What changed in this filing

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Item 1. Financial Statements

2024-01-25 compared with 2023-10-27 · 386 added, 202 removed, 827 unchanged (42% of the section changed)

3 unchanged sentences

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

September 30,

2023 June 30,

1 unchanged sentence

Cash and cash equivalents $ 210,247 $ 227,891

Accounts receivable, net of allowances of $ 20,532 and $ 23,603 at September 30, 2023 and June 30, 2023, respectively

Accounts receivable, net of allowances of $ 21,822 and $ 23,603 at December 31, 2023 and June 30, 2023, respectively

729,740 704,909

33 unchanged sentences

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

188,921,316 issued and 147,085,082 outstanding at September 30, 2023 and 188,900,583 issued and 147,064,349 outstanding at June 30, 2023

189,259,220 issued and 147,087,512 outstanding at December 31, 2023 and 188,900,583 issued and 147,064,349 outstanding at June 30, 2023

Additional paid-in capital 1,822,918 1,772,083

Retained earnings 4,539,963 4,253,016

Treasury stock, at cost, 41,836,234 shares at September 30, 2023 and June 30, 2023

Treasury stock, at cost, 42,171,708 shares at December 31, 2023 and 41,836,234 shares at June 30, 2023

( 1,673,263 ) ( 1,623,256 )

8 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

Net revenue - Sleep and Respiratory Care products $ 1,017,855 $ 916,981 $ 1,980,892 $ 1,761,424

12 unchanged sentences

Amortization of acquired intangible assets 11,577 9,563 24,056 17,513

Restructuring expenses (note 11) 64,228 — 64,228 —

Acquisition related expenses — 8,412 — 9,157

Total operating expenses 371,840 299,521 682,903 564,592

2 unchanged sentences

Interest (expense) income, net ( 13,805 ) ( 10,338 ) ( 28,762 ) ( 17,472 )

Loss attributable to equity method investments (note 5) ( 3,895 ) ( 2,028 )

Gain (loss) attributable to equity method investments (note 5) 739 ( 2,826 ) ( 3,156 ) ( 4,853 )

Gain (loss) on equity investments (note 5) ( 1,888 ) 8,368 ( 2,491 ) 5,088

15 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

Net income $ 208,800 $ 224,914 $ 428,222 $ 435,392

Other comprehensive income (loss), net of taxes:

Other comprehensive income, net of taxes:

Unrealized losses on designated hedging instruments ( 19,891 ) ( 20,203 ) ( 36,984 ) ( 20,203 )

Foreign currency translation (loss) gain adjustments ( 30,527 ) ( 93,381 )

Foreign currency translation gain adjustments 131,687 156,163 101,160 62,782

Comprehensive income $ 320,596 $ 360,874 $ 492,398 $ 477,971

21 unchanged sentences

188,921 $ 588 $ 1,791,351 ( 41,836 ) $ ( 1,623,256 ) $ 4,401,841 $ ( 320,148 ) $ 4,250,376

Common stock issued on exercise of options 24 — 1,557 — — — — 1,557

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 163 1 ( 7,798 ) — — — — ( 7,797 )

Common stock issued on employee stock purchase plan 151 1 17,966 — — — — 17,967

Treasury stock purchases — ( 2 ) 2 ( 336 ) ( 50,007 ) — — ( 50,007 )

Stock-based compensation costs — — 19,840 — — — — 19,840

Other comprehensive income — — — — — — 111,796 111,796

Net income — — — — — 208,800 — 208,800

Dividends declared ($ 0.48 per common share)

— — — — — ( 70,678 ) — ( 70,678 )

Balance, December 31, 2023

189,259 $ 588 $ 1,822,918 ( 42,172 ) $ ( 1,673,263 ) $ 4,539,963 $ ( 208,352 ) $ 4,481,854

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

20 unchanged sentences

188,295 $ 586 $ 1,701,902 ( 41,836 ) $ ( 1,623,256 ) $ 3,759,783 $ ( 406,128 ) $ 3,432,887

Common stock issued on exercise of options 77 — 5,120 — — — — 5,120

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 265 1 ( 29,655 ) — — — — ( 29,654 )

Common stock issued on employee stock purchase plan 100 1 16,935 — — — — 16,936

Stock-based compensation costs — — 16,464 — — — — 16,464

Other comprehensive income (loss) — — — — — — 135,960 135,960

Net income — — — — — 224,914 — 224,914

Dividends declared ($ 0.44 per common share)

— — — — — ( 64,500 ) — ( 64,500 )

Balance, December 31, 2022

188,737 $ 588 $ 1,710,766 ( 41,836 ) $ ( 1,623,256 ) $ 3,920,197 $ ( 270,168 ) $ 3,738,127

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

3 unchanged sentences

(In US$ and in thousands)

Three Months Ended

September 30,

Six Months Ended

Cash flows from operating activities:

6 unchanged sentences

(Gain) loss on equity investments (note 5) 2,491 ( 5,088 )

Non-cash restructuring expenses (note 11) 33,239 —

Changes in operating assets and liabilities:

11 unchanged sentences

Proceeds from exits of investments (note 5) 250 —

(Payments) / proceeds on maturity of foreign currency contracts ( 1,501 ) ( 3,042 )

Proceeds / (payments) on maturity of foreign currency contracts ( 6,956 ) 7,181

Net cash used in investing activities ( 190,123 ) ( 1,085,218 )

1 unchanged sentence

Proceeds from issuance of common stock, net 20,507 24,666

Purchases of treasury stock ( 50,007 ) —

Taxes paid related to net share settlement of equity awards ( 8,022 ) ( 29,713 )

3 unchanged sentences

Dividends paid ( 141,275 ) ( 128,931 )

Net cash used in financing activities

Net cash (used in) provided by financing activities

( 390,090 ) 891,022

10 unchanged sentences

Deferred payments

( 143 ) ( 874 )

Fair value of contingent consideration

20 unchanged sentences

The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024.

The condensed consolidated financial statements for the three months ended September 30, 2023 and September 30, 2022 are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K (our “Form 10-K”) for the year ended June 30, 2023.

The condensed consolidated financial statements for the three and six months ended December 31, 2023 and December 31, 2022 are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K (our “Form 10-K”) for the year ended June 30, 2023.

Revenue Recognition

10 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

U.S., Canada and Latin America

28 unchanged sentences

The following table summarizes our contract balances (in thousands):

September 30,

2023 June 30,

37 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.

Operating lease revenue was $ 22.7 million for the three months ended September 30, 2023 and $ 23.7 million for the three months ended September 30, 2022.

Operating lease revenue was $ 23.1 million and $ 45.7 million for the three and six months ended December 31, 2023 and $ 20.4 million and $ 44.1 million for the three and six months ended December 31, 2022.

Provision for Warranty

7 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

Recently Issued Accounting Standards Not Yet Adopted

2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures," which expands segment disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

This ASU is applicable to our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, and subsequent interim periods.

Early adoption is permitted and the amendments must be applied retrospectively to all prior periods presented.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

ASU 2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No.

2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures," which updates income tax disclosure requirements primarily by requiring specific categories and greater disaggregation within the rate reconciliation and disaggregation of income taxes paid.

This ASU is applicable to our Annual Report on Form 10-K for the fiscal year ended June 30, 2026, with early application permitted.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

(2) Segment Information

4 unchanged sentences

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, net interest expense (income), loss attributable to equity method investments, gains and losses on equity investments, and other, net.

The non-allocated items include corporate headquarters costs, stock-based compensation, amortization expense from acquired intangibles, restructuring expenses, field safety notification expenses, acquisition related expenses, net interest expense (income), gains and losses 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.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

The table below presents a reconciliation of net revenues and net operating profit by reportable segments (in thousands):

Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

Net revenue by segment

15 unchanged sentences

Amortization of acquired intangible assets 19,834 16,868 41,220 31,193

Restructuring expenses 64,228 — 64,228 —

Masks with magnets field safety notification expenses (1)

6,351 — 6,351 —

Astral field safety notification expenses (2)

Acquisition related expenses

— 8,412 — 9,157

Interest expense (income), net 13,805 10,338 28,762 17,472

Loss attributable to equity method investments 3,895 2,028

(Gain) Loss attributable to equity method investments

( 739 ) 2,826 3,156 4,853

(Gain) loss on equity investments 1,888 ( 8,368 ) 2,491 ( 5,088 )

1 unchanged sentence

Income before income taxes $ 259,454 $ 273,691 $ 531,645 $ 535,484

(1) The masks with magnets field safety notification expenses relate to estimated costs to provide alternative masks to patients in response to updated contraindications for use of masks that incorporate magnets.

(2) The Astral field safety notification expenses relate to estimated costs associated with the replacement of a certain component in some of our Astral ventilation devices that were manufactured between 2013 to 2019.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(3) Supplemental Balance Sheet Information

Components of selected captions in the condensed consolidated balance sheets consisted of the following (in thousands):

Inventories September 30,

Inventories December 31,

2023 June 30,

3 unchanged sentences

Total inventories $ 933,214 $ 998,012

Prepaid expenses and other current assets September 30,

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Prepaid expenses and other current assets December 31,

2023 June 30,

3 unchanged sentences

Total prepaid expenses and other current assets $ 504,876 $ 437,018

Property, Plant and Equipment September 30,

Property, Plant and Equipment December 31,

2023 June 30,

2 unchanged sentences

Property, plant and equipment, net $ 551,734 $ 537,856

Other Intangible Assets September 30,

Other Intangible Assets December 31,

2023 June 30,

11 unchanged sentences

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

During the three months ended December 31, 2023, we impaired $ 18.6 million of developed/core product technology intangible assets, $ 14.5 million of customer relationship intangible assets, and $ 0.1 million of other intangibles associated with restructuring activities.

These non-cash charges were recorded within restructuring expenses in the condensed consolidated statements of operations.

Refer to Note 11, Restructuring Expenses, for the facts and circumstances leading to the impairments.

We did not record any intangible asset impairments during the three and six months ended December 31, 2022.

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

Three Months Ended September 30, 2023

Six Months Ended December 31, 2023

Respiratory Care SaaS Total

3 unchanged sentences

Balance at the end of the period $ 751,842 $ 2,110,012 $ 2,861,854

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(5) Investments

1 unchanged sentence

The following discusses our investments in marketable equity securities, non-marketable equity securities, and investments accounted for under the equity method.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Our marketable equity securities are publicly traded stocks measured at fair value and classified within Level 1 in the fair value hierarchy because we use quoted prices for identical assets in active markets.

7 unchanged sentences

Equity investments by measurement category were as follows (in thousands):

Measurement category September 30,

Measurement category December 31,

2023 June 30,

3 unchanged sentences

Total $ 148,698 $ 146,537

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

The following tables show a reconciliation of the changes in our equity investments (in thousands):

Three Months Ended September 30, 2023

Six Months Ended December 31, 2023

Non-marketable securities Marketable securities Equity method investments Total

1 unchanged sentence

Additions to investments 4,180 — 3,125 7,305

Unrealized losses on marketable equity securities — ( 602 ) — ( 602 )

Observable price adjustments on non-marketable equity securities 2,315 — — 2,315

Unrealized (gains) losses on marketable equity securities — ( 4,806 ) — ( 4,806 )

Proceeds from exits of investments ( 250 ) — — ( 250 )

2 unchanged sentences

Carrying value at the end of the period $ 74,993 $ 7,617 $ 66,088 $ 148,698

Three Months Ended September 30, 2022

Six Months Ended December 31, 2022

Non-marketable securities Marketable securities Equity method investments Total

2 unchanged sentences

17,132 — 57,233 74,365

Observable price adjustments on non-marketable equity securities

9,275 — — 9,275

Unrealized losses on marketable equity securities

1 unchanged sentence

Loss attributable to equity method investments — — ( 4,853 ) ( 4,853 )

Foreign currency translation adjustments

— — 1,801 1,801

Carrying value at the end of the period $ 65,697 $ 4,980 $ 64,099 $ 134,776

Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of September 30, 2023 for the three months ended September 30, 2023 were $ 0.6 million.

Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of September 30, 2022 for the three months ended September 30, 2022 were $ 3.3 million.

Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of December 31, 2023 for the three and six months ended December 31, 2023 were $ 1.9 million and $ 2.5 million.

Net unrealized gains recognized for equity investments in non-marketable and marketable securities held as of December 31, 2022 for the three and six months ended December 31, 2022 were $ 8.4 million and $ 5.1 million.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(6) Product Warranties

Changes in the liability for warranty costs, which is included in accrued expenses in our condensed consolidated balance sheets, are as follows (in thousands):

Three Months Ended

September 30,

Six Months Ended

Balance at the beginning of the period $ 27,621 $ 25,889

4 unchanged sentences

Debt consisted of the following (in thousands):

September 30,

2023 June 30,

6 unchanged sentences

Total debt $ 1,226,667 $ 1,441,136

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Credit Facility

9 unchanged sentences

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.

Events of default under the Revolving Credit Agreement and the Term

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

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.

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.

1 unchanged sentence

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 September 30, 2023, the interest rate that was being charged on the outstanding principal amounts was 6.3 %.

At December 31, 2023, the interest rate that was being charged on the outstanding principal amounts was 6.3 %.

An applicable commitment fee of 0.075 % to 0.150 % (depending on the then-applicable leverage ratio) applies on the unused portion of the revolving credit facility.

As of September 30, 2023, we had $ 825.0 million available for draw down under the revolving credit facility.

As of December 31, 2023, we had $ 955.0 million 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 Adjusted Term SOFR plus the spreads described above, its carrying amount is equivalent to its fair value as at September 30, 2023 and June 30, 2023, which was $ 865.0 million and $ 945.0 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 December 31, 2023 and June 30, 2023, which was $ 730.0 million and $ 945.0 million, respectively.

On July 10, 2019, we entered into a Note Purchase Agreement with the purchasers to that agreement, in connection with the issuance and sale of $ 250.0 million principal amount of our 3.24 % senior notes due July 10, 2026, and $ 250.0 million principal amount of our 3.45 % senior notes due July 10, 2029 (collectively referred to as the “Senior Notes”).

2 unchanged sentences

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

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Under the terms of the Note Purchase Agreement, we agreed to customary covenants including with respect to our corporate existence, transactions with affiliates, and mergers and other extraordinary transactions.

2 unchanged sentences

As of September 30, 2023 and June 30, 2023, the Senior Notes had a carrying amount of $ 500.0 million, excluding deferred borrowing costs, and an estimated fair value of $ 451.7 million and $ 462.2 million, respectively.

As of December 31, 2023 and June 30, 2023, the Senior Notes had a carrying amount of $ 500.0 million, excluding deferred borrowing costs, and an estimated fair value of $ 466.8 million and $ 462.2 million, respectively.

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

At September 30, 2023, we were in compliance with our debt covenants and there was $ 1,365.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

At December 31, 2023, we were in compliance with our debt covenants and there was $ 1,230.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

(8) Earnings Per Share

1 unchanged sentence

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.

The weighted average number of outstanding stock options and restricted stock units not included in the computation of diluted earnings per share were 417,364 and 113,167 for the three months ended September 30, 2023 and 2022, respectively, as the effect would have been anti-dilutive.

The weighted average number of outstanding stock options and restricted stock units not included in the computation of diluted earnings per share were 663,485 and 293,796 for the three months ended December 31, 2023 and 2022,

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

respectively, and 643,466 and 270,100 for the six months ended December 31, 2023 and 2022, respectively, as the effect would have been anti-dilutive.

Basic and diluted earnings per share are calculated as follows (in thousands except per share data):

Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

Net income $ 208,800 $ 224,914 $ 428,222 $ 435,392

12 unchanged sentences

and 10,384,024.

According to the complaint, the NYU patents are directed to systems and methods for diagnosis and treating sleeping

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

disorders during different sleep states.

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.

1 unchanged sentence

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

We have also requested that the court dismiss the case based on NYU’s license of the patents to Fisher & Paykel and Fisher & Paykel’s prior settlement with us;

that request is pending.

In December 2022, the Patent Trial and Appeals Board (“PTAB”) of the Patent and Trademark Office granted our request to review the validity of the claims in the patents asserted by NYU against us, determining that there is a reasonable likelihood that we will prevail.

The PTAB’s final written decisions on the validity of the asserted claims is expected by December 2023.

On April 10, 2023, the district court granted our request to stay the case pending the PTAB’s decision on the validity of the patents asserted by NYU.

In December 2022, the Patent Trial and Appeal Board (“PTAB”) of the Patent and Trademark Office granted our request to review the validity of the claims in the patents asserted by NYU against us, determining that there is a reasonable likelihood that we will prevail.

In December 2023, the PTAB issued written decisions invalidating each of the challenged claims in each of the NYU patents asserted against us.

On December 28, 2023, the District Court entered an order continuing its stay of all proceedings against us pending any appeal by NYU of the invalidation of its patents by the PTAB.

The deadlines for NYU to appeal the PTAB’s rulings are the week of February 5, 2024.

Any appeals are not expected to resolve before March 2025.

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

13 unchanged sentences

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.

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-

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

discriminatory license rate for the standard essential patents it is asserting against the communications module defendants.

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

1 unchanged sentence

We were not a party to the ITC investigation, and we are not a party to the district court cases, but we sell products that incorporate communications modules at issue in the district court case.

The first trial in these cases is set for August 12, 2024.

The first trial in the cases by Philips against the communications module defendants is set for April 1, 2024.

On June 16, 2022, Cleveland Medical Devices Inc.

5 unchanged sentences

We moved to dismiss the action because Cleveland Medical sued the wrong ResMed entity, and to dismiss the indirect and willful infringement allegations by Cleveland Medical.

On October 2, 2023, the court granted a portion of the motion, dismissing all Cleveland Medical claims for indirect and willful infringement, and declined the rest of the motion.

On March 23, 2023, we filed a petition with the Patent Trial and Appeals Board of the Patent and Trademark Office seeking review of the validity of Cleveland Medical U.S.

Patent 10,076,269.

On September 25, 2023, the PTAB exercised its discretion to deny our petition challenging the validity of the ‘269 patent in light of the August 2024 trial date in the Delaware District Court case;

that decision does not impact the merits of our invalidity challenge in that trial.

On October 2, 2023, the court granted a portion of the motion, dismissing all Cleveland Medical claims for indirect and willful infringement, and denied the rest of the motion.

On March 22, 2023, we filed a petition with the PTAB of the Patent and Trademark Office seeking review of the validity of U.S.

On September 25, 2023, the PTAB exercised its discretion to deny our petition challenging the validity of the U.S.

10,076,269 in light of the August 2024 trial date in the Delaware District Court case.

That discretionary denial was overturned by the Director of the Patent and Trademark Office, and the panel was ordered to reconsider the discretionary denial.

That decision is pending.

On March 20, 2023, ResMed Corp.

filed suit in the Southern District of California, case no.

filed suit in the United States District Court for the Southern District of California, case no.

23-cv-00500-TWR-JLB, seeking a declaration that it does not infringe U.S.

patent number 11,602,284 recently issued to Cleveland Medical.

Cleveland Medical has asked the court to dismiss the California case or to move it to Delaware or Cleveland for the convenience of the parties.

We are opposing that request.

11,602,284 issued to Cleveland Medical.

In November 2023, the case was transferred to the Northern District of Ohio for the convenience of the parties.

Cleveland Medical answered the complaint and filed a counterclaim asserting that ResMed Corp.

infringes three additional Cleveland Medical patents, including U.S.

and 11,786,680.

has challenged the validity of U.S.

11,602,284 in the PTAB.

It is expected that the PTAB will determine whether to examine the validity of U.S.

11,602,284 patent by June 2024.

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.

2 unchanged sentences

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

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

customer’s receivable balance is with limited recourse whereby we are responsible for repaying the financing company should the customer default.

For some of these arrangements, the customer’s receivable balance is with limited recourse 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.

During the three months ended September 30, 2023 and September 30, 2022, receivables sold with limited recourse were $ 47.7 million and $ 39.9 million, respectively.

As of September 30, 2023, the maximum exposure on outstanding receivables sold with recourse and the associated contingent provision were $ 28.9 million and $ 0.8 million, respectively.

During the six months ended December 31, 2023 and December 31, 2022, receivables sold with limited recourse were $ 97.5 million and $ 84.3 million, respectively.

As of December 31, 2023, the maximum exposure on outstanding receivables sold with recourse and the associated contingent provision were $ 29.2 million and $ 0.8 million, respectively.

As of June 30, 2023, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $ 32.6 million and $ 0.6 million, respectively.

6 unchanged sentences

All derivatives are recorded at fair value as either an asset or liability.

Cash flows associated with derivative instruments are presented in the same category on the consolidated statements of cash flows as the hedged item.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

associated with derivative instruments are presented in the same category on the consolidated statements of cash flows as the hedged item.

The purpose of the cross-currency swaps for the fair value hedge is to mitigate foreign currency risk associated with changes in spot rates on foreign denominated intercompany debt between USD and EUR.

6 unchanged sentences

The initial fair value of components excluded from the assessment of hedge effectiveness will be recognized in interest (expense) income, net.

The notional value of outstanding foreign cross-currency swaps was $ 1,014.8 million and $ 1,046.6 million at September 30, 2023 and June 30, 2023, respectively.

The notional value of outstanding foreign cross-currency swaps was $ 1,059.3 million and $ 1,046.6 million at December 31, 2023 and June 30, 2023, respectively.

These contracts mature at various dates prior to December 31, 2029.

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All movements in the fair value of the foreign currency instruments are recorded within other, net in our condensed consolidated statements of income.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

The notional value of the outstanding non-designated hedges was $ 1,363.3 million and $ 954.7 million at September 30, 2023 and June 30, 2023, respectively.

The notional value of the outstanding non-designated hedges was $ 1,158.5 million and $ 954.7 million at December 31, 2023 and June 30, 2023, respectively.

These contracts mature at various dates prior to March 15, 2025.

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The following table presents our assets and liabilities related to derivative instruments on a gross basis within the condensed consolidated balance sheets (in thousands):

September 30,

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

2023 June 30,

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Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

Gain (loss) recognized in other comprehensive income (loss) $ 2,002 $ ( 4,610 ) $ 2,590 $ ( 4,610 )

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Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

Gain (loss) recognized in cumulative translation adjustment within other comprehensive income (loss) $ ( 27,828 ) $ ( 22,831 ) $ ( 4,393 ) $ ( 22,831 )

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We recognized the following gains (losses) in the condensed consolidated statement of operations on derivatives not designated as hedging instruments (in thousands):

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

Gain (loss) recognized on foreign currency hedging instruments in other, net $ 30,654 $ 40,090 $ 15,581 $ 19,568

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We classified the fair values of all hedging instruments as Level 2 measurements within the fair value hierarchy.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

We are exposed to credit-related losses in the event of non-performance by counter parties to financial instruments.

We minimize counterparty credit risk by entering into derivative transactions with major financial institutions.

(11) Restructuring Expenses

During the three and six months ended December 31, 2023, we recorded $ 64.2 million of restructuring related charges associated with an evaluation of our existing operations to increase operational efficiency, decrease costs and increase profitability.

Although the costs associated with the restructuring plan have not been allocated to our business segments' results in Note 2 - Segment Information, the restructuring plan impacted both our Sleep and Respiratory Care and SaaS segments.

Restructuring charges for the three and six months ended December 31, 2023 are comprised of $ 28.6 million of employee severance and other one-time termination benefits, $ 33.2 million of intangible asset impairments associated with the wind down of certain business activities, and $ 2.4 million of other miscellaneous asset impairments.

These costs are separately presented as restructuring expenses within our condensed consolidated statement of operations.

We had $ 7.0 million remaining in our accruals at December 31, 2023.

We expect to complete all actions related to the restructuring by June 30, 2024, and we do not expect the remaining expense to be material.

PART I – FINANCIAL INFORMATION Item 2

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

The following is an overview of our results of operations for the three months ended September 30, 2023.

The following is an overview of our results of operations for the three and six months ended December 31, 2023.

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition.

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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.

In November 2023, we announced a new operating model to accelerate long-term growth.

The new operating model introduces dedicated leadership in Product, Revenue, and Marketing to the global executive team.

This change aims to increase the velocity of product development and sharpen our customer and brand focus.

Ultimately, the goal is to accelerate profitable growth, while driving greater value and improved care throughout the outside hospital care continuum and the patient journey.

We are committed to ongoing investment in research and development and product enhancements.

During the three months ended September 30, 2023, we invested $75.7 million on research and development activities, which represents 6.9% of net revenues, 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.

During the three months ended September 30, 2023, we continued the launch of AirSense 11, which introduces new features such as a touch screen, algorithms for patients new to therapy and digital enhancements and over-the-air update capabilities.

During the three months ended December 31, 2023, we invested $73.9 million on research and development activities, which represents 6.4% of net revenues, 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.

During the three months ended December 31, 2023, we continued the launch of AirSense 11, which introduces new features such as a touch screen, algorithms for patients new to therapy and digital enhancements and over-the-air update capabilities.

Due to multiple acquisitions, including Brightree in 2016, HEALTHCAREfirst and MatrixCare in 2018, and MEDIFOX DAN in 2022, our operations 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.

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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”).

Net revenue for the three months ended September 30, 2023 was $1.1 billion, an increase of 16% compared to the three months ended September 30, 2022.

Gross margin was 54.4% for the three months ended September 30, 2023 compared to 56.9% for the three months ended September 30, 2022.

Diluted earnings per share was $1.49 for the three months ended September 30, 2023, compared to diluted earnings per share of $1.43 for the three months ended September 30, 2022.

At September 30, 2023, our cash and cash equivalents totaled $209.1 million, our total assets were $6.7 billion and our stockholders’ equity was $4.3 billion.

Net revenue for the three months ended December 31, 2023 was $1.2 billion, an increase of 12% compared to the three months ended December 31, 2022.

Gross margin was 55.6% for the three months ended December 31, 2023 compared to 56.1% for the three months ended December 31, 2022.

Diluted earnings per share was $1.42 for the three months ended December 31, 2023, compared to diluted earnings per share of $1.53 for the three months ended December 31, 2022.

At December 31, 2023, our cash and cash equivalents totaled $210.2 million, our total assets were $6.9 billion and our stockholders’ equity was $4.5 billion.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

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.

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dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”).

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

Results of Operations

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

Net revenue for the three months ended September 30, 2023 increased to $1,102.3 million from $950.3 million for the three months ended September 30, 2022, an increase of $152.0 million or 16% (a 15% increase on a constant currency basis).

Three Months Ended December 31, 2023 Compared to the Three Months Ended December 31, 2022

Net revenue for the three months ended December 31, 2023 increased to $1,162.8 million from $1,033.7 million for the three months ended December 31, 2022, an increase of $129.1 million or 12% (a 11% increase on a constant currency basis).

The following table summarizes our net revenue disaggregated by segment, product and region (in thousands):

Three Months Ended

September 30, % Change Constant Currency*

December 31, % Change Constant Currency*

U.S., Canada and Latin America

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Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the three months ended September 30, 2023 was $963.0 million, an increase of 14% compared to net revenue for the three months ended September 30, 2022.

Net revenue from our Sleep and Respiratory Care business for the three months ended December 31, 2023 was $1,017.9 million, an increase of 11% compared to net revenue for the three months ended December 31, 2022.

Movements in international currencies against the U.S.

dollar positively impacted net revenue by approximately $9.6 million for the three months ended September 30, 2023.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended September 30, 2023 increased by 13% compared to the three months ended September 30, 2022.

dollar positively impacted net revenue by approximately $10.8 million for the three months ended December 31, 2023.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended December 31, 2023 increased by 10% compared to the three months ended December 31, 2022.

The increase in net revenue associated with our devices and masks was primarily attributable to increased demand and unit sales.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the three months ended September 30, 2023 increased to $638.4 million from $578.1 million for the three months ended September 30, 2022, an increase of $60.3 million or 10%.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the three months ended December 31, 2023 increased to $669.3 million from $615.3 million for the three months ended December 31, 2022, an increase of $54.1 million or 9%.

The increase in net revenue associated with our devices and masks was primarily attributable to increased demand and unit sales.

Net revenue in combined Europe, Asia and other markets increased for the three months ended September 30, 2023 to $324.7 million from $266.3 million for the three months ended September 30, 2022, an increase of $58.3 million or 22% (an 18% increase on a constant currency basis).

Net revenue in combined Europe, Asia and other markets increased for the three months ended December 31, 2023 to $348.5 million from $301.7 million for the three months ended December 31, 2022, an increase of $46.8 million or 16%

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

(an 12% increase on a constant currency basis).

The constant currency increase in device and mask sales in combined Europe, Asia and other was primarily attributable to increased demand and unit sales.

Net revenue from devices for the three months ended September 30, 2023 increased to $564.7 million from $517.6 million for the three months ended September 30, 2022, an increase of $47.2 million or 9%, including an increase of 2% in the U.S., Canada and Latin America and an increase of 23% in combined Europe, Asia and other markets (a 20% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the three months ended September 30, 2023 increased by 8%.

Net revenue from devices for the three months ended December 31, 2023 increased to $606.0 million from $542.8 million for the three months ended December 31, 2022, an increase of $63.2 million or 12%, including an increase of 7% in the U.S., Canada and Latin America and an increase of 19% in combined Europe, Asia and other markets (a 16% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the three months ended December 31, 2023 increased by 11%.

Net revenue from masks and other for the three months ended December 31, 2023 increased to $411.9 million from $374.2 million for the three months ended December 31, 2022, an increase of $37.7 million or 10%, including an increase of 10% in the U.S., Canada and Latin America and an increase of 9% in combined Europe, Asia and other markets (a 4% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales for the three months ended December 31, 2023 increased by 9%.

Software as a Service

Net revenue from our SaaS business for the three months ended December 31, 2023 increased to $144.9 million from $116.8 million for the three months ended December 31, 2022, an increase of $28.2 million or 24%.

The increase was predominantly due to our acquisition of MEDIFOX DAN, which was acquired on November 21, 2022.

Excluding the MEDIFOX DAN acquisition, SaaS revenue increased 10% and was driven primarily by continued growth in the HME vertical within our SaaS business.

Six Months Ended December 31, 2023 Compared to the Six Months Ended December 31, 2022

Net revenue for the six months ended December 31, 2023 increased to $2,265.1 million from $1,984.0 million for the six months ended December 31, 2022, an increase of $281.1 million or 14% (a 13% increase on a constant currency basis).

The following table summarizes our net revenue disaggregated by segment, product and region (in thousands):

Six Months Ended

December 31, % Change Constant Currency*

U.S., Canada and Latin America

Devices $ 717,233 $ 685,070 5 %

Masks and other 590,455 508,293 16

Total U.S., Canada and Latin America

$ 1,307,688 $ 1,193,363 10

Combined Europe, Asia and other markets

Devices $ 453,492 $ 375,305 21 % 18 %

Masks and other 219,712 192,756 14 9

Total Combined Europe, Asia and other markets

$ 673,204 $ 568,061 19 15

Global revenue

Total Devices $ 1,170,725 $ 1,060,375 10 % 9 %

Total Masks and other 810,167 701,049 16 14

Total Sleep and Respiratory Care $ 1,980,892 $ 1,761,424 12 11

Software as a Service 284,230 222,614 28

Total $ 2,265,122 $ 1,984,038 14 13

Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the six months ended December 31, 2023 was $1,980.9 million, an increase of 12% compared to net revenue for the six months ended December 31, 2022.

Movements in international currencies against the U.S.

dollar positively impacted net revenue by approximately $20.5 million for the six months ended December 31, 2023.

Excluding the impact of currency movements, total Sleep and Respiratory Care net

PART I – FINANCIAL INFORMATION Item 2

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

Net revenue from masks and other for the three months ended September 30, 2023 increased to $398.3 million from $326.9 million for the three months ended September 30, 2022, an increase of $71.4 million or 22%, including an increase of 23% in the U.S., Canada and Latin America and an increase of 20% in combined Europe, Asia and other markets (a 15% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales for the three months ended September 30, 2023 increased by 21%.

revenue for the six months ended December 31, 2023 increased by 11% compared to the six months ended December 31, 2022.

The increase net revenue associated with our devices and masks was primarily attributable to increased demand and unit sales.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the six months ended December 31, 2023 increased to $1,307.7 million from $1,193.4 million for the six months ended December 31, 2022, an increase of $114.3 million or 10%.

The increase in net revenue associated with our devices and masks was primarily attributable to increased demand and unit sales .

Net revenue in combined Europe, Asia and other markets increased for the six months ended December 31, 2023 to $673.2 million from $568.1 million for the six months ended December 31, 2022, an increase of $105.1 million or 19% (a 15% increase on a constant currency basis).

The constant currency increase in device and mask sales in combined Europe, Asia and other markets was primarily attributable to increased demand and unit sales

Net revenue from devices for the six months ended December 31, 2023 increased to $1,170.7 million from $1,060.4 million for the six months ended December 31, 2022, an increase of $110.4 million or 10%, including an increase of 5% in the U.S., Canada and Latin America and an increase of 21% in combined Europe, Asia and other markets (an 18% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the six months ended December 31, 2023 increased by 9%.

Net revenue from masks and other for the six months ended December 31, 2023 increased to $810.2 million from $701.0 million for the six months ended December 31, 2022, an increase of $109.1 million or 16%, including an increase of 16% in the U.S., Canada and Latin America and an increase of 14% in combined Europe, Asia and other markets (a 9% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales increased by 14%, compared to the six months ended December 31, 2022.

Software as a Service

Net revenue from our SaaS business for the three months ended September 30, 2023 increased to $139.3 million from $105.9 million for the three months ended September 30, 2022, an increase of $33.4 million or 32%.

The increase was predominantly due to our recent acquisition of MEDIFOX DAN, which was acquired on November 21, 2022.

Net revenue from our SaaS business for the six months ended December 31, 2023 increased to $284.2 million from $222.6 million for the six months ended December 31, 2022, an increase of $61.6 million or 28%.

The increase was predominantly due to our acquisition of MEDIFOX DAN, which was acquired on November 21, 2022.

Excluding the MEDIFOX DAN acquisition, SaaS revenue increased 9% and was driven by continued growth in the HME vertical within our SaaS business.

Gross Profit and Gross Margin

Gross profit increased for the three months ended September 30, 2023 to $600.1 million from $540.8 million for the three months ended September 30, 2022, an increase of $59.3 million or 11%.

Gross margin, which is gross profit as a percentage of net revenue, for the three months ended September 30, 2023 was 54.4% compared to 56.9% for the three months ended September 30, 2022.

The decrease in gross margin for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 was due primarily to a $7.9 million provision of expected costs associated with a field safety notification on Astral devices, in addition to higher component and manufacturing costs, partially offset by a favorable product mix and favorable foreign currency movements.

The Astral field safety notification relates to estimated expenses associated with the replacement of a certain component in some of our Astral ventilation devices that were manufactured between 2013 to 2019.

Gross profit increased for the three months ended December 31, 2023 to $646.9 million from $579.7 million for the three months ended December 31, 2022, an increase of $67.2 million or 12%.

Gross margin, which is gross profit as a percentage of net revenue, for the three months ended December 31, 2023 was 55.6% compared to 56.1% for the three months ended December 31, 2022.

The decrease in gross margin for the three months ended December 31, 2023 compared to the three months ended December 31, 2022 was due primarily to a $6.4 million provision for expected costs associated with a field safety notification for masks with magnets, in addition to an increase in the amortization of acquired intangible assets, partially offset by a favorable impact from our SaaS business and reduced freight costs.

The field safety expenses relate to estimated costs to provide alternative masks to patients in response to updated contraindications for use of masks that incorporate magnets.

Gross profit increased for the six months ended December 31, 2023 to $1,247.0 million from $1,120.5 million for the six months ended December 31, 2022, an increase of $126.5 million or 11%.

Gross margin for the six months ended December 31, 2023 was 55.1% compared to 56.5% for the six months ended December 31, 2022.

The decrease in gross margin for the six months ended December 31, 2023 compared to the six months ended December 31, 2022 was due primarily to $14.3 million of combined expenses associated with the field safety notifications for masks with magnets and Astral devices, in addition to an increase in the amortization of acquired intangible assets, partially offset by a favorable impact from our SaaS business and reduced freight costs.

The Astral field safety notification expenses relate to estimated costs associated with the replacement of a certain component in some of our Astral ventilation devices that were manufactured between 2013 to 2019.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

Operating Expenses

1 unchanged sentence

Three Months Ended

September 30, Change % Change Constant Currency

December 31, Change % Change Constant Currency

Selling, general, and administrative $ 222,155 $ 211,672 $ 10,483 5 % 4 %

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Amortization of acquired intangible assets 11,577 9,563 2,014 21 % 21 %

Six Months Ended

December 31, Change % Change Constant Currency

Selling, general, and administrative $ 445,029 $ 404,860 $ 40,169 10 % 9 %

as a % of net revenue 19.6 % 20.4 %

Research and development 149,590 133,062 16,528 12 % 13 %

as a % of net revenue 6.6 % 6.7 %

Amortization of acquired intangible assets 24,056 17,513 6,543 37 % 38 %

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased for the three months ended September 30, 2023 to $222.9 million from $193.9 million for the three months ended September 30, 2022, an increase of $28.9 million or 15%.

Selling, general, and administrative expenses increased for the three months ended December 31, 2023 to $222.2 million from $211.7 million for the three months ended December 31, 2022, an increase of $10.5 million or 5%.

Selling, general, and administrative expenses were unfavorably impacted by the movement of international currencies against the U.S.

dollar, which increased our expenses by approximately $2.2 million, as reported in U.S.

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the three months ended September 30, 2023 increased by 14% compared to the three months ended September 30, 2022.

As a percentage of net revenue, selling, general, and administrative expenses were 20.2% for the three months ended September 30, 2023, compared to 20.4% for the three months ended September 30, 2022.

The constant currency increase in selling, general, and administrative expenses during the three months ended September 30, 2023 compared to the three months ended September 30, 2022 was primarily due to increases in employee-related costs and additional expenses associated with the consolidation of recent acquisitions.

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the three months ended December 31, 2023 increased by 4% compared to the three months ended December 31, 2022.

As a percentage of net revenue, selling, general, and administrative expenses were 19.1% for the three months ended December 31, 2023, compared to 20.5% for the three months ended December 31, 2022.

The constant currency increase in selling, general, and administrative expenses during the three months ended December 31, 2023 compared to the three months ended December 31, 2022 was primarily due to increases in employee-related costs and additional expenses associated with the consolidation of recent acquisitions.

Selling, general, and administrative expenses increased for the six months ended December 31, 2023 to $445.0 million from $404.9 million for the six months ended December 31, 2022, an increase of $40.2 million or 10%.

Selling, general, and administrative expenses were unfavorably impacted by the movement of international currencies against the U.S.

dollar, which increased our expenses by approximately $4.4 million, as reported in U.S.

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the six months ended December 31, 2023 increased by 9% compared to the six months ended December 31, 2022.

As a percentage of net revenue, selling, general, and administrative expenses were 19.6% for the six months ended December 31, 2023, compared to 20.4% for the six months ended December 31, 2022.

The constant currency increase in selling, general, and administrative expenses during the six months ended December 31, 2023 compared to the six months ended December 31, 2022 was primarily due to increases in employee-related costs and additional expenses associated with the consolidation of recent acquisitions.

Research and Development Expenses

Research and development expenses increased for the three months ended December 31, 2023 to $73.9 million from $69.9 million for the three months ended December 31, 2022, an increase of $4.0 million, or 6%.

Research and development expenses were not significantly impacted by foreign currency movements for the three months ended December 31, 2023, as reported in U.S.

As a percentage of net revenue, research and development expenses were 6.4% for the three months ended December 31, 2023 compared to 6.8% for the three months ended December 31, 2022.

PART I – FINANCIAL INFORMATION Item 2

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

Research and Development Expenses

Research and development expenses increased for the three months ended September 30, 2023 to $75.7 million from $63.2 million for the three months ended September 30, 2022, an increase of $12.5 million, or 20%.

The increase in research and development expenses in constant currency terms was primarily due to increased investment in our digital health technologies and SaaS solutions as well as additional expenses associated with the consolidation of recent acquisitions.

Research and development expenses increased for the six months ended December 31, 2023 to $149.6 million from $133.1 million for the six months ended December 31, 2022, an increase of $16.5 million, or 12%.

Research and development expenses were favorably impacted by the movement of international currencies against the U.S.

dollar, which decreased our expenses by approximately $0.6 million for the three months ended September 30, 2023, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses increased by 21% compared to the three months ended September 30, 2022.

As a percentage of net revenue, research and development expenses were 6.9% for the three months ended September 30, 2023 compared to 6.6% for the three months ended September 30, 2022.

dollar, which decreased our expenses by approximately $0.5 million for the six months ended December 31, 2023, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses increased by 13% compared to the six months ended December 31, 2022.

As a percentage of net revenue, research and development expenses were 6.6% for the six months ended December 31, 2023, compared to 6.7% for the six months ended December 31, 2022.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets for the three months ended September 30, 2023 totaled $12.5 million compared to $8.0 million for the three months ended September 30, 2022.

Amortization of acquired intangible assets for the three months ended December 31, 2023 totaled $11.6 million compared to $9.6 million for the three months ended December 31, 2022.

The increase in amortization expense was primarily attributable to our acquisition of MEDIFOX DAN.

Amortization of acquired intangible assets for the six months ended December 31, 2023 totaled $24.1 million compared to $17.5 million for the six months ended December 31, 2022.

The increase in amortization expense was primarily attributable to our acquisition of MEDIFOX DAN.

Restructuring Expenses

During the three and six months ended December 31, 2023, we recorded $64.2 million of restructuring related charges associated with an evaluation of our existing operations to increase operational efficiency, decrease costs and increase profitability.

Restructuring charges for the three and six months ended December 31, 2023 were comprised of $28.6 million of employee severance and other one-time termination benefits, $33.2 million of intangible asset impairments associated with the wind down of certain business activities, and $2.4 million of other miscellaneous asset impairments.

We expect to complete all actions related to the restructuring by June 30, 2024, and we do not expect the remaining expense associated with this initiative to be material.

Total Other Income (Loss), Net

1 unchanged sentence

Three Months Ended

September 30,

2023 2022 Change

Interest (expense) income, net $ (13,805) $ (10,338) $ (3,467)

Gain (loss) attributable to equity method investments 739 (2,826) 3,565

Gain (loss) on equity investments (1,888) 8,368 (10,256)

Other, net (686) (1,707) 1,021

Total other income (loss), net $ (15,640) $ (6,503) $ (9,137)

Six Months Ended

2023 2022 Change

Interest (expense) income, net $ (28,762) $ (17,472) $ (11,290)

Loss attributable to equity method investments (3,156) (4,853) 1,697

2 unchanged sentences

Total other income (loss), net $ (32,446) $ (20,448) $ (11,998)

Total other income (loss), net for the three months ended September 30, 2023 was a loss of $16.8 million compared to a loss of $13.9 million for the three months ended September 30, 2022.

Interest expense, net, increased to $15.0 million for the three months ended September 30, 2023 compared to $7.1 million for the three months ended September 30, 2022 due to higher debt levels associated with the acquisition of MEDIFOX DAN, which was funded by our Revolving Credit Agreement.

In addition, we recorded higher losses attributable to equity method investments for the three months ended September 30, 2023 of $3.9 million compared to $2.0 million for the three months ended September 30, 2022.

Increases in interest expense, net, and losses attributable to equity method investments were partially offset by foreign exchange net gains for the three months ended September 30, 2023 of $2.6 million compared to foreign exchange net losses of $1.4 million for the three months ended September 30, 2022, as well as lower losses associated with our investments in marketable and non-marketable equity securities, which were a loss of $0.6 million for the three months ended September 30, 2023 compared to a loss of $3.3 million for the three months ended September 30, 2022.

Our effective income tax rate for the three months ended September 30, 2023 was 19.4% as compared to 19.6% for the three months ended September 30, 2022.

Our effective rate of 19.4% for the three months ended September 30, 2023 differs from the statutory rate of 21.0% primarily due to research credits, foreign operations and windfall tax benefits related to the vesting or settlement of employee share-based awards.

The decrease in our effective tax rate for the three months ended September 30, 2023 was primarily due to a shift in the geographic mix of earnings.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

Total other income (loss), net for the three months ended December 31, 2023 was a loss of $15.6 million compared to a loss of $6.5 million for the three months ended December 31, 2022.

Interest expense, net, increased to $13.8 million for the three months ended December 31, 2023 compared to $10.3 million for the three months ended December 31, 2022 due to higher debt levels associated with the acquisition of MEDIFOX DAN, which was funded by our Revolving Credit Agreement.

In addition, we recorded losses associated with our investments in marketable and non-marketable equity securities of $1.9 million for the three months ended December 31, 2023 compared to a gain of $8.4 million for the three months ended December 31, 2022.

Increases in interest expense, net, and losses attributable to investments in marketable and non-marketable equity securities were partially offset by gains attributable to equity method investments for the three months ended December 31, 2023 of $0.7 million compared to losses of $2.8 million for the three months ended December 31, 2022.

Total other income (loss), net for the six months ended December 31, 2023 was a loss of $32.4 million compared to a loss of $20.4 million for the six months ended December 31, 2022.

Interest expense, net, increased to $28.8 million for the six months ended December 31, 2023 compared to $17.5 million for the six months ended December 31, 2022 due to higher debt levels associated with the acquisition of MEDIFOX DAN, which was funded by our Revolving Credit Agreement.

In addition, we recorded losses associated with our investments in marketable and non-marketable equity securities of $2.5 million for the six months ended December 31, 2023 compared to a gain of $5.1 million for the six months ended December 31, 2022.

Increases in interest expense, net, and losses attributable to investments in marketable and non-marketable equity securities were partially offset by foreign exchange net gains for the six months ended December 31, 2023 of $1.8 million compared to foreign exchange net losses of $3.1 million for the six months ended December 31, 2022, which are presented in other, net.

In addition, we recorded lower losses attributable to equity method investments for the six months ended December 31, 2023 of $3.2 million compared to $4.9 million for the six months ended December 31, 2022.

Our effective income tax rate for both the three and six months ended December 31, 2023 was 19.5% as compared to 17.8% and 18.7% for the three and six months ended December 31, 2022, respectively.

Our effective rate of 19.5% for the three months ended December 31, 2023 differs from the statutory rate of 21.0% primarily due to research credits and foreign operations.

The increase in our effective tax rate for the three and six months ended December 31, 2023 was primarily due lower tax deductions in the current period associated with the vesting or settlement of employee share-based awards.

Our Singapore 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.

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federal tax, if repatriated.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

Net Income and Earnings per Share

As a result of the factors above, our net income for the three months ended September 30, 2023 was $219.4 million compared to $210.5 million for the three months ended September 30, 2022, an increase of $8.9 million, or 4%.

Our diluted earnings per share for the three months ended September 30, 2023 was $1.49 per diluted share compared to $1.43 for the three months ended September 30, 2022, an increase of 4%.

As a result of the factors above, our net income for the three months ended December 31, 2023 was $208.8 million compared to $224.9 million for the three months ended December 31, 2022, a decrease of $16.1 million, or 7%.

Our diluted earnings per share for the three months ended December 31, 2023 was $1.42 per diluted share compared to $1.53 for the three months ended December 31, 2022, a decrease of 7%.

Summary of Non-GAAP Financial Measures

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For these reasons, we use non-GAAP information internally in planning, forecasting, and evaluating the results of operations in the current period and in comparing it to past periods.

These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, GAAP financial measures.

These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, GAAP

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

financial measures.

We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Non-GAAP financial measures as presented herein may not be comparable to similarly titled measures used by other companies.

The measure “non-GAAP cost of sales” is equal to GAAP cost of sales less amortization of acquired intangible assets relating to cost of sales and Astral field safety notification expenses.

The measure “non-GAAP cost of sales” is equal to GAAP cost of sales less amortization of acquired intangible assets relating to cost of sales and field safety notification expenses.

The masks with magnets field safety notification expenses relate to estimated costs to provide alternative masks to patients in response to updated contraindications for use of masks that incorporate magnets.

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Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

GAAP Net revenue $ 1,162,801 $ 1,033,744 $ 2,265,122 $ 1,984,038

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(8,257) (7,305) (17,164) (13,680)

Masks with magnets field safety notification expenses

(6,351) — (6,351) —

Astral field safety notification expenses

— — (7,911) —

Non-GAAP cost of sales $ 501,259 $ 446,724 $ 986,702 $ 849,834

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Non-GAAP gross margin 56.9 % 56.8 % 56.4 % 57.2 %

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

The measure “non-GAAP income from operations” is equal to GAAP income from operations once adjusted for amortization of acquired intangibles, acquisition-related expenses, and Astral field safety notification expenses.

The measure “non-GAAP income from operations” is equal to GAAP income from operations once adjusted for amortization of acquired intangibles, restructuring expenses, field safety notification expenses, and acquisition-related expenses.

Non-GAAP income from operations is reconciled with GAAP income from operations below (in thousands):

Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

GAAP income from operations $ 275,094 $ 280,194 $ 564,091 $ 555,932

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Amortization of acquired intangibles - operating expenses 11,577 9,563 24,056 17,513

Acquisition-related expenses 483 745

Restructuring expenses 64,228 — 64,228 —

Masks with magnets field safety notification expenses 6,351 — 6,351 —

Astral field safety notification expenses — — 7,911 —

Acquisition-related expenses — 8,412 483 9,157

Non-GAAP income from operations $ 365,507 $ 305,474 $ 684,284 $ 596,282

The measure “non-GAAP net income” is equal to GAAP net income once adjusted for amortization of acquired intangibles, acquisition related expenses, Astral field safety notification expenses, and associated tax effects.

The measure “non-GAAP diluted earnings per share” is the ratio of non-GAAP net income to diluted shares outstanding.

The measure “non-GAAP net income” is equal to GAAP net income once adjusted for amortization of acquired intangibles, restructuring expenses, field safety notification expenses, acquisition related expenses, and associated tax effects.

The measure “non-GAAP diluted earnings per share” is the ratio of non-GAAP net income to diluted shares

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

These non-GAAP measures are reconciled to their most directly comparable GAAP financial measures below (in thousands, except for per share amounts):

Three Months Ended

September 30,

December 31, Six Months Ended

2023 2022 2023 2022

GAAP net income $ 208,800 $ 224,914 $ 428,222 $ 435,392

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Amortization of acquired intangibles - operating expenses 11,577 9,563 24,056 17,513

Acquisition related expenses 483 745

Restructuring expenses 64,228 — 64,228 —

Masks with magnets field safety notification expenses 6,351 — 6,351 —

Astral field safety notification expenses — — 7,911 —

Acquisition related expenses — 8,412 483 9,157

Income tax effect on non-GAAP adjustments (21,868) (5,812) (29,886) (9,272)

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Our principal sources of liquidity are our existing cash and cash equivalents, cash generated from operations and access to our revolving credit facility.

Our primary uses of cash have been for research and development activities, selling and marketing activities, capital expenditures, strategic acquisitions and investments, dividend payments and repayment of debt obligations.

We expect that cash provided by operating activities may fluctuate in future periods as a result of several factors, including fluctuations in our operating results, which include impacts from supply chain disruptions, working capital requirements and capital deployment decisions.

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As part of our liquidity strategy, we will continue to monitor our current level of earnings and cash flow generation as well as our ability to access the market considering those earning levels.

As of September 30, 2023 and June 30, 2023, we had cash and cash equivalents of $209.1 million and $227.9 million, respectively.

Our cash and cash equivalents held within the United States at September 30, 2023 and June 30, 2023 were

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

$41.0 million and $49.3 million, respectively.

Our remaining cash and cash equivalent balances at September 30, 2023 and June 30, 2023, were $168.1 million and $178.6 million, respectively.

As of December 31, 2023 and June 30, 2023, we had cash and cash equivalents of $210.2 million and $227.9 million, respectively.

Our cash and cash equivalents held within the United States at December 31, 2023 and June 30, 2023 were $38.2 million and $49.3 million, respectively.

Our remaining cash and cash equivalent balances at December 31, 2023 and June 30, 2023, were $172.0 million and $178.6 million, respectively.

Our cash and cash equivalent balances are held at highly rated financial institutions .

As of September 30, 2023, we had $825.0 million available for draw down under the revolver credit facility and a combined total of $1,034.1 million in cash and available liquidity under the revolving credit facility.

As of December 31, 2023, we had $955.0 million available for draw down under the revolving credit facility and a combined total of $1,165.2 million in cash and available liquidity under the revolving credit facility.

As a result of the U.S.

Tax Act, we treated all non-U.S.

Tax Cuts and Jobs Act of 2017, we treated all non-U.S.

historical earnings as taxable, which resulted in additional tax expense of $126.9 million which was payable over the proceeding eight years.

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We believe that our current sources of liquidity will be sufficient to fund our operations, including expected capital expenditures, for the next 12 months and beyond.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

Revolving Credit Agreement, Term Credit Agreement and Senior Notes

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Additionally, on June 29, 2022, ResMed Pty Limited entered into a Second Amendment to the Syndicated Facility Agreement (the “Term Credit Agreement”).

The Term Credit Agreement, among other things, provides ResMed Limited a senior unsecured term credit facility of $200.0 million.

The Term Credit Agreement, among other things, provides ResMed Pty Limited a senior unsecured term credit facility of $200.0 million.

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.

As of September 30, 2023, we had $825.0 million available for draw down under the revolving credit facility.

As of December 31, 2023, we had $955.0 million available for draw down under the revolving credit facility.

On July 10, 2019, we entered into a Note Purchase Agreement with the purchasers to that agreement, in connection with the issuance and sale of $250.0 million principal amount of our 3.24% senior notes due July 10, 2026, and $250.0 million principal amount of our 3.45% senior notes due July 10, 2029 (“Senior Notes”).

On September 30, 2023, there was a total of $1,365.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

On December 31, 2023, there was a total of $1,230.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes and we were in compliance with our debt covenants.

We expect to satisfy all of our liquidity and long-term debt requirements through a combination of cash on hand, cash generated from operations and debt facilities.

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The following table summarizes our cash flow activity (in thousands):

Three Months Ended

September 30,

Six Months Ended

Net cash provided by operating activities $ 559,115 $ 173,298

Net cash used in investing activities (190,123) (1,085,218)

Net cash used in financing activities (151,132) (41,880)

Net cash (used in) provided by financing activities (390,090) 891,022

Effect of exchange rate changes on cash 3,454 387

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Operating Activities

Cash provided by operating activities was $286.3 million for the three months ended September 30, 2023, compared to cash provided of $44.7 million for the three months ended September 30, 2022.

The $241.6 million increase in cash flow from operations was primarily due to lower cash outflows on inventory purchases and greater cash inflows from customer payments during the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

Cash provided by operating activities was $559.1 million for the six months ended December 31, 2023, compared to cash provided of $173.3 million for the six months ended December 31, 2022.

The $385.8 million increase in cash flow from operations was primarily due to lower cash outflows on inventory purchases and greater cash inflows from customer payments during the six months ended December 31, 2023 compared to the six months ended December 31, 2022.

Investing Activities

Cash used in investing activities was $149.0 million for the three months ended September 30, 2023, compared to cash used of $58.8 million for the three months ended September 30, 2022.

The $90.2 million increase in cash flow used in

Cash used in investing activities was $190.1 million for the six months ended December 31, 2023, compared to cash used of $1,085.2 million for the six months ended December 31, 2022.

The $895.1 million decrease in cash flow used in investing activities was primarily due to cash used to acquire MEDIFOX DAN during the six months ended December 31, 2022, partially offset by cash used to acquire Somnow are during the six months ended December 31, 2023 .

Financing Activities

Cash used in financing activities was $390.1 million for the six months ended December 31, 2023, compared to cash provided of $891.0 million for the six months ended December 31, 2022.

The $1,281.1 million increase in cash flow used in financing activities was primarily due to borrowing activity under our Revolving Credit Agreement in order to finance our acquisition of MEDIFOX DAN during the six months ended December 31, 2022 and subsequent repayments during the six months ended December 31, 2023.

PART I – FINANCIAL INFORMATION Item 2

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

investing activities was primarily due to cash used to acquire Somnow are, a leader in digital sleep and respiratory care diagnostics software for sleep labs and physicians.

Financing Activities

Cash used in financing activities was $151.1 million for the three months ended September 30, 2023, compared to cash used of $41.9 million for the three months ended September 30, 2022.

The $109.3 million increase in cash flow used in financing activities was primarily due to borrowing activity under our Revolving Credit Agreement in order to finance our acquisition of Somnoware.

During the three months ended September 30, 2023, we paid cash dividends of $0.48 per common share totaling $70.6 million.

On October 26, 2023, our board of directors declared a cash dividend of $0.48 per common share, to be paid on December 14, 2023, to shareholders of record as of the close of business on November 9, 2023.

During the three months ended December 31, 2023, we paid cash dividends of $0.48 per common share totaling $70.7 million.

On January 24, 2024, our board of directors declared a cash dividend of $0.48 per common share, to be paid on March 14, 2024, to shareholders of record as of the close of business on February 8, 2024.

Future dividends are subject to approval by our board of directors.

On February 21, 2014, our board of directors approved our current share repurchase program, authorizing us to acquire up to an aggregate of 20.0 million shares of our common stock.

Since approval of the share repurchase program in 2014 through September 30, 2023, we have repurchased a total of 7.1 million shares under this repurchase program for an aggregate of $413 million.

We did not repurchase any shares during the three months ended September 30, 2023 and 2022.

Since approval of the share repurchase program in 2014 through December 31, 2023, we have repurchased a total of 7.5 million shares under this repurchase program for an aggregate of $462.7 million.

During the six months ended December 31, 2023, we repurchased 335,474 shares at a cost of $50.0 million.

Shares that are repurchased are classified as treasury stock pending future use and reduce the number of shares of common stock outstanding used in calculating earnings (loss) per share.

We are authorized to continue repurchasing shares through June 30, 2024, provided that the program may be accelerated, suspended, delayed or discontinued at any time at the discretion of our board of directors.

At September 30, 2023, 12.9 million additional shares remain available for us to repurchase under the approved share repurchase program.

At December 31, 2023, 12.5 million additional shares remain available for us to repurchase under the approved share repurchase program.

Critical Accounting Principles and Estimates

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Recently Issued Accounting Pronouncements

See note 1 to the unaudited condensed consolidated financial statements for a description of recently issued accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial position and cash flows.

Contractual Obligations and Commitments

There have been no material changes outside the ordinary course of business in our outstanding contractual obligations from those disclosed within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

Other than for purchase obligations, there have been no material changes outside the ordinary course of business in our outstanding contractual obligations from those disclosed within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

Details of our purchase obligations as of December 31, 2023 were as follows:

Payments Due by December 31,

Total 2024 2025 2026 2027 2028 Thereafter

Purchase obligations $ 997,588 $ 721,782 $ 254,055 $ 18,857 $ 2,788 $ 106 $ —

Off-Balance Sheet Arrangements

As of September 30, 2023, we are not involved in any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC.

As of December 31, 2023, we are not involved in any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC.

PART I – FINANCIAL INFORMATION Item 3

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The initial fair value of components excluded from the assessment of hedge effectiveness will be recognized in interest (expense) income, net.

The notional value of outstanding foreign cross-currency swaps was $1,014.8 million and $1,046.6 million at September 30, 2023 and June 30, 2023, respectively.

The notional value of outstanding foreign cross-currency swaps was $1,059.3 million and $1,046.6 million at December 31, 2023 and June 30, 2023, respectively.

These contracts mature at various dates prior to December 31, 2029.

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All movements in the fair value of the foreign currency instruments are recorded within other, net in our condensed consolidated statements of operations.

The notional value of the outstanding non-designated hedges was $1,363.3 million and $954.7 million at September 30, 2023 and June 30, 2023, respectively.

The notional value of the outstanding non-designated hedges was $1,158.5 million and $954.7 million at December 31, 2023 and June 30, 2023, respectively.

These contracts mature at various dates prior to March 15, 2025.

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The table below provides information (in U.S.

dollars) on our foreign currency denominated operating assets and liabilities and after considering our foreign currency hedging activities as of September 30, 2023 (in thousands):

dollars) on our foreign currency denominated operating assets and liabilities and after considering our foreign currency hedging activities as of December 31, 2023 (in thousands):

(EUR) Canadian

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dollar equivalents.

The table summarizes information on instruments and transactions that are sensitive to foreign currency exchange rates, including foreign currency call options, collars, forward contracts and cross-currency swaps held at September 30, 2023.

The table presents the notional amounts and weighted average exchange rates by contractual maturity dates for our foreign currency derivative financial instruments, including the forward contracts used to hedge our foreign currency denominated assets and liabilities.

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Fair Value Assets / (Liabilities)

Total September 30,

Total December 31,

2023 June 30,

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We are exposed to risk associated with changes in interest rates affecting the return on our cash and cash equivalents and debt.

At September 30, 2023, we held cash and cash equivalents of $209.1 million, principally comprised of bank term deposits and at-call accounts, and are invested at both short-term fixed interest rates and variable interest rates.

At September 30, 2023, there was $865.0 million outstanding under the Revolving Credit Agreement and Term Credit Agreement, which are subject to variable interest rates.

A hypothetical 10% change in interest rates during the three months ended September 30, 2023, would not have had a material impact on pretax income.

At December 31, 2023, we held cash and cash equivalents of $210.2 million, principally comprised of bank term deposits and at-call accounts, and are invested at both short-term fixed interest rates and variable interest rates.

At December 31, 2023, there was $730.0 million outstanding under the Revolving Credit Agreement and Term Credit Agreement, which are subject to variable interest rates.

A hypothetical 10% change in interest rates during the three months ended December 31, 2023, would not have had a material impact on pretax income.

We have no interest rate hedging agreements.

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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-Q

Item 1. Financial Statements