RESMED INC 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk Foreign Currency Market Risk Our reporting currency is the U.S. dollar, although the financial statements of our non-U.S. subsidiaries are maintained in their respective local currencies. We transact business in various foreign currencies, including a number of major European currencies as well as the Australian and Singapore dollars. We have significant foreign currency exposure through our Australian and Singapore manufacturing activities and our international sales operations. Net Investment and Fair Value Hedging On November 17, 2022, we executed foreign cross-currency swaps as net investment hedges and fair value hedges in designated hedging relationships with either the foreign denominated net asset balances or the foreign denominated intercompany loan as the hedged items. 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. 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. For these hedges, we excluded certain components from the assessment of hedge effectiveness that are not related to spot rates. 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 operations. 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. 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. 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. 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 $1,124.9 million and $1,128.3 million at December 31, 2025 and June 30, 2025, respectively. These contracts mature at various dates prior to December 31, 2029. Non-Designated Hedges We transact business in various foreign currencies, including a number of major European currencies as well as the Australian and Singapore dollars. We have foreign currency exposure through both our Australian and Singapore manufacturing activities, and international sales operations. We have established a foreign currency hedging program using purchased foreign currency call options, collars and forward contracts to hedge foreign-currency-denominated financial assets, liabilities and manufacturing cash flows. The terms of such foreign currency hedging contracts generally do not exceed three years. The purpose of this hedging program is to economically manage the financial impact of foreign currency exposures denominated mainly in Euros, and Australian and Singapore dollars. Under this program, increases or decreases in our foreign currency denominated financial assets, liabilities, and firm commitments are partially offset by gains and losses on the hedging instruments. We do not designate these foreign currency contracts as hedges. 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 $1,794.0 million and $1,410.2 million at December 31, 2025 and June 30, 2025, respectively. These contracts mature at various dates prior to September 15, 2026. 37 Table of Contents PART I – FINANCIAL INFORMATION Item 3 RESMED INC. AND SUBSIDIARIES Quantitative and Qualitative Disclosures About Market Risk Fair Values of Derivative Instruments 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 December 31, 2025 (in thousands): U.S. Dollar (USD) Euro (EUR) Canadian Dollar (CAD) Chinese Yuan (CNY) AUD Functional: Net Assets/(Liabilities) 480,335 (221,214) (17) 47,915 Foreign Currency Hedges (475,000) 187,750 — (28,583) Net Total 5,335 (33,464) (17) 19,332 USD Functional: Net Assets/(Liabilities) — 332,399 32,914 — Foreign Currency Hedges — (328,562) (36,457) — Net Total — 3,837 (3,543) — SGD Functional: Net Assets/(Liabilities) 741,692 284,374 — 3,159 Foreign Currency Hedges (720,000) (240,554) — — Net Total 21,692 43,820 — 3,159 38 Table of Contents PART I – FINANCIAL INFORMATION Item 3 RESMED INC. AND SUBSIDIARIES Quantitative and Qualitative Disclosures About Market Risk The table below provides information about our material foreign currency derivative financial instruments and presents the information in U.S. 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 December 31, 2025. 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. These notional amounts generally are used to calculate payments to be exchanged under the contracts (in thousands, except exchange rates). Fair Value Assets / (Liabilities) Total December 31, 2025 June 30, 2025 AUD/USD Contract amount 475,000 4,700 2,969 Ave. contractual exchange rate AUD 1 = USD 0.6606 AUD/EUR Contract amount 240,554 (888) (1,203) Ave. contractual exchange rate AUD 1 = EUR 0.5749 SGD/EUR Contract amount 293,359 591 (1,426) Ave. contractual exchange rate SGD 1 = EUR 0.6598 SGD/USD Contract amount 720,000 1,114 3,031 Ave. contractual exchange rate SGD 1 = USD 0.7772 AUD/CNY Contract amount 28,583 38 374 Ave. contractual exchange rate AUD 1 = CNY 4.6405 USD/EUR Contract amount 1,124,851 (126,623) (128,631) Ave. contractual exchange rate USD 1 = EUR 0.9610 USD/CAD Contract amount 36,457 624 370 Ave. contractual exchange rate CAD 1 = USD 0.7416 Interest Rate Risk We are exposed to risk associated with changes in interest rates affecting the return on our cash and cash equivalents and debt. At December 31, 2025, we held cash and cash equivalents of $1,417.1 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 December 31, 2025, there was $165.0 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, 2025, would not have had a material impact on pretax income. We have no interest rate hedging agreements. Inflation Inflationary factors such as increases in the cost of our products, freight, overhead costs or wage rates may adversely affect our operating results. Sustained inflationary pressures in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses as a percentage of net revenue if we are unable to offset such higher costs through price increases. 39 Table of Contents PART I – FINANCIAL INFORMATION Item 4 RESMED INC. AND SUBSIDIARIES