Dear Shareholders,
Our fiscal 2009 was an extraordinary year in many ways, a year in which the Company performed above and beyond…and a year when our team was able to touch the lives of millions of patients across the globe. It was also a year that produced sustained sales performance throughout all of our commercial regions, terrific gains in capturing market share and success in managing our expenses. Our focus on quality and innovation meant that even during difficult economic times, customers and patients reached for the best, for products they could trust, from a team they could trust.

We did all this while building the foundation for future growth; upgrading our global ERP technology system, opening new operations in Malaysia and Singapore and moving into new headquarters in San Diego.

Total revenue in 2009 was $921 million, up 10% from the past year and up 15% on a constant currency basis. Net income was a record $146.4 million, an increase of 33% over the prior year and earnings per share were $1.90, an increase of 36% over the prior year. Our balance sheet remains strong, with total assets at year-end of $1.5 billion and net equity of $1.1 billion. Our cash balance at the end of the fiscal year stood at $416 million.

The sleep-disordered breathing market continues to be vastly underpenetrated, with only 10% of the potential patient population receiving treatment. Awareness of sleep disordered breathing and its consequences continues to expand, a promising signal for the future of patient care and ResMed’s continued growth. The global market grew in double digit percentage terms in fiscal 2009, a year in which many industries around the globe struggled. Our most critical mission is to continue expanding the markets we serve, whether through our long-standing efforts in cardiology, type 2 diabetes and occupational health and safety, through ventilation and anesthesiology, or through helping to increase the numbers of masks and accessories a patient receives each year. As a market leader, we are focused on driving market growth, not just accepting it.

ResMed products address a patient population linked to some of the most prevalent and expensive chronic disorders faced by global healthcare systems. Sleep- disordered breathing is linked to three out of the four top killers in the U.S. alone, costing the healthcare system more than half a trillion dollars per annum. We have products that we believe can help reduce the cost of caring for these patients while extending their lives. In order to persuade even the most skeptical audiences, we have embarked on the largest clinical study ResMed has ever undertaken — SERVE HF. SERVE HF is a large, multi-national randomized prospective study focused on treating New York Heart Association Class 2, 3 and 4 heart failure patients with adaptive servo-ventilation. The aim of the study is to demonstrate improvements in morbidity, mortality and reduced hospitalization costs when using our adaptive servo-ventilator device as compared to standard of care…critical objectives for governments and healthcare systems around the globe. Good patient care and good economics is a powerful combination.

Type 2 diabetes is a critical co-morbidity that we are addressing in order to support improved patient care and drive market volume. The prevalence of SDB in type 2 diabetes is staggering. The overall global prevalence of type 2 diabetes is similar to the prevalence of SDB, although far fewer patients suffering from SDB have been identified when compared with diabetics. That means there is anopportunity to address the population of patients with diagnosed diabetes, and also diagnose them for SDB. In fact, the International Diabetes Federation has issued a consensus statement suggesting that all type 2 diabetic patients be evaluated for SDB. The literature also shows that by treating their SDB, we can help patients improve their cardiovascular health as well as potentially improve glycemic control. We are currently supporting a multinational clinical trial to demonstrate that effective use of CPAP in these populations will bettercontrol HbA1c levels, a critical indicator for diabetes management. We are also working closely with companies that have access to diabetic patients in order to more quickly and efficiently educate these patients and their physicians.

In addition to stimulating market expansion in 2009, the ResMed team also expanded our market share. We have gained market share by leveraging an experienced team and an unparalleled product range. Our patented EasyBreathe technology underpinned growth in CPAPs, APAPs and VPAP bi-levels this past year. With the launch of Swift™ LT, Swift LT for Her and Activa™ LT, we added to our continuing success in the patient interface segment. The VSIII™ introduction provided stability and new growth opportunities in an expanding ventilation market. The industry-leading quietness and performance of the VPAP™ IV ST proved a huge success as we gained significant market share in the non-invasive ventilation market. And just as exciting…we believe our current product pipeline is even more robust than what we launched in the past year. During fiscal year 2010 and beyond, we have planned a series of product launches that will provide exciting growth opportunities for ResMed in both new and existing market segments.

Fiscal 2010 promises to be an exciting year for ResMed. The continued flow of positive clinical data linking SDB to dangerous and costly co-morbidities, the simplification of the diagnostic pathway in selected markets, the increased efforts to educate and engage primary care physicians in coordination with our sleep physician partners, and an exciting schedule of new product introductions all bode well for both market expansion and market share growth. We look forward to keeping our shareholders updated throughout the fiscal year as we both drive and leverage these opportunities.

I want to take this opportunity to thank all of our more than 3,000 employees worldwide for their commitment to quality, their passion and enthusiasm. It is their daily contributions that allow ResMed to serve millions of patients across the globe.

Kieran T. Gallahue
President and CEO