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OK I did some work on the financials using the 2001 financial report (10k)
looking at note 7. debt is not 150m but 180m bcs the notes were oversubscribed. interest payable is at 4% (i think the explanation was a bit hard for me to understand)

debt to equity ratio = borrowings - cash
shareholders equity
= (180,000-40136)/100366
= 139%

interest cover = EBIT/net interest payments
= 26042/762
= 34.18

so my conclusion is this - debt to equity ratio is very high - i'm not happy about it. However, interest coverage is 34x - which is excellent and they don't have a problem paying that.

looking at the 10Q - september
debt to equity = (180,000 - 60,444)/116,625 = 103%
interest cover = 13187/735 = 17.94

so doing a comparision - though you can't really compare annual to quarterly results - debt to equity ratio - moving downwards (that is definitely a positive); interest cover still greater than 3 - so the company looks good from this angle.

if you look further into the 10k (the 10Q, doesn't really have notes attached) - sales in all its segments have increased substantially ie in US, , Germany, France, australia and rest of the world. the totals are as follows:(in thousands)

2001 2000 1999
$155,156 $115,615 $88,627

of course I have to do more analysis - inventoris, recievables, versus sales, free cash flow, gross profits, ROIC.

but I think it is OK for now.

If you want to do a more detailed analysis - let me know and we can do it together.

I hope the above helped - though it would not have helped the valuation.



I spoke to my broker about 2 weeks ago about resmed - the share price dropped bcs another company has brought out a competitive sleep disorder machine - it is not yet on market. Fischer and Paykel healthcare share price also dropped as did the other main US competitor (I can't remember the name) - he thought it was an over-reaction - so lets watch it and see if we can pick up a bargain.
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