-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QghNzK3PA5JExpi989J5QudmEUV1aFjCFThLbiE7/SQdY6K9LyXBodaxYR7+yUJO ZCF80PRSgOvxF8XamrgyEQ== 0000950132-01-500385.txt : 20020410 0000950132-01-500385.hdr.sgml : 20020410 ACCESSION NUMBER: 0000950132-01-500385 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESPIRONICS INC CENTRAL INDEX KEY: 0000780434 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 251304989 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16723 FILM NUMBER: 1787186 BUSINESS ADDRESS: STREET 1: 1501 ARDMORE BOULEVARD CITY: PITTSBURGH STATE: PA ZIP: 15221-4401 BUSINESS PHONE: 4127312100 MAIL ADDRESS: STREET 1: 1501 ARDMORE BOULEVARD CITY: PITTSBURGH STATE: PA ZIP: 15221-4401 10-Q 1 d10q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) X Quarterly Report pursuant to section 13 or 15(d) of the Securities Exchange - ---- Act of 1934 for the quarterly period ended September 30, 2001 or ____ Transition Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________ to ____________ Commission File No. 000-16723 RESPIRONICS, INC. (Exact name of registrant as specified in its charter) Delaware 25-1304989 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 1501 Ardmore Blvd. Pittsburgh, Pennsylvania 15221 (Address of principal executive offices) (Zip Code) (Registrant's Telephone Number, including area code) 412-731-2100 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _______ . --- As of October 31, 2001, there were 34,110,511 shares of Common Stock of the registrant outstanding, of which 3,633,836 were held in treasury. INDEX RESPIRONICS, INC. PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements (Unaudited). Independent Accountants' Review Report Consolidated balance sheets -- September 30, 2001 and June 30, 2001. Consolidated statements of operations -- Three months ended September 30, 2001 and 2000. Consolidated statements of cash flows -- Three months ended September 30, 2001 and 2000. Notes to consolidated financial statements - September 30, 2001. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Item 3. Quantitative and Qualitative Disclosures about Market Risk. PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings. Item 2. Changes in Securities. Item 3. Defaults Upon Senior Securities. Item 4. Submission of Matters to a Vote of Security Holders. Item 5. Other Information. Item 6. Exhibits and Reports on Form 8-K. SIGNATURES - ---------- Independent Accountants' Review Report Board of Directors Respironics, Inc. and Subsidiaries We have reviewed the accompanying condensed consolidated balance sheet of Respironics, Inc. and Subsidiaries as of September 30, 2001, and the related condensed consolidated statements of operations for the three-month periods ended September 30, 2001 and 2000, and the condensed consolidated statements of cash flows for the three-month periods ended September 30, 2001 and 2000. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States. We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of Respironics, Inc. and Subsidiaries as of June 30, 2001, and the related consolidated statements of operations, shareholders' equity, and cash flows for the year then ended not presented herein and in our report dated July 24, 2001, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of June 30, 2001, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ Ernst & Young LLP Pittsburgh, Pennsylvania October 23, 2001 CONSOLIDATED BALANCE SHEETS (UNAUDITED) RESPIRONICS, INC. AND SUBSIDIARIES
September 30 June 30 2001 2001 ---------------- ---------------- ASSETS CURRENT ASSETS Cash and short-term investments $ 37,427,478 $ 27,320,910 Trade accounts receivable, less allowance for doubtful accounts of $17,374,000 and $16,457,000 96,770,818 98,078,344 Inventories 69,337,742 73,417,896 Prepaid expenses and other 11,818,976 10,937,110 Deferred income tax benefits 14,855,307 14,855,307 ---------------- --------------- TOTAL CURRENT ASSETS 230,210,321 224,609,567 PROPERTY, PLANT AND EQUIPMENT Land 2,506,052 2,506,052 Building 8,580,888 8,509,596 Machinery and equipment 87,295,026 84,559,172 Furniture, office and computer equipment 59,936,115 56,011,341 Leasehold improvements 5,434,673 5,286,891 ---------------- --------------- 163,752,754 156,873,052 Less allowances for depreciation and amortization 93,940,107 87,725,808 ---------------- --------------- 69,812,647 69,147,244 OTHER ASSETS 13,071,138 14,334,938 GOODWILL 59,557,755 59,856,714 ---------------- --------------- $ 372,651,861 $ 367,948,463 ================ =============== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 25,972,950 $ 28,964,129 Accrued expenses and other 20,657,023 19,662,491 Current portion of long-term obligations 932,197 3,998,317 ---------------- --------------- TOTAL CURRENT LIABILITIES 47,562,170 52,624,937 LONG-TERM OBLIGATIONS 79,917,541 80,055,378 SHAREHOLDERS' EQUITY Common Stock, $.01 par value; authorized 100,000,000 shares; issued and outstanding 34,089,171 shares at September 30, 2001 and 34,013,785 shares at June 30, 2001 340,892 340,138 Additional capital 122,744,333 121,720,289 Accumulated other comprehensive loss (3,502,397) (4,237,433) Retained earnings 168,135,687 160,033,521 Treasury stock (42,546,365) (42,588,367) ---------------- --------------- TOTAL SHAREHOLDERS' EQUITY 245,172,150 235,268,148 ---------------- --------------- $ 372,651,861 $ 367,948,463 ================ ===============
See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) RESPIRONICS, INC. AND SUBSIDIARIES
Three months ended September 30 September 30 2001 2000 -------------------------------------------------- Net sales $ 107,408,622 $ 92,064,204 Cost of goods sold 56,508,529 48,661,952 ------------------ --------------- GROSS MARGIN 50,900,093 43,402,252 General and administrative expenses 12,909,013 10,869,663 Sales, marketing and commission expenses 19,498,801 16,823,393 Research and development expenses 4,313,602 3,371,149 Interest expense 1,074,588 2,149,124 Other income (323,432) (295,498) ------------------ --------------- 37,472,572 32,917,831 ------------------ --------------- INCOME BEFORE INCOME TAXES 13,427,521 10,484,421 Income taxes 5,325,355 4,193,769 ------------------ --------------- NET INCOME $ 8,102,166 $ 6,290,652 ================== =============== Basic earnings per share $ 0.27 $ 0.21 ================== =============== Basic shares outstanding 30,408,210 29,477,044 Diluted earnings per share $ 0.26 $ 0.21 ================== =============== Diluted shares outstanding 31,361,104 30,289,365
See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) RESPIRONICS, INC. AND SUBSIDIARIES
Three Months Ended September 30 2001 2000 --------------------------------------------------- OPERATING ACTIVITIES Net income $ 8,102,166 $ 6,290,652 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,527,596 7,020,984 Changes in operating assets and liabilities: Decrease in accounts receivable 1,307,526 1,664,491 Decrease (increase) in inventories 4,080,154 (705,695) Change in other operating assets and liabilities (2,063,047) (5,368,892) ----------------- -------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 19,954,395 8,901,540 INVESTING ACTIVITIES Purchase of property, plant and equipment (7,104,159) (8,304,395) Additional purchase price for acquired business (606,511) (787,580) ----------------- -------------- NET CASH USED BY INVESTING ACTIVITIES (7,710,670) (9,091,975) FINANCING ACTIVITIES Net decrease in borrowings (3,203,957) (337,755) Issuance of common stock 1,024,798 572,977 Use of treasury stock, net 42,002 29,929 ----------------- -------------- NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (2,137,157) 265,151 ----------------- -------------- INCREASE IN CASH AND SHORT-TERM INVESTMENTS 10,106,568 74,716 Cash and short-term investments at beginning of period 27,320,910 19,594,484 ----------------- -------------- CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 37,427,478 $ 19,669,200 ================= ==============
See notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) RESPIRONICS, INC. AND SUBSIDIARIES September 30, 2001 NOTE A -- BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ended June 30, 2002. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 2001. NOTE B -- INVENTORIES The composition of inventory is as follows:
September 30 June 30 2001 2001 ----------- ----------- Raw materials $17,935,000 $20,738,000 Work-in-process 5,154,000 5,961,000 Finished goods 46,249,000 46,719,000 ----------- ----------- $69,338,000 $73,418,000 =========== ===========
NOTE C -- CONTINGENCIES As previously disclosed, the Company is party to actions filed in a Federal District Court in January 1995 and June 1996 in which a competitor alleges that the Company's manufacture and sale in the United States of certain products infringes four of the competitor's patents. In its response to these actions, the Company has denied the allegations and has separately sought judgment that the claims under the patents are invalid or unenforceable and that the Company does not infringe upon the patents. The January 1995 and June 1996 actions have been consolidated, and discovery is ongoing. The Court has granted the Company's various motions for summary judgment and held that the Company does not infringe any of the competitor's four patents at issue. The competitor may seek an appeal of those decisions. In any event, the Company intends to continue to pursue its claims that the competitor's patents are invalid or unenforceable. The Company is, as a normal part of its business operations, a party to other legal proceedings in addition to those previously described by filings of the Company. Legal counsel has been retained for each proceeding and none of these proceedings is expected to have a material adverse impact on the Company's results of operations or financial condition. NOTE D -- RESTRUCTURING CHARGES In July 1999, the Company announced a major restructuring of its U.S. operations that included facility closings and downsizings, a divisional and management realignment, and an approximate ten percent workforce reduction associated with those changes. The following table summarizes these restructuring charges and corresponding expenditures. RECONCILIATION OF RESTRUCTURING RESERVES
Employee Lease Buyouts Severance Asset & Other Direct Total Costs Write-Downs Expenses Restructuring -------------------- --------------------- -------------------- -------------------- Balance at July 1, 1999 $ - $ - $ - $ - Restructuring charges (net) 6,300,000 8,900,000 14,000,000 29,200,000 Cash expenditures (3,100,000) - (12,900,000) (16,000,000) Noncash expenditures - (1,700,000) - (1,700,000) -------------------- --------------------- -------------------- -------------------- Balance at June 30, 2000 3,200,000 7,200,000 1,100,000 11,500,000 -------------------- --------------------- -------------------- -------------------- Restructuring charges (net) (200,000) 1,000,000 - 800,000 Cash expenditures (1,500,000) - (900,000) (2,400,000) Noncash expenditures - (2,500,000) - (2,500,000) -------------------- --------------------- -------------------- -------------------- Balance at June 30, 2001 1,500,000 5,700,000 200,000 7,400,000 -------------------- --------------------- -------------------- -------------------- Restructuring charges (net) - - - - Cash expenditures (400,000) - - (400,000) Noncash expenditures - (400,000) - (400,000) -------------------- --------------------- -------------------- -------------------- Balance at September 30, 2001 $ 1,100,000 $ 5,300,000 $ 200,000 $ 6,600,000 ==================== ===================== ==================== ====================
Restructuring costs incurred but not yet paid have been credited to accrued expense and asset write-downs have been credited against the applicable asset accounts. Substantially all of the remaining restructuring accruals as of September 30, 2001 are expected to be paid out during fiscal year 2002. NOTE E - COMPREHENSIVE INCOME (LOSS) The components of comprehensive income (loss), net of tax, were as follows:
Three Months Ended September 30, September 30, 2001 2000 ------------------ ------------------ Net income $ 8,102,000 $ 6,291,000 Foreign currency translation gains (losses) 735,000 (976,000) ------------------ ------------------ Comprehensive income $ 8,837,000 $ 5,315,000 ================== ==================
NOTE F - RECENT ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of fiscal year 2003. Application of the nonamortization provisions of the Statement is expected to result in an increase in annual net income, the impact of which is not yet fully determined. During fiscal year 2003, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets as of July 1, 2002. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES REFORM ACT OF 1995. The statements contained in this Quarterly Report on Form 10-Q, specifically those contained in Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations", along with statements in other reports filed with the Securities and Exchange Commission, external documents and oral presentations which are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities and Exchange Act of 1934, as amended. These forward-looking statements represent the Company's present expectations or beliefs concerning future events. The Company cautions that such statements are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. Results actually achieved may differ materially from expected results included in these statements. Those factors include, but are not limited to, the following: foreign currency fluctuations, regulations and other factors affecting operations and sales outside the United States including potential future effects of the change in sovereignty of Hong Kong, customer consolidation and concentration, increasing price competition and other competitive factors in the sale of products, the success of programs, interest rate fluctuations, intellectual property and related litigation, other litigation, FDA and other government regulation, and third party reimbursement. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net sales for the three months ended September 30, 2001 were $107,409,000 representing a 17% increase over the sales of $92,064,000 recorded for the three months ended September 30, 2000. Increases in unit and dollar sales for the Company's sleep apnea therapy devices (the Company's largest product line) and oxygen concentrator devices, as well as increases in the sales of masks and accessories, helped to drive the increase in sales for the quarter. Sales of the Company's non-invasive ventilation devices also increased during the quarter, particularly sales of the Company's BiPAP(R) Synchrony(TM) Ventilatory Support System, which was introduced during fiscal year 2001. These product lines comprise the major part of the Company's homecare product offerings. Sales of the Company's asthma and allergy products and its domestic hospital products also increased during the current quarter. The Company's gross profit was 47% of net sales for the quarters ended September 30, 2001 and 2000. This static gross profit percentage reflects the impact of higher revenue levels, offset by sales mix and selling price decreases consistent with those seen in prior years. General and administrative expenses were $12,909,000 (12% of net sales) for the quarter ended September 30, 2001 as compared to $10,870,000 (12% of net sales) for the quarter ended September 30, 2000. The increase in absolute dollars of general and administrative expenses for the current quarter was due primarily to increases in spending consistent with the growth of the Company's business, including credit and collection department expenses. Sales, marketing and commission expenses were $19,499,000 (18% of net sales) for the quarter ended September 30, 2001 as compared to $16,823,000 (18% of net sales) for the quarter ended September 30, 2000. The increase in absolute dollars of expense for the current quarter was due primarily to increased sales (resulting in higher commission and bonus expenses) and increased sales, marketing, product support, and service activity levels in the Company's homecare and hospital product lines during the current year. Research and development expenses were $4,314,000 (4% of net sales) for the quarter ended September 30, 2001 as compared to $3,371,000 (4% of net sales) for the quarter ended September 30, 2000. The increase in absolute dollars of expense for the current quarter was due primarily to the timing of research and development projects. Significant product development efforts are ongoing and new product launches in many of the Company's major product lines are scheduled for the remainder of fiscal year 2002. Additional development work and clinical trials are being conducted in certain product areas outside the Company's current core products, including congestive heart failure. The Company's effective income tax rate was approximately 40% for the quarters ended September 30, 2001 and 2000. As a result of the factors described above, the Company's net income was $8,102,000 (8% of net sales) or $0.26 per diluted share for the quarter ended September 30, 2001 as compared to net income of $6,291,000 (7% of net sales) or $0.21 per diluted share for the quarter ended September 30, 2000. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The Company had working capital of $182,648,000 at September 30, 2001 and $171,985,000 at June 30, 2001. Net cash provided by operating activities was $19,954,000 for the three months ended September 30, 2001 as compared to $8,902,000 for the three months ended September 30, 2000. The increase in cash provided by operating activities for the current three-month period was primarily due to higher earnings and reductions in inventory as compared to an inventory increase in the prior year. Net cash used by investing activities was $7,711,000 for the three months ended September 30, 2001 as compared to $9,092,000 for the three months ended September 30, 2000. Cash used by investing activities for both periods include capital expenditures, including the purchase of leasehold improvements, production equipment, computer hardware and software, and telecommunications and office equipment. In addition, cash used by investing activities in the periods described includes additional purchase price paid for a previously acquired business pursuant to the terms of that acquisition agreement. The funding for investment activities in both periods was provided by positive cash flow from operating activities and accumulated cash and short-term investments. Net cash used or provided by financing activities includes repayments under the Company's various long-term obligations and proceeds from the issuance of common stock under the Company's stock option plans. Net cash used by financing activities was $2,137,000 for the three months ended September 30, 2001 as compared to net cash provided by financing activities of $265,000 for the three months ended September 30, 2000. The increase in cash used by financing activities was due primarily to a repayment of $3,000,000 on the Company's revolving credit facility during the current quarter. The Company believes that projected positive cash flow from operating activities, the availability of additional funds under its revolving credit facility (totaling approximately $44,900,000 at September 30, 2001), and its accumulated cash and short-term investments will be sufficient to meet its current and presently anticipated future needs for the next twelve months for operating activities (including payments against restructuring accruals), investing activities, and financing activities (primarily consisting of scheduled payments on long-term debt). Item 3. Quantitative and Qualitative Disclosures about Market Risk. The Company is exposed to market risk from changes in interest rates and foreign exchange rates. Interest Rates: The Company's primary interest rate risk relates to its long-term debt obligations. At September 30, 2001, the Company had total long- term debt obligations, including the current portion of those obligations, of $80,850,000. Of that amount, $1,950,000 was in fixed rate obligations and $78,900,000 was in variable rate obligations. Assuming a 10% increase in interest rates on the Company's variable rate obligations (i.e. an increase from the September 30, 2001 weighted average interest rate of 3.72% to a weighted average interest rate of 4.09%), annual interest expense would be approximately $294,000 higher based on the September 30, 2001 outstanding balance of variable rate obligations. The Company has no interest rate swap or exchange agreements. Foreign Exchange Rates: Information relating to the sensitivity to foreign currency exchange rate changes is omitted because foreign exchange exposure risk has not materially changed from that disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2001. Inflation Inflation has not had a significant effect on the Company's business during the periods discussed. Recent Accounting Pronouncements In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of fiscal year 2003. Application of the nonamortization provisions of the Statement is expected to result in an increase in annual net income, the impact of which is not yet fully determined. During fiscal year 2003, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets as of July 1, 2002. In August 2001, Statement of Financial Accounting Standards No. 143 ("FAS 143"), "Accounting for Asset Retirement Obligations," was issued. This Statement requires recording the fair value of a liability for an asset retirement obligation in the period in which it is incurred, and a corresponding increase in the carrying value of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, it is either settled for its recorded amount or a gain or loss upon settlement is recorded. FAS 143 is effective for the Company's fiscal year ended June 30, 2003. The Company is currently assessing, but has not yet determined, the impact of FAS 143 on its financial position and results of operations. In August 2001, Statement of Financial Accounting Standards No. 144 ("FAS 144"), "Accounting for the Impairment or Disposal of Long-Lived Assets," was issued. This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supercedes FAS Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and the accounting and reporting provisions of Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of Operations -Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for the disposal of a segment of a business (as previously defined in that Opinion). FAS 144 is effective for the Company's fiscal year ended June 30, 2003. The Company is currently assessing, but has not yet determined, the impact of FAS 144 on its financial position and results of operations. PART 2 OTHER INFORMATION Item 1: Legal Proceedings - ------- ----------------- The Company is, as a normal part of its business operations, a party to other legal proceedings in addition to those previously described by filings of the Company. Legal counsel has been retained for each proceeding and none of these proceedings is expected to have a material adverse impact on the Company's results of operations or financial condition. Item 2: Changes in Securities - ------- --------------------- (a) Not applicable (b) Not applicable (c) Not applicable Item 3: Defaults Upon Senior Securities - ------- ------------------------------- (a) Not applicable (b) Not applicable Item 4: Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- Not applicable. Item 5: Other Information - ------- ----------------- Not applicable Item 6: Exhibits and Reports on Form 8-K - ------- -------------------------------- (a) Exhibits Exhibit 15 Acknowledgement of Ernst & Young LLP. (b) Reports on Form 8-K Not applicable SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RESPIRONICS, INC. Date: November 14, 2001 /s/ Daniel J. Bevevino ----------------------- --------------------------- Daniel J. Bevevino Vice President, and Chief Financial and Principal Accounting Officer Signing on behalf of the registrant and as Chief Financial and Principal Accounting Officer EX-15 3 dex15.txt ACKNOWLEDGEMENT OF ERNST & YOUNG LLP Exhibit 15 Acknowledgement of Ernst & Young LLP Board of Directors Respironics, Inc. and Subsidiaries We are aware of the incorporation by reference in the Registration Statements (Post Effective Amendment No.1 on Form S-8 to Form S-4 No. 333-43703) pertaining to the Healthdyne Technologies, Inc. 1996 Stock Option Plan, Healthdyne Technologies, Inc. Stock Option Plan, Healthdyne Technologies, Inc. Nonemployee Director Stock Option Plan, and Healthdyne Technologies, Inc. Stock Option Plan II; (Form S-8 No. 333-22639) pertaining to the 1997 Employee Stock Purchase Plan; (Form S-8 No. 333-16721) pertaining to the Respironics, Inc. Retirement Savings Plan; (Form S-8 No. 33-89308) pertaining to the 1992 Stock Incentive Plan; (Form S-8 No. 33-44716) pertaining to the 1991 Nonemployee Directors' Stock Option Plan; (Form S-8 No. 33-36459) pertaining to the Amended and Restated Incentive Stock Option Plan of Respironics, Inc. and Gerald E. McGinnis and the Consulting Agreement dated July 1, 1988 between Respironics, Inc. and Mark H. Sanders, M.D.; (Form S-8 No. 333-87335) pertaining to the Respironics, Inc. 1997 Non-Employee Directors' Fee Plan; and (Form S-8 No. 333-56812) pertaining to the Respironics, Inc. 2000 Stock Incentive Plan of our report dated October 23, 2001 relating to the unaudited condensed consolidated interim financial statements of Respironics, Inc. and Subsidiaries that are included in its Form 10-Q for the three-month period ended September 30, 2001. /s/ Ernst & Young LLP Pittsburgh, Pennsylvania November 13, 2001 -----END PRIVACY-ENHANCED MESSAGE-----