Special Note Regarding Forward-Looking Statements

This report contains or may contain certain forward-looking statements and information that are based on the beliefs of our management as well as estimates and assumptions made by, and information currently available to, our management. All statements other than statements regarding historical facts are forward-looking statements. The words "believe," "expect," "anticipate," "will continue," "will," "estimate," "plan," "future" and other similar expressions, and negative statements of such expressions, generally identify forward-looking statements, including, in particular, statements regarding the development and approval of new products and product applications, market expansion, pending litigation and the development of new markets for our products, such as cardiovascular and stroke markets. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on these forward-looking statements. Such forward-looking statements reflect the views of our management at the time such statements are made and are subject to a number of risks, uncertainties, estimates and assumptions, including, without limitation, and in addition to those identified in the text surrounding such statements, those identified in our annual report on Form 10-K for the fiscal year ended June 30, 2012 and elsewhere in this report.

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

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

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

Overview

The following is an overview of our results of operations for the three and six months ended December 31, 2012. Management's discussion and analysis of financial condition and results of operations is intended to help the reader understand the results of operations and financial condition of ResMed Inc. Management's discussion and analysis is provided as a supplement to, and should be read in conjunction with selected financial data and condensed consolidated financial statements and notes, included herein.

We are a leading developer, manufacturer and distributor of medical equipment for treating, diagnosing, and managing sleep-disordered breathing ("SDB") and other respiratory disorders. During the three and six months ended December 31, 2012, we continued our efforts to build awareness of the consequences of untreated SDB, and to grow our business in this market. In our efforts, we have attempted to raise awareness through market and clinical initiatives highlighting the relationship between SDB/obstructive sleep apnea and co-morbidities, such as cardiac disease, diabetes, hypertension and obesity, as well as the dangers of sleep apnea in regard to occupational health and safety, especially in the transport industry.

We are committed to ongoing investment in research and development and product enhancements. During the three and six months ended December 31, 2012, we invested $30.3 million and $57.5 million, respectively, on research and development activities. Since the development of continuous positive airway pressure ("CPAP") therapy, we have developed a number of innovative products for SDB and other respiratory disorders including airflow generators, diagnostic products, mask systems, headgear and other accessories. Our new product release schedule remains active across both our mask and flow generator categories. We are taking steps to increase awareness of the health dangers of SDB by sponsoring educational programs targeted at the primary care physician community. We believe these efforts should further increase awareness of both doctors and patients about the relationship between SDB, obstructive sleep apnea and co-morbidities such as cardiac disease, diabetes, hypertension and obesity. We also believe these efforts should help inform the community of the dangers of sleep apnea in occupational health and safety, especially in the transport industry.

During the three months ended December 31, 2012, our net revenue increased by 13% when compared to the three months ended December 31, 2011. Gross margin was 61.8% for the three months ended December 31, 2012 compared to 59.7% for the three months ended December 31, 2011. Diluted earnings per share for the three months ended December 31, 2012 increased to $0.53 per share, up from $0.42 per share in the three months ended December 31, 2011.

At December 31, 2012, our cash and cash equivalents totaled $958.3 million, our total assets were $2.3 billion and our stockholders' equity was $1.8 billion.

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

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

Net Revenue

Net revenue increased for the three months ended December 31, 2012 to $376.5 million compared to $332.7 million for the three months ended December 31, 2011, an increase of $43.8 million or 13%. The increase in net revenue is primarily attributable to an increase in unit sales of our S9 autoset and bilevel flow generators, masks and accessories. Movements in international currencies against the U.S. dollar negatively impacted revenues by approximately $4.2 million during the three months ended December 31, 2012. Excluding the impact of foreign currency movements, net revenue for the three months ended December 31, 2012 increased by 14% compared to the three months ended December 31, 2011.

Net revenue in North and Latin America increased for the three months ended December 31, 2012 to $211.8 million from $182.5 million for the three months ended December 31, 2011, an increase of 16%. We believe this increase primarily reflects growth in the overall sleep-disordered breathing market and growth generated from our recent product releases. Net international revenue, which includes all markets outside North and Latin America, for the three months ended December 31, 2012, increased to $164.7 million from $150.2 million for the three months ended December 31, 2011, an increase of 10%. Movements in international currencies against the U.S. dollar negatively impacted international revenues by approximately $4.2 million during the three months ended December 31, 2012. Excluding the impact of movements in international currencies, international sales grew by 12% compared to the three months ended December 31, 2011. We believe this increase in revenue outside North and Latin America primarily reflects growth in the overall SDB market and growth generated from our recent product releases.

Net revenue from the sales of flow generators, including humidifiers, for the three months ended December 31, 2012 totaled $202.6 million, an increase of 12% compared to the three months ended December 31, 2011 of $180.6 million, including increases of 16% in North and Latin America and 9% internationally. Net revenue from the sales of masks and other accessories for the three months ended December 31, 2012 totaled $173.9 million, an increase of 14% compared to the three months ended December 31, 2011 of $152.1 million, including increases of 16% in North and Latin America and 11% internationally. Excluding the impact of unfavorable currency movements, international revenue increased by 11% and 16% for flow generators and masks and other accessories, respectively, for the three months ended December 31, 2012 compared to the three months ended December 31, 2011. We believe these increases primarily reflect growth in the overall SDB market and contributions from recent product releases.

The following table summarizes the percentage movements in our net revenue for the three months ended December 31, 2012 compared to the three months ended December 31, 2011:

                                                                                              International          Total
                                      North and                                                 (Constant          (Constant
                                    Latin America         International         Total          Currency) *         Currency)
Flow generators                                 16 %                   9 %          12 %                  11 %             13 %
Masks and other accessories                     16 %                  11 %          14 %                  16 %             16 %
Total                                           16 %                  10 %          13 %                  12 %             14 %

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

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

Net Revenue, Continued

Net revenue for the six months ended December 31, 2012, was $716.3 million as compared to $647.5 million for the six months ended December 31, 2011, an increase of 11%. For the six months ended December 31, 2012, revenue from sales of flow generators increased by 9% compared to the six months ended December 31, 2011, comprising a 17% increase in North and Latin America and a 3% increase internationally. Revenue from sales of mask systems, motors and other accessories increased by 12%, comprising a 14% increase in North and Latin America and an 8% increase internationally, for the six months ended December 31, 2012 compared to the six months ended December 31, 2011. Movement in international currencies against the U.S. dollar negatively impacted net revenue by approximately $16.8 million during the six months ended December 31, 2012. Excluding the impact of unfavorable currency movements, total revenue for the six months ended December 31, 2012 increased by 13% compared to the six months ended December 31, 2011. We believe these increases primarily reflect growth in the overall sleep-disordered breathing market, and growth generated from our recent product releases.

The following table summarizes the percentage movements in our net revenue for the six months ended December 31, 2012 compared to the six months ended December 31, 2011:

                                                                                                      International             Total
                                           North and                                                    (Constant             (Constant
                                         Latin America          International          Total           Currency) *           Currency) *
Flow generators                                      17 %                    3 %            9 %                    9 %                 12 %
Masks, motors and other accessories                  14 %                    8 %           12 %                   15 %                 14 %
Total                                                15 %                    5 %           11 %                   11 %                 13 %

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

Gross Profit

Gross profit increased for the three months ended December 31, 2012 to $232.7 million from $198.7 million for the three months ended December 31, 2011, an increase of $34.0 million or 17%. Gross profit as a percentage of net revenue for the three months ended December 31, 2012 increased to 61.8% from 59.7% for the three months ended December 31, 2011.

Gross profit increased for the six months ended December 31, 2012 to $441.4 million from $383.8 million for the six months ended December 31, 2011, an increase of $57.6 million or 15%. Gross profit as a percentage of net revenue for the six months ended December 31, 2012 was 61.6% compared to 59.3% for the six months ended December 31, 2011.

The improvement in gross margins for the three and six months ended December 31, 2012 was primarily due to manufacturing and supply chain improvements, and favorable change in product mix as sales of our higher margin products represented a higher proportion of our sales, partially offset by declines in our average selling prices.

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

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased for the three months ended December 31, 2012 to $107.8 million from $100.6 million for the three months ended December 31, 2011, an increase of $7.3 million or 7%. Selling, general and administrative expenses, as a percentage of net revenue, were 28.6% for the three months ended December 31, 2012 compared to 30.2% for the three months ended December 31, 2011.

Selling, general and administrative expenses increased for the six months ended December 31, 2012 to $206.1 million from $194.8 million for the six months ended December 31, 2011, an increase of $11.4 million or 6%. Selling, general and administrative expenses, as a percentage of net revenue, were 28.8% for the six months ended December 31, 2012 compared to 30.1% for the six months ended December 31, 2011.

The increase in selling, general and administrative expenses was primarily due to an increase in the number of sales and administrative personnel to support our growth and other expenses related to the increase in our sales. The increase in selling, general and administrative expenses was favorably impacted by the movement of international currencies against the U.S. dollar, which decreased our expenses by approximately $1.2 million and $5.6 million for the three and six months ended December 31, 2012, respectively, as reported in U.S. dollars. As a percentage of net revenue, we expect our future selling, general and administrative expenses to be approximately 29%.

Research and Development Expenses

Research and development expenses increased for the three months ended December 31, 2012 to $30.3 million from $27.2 million for the three months ended December 31, 2011, an increase of $3.1 million or 11%. Research and development expenses, as a percentage of net revenue, were 8.1% for the three months ended December 31, 2012, compared to 8.2% for the three months ended December 31, 2011.

Research and development expenses increased for the six months ended December 31, 2012 to $57.5 million from $53.4 million for the six months ended December 31, 2011, an increase of $4.1 million or 8%. Research and development expenses, as a percentage of net revenue, were 8.0%, for the six months ended December 31, 2012 compared to 8.3% for the six months ended December 31, 2011.

The increase in research and development expenses was primarily due to an increase in the number of research and development personnel, consulting and contractor expenses and an increase in materials and tooling costs incurred to facilitate development of new products. As a percentage of net revenue, we expect our future research and development expenses to continue to be approximately 8%.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets for the three and six months ended December 31, 2012 totaled $2.5 million and $5.1 million, respectively, as compared to $3.7 million and $7.5 million for the three and six months ended December 31, 2011. The decrease in amortization expense is mainly attributable to previously acquired intangibles reaching their projected end of useful life and therefore being fully written down.

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

Other Income, Net

Other income, net for the three and six months ended December 31, 2012 was $6.3 million and $16.7 million, respectively, compared to $15.7 million and $21.3 million, respectively, for the three and six months ended December 31, 2011. The decrease in other income, net, during the three and six months ended December 31, 2012, was predominantly due to losses on foreign currency and hedging transactions partly offset by an increase in interest income as a result of higher cash balances.

Income Taxes

Our effective income tax rate of approximately 20.8% for the three months ended December 31, 2012 was lower than our effective income tax rate of approximately 24.2% for the three months ended December 31, 2011. Our effective income tax rate of approximately 21.2% for the six months ended December 31, 2012 was lower than our effective tax rate of 24.1% for the six months ended December 31, 2011. The lower effective income tax rate was primarily due to a change in the geographic mix of our taxable income, including the lower taxes associated with our Singapore manufacturing operation.

Net Income

As a result of the factors above and share repurchases, our net income for the three months ended December 31, 2012 was $77.9 million or $0.53 per diluted share compared to net income of $62.9 million or $0.42 per diluted share for the three months ended December 31, 2011, an increase of 24% and 26%, respectively, over the three months ended December 31, 2011. Our net income for the six months ended December 31, 2012 was $149.2 million or $1.02 per diluted share compared to net income of $113.4 million or $0.75 per diluted share for the six months ended December 31, 2011, an increase of 32% and 36%, respectively, over the six months ended December 31, 2011.

Liquidity and Capital Resources

As of December 31, 2012 and June 30, 2012, we had cash and cash equivalents of $958.3 million and $809.5 million, respectively. Working capital was $1.3 billion and $1.1 billion at December 31, 2012 and June 30, 2012, respectively.

As of December 31, 2012 and June 30, 2012, our cash and cash equivalent balances held within the United States amounted to $42.9 million and $61.7 million, respectively. Our remaining cash and cash equivalent balances at December 31, 2012 and June 30, 2012, of $915.4 million and $747.8 million, respectively, were held by our non-U.S. subsidiaries, indefinitely invested outside the United States. Our cash and cash equivalent balances are held at highly rated financial institutions. Should we repatriate our cash and cash equivalent balances held outside the U.S., we would have to record a tax liability for the incremental tax consequences and a charge to the income tax provision in the period any such repatriation were to occur.

Inventories at December 31, 2012 were $194.8 million, an increase of $10.4 million or 6% over the December 31, 2011 balance of $184.4 million.

Accounts receivable at December 31, 2012 were $281.4 million, an increase of $42.7 million or 18% over the December 31, 2011 accounts receivable balance of $238.8 million. Accounts receivable days outstanding of 68 days at December 31, 2012 was 5 days higher, compared to 63 days at December 31, 2011. Our allowance for doubtful accounts as a percentage of total accounts receivable at December 31, 2012 was 3.0% compared to 2.5% at June 30, 2012. We have not experienced any significant decline in the credit quality of our customers and collections remain broadly consistent with our past experience. 2012 was 3.0% compared to 2.5% at June 30, 2012. We have not experienced any significant decline in the credit quality of our customers and collections remain broadly consistent with our past experience.

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

Liquidity and Capital Resources, Continued

During the six months ended December 31, 2012, we generated cash of $171.9 million from operations. This was lower than the cash generated from operations for the six months ended December 31, 2011 of $200.2 million and was primarily the result of the timing of tax installment payments in the current fiscal half and the increase in our accounts receivable and inventories. Movements in foreign currency exchange rates during the six months ended December 31, 2012 had the effect of increasing our cash and cash equivalents by $14.4 million, as reported in U.S. dollars. During the six months ended December 31, 2012 and 2011, we repurchased 1.2 million and 8.5 million shares at a cost of $48.1 million and $235.2 million, respectively. During the six months ended December 31, 2012, we also paid a dividend of $48.7 million.

Capital expenditures for the six months ended December 31, 2012 and 2011 amounted to $27.6 million and $25.2 million, respectively. The capital expenditures for the six months ended December 31, 2012 primarily reflected investment in computer hardware and software, rental and loan equipment and purchase of production tooling equipment and machinery. At December 31, 2012, our balance sheet reflects net property, plant and equipment of $439.6 million compared to $434.4 million at June 30, 2012.

At December 31, 2012, no capital lease obligations exist. Details of contractual obligations at December 31, 2012 are as follows:

                                                                          Payments Due by Period
In $000's                          Total         2013          2014         2015        2016        2017        Thereafter
Long Term Debt                   $ 300,852     $      54     $ 300,000     $     0     $     0     $     0     $        798
Interest on Long Term Debt           8,502         6,038         2,225          38          38          38              125
Operating Leases                    42,805        16,228        13,198       7,676       3,945       1,053              705
Purchase Obligations                90,844        90,480           182         182           0           0                0

Total                            $ 443,003     $ 112,800     $ 315,605     $ 7,896     $ 3,983     $ 1,091     $      1,628

Details of other commercial commitments as at December 31, 2012 are as follows:

                Total Amounts                    Amount of Commitment Expiration Per Period
 In $000's        Committed         2013        2014        2015        2016       2017       Thereafter
 Guarantees*   $        14,614     $ 2,398     $ 1,146     $   830     $ 2,299     $ 561     $      7,380
 Other                     624           0         208         416           0         0                0

 Total         $        15,238     $ 2,398     $ 1,354     $ 1,246     $ 2,299     $ 561     $      7,380

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

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

Liquidity and Capital Resources, Continued

We use independent leasing companies to provide financing to certain customers for the purchase of our products. In some cases, we are contingently liable in the event of a customer default, to the leasing companies, within certain limits, for unpaid installment receivables transferred to the leasing companies. The gross amount of receivables sold under these arrangements, for the six months ended December 31, 2012 and 2011, amounted to $0.7 million and $6.1 million, respectively. The maximum potential amount of contingent liability under these arrangements at December 31, 2012 and June 30, 2012 was $0.5 million, and $2.1 million, respectively. The recourse liability recognized by us at December 31, 2012 and June 30, 2012, in relation to these arrangements was $0.2 million and $0.6 million, respectively.

Credit Facility

During the year ended June 30, 2011, we entered into a credit agreement with lenders, including Union Bank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, HSBC Bank USA, National Association, as Syndication Agent and Union Bank, N.A., HSBC Bank USA, National Association, Commonwealth Bank of . . .