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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-08-09 compared with 2023-08-11 · 192 added, 169 removed, 1144 unchanged (24% of the section changed)

13 unchanged sentences

For fair value hedges that qualify and are designated for hedge accounting, the change in fair value of the derivative is recorded in the same line item as the hedged item, Other, net, in the condensed consolidated statement of income.

The initial fair value of hedge components excluded from the assessment of effectiveness is recognized in the statement of operations under a systematic and rational method over the life of the hedging instrument and is presented in interest (expense) income, net.

The initial fair value of hedge components excluded from the assessment of effectiveness is recognized in the statement of income under a systematic and rational method over the life of the hedging instrument and is presented in interest (expense) income, net.

Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income.

14 unchanged sentences

The notional value of the outstanding non-designated hedges was $1,340.0 million and $954.7 million at June 30, 2024 and June 30, 2023, respectively.

These contracts mature at various dates prior to December 15, 2024.

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

PART II Item 7A

109 unchanged sentences

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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

Evaluation of goodwill triggering events

2 unchanged sentences

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

After completing Step 0, the Company determined

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

PART II Item 8

AND SUBSIDIARIES

that goodwill was not more likely than not impaired and, therefore, no Step 1, or quantitative assessment, was necessary.

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

8 unchanged sentences

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

Evaluation of acquisition-date fair value of intangible assets

As discussed in Note 17 to the consolidated financial statements, the Company acquired MediFox-Dan Investment GmbH and its subsidiaries (MEDIFOX DAN) on November 21, 2022, for a total purchase price of $997.5 million, which is net of cash acquired and debt assumed.

In connection with the transaction, the Company recorded customer relationships, developed technology, and trade names intangible assets (collectively, the intangible assets).

The acquisition-date fair value for the intangible assets was $250.6 million as of June 30, 2023.

We identified the evaluation of the acquisition-date fair value of certain intangible assets acquired in the MEDIFOX DAN transaction as a critical audit matter.

Due to limited observable market information, a high degree of subjective auditor judgment was required to evaluate key assumptions used to determine the fair value of the intangible assets, specifically the forecasted revenue growth rates, forecasted earnings before interest, tax, depreciation, and amortization (EBITDA) margins, and weighted-average cost of capital (WACC), including the discount rate.

In addition, valuation professionals with specialized skills and knowledge were required to assist in performing certain audit procedures related to evaluating the WACC and discount rate.

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

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls over the development of the key assumptions.

We evaluated the Company’s forecasted revenue growth rates by comparing forecasted growth assumptions to those of MEDIFOX DAN peers and industry reports, as well as historical results of MEDIFOX DAN.

We assessed the Company’s ability to accurately forecast by comparing the Company’s forecasted revenue growth rates and EBITDA margins of the acquired business to actual results subsequent to the acquisition date.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company’s discount rate by comparing it against a discount rate range that was independently developed using publicly available market data for comparable peers

• assessing the Company’s WACC by comparing it against an independently developed WACC based on inputs obtained through published surveys and studies.

PART II Item 8

AND SUBSIDIARIES

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

12 unchanged sentences

Inventories (note 4)

822,250 998,012

Prepaid expenses and other current assets (note 4)

459,833 437,018

Total current assets 2,357,719 2,367,830

1 unchanged sentence

Property, plant and equipment, net (note 4)

548,025 537,856

Operating lease right-of-use assets (note 9) 151,121 127,955

Goodwill (note 5)

2,842,055 2,770,299

Other intangible assets, net (note 5)

485,904 552,341

Deferred income taxes (note 12) 203,569 132,974

6 unchanged sentences

Accrued expenses (note 7)

377,678 365,660

Operating lease liabilities, current (note 9) 25,278 21,919

19 unchanged sentences

Retained earnings 4,991,647 4,253,016

Treasury stock, at cost, 41,836,234 shares at June 30, 2023 and June 30, 2022

Treasury stock, at cost, 42,664,067 shares at June 30, 2024 and 41,836,234 shares at June 30, 2023

( 1,773,267 ) ( 1,623,256 )

28 unchanged sentences

Other income (loss), net:

Interest (expense) income, net ( 47,379 ) ( 22,312 ) ( 23,627 )

Interest expense, net ( 45,708 ) ( 47,379 ) ( 22,312 )

Loss attributable to equity method investments (note 6)

Gain (loss) on equity investments (note 5) 9,922 ( 12,202 ) 14,515

( 1,848 ) ( 7,265 ) ( 8,486 )

(Loss) gain on equity investments (note 6) ( 4,045 ) 9,922 ( 12,202 )

Gain on insurance recoveries — 20,227 —

15 unchanged sentences

(In US$ and in thousands)

2023 2022 2021

June 30, 2024 June 30, 2023 June 30, 2022

Net income $ 1,020,951 $ 897,556 $ 779,437

Other comprehensive income (loss):

Unrealized losses on designated hedging instruments ( 35,596 ) — —

Unrealized gains (losses) on designated hedging instruments 31,743 ( 35,596 ) —

Foreign currency translation (loss) gain adjustments ( 10,744 ) 75,815 ( 119,260 )

18 unchanged sentences

Stock-based compensation costs — — 65,257 — — — — 65,257

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

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

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

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

Dividends declared ($ 1.68 per common share)

6 unchanged sentences

Stock-based compensation costs — — 71,142 — — — — 71,142

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

Other comprehensive income — — — — — — 40,219 40,219

Net income — — — — — 897,556 — 897,556

6 unchanged sentences

Common stock issued on employee stock purchase plan (note 10) 323 1 39,609 — — — — 39,610

Treasury stock purchases — ( 2 ) 2 ( 828 ) ( 150,011 ) ( 150,011 )

Stock-based compensation costs — — 80,184 — — — — 80,184

Other comprehensive income (loss) — — — — — — 40,219 40,219

Other comprehensive income — — — — — — 20,999 20,999

Net income — — — — — 1,020,951 — 1,020,951

17 unchanged sentences

Loss attributable to equity method investments, net of dividends received (note 6)

1,848 10,138 8,486

(Gain) loss on equity investments (note 6)

4,045 ( 9,922 ) 12,202

Restructuring expenses (note 18) 33,239 9,177 —

11 unchanged sentences

Purchases of investments (note 6)

Proceeds from sale of investment (note 5) 3,937 6,802 —

( 12,765 ) ( 32,229 ) ( 20,724 )

Proceeds from exits of investments (note 6) 1,000 3,937 6,802

Proceeds / (payments) on maturity of foreign currency contracts ( 9,699 ) 15,196 ( 17,176 )

3 unchanged sentences

Taxes paid related to net share settlement of equity awards ( 8,757 ) ( 30,631 ) ( 52,406 )

Purchases of treasury stock ( 150,011 ) — —

Payments of business combination contingent consideration ( 1,293 ) ( 2,361 ) —

2 unchanged sentences

Dividends paid ( 282,320 ) ( 258,276 ) ( 245,341 )

Net cash provided by (used in) financing activities 422,874 ( 128,363 ) ( 764,632 )

Net cash (used in) provided by financing activities ( 1,119,287 ) 422,874 ( 128,363 )

Effect of exchange rate changes on cash ( 1,719 ) ( 2,147 ) ( 14,434 )

Net decrease in cash and cash equivalents ( 45,819 ) ( 21,568 ) ( 167,878 )

Net increase (decrease) in cash and cash equivalents 10,470 ( 45,819 ) ( 21,568 )

Cash and cash equivalents at beginning of period 227,891 273,710 295,278

26 unchanged sentences

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

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

Actual results could differ from management’s estimates.

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

(b) Revenue Recognition

32 unchanged sentences

In our Sleep and Respiratory Care segment, the amount of consideration received and revenue recognized varies with changes in marketing incentives (e.g.

rebates, discounts, free goods) and returns offered to our customers and their customers.

rebates, discounts, free goods) and returns by our customers and their customers.

When we give customers the right to return eligible products and receive credit, returns are estimated based on an analysis of our historical experience.

However, returns of products, excluding warranty-related returns, have historically been infrequent and insignificant.

Returns of products, excluding warranty-related returns, have historically been infrequent and insignificant.

We adjust the estimate of revenue at the earlier of when the most likely amount of consideration can be estimated, the amount expected to be received changes, or when the consideration becomes fixed.

13 unchanged sentences

We have also elected for all taxes assessed by government authorities that are imposed on and concurrent with revenue-producing transactions, such as sales and value added taxes, to be excluded from revenue and presented on a net basis.

We have adopted two practical expedients including the “right to invoice” practical expedient, which allows us to recognize revenue in the amount of the invoice when it corresponds directly with the value of performance completed to date and which is relevant for some of our SaaS contracts.

We have adopted two practical expedients including the “right to invoice” practical expedient, which is relevant for some of our SaaS contracts as it allows us to recognize revenue in the amount of the invoice when it corresponds directly with the value of performance completed to date.

The second practical expedient adopted permits relief from considering a significant financing component when the payment for the good or service is expected to be one year or less.

6 unchanged sentences

Our derivative contracts are transacted with various financial institutions with high credit standings and any exposure to counterparty credit-related losses in these contracts is largely mitigated with collateralization and master-netting agreements.

The risk with respect to trade receivables is mitigated by credit evaluations we perform on our customers, the short duration of our payment terms for the significant majority of our customer contracts and by the diversification of our customer base.

The risk with respect to trade receivables is mitigated by credit evaluations we perform on our customers, the short duration of our payment terms for the majority of our customer contracts and by the diversification of our customer base.

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

32 unchanged sentences

If a patent is superseded or a product is retired, any unamortized costs are written off immediately.

We amortize all of our other intangible assets on a straight-line basis over their estimated useful lives, which range from two years to fifteen years .

We take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists and, at least annually, evaluate the recoverability of intangible assets.

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

We amortize our other intangible assets on a straight-line basis over their estimated useful lives, which range from two years to fifteen years .

We evaluate events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists and, at least annually, evaluate the recoverability of intangible assets.

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

8 unchanged sentences

During the annual reviews for the years ended June 30, 2024, 2023 and 2022, we completed a Step 0 or Qualitative assessment and determined it was more likely than not that the fair value of our reporting units exceeded their carrying amounts, including goodwill, and therefore goodwill was not impaired.

(j) Equity investments

(j) Business Combinations

We allocate the purchase price to the estimated fair values of the assets acquired and liabilities assumed.

This allocation process involves the use of estimates and assumptions made in connection with determining the fair value of assets acquired and liabilities assumed including cash flows expected to be derived from the use of the asset, the timing of such cash flows, the remaining useful life of assets and applicable discount rates.

If actual results vary from the estimates or assumptions used in the valuation or allocation process, we may be required to record an impairment charge or an increase in depreciation or amortization in future periods, or both.

(k) Equity Investments

We have equity investments in privately and publicly held companies that are unconsolidated entities.

2 unchanged sentences

Marketable equity securities are recorded in prepaid expenses and other current assets on the consolidated balance sheets.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Non-marketable equity securities consist of investments in privately held companies without readily determinable fair values and are recorded in prepaid taxes and other non-current assets on the consolidated balance sheets.

2 unchanged sentences

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

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Equity investments whereby we have significant influence but not control over the investee and are not the primary beneficiary of the investee’s activities, are accounted for under the equity method.

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

(k) Research and Development

(l) Research and Development

We record all research and development expenses in the period we incur them.

(l) Foreign Currency

(m) Foreign Currency

The consolidated financial statements of our non-U.S.

7 unchanged sentences

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

(m) Foreign Exchange Risk Management

(n) Foreign Exchange Risk Management

We may use derivative financial instruments, specifically foreign cross-currency swaps, purchased foreign currency call options, collars and forward contracts to mitigate exposure from certain foreign currency risk.

11 unchanged sentences

The purpose of the cross-currency swaps for the net investment hedge is to mitigate foreign currency risk associated with changes in spot rates on the net asset balances of our foreign functional subsidiaries.

For net investment hedges that qualify and are designated for hedge accounting, the change in fair value of the derivative is recorded in cumulative translation adjustment within other comprehensive loss and reclassified into earnings when the hedged net investment is either sold or substantially liquidated.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

substantially liquidated.

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

2 unchanged sentences

Non-Designated Hedges

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

We transact business in various foreign currencies, including a number of major European currencies as well as the Australian and Singapore dollars.

7 unchanged sentences

The notional value of the outstanding non-designated hedges was $ 1,340.0 million and $ 954.7 million at June 30, 2024 and June 30, 2023, respectively.

These contracts mature at various dates prior to December 15, 2024.

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

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

1 unchanged sentence

We minimize counterparty credit risk by entering into derivative transactions with major financial institutions and we do not expect material losses as a result of default by our counterparties.

(n) Income Taxes

(o) Income Taxes

We account for income taxes under the asset and liability method.

4 unchanged sentences

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

(o) Provision for Warranty

We provide for the estimated cost of product warranties on our Sleep and Respiratory Care products at the time the related revenue is recognized.

We determine the amount of this provision by using a financial model, which takes into consideration actual historical expenses and potential risks associated with our different products.

We use this financial model to calculate the future probable expenses related to warranty and the required level of the warranty provision.

Although we engage in product improvement programs and processes, our warranty obligation is affected by product failure rates and costs incurred to correct those product failures.

Should actual product failure rates or estimated costs to repair those product failures differ from our estimates, we would be required to revise our estimated warranty provision.

(p) Allowance for Credit Losses

We maintain an allowance for credit losses on customer receivables based on our historical write-off experience, an assessment of our customers’ financial conditions and available information that is relevant to assessing the collectability of cash flows, which includes current conditions and forecasts about future economic conditions.

We maintain an allowance for credit losses on customer receivables based expected losses, considering our historical write-off experience, an assessment of our customers’ financial conditions, and available information that is relevant to assessing the collectability of cash flows, which includes current conditions and forecasts about future economic conditions.

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

1 unchanged sentence

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

(q) Impairment of Long-Lived Assets

We periodically evaluate the carrying value of long-lived assets to be held and used, including certain identifiable intangible assets, when events and circumstances indicate that the carrying amount of an asset may not be recovered.

PART II Item 8

1 unchanged sentence

Notes to the Consolidated Financial Statements

(q) Impairment of Long-Lived Assets

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset.

1 unchanged sentence

We report assets to be disposed of at the lower of the carrying amount or fair value less costs to sell.

During the year ended June 30, 2024, we recorded $ 33.2 million of restructuring related intangible asset impairments associated with the wind down of certain business activities.

Refer to Note 18 – Restructuring Expenses for additional information regarding restructuring costs.

We did not recognize impairment charges in relation to long-lived assets during the fiscal years ended June 30, 2023 and 2022.

4 unchanged sentences

When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded.

(3) New Accounting Pronouncements

(a) 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.

(4) Supplemental Balance Sheet Information

5 unchanged sentences

Total inventories $ 822,250 $ 998,012

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Prepaid expenses and other current assets 2024 2023

15 unchanged sentences

Property, plant and equipment, net $ 548,025 $ 537,856

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(5) Goodwill and Other Intangible Assets, net

20 unchanged sentences

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

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

During the year ended June 30, 2024, 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 consolidated statements of income.

Refer to Note 18 – Restructuring Expenses for the facts and circumstances leading to the impairments.

We did not record any intangible asset impairments during the years ended June 30, 2023 and 2022.

Amortization expense related to identified intangible assets for the years ended June 30, 2024 and June 30, 2023 was $ 79.5 million and $ 72.4 million, respectively.

Amortization expense related to patents for the years ended June 30, 2023 and June 30, 2022 was $ 7.0 million and $ 6.2 million, respectively.

Amortization expense related to patents, included in other intangibles, for the years ended June 30, 2024 and June 30, 2023 was $ 7.6 million and $ 7.0 million, respectively.

Total estimated annual amortization expense for the years ending June 30, 2025 through June 30, 2029, is shown below (in thousands):

9 unchanged sentences

Total $ 151,227 $ 146,537

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The following table shows a reconciliation of the changes in our equity investments for the year ended June 30, 2024 (in thousands):

2 unchanged sentences

Additions to investments 8,640 1,000 3,125 12,765

21,738 4,991 62,733 89,462

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

Impairment of investments ( 4,963 ) — — ( 4,963 )

Realized gains on marketable and non-marketable equity securities 3,937 — — 3,937

Proceeds from exits of investments ( 1,000 ) — — ( 1,000 )

1 unchanged sentence

Loss attributable to equity method investments — — ( 1,848 ) ( 1,848 )

Dividends received — — ( 2,873 ) ( 2,873 )

Foreign currency translation adjustments ( 1 ) — ( 1,181 ) ( 1,182 )

Carrying value at the end of the period $ 73,739 $ 12,026 $ 65,462 $ 151,227

(1) Includes additions from purchases and an equity method investment acquired and measured at fair value via our acquisition of MEDIFOX DAN.

Refer to Note 17 herein.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The following table shows a reconciliation of the changes in our equity investments for the year ended June 30, 2023 (in thousands):

1 unchanged sentence

Balance at the beginning of the period $ 39,290 $ 9,167 $ 9,918 $ 58,375

Net additions (reductions) to investments (2)

Additions to investments (1)

21,738 4,991 62,733 89,462

2 unchanged sentences

Realized gains on marketable and non-marketable equity securities 3,937 — — 3,937

Proceeds from exits of investments ( 3,937 ) — — ( 3,937 )

Unrealized losses on marketable equity securities — ( 1,735 ) — ( 1,735 )

Loss attributable to equity method investments — — ( 7,265 ) ( 7,265 )

Dividends received — — ( 2,873 ) ( 2,873 )

Foreign currency translation adjustments — — 2,853 2,853

Carrying value at the end of the period $ 68,748 $ 12,423 $ 65,366 $ 146,537

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

Net unrealized gains and losses recognized in the years ended June 30, 2023, 2022 and 2021 for equity investments in non-marketable and marketable securities still held as of those respective dates were a gain of $ 6.0 million, a loss of $ 16.2 million, and a gain of $ 14.5 million, respectively.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(1) Includes additions from purchases and an equity method investment acquired and measured at fair value via our acquisition of MEDIFOX DAN.

Refer to Note 17 herein.

Net unrealized gains and losses recognized in the years ended June 30, 2024, 2023 and 2022 for equity investments in non-marketable and marketable securities still held as of those respective dates were a loss of $ 4.0 million, a gain of $ 6.0 million, and a loss of $ 16.2 million, respectively.

(7) Accrued Expenses

Accrued expenses at June 30, 2024 and June 30, 2023 consist of the following (in thousands):

Product warranties (note 7) $ 27,621 $ 25,889

Product warranties $ 35,134 $ 27,621

Consulting and professional fees 27,143 26,148

8 unchanged sentences

Total accrued expenses $ 377,678 $ 365,660

(7) Product Warranties

We include the liability for warranty costs in accrued expenses in our consolidated balance sheets.

Changes in the liability for product warranty for the years ended June 30, 2023 and June 30, 2022 are as follows (in thousands):

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

Warranty accruals for the period 15,628 17,442

Warranty costs incurred for the period ( 13,734 ) ( 12,124 )

Foreign currency translation adjustments ( 162 ) ( 1,461 )

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

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Debt at June 30, 2024 and June 30, 2023 consists of the following (in thousands):

9 unchanged sentences

The Revolving Credit Agreement, among other things, provided a senior unsecured revolving credit facility of $ 1,500.0 million, with an uncommitted option to increase the revolving credit facility by an additional amount equal to the greater of $ 1,000.0 million or 1.0 times the EBITDA (as defined in the Revolving Credit Agreement) for the trailing twelve-month measurement period.

The Revolving Credit Facility amends and restates that certain Amended and

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Restated Credit Agreement, dated as of April 17, 2018, among ResMed, MUFG Union Bank, N.A., Westpac Banking Corporation and the lenders party thereto.

The Revolving Credit Agreement amends and restates that certain Amended and Restated Credit Agreement, dated as of April 17, 2018, among ResMed, MUFG Union Bank, N.A., Westpac Banking Corporation and the lenders party thereto.

Additionally, on June 29, 2022, ResMed Pty Limited entered into a Second Amendment to the Syndicated Facility Agreement and First Amendment to Unconditional Guaranty Agreement (the “Term Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger and joint book runner, and Westpac Banking Corporation, as syndication agent, joint lead arranger and joint book runner, which amends that certain Syndicated Facility Agreement dated as of April 17, 2018.

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

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

Our obligations under the Revolving Credit Agreement are guaranteed by certain of our direct and indirect U.S.

6 unchanged sentences

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

The outstanding principal amounts will bear interest at a rate equal to 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).

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

At June 30, 2024, the interest rate that was being charged on the outstanding principal amounts was 6.19 %.

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.

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

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

ratio) applies on the unused portion of the revolving credit facility.

As of June 30, 2024, we had $ 1,470.0 million available for draw down under the revolving credit facility.

8 unchanged sentences

This ratio is calculated at the end of each reporting period for which the Note Purchase Agreement requires us to deliver financial statements, using the results of the 12 consecutive month period ending with such reporting period.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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.

14 unchanged sentences

We lease certain office space, warehouses and distribution centers, manufacturing facilities, vehicles, and equipment with remaining lease terms ranging from less than 1 year to 15 years, some of which include options to extend or terminate the leases.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Operating lease costs for the years ended June 30, 2024, 2023 and 2022 were $ 40.8 million, $ 33.6 million and $ 35.3 million, respectively.

5 unchanged sentences

Total lease liabilities $ 166,722

As of June 30, 2023, we had additional operating lease commitments of $ 57.3 million for manufacturing and office space that have not yet commenced.

These leases will commence during the years ended June 30, 2024 and June 30, 2025 with lease terms of 10 years to 15 years.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of June 30, 2024, future operating lease commitments for leases that have not yet commenced were not material.

The supplemental information related to operating leases for the years ended June 30, 2024 and June 30, 2023 was as follows (in thousands):

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(b) Leases where ResMed is the Lessor

We lease sleep and respiratory medical devices to customers primarily as a means to comply with local health insurer requirements in certain foreign geographies.

Contract terms for operating lease contracts vary by customer and include options to terminate or extend the contract.

We lease sleep and respiratory medical devices to customers primarily to comply with local health insurer requirements in certain foreign geographies.

Device rental contracts are classified as operating leases, and contract terms vary by customer and include options to terminate or extend the contract.

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.

7 unchanged sentences

All share repurchases since February 21, 2014 have been executed in accordance with this program.

We have temporarily suspended our repurchase program and, accordingly, did not repurchase any shares during fiscal years 2023 or 2022.

During fiscal year 2024, we repurchased approximately 828,000 shares at a cost of $ 150.0 million.

We did not repurchase any shares during fiscal year 2023.

As of June 30, 2024, we have repurchased a total of 42.7 million shares at a cost of $ 1.8 billion.

4 unchanged sentences

No such shares were issued or outstanding at June 30, 2024.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Stock Options and Restricted Stock Units.

6 unchanged sentences

At the annual meeting of our stockholders in November 2017, our stockholders approved an amendment and restatement to the 2009 Plan to increase the number of shares of common stock that may be issued or transferred pursuant to awards under the 2009 Plan by 7.4 million.

The amendment and restatement imposes a maximum award amount which may be granted under the 2009 Plan to non-employee director in a calendar year, which when taken together with any other cash fees

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

earned for services as a non-employee director during the calendar year, has a total value of $ 0.7 million, or $ 1.2 million in the case of a non-employee director who is also serving as chairman of our board of directors.

The amendment and restatement imposes a maximum award amount which may be granted under the 2009 Plan to non-employee director in a calendar year, which when taken together with any other cash fees earned for services as a non-employee director during the calendar year, has a total value of $ 0.7 million, or $ 1.2 million in the case of a non-employee director who is also serving as chairman of our board of directors.

The amendment and restatement also increased the maximum amount payable pursuant to cash-denominated performance awards granted in any calendar year from $ 3.0 million to $ 5.0 million.

9 unchanged sentences

The amount remitted to the tax authorities for the employees’ tax obligation is reflected as a financing activity on our consolidated statements of cash flows.

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

Shares withheld by us as a result of the net settlement are not considered issued and outstanding and are added to the shares available for future issuance under the 2009 Plan.

The total fair value of RSUs and PRSUs that vested during the years ended June 30, 2024, 2023 and 2022, was $ 51.0 million, $ 66.8 million and $ 65.5 million, respectively.

6 unchanged sentences

Vested* ( 236 ) 215.74

Performance factor adjustment 115 —

Forfeited ( 61 ) 218.09

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Options vested and expected to vest at end of period 778 $ 146.52 2.8

* Includes 1 thousand shares netted for tax.

The aggregate intrinsic value of options exercised during the fiscal years 2024, 2023 and 2022, was $ 17.9 million, $ 25.4 million and $ 33.7 million, respectively.

80 unchanged sentences

Provision for income taxes $ 243,847 $ 204,108 $ 181,046

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

12 unchanged sentences

Stock-based compensation expense 4,875 ( 6,282 ) ( 11,294 )

Uncertain tax position — — 248,773

Other 15,823 4,051 8,278

Provision for income taxes $ 243,847 $ 204,108 $ 181,046

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

We reported net deferred tax assets and liabilities in our consolidated balance sheets at June 30, 2024 and June 30, 2023, as follows (in thousands):

16 unchanged sentences

Hedging contracts 56,324 27,666

State income taxes 3,566 2,468

Other 5,538 ( 2,014 )

8 unchanged sentences

Net deferred tax asset $ 124,230 $ 42,324

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of June 30, 2024, we had $ 16.5 million of U.S.

6 unchanged sentences

The net impact of these tax holidays and tax incentive programs increased our net income by $ 49.6 million ($ 0.34 per diluted share) for the year ended June 30, 2024, $ 40.5 million ($ 0.27 per diluted share) for the year ended June 30, 2023, and $ 38.0 million ($ 0.26 per diluted share) for the year ended June 30, 2022.

As a result of the Tax Cuts and Jobs Act of 2017 (the “U.S.

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

As a result of the Tax Cuts and Jobs Act of 2017 (“TCJA”), we have treated all non-U.S.

historical earnings as taxable.

3 unchanged sentences

The total amount of these undistributed earnings at June 30, 2024 amounted to approximately $ 4.1 billion.

In the event our non-U.S.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

the event our non-U.S.

earnings had not been permanently reinvested, approximately $ 4.9 million in U.S.

state deferred taxes would have been recognized in the consolidated financial statements.

Tax Act also introduced U.S.

The TCJA also introduced U.S.

taxation on certain global intangible low-taxed income (“GILTI”).

15 unchanged sentences

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

Tax years 2018 to 2022 remain subject to future examination by the major tax jurisdictions in which we are subject to tax.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Tax years 2018 to 2023 remain subject to examination by the major tax jurisdictions in which we are subject to tax.

(13) Segment Information

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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.

Additionally, effective in the first quarter of fiscal year 2023, we updated the extent of allocation and method of attribution of certain shared costs that are principally managed at the corporate level as part of our evaluation of segment operating performance.

As a result, certain shared administrative costs, including shared IT, legal and other administrative functions, which were previously included in segment operating results, are now reported in Corporate costs within our reconciliation of segment operating profit to income before income taxes.

PART II Item 8

AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Additionally, effective in the third quarter of fiscal year 2024, we updated the method of attribution of certain costs that are principally managed at the segment level as part of our evaluation of segment operating performance.

As a result, certain costs relating to quality and regulatory assurance, commercial legal, operations, sales and marketing, customer service, information technology, and other administrative costs, which were previously included in Corporate costs within our reconciliation of segment operating profit to income before income taxes, are now reported in segment operating results.

The financial information presented herein reflects the impact of the preceding reporting change for all periods presented.

13 unchanged sentences

Software as a Service (1)

154,450 115,655 93,756

Total $ 1,835,804 $ 1,562,775 $ 1,373,347

3 unchanged sentences

Restructuring expenses 64,228 9,177 —

Masks with magnets field safety notification expenses (2)

Astral field safety notification expenses (3)

Acquisition related expenses — 10,949 1,864

5 unchanged sentences

Income before income taxes $ 1,264,798 $ 1,101,664 $ 960,483

(1) During the fiscal year ended June 30, 2024, we recorded $ 4.1 million of operating lease right-of-use asset impairments within our SaaS segment.

The impairments related to leases for office space and were recorded within net operating profit.

(2) 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.

(3) 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 II Item 8

41 unchanged sentences

Notes to the Consolidated Financial Statements

eligible compensation, subject to the annual IRS limit.

Our total contributions to the plan were $ 13.8 million, $ 12.7 million and $ 11.9 million in fiscal 2024, 2023 and 2022, respectively.

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

Singapore We sponsor a defined contribution plan available to all domestic employees.

Company contributions to this plan are based on a percentage of employee contributions to a maximum of 17.0 % of the employee’s salary.

11 unchanged sentences

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.

On January 31, 2024, NYU appealed the PTAB’s rulings to the Court of Appeals for the Federal Circuit.

The appeals are not expected to be resolved 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.

17 unchanged sentences

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 the cases by Philips against the communications module defendants was originally set for August 12, 2024.

On August 5, 2024, the court issued an order vacating the trial date.

On June 16, 2022, Cleveland Medical Devices Inc.

2 unchanged sentences

1:22-cv-00794.

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

and 11,234,637.

We have moved to

PART II Item 8

1 unchanged sentence

Notes to the Consolidated Financial Statements

dismiss the action because Cleveland Medical sued the wrong ResMed entity.

We have also moved to dismiss all claims based on U.S.

10,076,269, as well as indirect and willful infringement allegations as to the remaining patents asserted against ResMed;

that motion is pending.

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

Patent 10,076,269.

The PTAB will decide whether to review the validity of the ‘269 patent by September 2023.

The parties are engaged in discovery in the Delaware action.

The case is set for trial in August 2024.

and 11,234,637.

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 denied the rest of the motion.

On March 22, 2023, ResMed Corp.

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

filed a petition with the PTAB seeking review of the validity of U.S.

On May 6, 2024, the PTAB granted the petition and instituted an Inter Partes Review proceeding against the patent.

On June 21, 2024, the District Court of Delaware granted ResMed’s motion to stay the case until the PTAB issues its final written decision in the Inter Partes Review proceeding.

The PTAB decision is expected by May 6, 2025.

On March 20, 2023, ResMed Corp.

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.

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.

On April 9, 2024, Cleveland Medical filed a second amended answer and counterclaims accusing ResMed Corp.

of infringing U.S.

11,857,333 and 11,872,029.

filed a petition with the PTAB for post-grant review of the validity of U.S.

11,602,284, which the PTAB denied on June 24, 2024.

On July 24, 2024, ResMed Corp.

requested rehearing of the PTAB's denial of the petition for post-grant review of US Patent No.

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.

49 unchanged sentences

Non-designated Derivative Gains (Losses)

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

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

Twelve Months Ended

32 unchanged sentences

Pro forma results of operations have not been presented because the effects of this acquisition were not material to our consolidated statements of income.

We recorded acquisition related expenses of $ 10.9 million and $ 1.9 million during the years ended June 30, 2023 and June 30, 2022, respectively.

We did not have material acquisition related expenses during the year ended June 30, 2024.

We recorded acquisition related expenses of $ 10.9 million and $ 1.9 million during the years ended June 30, 2023 and June 30, 2022, respectively.

(18) Restructuring Expenses

During the year ended June 30, 2023, we incurred restructuring expenses of $ 9.2 million associated with the reorganization and rationalization of our operations.

We recorded the full amount of $ 9.2 million during the year ended June 30, 2023, of which $ 6.7 million related to our Sleep and Respiratory Care segment and $ 2.5 million related to our SaaS segment.

The restructuring expenses consisted primarily of severance to employees and were separately disclosed within our operating expenses.

We had $ 7.8 million remaining in our accruals at year end which will be paid during the year ended June 30, 2024.

We did no t incur material restructuring expenses during the year ended June 30, 2022.

During the year ended June 30, 2021, we closed our Portable Oxygen Concentrator business, which was part of the Sleep and Respiratory Care segment.

We recognized restructuring expenses of $ 13.9 million primarily related to inventory write-

Restructuring expenses consist of costs incurred in connection with the realignment of business strategies and operations as well as cost rationalization efforts.

These costs are separately presented as restructuring expenses within our consolidated statement of income for all periods presented.

Although the costs associated with restructuring plans have not been allocated to our business segments' results in Note 13 – Segment Information, the restructuring plans impacted both our Sleep and Respiratory Care and SaaS segments.

During the year ended June 30, 2024, 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 year ended June 30, 2024 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

PART II Item 8

1 unchanged sentence

Notes to the Consolidated Financial Statements

downs of $ 5.2 million, accelerated amortization of acquired intangible assets of $ 5.1 million, asset impairments of $ 2.3 million, employee-related costs of $ 0.7 million and contract cancellation costs of $ 0.6 million.

Of the total expense recognized during year ended June 30, 2021, the inventory write-down of $ 5.2 million is presented within cost of sales and the remaining $ 8.7 million in restructuring costs is separately disclosed as restructuring expenses on the consolidated statements of income.

The restructure was completed as of June 30, 2021.

business activities, and $ 2.4 million of other miscellaneous asset impairments.

As of June 30, 2024, there were no restructuring expenses remaining in our accruals.

During the year ended June 30, 2023, we incurred restructuring expenses of $ 9.2 million associated with the reorganization and rationalization of our operations.

We recorded the full amount of $ 9.2 million during the year ended June 30, 2023.

The restructuring expenses consisted primarily of severance to employees.

As of June 30, 2023, we had $ 7.8 million in restructuring expenses remaining in our accruals which were paid during the year ended June 30, 2024.

We did not incur material restructuring expenses during the year ended June 30, 2022.

PART II Item 8

23 unchanged sentences

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

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk