision Maker evaluate the operating segments using discrete asset information.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The table below presents a reconciliation of net revenues, depreciation and amortization and net operating profit by reportable segments for the years ended June 30, 2022, 2021 and 2020 (in thousands):

2022 2021 2020

Net revenue by segment

2 unchanged sentences

Deferred revenue fair value adjustment (1)

— — ( 2,102 )

Total Software as a Service 400,829 373,590 354,632

Total $ 3,578,127 $ 3,196,825 $ 2,957,013

Depreciation and amortization by segment

2 unchanged sentences

Amortization of acquired intangible assets and corporate assets 72,927 78,377 81,556

Total $ 159,609 $ 156,758 $ 154,850

Net operating profit by segment

1 unchanged sentence

Software as a Service 93,821 93,037 82,152

Total $ 1,226,331 $ 1,129,749 $ 1,016,849

Reconciling items

3 unchanged sentences

Litigation settlement expenses — — ( 600 )

Acquisition related expenses

Deferred revenue fair value adjustment (1)

1 unchanged sentence

Loss attributable to equity method investments 8,486 11,205 25,058

(Gain) loss on equity investments 12,202 ( 14,515 ) 14,519

Other, net ( 3,197 ) ( 301 ) ( 2,362 )

Income before income taxes $ 960,483 $ 883,662 $ 733,088

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

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The following table summarizes our net revenue disaggregated by segment, product and region for the years ended June 30, 2022, 2021 and 2020 (in thousands):

2022 2021 2020

U.S., Canada and Latin America

Devices $ 1,070,420 $ 863,661 $ 792,766

Masks and other 911,387 841,452 779,561

1 unchanged sentence

Software as a Service 400,829 373,590 354,632

Total $ 2,382,636 $ 2,078,703 $ 1,926,959

Combined Europe, Asia and other markets

Devices $ 796,488 $ 746,379 $ 715,056

Masks and other 399,003 371,743 314,998

1 unchanged sentence

Global revenue

Devices $ 1,866,908 $ 1,610,040 $ 1,507,822

Masks and other 1,310,390 1,213,195 1,094,559

1 unchanged sentence

Software as a Service 400,829 373,590 354,632

Total $ 3,578,127 $ 3,196,825 $ 2,957,013

Revenue information by geographic area for the years ended June 30, 2022, 2021 and 2020 is summarized below (in thousands):

2022 2021 2020

United States $ 2,249,381 $ 1,962,721 $ 1,828,575

Rest of the World 1,328,746 1,234,104 1,128,438

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Total $ 3,578,127 $ 3,196,825 $ 2,957,013

Long-lived assets of geographic areas are those assets used in our operations in each geographical area, and excludes goodwill, other intangible assets, and deferred tax assets.

Long-lived assets by geographic area as of June 30, 2022 and 2021 is summarized below (in thousands):

Australia $ 192,833 $ 186,289

United States 169,090 159,815

Singapore 72,821 64,182

Rest of the World 63,309 53,204

Total $ 498,053 $ 463,490

(15) Employee Retirement Plans

5 unchanged sentences

Our total contributions to the plans for the years ended June 30, 2022, 2021 and 2020, were $ 11.8 million, $ 10.7 million and $ 9.5 million, respectively.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

United States We sponsor a defined contribution plan available to substantially all domestic employees.

7 unchanged sentences

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.

Taxation Matters

We are under audit by the ATO in three different cycles:

tax years 2009 to 2013, tax years 2014 to 2017 and tax year 2018.

Please refer to note 14 – Income Taxes, where we have provided an update in relation to this tax dispute in accordance with ASC 740 Income Taxes .

On June 2, 2021, New York University filed a complaint for patent infringement in the United States District Court, District of Delaware against ResMed Inc., case no.

1:21-cv-00813 (CFC).

The complaint alleges that the AutoSet or AutoRamp features of ResMed’s AirSense 10 AutoSet flow generators infringe one or more claims of various NYU patents, including U.S.

and 10,384,024.

According to the complaint, the NYU patents are directed to systems and methods for diagnosis and treating sleeping disorders during different sleep states.

The complaint seeks monetary damages and attorneys’ fees.

ResMed answered the complaint on September 30, 2021 and filed a motion to dismiss the complaint on the basis that the patents are invalid because the subject matter of the patents is not patentable under the Supreme Court and Federal Circuit precedent.

The motion to dismiss was granted in part and denied in part.

The matter is proceeding to discovery.

On January 27, 2021, the International Trade Commission instituted In Re Certain UMTS and LTE Cellular Communications Modules and Products Containing the Same, Investigation No.

337-TA-1240, by complainants Philips RS North America, LLC and Koninklijke Philips N.V.

(collectively “Philips”) against Quectel Wireless Solutions Co., Ltd;

Thales DIS AIS USA, LLC, Thales DIS AIS Deutschland GmbH;

Telit Wireless Solutions, Inc., Telit Communications PLC, CalAmp.

Corp., Xirgo Technologies, LLC, and Laird Connectivity, Inc.

(collectively “respondents”).

In the ITC investigation, Philips seeks an order excluding communications modules, and products that contain them, from importation into the United States based on alleged infringement of 3G and 4G standard essential patents held by Philips.

On October 6-14, 2021, the administrative law judge held a hearing on the merits.

The administrative law judge issued an initial determination on April 1, 2022, finding no violation of any of the Philips patents asserted in the ITC.

Philips sought review by the full International Trade Commission.

On July 6, 2022, the Commission affirmed the administrative law judge’s determination that there was no violation of asserted Philips patents.

The Commission terminated the ITC proceedings.

Philips may appeal the ITC’s decision or return to the district court to pursue its civil case for damages and an injunction.

On December 17, 2020, Philips filed companion cases for patent infringement against the same defendants in the United States District Court for the District of Delaware, case nos.

1:20-cv-01707, 01708, 01709, 01710, 01711, and 01713 (CFC) seeking damages, an injunction, and a declaration from the court on the amount of a fair reasonable and non-discriminatory license rate for the standard essential patents it is asserting against the communications module defendants.

The district court cases have been stayed pending the resolution of the ITC proceedings.

ResMed is not a party to the ITC investigation or the district court cases but sells products that incorporate some of the communications modules at issue in the cases.

On June 16, 2022, Cleveland Medical Devices Inc.

filed suit for patent infringement against ResMed Inc.

in the United States District Court for the District of Delaware, case no.

1:22-cv-00794.

Cleveland Medical asserts that numerous ResMed connected devices, when combined with ResMed’s AirView and ResScan data platforms, infringe one or more of eight Cleveland Medical patents, including U.S.

and 11,234,637.

Based on currently available information, we are unable to make a reasonable estimate of loss or range of losses, if any, arising from matters that remain open.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Contingent Obligations Under Recourse Provisions

7 unchanged sentences

As of June 30, 2021, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $ 30.2 million and $ 8.2 million, respectively.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

In the normal course of business, we enter into agreements to purchase goods or services that are not cancelable without penalty, primarily related to supply arrangements.

Obligations under our purchase agreements at June 30, 2021 were as follows (in thousands):

Fiscal Years Ending June 30

In addition, in June 2022 we signed a definitive agreement to acquire MEDIFOX DAN which is expected to close during our fiscal year 2023.

The MEDIFOX DAN acquisition remains subject to regulatory clearances and other customary closing conditions.

Upon closing, acquisition consideration will be paid, in part, with funds available for draw under our Revolving Credit Agreement.

Obligations under our purchase agreements and the MEDIFOX DAN acquisition agreement at June 30, 2022 were as follows (in thousands):

Total Fiscal Years Ending June 30

2023 2024 2025 2026 2027 Thereafter

Minimum purchase obligations $ 1,707,951 $ 1,251,476 $ 440,067 $ 13,152 $ 1,431 $ — $ 1,825

(18) Business Combinations

Fiscal years ended June 30, 2021 and June 30, 2020

During the years ended June 30, 2021 and 2020 we did no t complete any material business combinations or record material acquisition-related expenses.

Fiscal year ended June 30, 2019

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.

During the year ended June 30, 2019, revenues of $ 79.2 million and losses from operations of $ 9.1 million related to MatrixCare were included in the consolidated statement of comprehensive income.

The losses from operations for the year ended June 30, 2019 was negatively impacted by $ 19.0 million of amortization of acquired intangible assets and fair value purchase price adjustments relating to deferred revenue of $ 5.3 million.

Excluding the impact of these items, revenue for the year ended June 30, 2019 was $ 84.6 million and income from operations was $ 15.3 million.

The acquisition is considered a material business combination and accordingly unaudited pro forma information is presented below for the year ended June 30, 2019.

The pro forma results were prepared using the acquisition method of accounting and combine our historical results and MatrixCare’s for the year ended June 30, 2019, 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.

The following table summarized unaudited pro forma consolidated results for the year ended June 30, 2019 (in thousands, except per share information):

Basic earnings per share

Diluted earnings per share

The unaudited pro forma consolidated results for the year ended June 30, 2019 reflects primarily the following pro forma pre-tax adjustments:

 Net amortization expense related to the fair value of identifiable intangible assets acquired of $ 0.6 million.

 Net interest expense associated with debt that was issued to finance the acquisition of $ 2.6 million.

 Elimination of pre-tax acquisition-related costs incurred by ResMed and MatrixCare of $ 3.7 million and $ 16.7 million, respectively.

 Net income tax expense of $ 1.8 million.

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

MEDIFOX DAN acquisition consideration $ 994,245 $ 994,245 $ — $ — $ — $ — $ —

Total $ 2,702,196 $ 2,245,721 $ 440,067 $ 13,152 $ 1,431 $ — $ 1,825

(17) Restructuring Expenses

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The restructure was completed as of June 30, 2021.

During the year ended June 30, 2020, we did no t incur material restructuring expenses.

During the year ended June 30, 2019, we incurred restructuring expenses of $ 9.4 million associated with the reorganization, rationalization and relocation of some of our research and development and SaaS operations including the closure of our German research and development site.

We recorded the full amount of $ 9.4 million during the year ended June 30, 2019, within our operating expenses, which was separately disclosed as restructuring expenses and had $ 5.4 million remaining in our accruals at year end, which was paid during the year ended June 30, 2020.

The restructuring expenses consisted primarily of severance payments to employees and contract exit costs associated with several impacted sites.

(20) Litigation Settlement Expenses

We did no t recognize any material litigation settlement expenses during the years ended June 30, 2021 and 2020.

During the year ended June 30, 2019 we recognized litigation settlement expenses of $ 41.2 million associated with a tentative agreement with the United States Department of Justice to civilly resolve the investigation of certain marketing practices.

We finalized the settlement in December 2019 and announced it in January 2020 on terms that were consistent with our prior reserve.

The settlement amount consisted of the payment to the United States and to various states that joined the action, as well as attorneys’ fees and other costs to the private litigants that filed the suits that the Department of Justice pursued.

We also entered into a corporate integrity agreement with the Office of the Inspector General of the U.S.

Department of Health and Human Services with accompanying oversight of our sales and marketing practices in the United States for five years.

During the years ended June 30, 2022 and 2020 we did no t incur material restructuring expenses.

PART II Item 8

AND SUBSIDIARIES

2 unchanged sentences

(in thousands)

Charged to costs and expenses

‎ (deductions)

of Period Charged to costs and expenses Other

(deductions) Balance at

Year ended June 30, 2022

4 unchanged sentences

Allowance for trade accounts receivable (1)

$ 30,013 $ 7,805 $ ( 5,680 ) $ 32,138

Year ended June 30, 2020

4 unchanged sentences

Measurement of Credit Losses on Financial Instruments” (Topic 326), effective July 1, 2021.

Refer to Note 3 - New Accounting Pronouncements of the Notes to the Consolidated Financial Statements (Part II, Item 8) for additional information.

See accompanying report of independent registered public accounting firm.

PART II Items 9 – 9B

AND SUBSIDIARIES

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk