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, 2003

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 incorporation or organization)	(I.R.S. Employer Identification Number)
1010 Murry Ridge Lane Murrysville, Pennsylvania	15668-8525
(Address of principal executive offices)	(Zip Code)

(Registrant’s Telephone Number, including area code) 724-387-5200

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, 2003, there were 35,167,864 shares of Common Stock of the registrant outstanding, of which 3,548,260 were held in treasury.

INDEX

RESPIRONICS, INC.

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited).
	Independent Accountants’ Review Report.	3
	Consolidated balance sheets — September 30, 2003 and June 30, 2003.	4
	Consolidated statements of operations — Three months ended September 30, 2003 and 2002.	5
	Consolidated statements of cash flows — Three months ended September 30, 2003 and 2002.	6
	Notes to consolidated financial statements — September 30, 2003.	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	18
Item 4.	Controls and Procedures.	18
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	19
Item 2.	Changes in Securities.	19
Item 3.	Defaults Upon Senior Securities.	19
Item 4.	Submission of Matters to a Vote of Security Holders.	19
Item 5.	Other Information.	19
Item 6.	Exhibits and Reports on Form 8-K.	19
SIGNATURES		21

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, 2003, and the related condensed consolidated statements of operations for the three-month periods ended September 30, 2003 and 2002, and the condensed consolidated statements of cash flows for the three-month periods ended September 30, 2003 and 2002. 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, 2003, 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 22, 2003 we expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph for the Company adopting Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” effective July 1, 2002. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of June 30, 2003, 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 21, 2003

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CONSOLIDATED BALANCE SHEETS

RESPIRONICS, INC. AND SUBSIDIARIES

	(Unaudited) September 30 2003			June 30 2003
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	101,506,605		$	95,900,114
Trade accounts receivable		129,574,662			128,126,999
Inventories		82,229,351			83,986,140
Prepaid expenses and other current assets		8,912,487			7,890,194
Deferred income tax benefits		24,777,042			24,111,838
TOTAL CURRENT ASSETS		347,000,147			340,015,285
PROPERTY, PLANT AND EQUIPMENT
Land		2,897,011			2,868,310
Buildings		17,188,321			16,888,036
Production and office equipment		226,066,968			218,839,491
Leasehold improvements		7,217,677			7,630,418
		253,369,977			246,226,255
Less allowances for depreciation and amortization		151,472,292			147,546,282
		101,897,685			98,679,973
OTHER ASSETS		34,583,201			34,591,712
GOODWILL		108,961,527			108,909,352
	$	592,442,560		$	582,196,322
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	41,822,206		$	40,531,413
Accrued expenses and other current liabilities		66,472,693			68,389,269
Current portion of long-term obligations		9,849,152			18,307,876
TOTAL CURRENT LIABILITIES		118,144,051			127,228,558
LONG-TERM OBLIGATIONS		19,931,401			16,513,243
OTHER NON-CURRENT LIABILITIES		11,429,044			11,585,202
SHAREHOLDERS’ EQUITY
Common Stock, $.01 par value; authorized 100,000,000 shares; issued 37,629,182 shares at September 30, 2003 and 37,505,700 shares at June 30, 2003; outstanding 34,080,901 shares at September 30, 2003 and 33,957,221 shares at June 30, 2003		376,292			375,057
Additional capital		230,403,169			226,884,681
Accumulated other comprehensive loss		(2,160,481	)		(3,557,902	)
Retained earnings		256,181,891			245,031,878
Treasury stock		(41,862,807	)		(41,864,395	)
TOTAL SHAREHOLDERS’ EQUITY		442,938,064			426,869,319
	$	592,442,560		$	582,196,322

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

RESPIRONICS, INC. AND SUBSIDIARIES

	Three months ended September 30
	2003			2002
Net sales	$	164,058,064		$	138,642,222
Cost of goods sold		80,001,585			70,506,166
		84,056,479			68,136,056
General and administrative expenses		23,671,977			17,779,005
Sales, marketing and commission expenses		33,030,787			27,216,822
Research and development expenses		6,438,456			5,484,203
Restructuring and acquisition-related expenses		3,345,464			3,165,094
Other (income) expense, net		(72,631	)		200,762
		66,414,053			53,845,886
INCOME BEFORE INCOME TAXES		17,642,426			14,290,170
Income taxes		6,492,413			5,404,542
NET INCOME	$	11,150,013		$	8,885,628
Basic earnings per share	$	0.33		$	0.27
Basic shares outstanding		34,023,665			33,280,684
Diluted earnings per share	$	0.32		$	0.26
Diluted shares outstanding		34,906,175			34,155,595

See notes to consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

RESPIRONICS, INC. AND SUBSIDIARIES

	Three Months Ended September 30
	2003			2002
OPERATING ACTIVITIES
Net income	$	11,150,013		$	8,885,628
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,426,640			9,858,057
Changes in operating assets and liabilities:
Accounts receivable		(1,447,663	)		424,765
Inventories		1,756,789			1,247,648
Other operating assets and liabilities		(2,068,654	)		(7,805,422	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		18,817,125			12,610,676
INVESTING ACTIVITIES
Purchase of property, plant and equipment		(8,772,277	)		(9,739,725	)
Additional purchase price and transaction costs for previously acquired businesses		(52,175	)		(674,411	)
NET CASH USED BY INVESTING ACTIVITIES		(8,824,452	)		(10,414,136	)
FINANCING ACTIVITIES
Net decrease in borrowings		(7,080,315	)		(16,924,082	)
Issuance of common stock		2,694,133			1,138,453
NET CASH USED BY FINANCING ACTIVITIES		(4,386,182	)		(15,785,629	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		5,606,491			(13,589,089	)
Cash and cash equivalents at beginning of period		95,900,114			62,334,684
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	101,506,605		$	48,745,595

See notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

RESPIRONICS, INC. AND SUBSIDIARIES

September 30, 2003

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 accounting principles generally accepted in the United States 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, 2003 are not necessarily indicative of the results that may be expected for the year ended June 30, 2004. The amounts and information as of June 30, 2003 set forth in the consolidated balance sheet and notes to the consolidated financial statements that follow was derived from the Company’s Annual Report on Form 10-K for the year ended June 30, 2003. 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, 2003.

NOTE B – ACCOUNTS RECEIVABLE

Trade accounts receivable in the consolidated balance sheets is net of allowances for doubtful accounts of $12,723,000 as of September 30, 2003 and $12,808,000 as of June 30, 2003.

NOTE C – INVENTORIES

The composition of inventory is as follows:

	September 30 2003		June 30 2003
Raw materials	$	20,506,000	$	18,091,000
Work-in-process		8,124,000		8,727,000
Finished goods		53,599,000		57,168,000
	$	82,229,000	$	83,986,000

NOTE D – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company’s functional currency is the U.S. dollar, and a substantial majority of the Company’s sales, expenses, and cash flows are transacted in U.S. dollars. The Company also does business in various foreign currencies, primarily the Japanese yen, the Euro, the Hong Kong dollar and the Chinese Yuan. As part of the Company’s risk management strategy, management put in place a hedging program beginning on July 1, 2003 under which the Company enters into foreign currency option and forward contracts to hedge a portion of cash flows denominated in Japanese Yen.

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On July 1, 2003 the Company acquired foreign currency option and forward contracts to hedge a portion of forecasted cash flows and recognized foreign currency transactions denominated in Japanese Yen. These foreign currency option and forward contracts have notional amounts of approximately $18,000,000 as of September 30, 2003 and mature at various dates through June 30, 2004. As of September 30, 2003, the fair market value of the contracts resulted in an accrued cost of $362,000, which is recorded in accrued expenses and other current liabilities.

These contracts are entered into to reduce the risk that the Company’s earnings and cash flows, resulting from certain forecasted and recognized currency transactions, will be affected by changes in foreign currency exchange rates. However, the Company may be impacted by changes in foreign exchange rates related to the portion of the forecasted transactions that is not hedged. The success of the hedging program depends, in part, on forecasts of the Company’s transactions in Japanese Yen. Hedges are placed for periods consistent with identified exposures, but not longer than the end of the year for which we have substantially completed our annual business plan.

The Company may experience unanticipated foreign currency exchange gains or losses to the extent that there are timing differences between forecasted and actual activity during periods of currency volatility. However, since the critical terms of contracts designated as cash flow hedges are the same as the underlying forecasted and recognized currency transactions, changes in fair value of the contracts should be highly effective in offsetting the present value of changes in the expected cash flows from the forecasted and recognized currency transactions. The ineffective portion of changes in the fair value of contracts designated as hedges, if any, is recognized immediately in earnings. The Company did not recognize material gains or losses resulting from either hedge ineffectiveness or changes in forecasted transactions during the three-month period ended September 30, 2003.

The effective portion of any changes in the fair value of the derivative instruments, designated as cash flow hedges, is recorded in other comprehensive (income) loss (“OCI”) until the hedged forecasted transaction occurs or the recognized currency transaction affects earnings. Once the forecasted transaction occurs or the recognized currency transaction affects earnings, the effective portion of any related gains or losses on the cash flow hedge is reclassified from OCI to earnings. In the event the hedged forecasted transaction does not occur, or it becomes probable that it will not occur, the ineffective portion of any gain or loss on the related cash flow hedge would be reclassified from OCI to earnings at that time.

For the three-month period ended September 30, 2003, the Company recognized net losses related to designated cash flow hedges in the amount of $40,000. This amount is classified with other (income) expense, net in the consolidated statement of operations. During the three-month period ended September 30, 2003, the derivative losses were more than offset by realized and unrealized currency gains of $316,000 on the cash flows being hedged, which are also classified with other (income) expense, net in the consolidated statement of operations. As of September 30, 2003, a loss of $340,000 was included in OCI. This loss is expected to be charged to earnings during the 2004 fiscal year as the hedged transactions occur, and it is expected that the loss will be more than offset by currency gains on the items being hedged.

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NOTE E – COMMITMENTS AND CONTINGENCIES

Litigation:

On September 4, 2003, the Company and ResMed reached a settlement on all of the previously disclosed litigation. The settlement is not material to the Company’s results of operations, financial condition or cash flows.

The Company is, as a normal part of its business operations, a party to other legal proceedings in addition to those previously described in 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.

Contingent Obligations Under Recourse Provisions:

In connection with customer leasing programs, the Company uses independent leasing companies to provide financing to certain customers for the purchase of the Company’s products. The Company is contingently liable, in the event of a customer default, to the leasing companies within certain limits for unpaid installment receivables initiated by or transferred to the leasing companies. The transfer of certain of these installment receivables meets the criteria of Statement of Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities,” and therefore are not recorded on the Company’s financial statements. The total exposure for unpaid installment receivables meeting these criteria and not recorded on the Company’s financial statements was approximately $12,499,000 at September 30, 2003 as compared to $12,147,000 at June 30, 2003. Approximately 8% of the Company’s net sales were made under these financing arrangements during the three-month periods ended September 30, 2003 and 2002, of which a portion was made with recourse. The Company is not dependent on these off-balance sheet arrangements.

The remainder of these installment receivables (consisting of installment receivables acquired as part of the Novametrix acquisition) do not meet the criteria of FASB No. 140 and therefore are recorded as collateralized borrowing arrangements. Accordingly, at September 30, 2003 and June 30, 2003, the Company has included $1,049,000 of receivables sold with recourse in prepaid expenses and other current assets, and has recorded offsetting amounts at those dates in accrued expenses and other current liabilities.

Product Warranties:

Estimated future warranty costs related to certain products are charged to operations in the period in which the related revenue is recognized.

Generally, the Company’s standard product warranties are for a one- or two-year period (based on the specific product sold and country in which the Company does business) that covers both parts and labor. The Company provides for the estimated cost of product warranties at the time revenue is recognized. The Company’s product warranty liability reflects management’s best estimate of probable liability under its product warranties. Management estimates the liability based on the Company’s stated warranty policies, which project the estimated warranty obligation on a product-by-product basis based on the historical frequency of claims, the cost to replace or repair its products under warranty, and the number of products under warranty based on the warranty terms and historical units shipped. The warranty liability also includes estimated warranty costs that may arise from specific product issues. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. The Company also engages in the sale of extended warranties for which revenue is deferred and recognized over the warranty terms, which are

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generally between two and eight years. Changes in the liability for product warranty and deferred service revenues associated with these service programs for the three-months ended September 30, 2003 are as follows:

Product Warranties
Balance as of June 30, 2003	$	4,848,000
Warranty accruals during the period		3,270,000
Service costs incurred during the period		(2,017,000	)
Balance at September 30, 2003	$	6,101,000
Deferred Service Revenues
Balance as of June 30, 2003	$	3,097,000
Revenues deferred during the period		576,000
Amounts recorded as revenue during the period		(158,000	)
Balance at September 30, 2003	$	3,515,000

The accruals for product warranties and deferred service revenues are classified with accrued expenses and other current liabilities in the consolidated balance sheets.

NOTE F – RESTRUCTURING

On October 23, 2002, the Company announced the relocation of several of its smaller product lines and related support functions from the Company’s Kennesaw, Georgia manufacturing facility to its Murrysville, Pennsylvania location. This relocation will allow the Company to standardize its manufacturing support, engineering, and marketing functions as well as improve the overall efficiency of its manufacturing operations in Kennesaw. Approximately 134 employees were involuntarily terminated and 6 relocated as a result of the restructuring actions, primarily from manufacturing and manufacturing support, engineering, purchasing, and marketing. In conjunction with these actions, the Company incurred $176,000 of restructuring expenses during the three months ended September 30, 2003. As of September 30, 2003, the transition of products and manufacturing processes from Kennesaw to Murrysville is complete, and both facilities are currently operating at capacity levels that reflect the changes brought about by the facility consolidation. In total, from inception of the project during the quarter ended December 31, 2002 through September 30, 2003, the Company incurred $9,707,000 of restructuring expenses in conjunction with these actions, related primarily to involuntary termination benefits accruing to employees affected by the restructuring plan, employee transition and relocation benefits that became payable during the period, idle facility rent obligations that became accruable on the date of the Company’s commitment to the restructuring plan, and certain asset write-offs related to products that were discontinued as a result of the restructuring plan. Substantially all of the restructuring obligations have been paid as of September 30, 2003, except for the idle facility costs that will be paid over the remaining term of the lease and certain employee termination benefits that are scheduled to be paid during the quarter ended December 31, 2003. Following is a summary of the restructuring expenses recorded during the three months ended September 30, 2003, the payments and asset write-offs made against the accrued amounts, and the remaining balances as of September 30, 2003:

	Accrued Employee Costs			Accrued Facility Costs			Accrued Product and Other Asset Costs			Other Direct Costs			Total
Balance at June 30, 2003	$	2,409,000		$	2,116,000		$	1,655,000		$	—		$	6,180,000
Restructuring expenses		81,000			—			—			95,000			176,000
Cash payments		(1,782,000	)		(100,000	)		—			(95,000	)		(1,977,000	)
Non-cash asset write-downs		—			—			(410,000	)		—			(410,000	)
Balance at September 30, 2003	$	708,000		$	2,016,000		$	1,245,000		$	—		$	3,969,000

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NOTE G – COMPREHENSIVE INCOME

The components of comprehensive income, net of tax, were as follows:

	Three Months Ended
	September 30 2003			September 30 2002
Net income	$	11,150,000		$	8,886,000
Foreign currency translation gains (losses)		1,737,000			(392,000	)
Derivatives qualifying as hedges		(340,000	)		—
Comprehensive income	$	12,547,000		$	8,494,000

NOTE H – STOCK OPTION AND PURCHASE PLANS

At September 30, 2003, the Company has one active employee stock option plan and an employee stock purchase plan, which are described more fully in Note L in the Company’s June 30, 2003 consolidated financial statements. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees, and related Interpretations.” No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant (or within permitted discounted prices as it pertains to the employee stock purchase plan). The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation.

	Three Months Ended September 30
	2003			2002
Net income, as reported	$	11,150,000		$	8,886,000
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		—			—
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(1,571,000	)		(1,325,000	)
Pro forma net income	$	9,579,000		$	7,561,000
Earnings per share:
Basic–as reported	$	0.33		$	0.27
Basic–pro forma	$	0.28		$	0.23
Diluted–as reported	$	0.32		$	0.26
Diluted–pro forma	$	0.28		$	0.22

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NOTE I – ACQUISITIONS

Novametrix Medical Systems Inc. - On April 12, 2002, the Company acquired 100% of the outstanding common stock of Novametrix Medical Systems Inc. (now known as “Respironics Novametrix, LLC” and referred to herein as “Novametrix”) for $85,149,000, comprised of the total value of shares of the Company’s common stock issued and reserved for issuance and other costs directly related to the acquisition. Novametrix was a leading cardio-respiratory monitoring company that develops, manufactures, and markets proprietary state-of-the-art noninvasive monitors, sensors, and disposable accessories. The results of operations of Novametrix are included in the Company’s Consolidated Statements of Operations beginning on the acquisition date, April 12, 2002.

In fiscal year 2002 after consummating the acquisition, the Company began to integrate Novametrix’s products and programs, employees, systems, and processes with its own. In connection with these actions, the Company incurred $0 and $3,165,000 of restructuring and acquisition-related expenses during the three-month periods ended September 30, 2003 and 2002, respectively. These costs were primarily related to the elimination and centralization of certain corporate services functions and certain compensation related payments associated with the acquisition and related integration activities. Substantially all of these expenses have been paid as of September 30, 2003.

On April 11, 2003, the Company announced that it would be consolidating product manufacturing activities and other support functions from the Company’s Wallingford, Connecticut plant to its Carlsbad, California location. This action represents the final step in the Company’s integration of Novametrix. The relocation will allow the Company to standardize its manufacturing support and engineering functions at the Carlsbad plant, will enable the Wallingford facility to concentrate on new product research and development, and will improve the overall efficiency of the Company. Approximately 80 employees will be involuntarily terminated as a result of the restructuring actions, primarily from manufacturing and manufacturing support, purchasing, and certain administrative support functions. During the three-month period ended September 30, 2003, the Company recorded $3,169,000 of restructuring and acquisition-related expenses, primarily to employee retention and transition benefits and other costs associated with the relocation and transition process.

Following is a summary of the restructuring and acquisition-related expenses related to the Novametrix acquisition that were recorded during the three-month period ended September 30, 2003, the payments made against the obligations (including amounts that were previously accrued as of June 30, 2003), and the remaining obligations as of September 30, 2003:

	Accrued Employee Costs			Accrued Facility Costs		Other Direct Costs			Total
Balance at June 30, 2003	$	1,834,000		$	1,075,000	$	—		$	2,909,000
Restructuring and acquisition-related expenses		1,043,000			—		2,126,000			3,169,000
Cash payments		(219,000	)		—		(2,126,000	)		(2,345,000	)
Balance at September 30, 2003	$	2,658,000		$	1,075,000	$	—		$	3,733,000

Substantially all of the accrued obligations will be paid by September 30, 2004, except for the idle facility costs that will be paid over the remaining term of the lease.

Fuji RC Kabushiki Kaisha - In May 2002, the Company acquired a 60% controlling interest in Fuji RC Kabushiki Kaisha (now known as “Fuji Respironics Kabushiki Kaisha” and referred to herein as “Fuji”), a leading provider of homecare and hospital products and services for respiratory-impaired patients in Japan, and entered into an agreement to purchase all of the remaining outstanding shares of Fuji in four annual installments of $1,433,000, the last of which is due on December 31, 2006 (before the amendment described below). The net present value of the Company’s fixed-price forward contract, $5,455,000, is accounted for as a financing of the Company’s purchase of the minority interest and is classified with other non-current liabilities in the Consolidated Balance Sheets. Including the fixed-price forward contract and costs directly associated with the acquisition, the base cash purchase price for all of the outstanding shares is approximately $12,662,000 with provisions for additional payments to one of the shareholders of Fuji to be made based on the operating performance of Fuji over the next four years, payable on December 31, 2006. These additional

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payments are being accrued as compensation over the four-year period as they are earned by the shareholder during his post-acquisition employment period. As of September 30, 2003 and June 30, 2003, $2,754,000 and $2,036,000, respectively, is accrued in the consolidated balance sheet and classified with other non-current liabilities pertaining to this obligation. No amounts of the purchase price were assigned to goodwill or other intangible assets since the initial purchase price equaled the fair market value of the net assets acquired.

On October 29, 2003, the Company and the 40% shareholder of Fuji entered into an amendment to the stock purchase agreement described above, whereby the Company acquired 20% of the outstanding shares of Fuji for $5,090,000 on the closing date of the amendment. The Company will acquire the remaining outstanding shares of Fuji on December 31, 2005 and 2006 for a total of $3,431,000. Provisions for the additional payments based on the operating performance of Fuji described above will remain in effect. The Company does not expect the total payments due under the amended purchase agreement to be different than the total of these payments under the original purchase agreement described previously.

BiliChek - On March 6, 2003, the Company acquired certain assets related to the BiliChek Non-invasive Bilirubin Analyzer product line from SpectRx, Inc. for a base purchase price of $4,000,000 and up to $7,250,000 of additional future payments based on the achievement of various performance milestones following the acquisition. The acquisition expands the Company’s involvement with the acquired product line from U.S. marketing and sales under a prior exclusive license agreement, to worldwide marketing and sales and also to the future development and manufacturing of the product. The acquisition did not materially impact the Company’s net sales or net income during the three-month period ended September 30, 2003. In connection with the acquisition, the Company recorded $3,365,000 of intangible assets, representing the fair market value of acquired product-related intellectual property and employee contracts. The weighted-average amortization period for these intangible assets is approximately 14 years.

NOTE J – RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” in an effort to expand upon and strengthen existing accounting guidance that addresses when a company should include in its financial statements the assets, liabilities and activities of variable interest entities, including special-purpose entities or off-balance sheet structures. The consolidation requirements of FIN No. 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period ending after December 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The Company believes the impact of FIN No. 46 on its financial position and results of operations will not be material, but the Company will continue to evaluate the impact of FIN No. 46 during the three-month period ended December 31, 2003.

In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement affects the issuer’s accounting for three types of freestanding financial statements: mandatorily redeemable shares, put and forward purchase contracts that require the issuer to buy back some of its shares in exchange for cash or other assets, and certain obligations that can be settled in shares. This statement is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The impact of adopting FASB No. 150 was not material to the Company’s financial position and results of operations.

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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, including those contained in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, along with statements in other sections of this document and 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 the expected results included in the forward-looking 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 the Company’s marketing, sales, and promotion programs, interest rate fluctuations, intellectual property and related litigation, other litigation, successful integration of acquisitions, FDA and other government regulation, anticipated levels of earnings and revenues, and third party reimbursement.

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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, 2003 were $164,058,000, representing an 18% increase over the sales of $138,642,000 recorded for the three months ended September 30, 2002. The Company’s sales growth is summarized as follows:

	Three Months Ended September 30				Dollar Increase (Decrease)			Percent Increase (Decrease)
	2003		2002
Domestic Homecare Products	$	106,718,000	$	90,369,000	$	16,349,000		18	%
Domestic Hospital Products		16,020,000		17,424,000		(1,404,000	)	(8	)%
International Products		41,320,000		30,849,000		10,471,000		34	%
Total	$	164,058,000	$	138,642,000	$	25,416,000		18	%

Domestic homecare sales for the three months ended September 30, 2003 were driven primarily by growth in sales of sleep apnea therapy devices, masks, and accessories. Sales of homecare ventilation devices and developmental infant care products also increased over the prior year, partially offset by decreases in sales of the Company’s home oxygen products. The revenue changes attributed to sales of the Company’s domestic hospital products for the three months ended September 30, 2003 were driven primarily by growth in sales of hospital ventilators and accessories, offset by decreases in sales of asthma products and cardio-respiratory monitoring devices. The Company’s growth internationally included increases in sales from both homecare and hospital products, with the most significant increases coming from homecare sleep apnea therapy and noninvasive ventilation devices and hospital ventilation systems.

The Company’s gross profit was 51% of net sales for the three months ended September 30, 2003, and 49% for the three months ended September 30, 2002. The increase in gross profit percentage for the three months ended September 30, 2003 compared to the prior year was primarily due to higher revenue, product sales mix, material cost reductions, and lowered indirect manufacturing costs resulting from the Company’s restructuring of operations at its Kennesaw, Georgia manufacturing facility.

General and administrative expenses were $23,672,000 (14% of net sales) for the quarter ended September 30, 2003 as compared to $17,779,000 (13% of net sales) for the quarter ended September 30, 2002. The increase for the three months ended September 30, 2003 was due to higher spending in a variety of areas consistent with the growth of the Company’s business, including performance-based and other employee compensation and warranty expenses.

Sales, marketing and commission expenses were $33,031,000 (20% of net sales) for the quarter ended September 30, 2003 as compared to $27,217,000 (20% of net sales) for the quarter ended September 30, 2002. The majority of the increase in expense was due to increases in sales levels, and resulting expenses like sales force compensation, from the year ago period and increased investments in the Company’s core sales and marketing programs, particularly in international markets.

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Research and development expenses were $6,438,000 (4% of net sales) for the quarter ended September 30, 2003 as compared to $5,484,000 (4% of net sales) for the quarter ended September 30, 2002. The increase in absolute dollars for the three months ended September 30, 2003 was due to the Company’s continuing commitment to research, development and new product introductions. Significant product development efforts are ongoing and new product launches in many of the Company’s major product lines are scheduled for the next six to eighteen months. Additional development work and clinical trials are being conducted in certain product areas and markets outside the Company’s current core products or patient groups.

During the three months ended September 30, 2003 and 2002, the Company incurred restructuring and acquisition-related expenses of $3,345,000 and $3,165,000, respectively. During the three months ended September 30, 2003, these expenses related primarily to the previously disclosed restructuring of operations at the Wallingford, Connecticut manufacturing facility. Additional expenses were also incurred to complete the previously disclosed restructuring of operations at the Kennesaw, Georgia manufacturing facility during the quarter ended September 30, 2003. In the prior year, restructuring and acquisition-related expenses related primarily to the previously disclosed integration of Novametrix. See Notes F and I to the consolidated financial statements for additional information regarding restructuring and acquisition-related expenses.

The Company’s effective income tax rate was approximately 37% for the three months ended September 30, 2003 as compared to 38% for the three months ended September 30, 2002. This reduction was due primarily to the income tax benefits associated with various on-going tax planning.

As a result of the factors described above, the Company’s net income was $11,150,000 (7% of net sales) or $0.32 per diluted share for the quarter ended September 30, 2003 as compared to net income of $8,886,000 (6% of net sales) or $0.26 per diluted share for the quarter ended September 30, 2002. The restructuring and acquisition-related expenses described above constituted $0.06 per diluted share on an after-tax basis, respectively, for the three months ended September 30, 2003 and 2002.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Company had working capital of $228,856,000 at September 30, 2003 and $212,787,000 at June 30, 2003. Net cash provided by operating activities was $18,817,000 for the three months ended September 30, 2003 as compared to $12,611,000 for the three months ended September 30, 2002. The increase in cash provided by operating activities for the current three-month period was primarily due to an increase in net income and lower accrued expense reductions compared to the prior year.

Net cash used by investing activities was $8,824,000 for the three months ended September 30, 2003 as compared to $10,414,000 for the three months ended September 30, 2002. Cash used by investing activities for both periods includes capital expenditures, including the purchase of leasehold improvements, production equipment, computer hardware and software, telecommunications and office equipment, and the cost of equipment leased to customers. Cash used by investing activities in the prior year also 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 flows from operating activities and accumulated cash and cash equivalents.

Net cash used by financing activities consists primarily of repayments under the Company’s various long-term obligations, partially offset by proceeds from the issuance of common stock under the Company’s stock option plan. Net cash used by financing activities was $4,386,000 for the three months ended September 30, 2003 as compared to $15,786,000 for the three months ended September 30, 2002.

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Net debt pay-downs were $7,080,000 and $16,924,000 for the three-month periods ended September 30, 2003 and 2002, respectively. As of September 30, 2003, the balance on the Company’s primary borrowing arrangement, its revolving credit facility, was reduced to zero.

The Company believes that its sources of funding — consisting of projected positive cash flow from operating activities, the availability of additional funds under its revolving credit facility (totaling approximately $148,549,000 at September 30, 2003), and its accumulated cash and cash equivalents — will be sufficient to meet its current and presently anticipated short-term and long-term future needs for operating activities, investing activities, and financing activities (primarily consisting of scheduled payments on long-term debt).

CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

The Company has contractual financial obligations and commercial financial commitments consisting primarily of long-term debt, capital lease obligations, non-cancelable operating leases, and amounts payable to selling shareholders under acquisition agreements. The composition and nature of these obligations and commitments have not changed materially since June 30, 2003.

The following table summarizes significant contractual obligations and commercial commitments of the Company as of September 30, 2003:

Contractual Obligations and Commercial Commitments

			Payments Due by Period
Contractual Obligations	Total		Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years
Long-Term Debt	$	4,127,000	$	527,000	$	2,411,000	$	1,086,000	$	103,000
Capital Lease Obligations		25,654,000		9,322,000		11,506,000		4,826,000		—
Operating Leases		29,540,000		6,908,000		9,604,000		6,771,000		6,257,000
Amounts payable to selling shareholder of Fuji		8,521,000		5,090,000		3,431,000		—		—
Total Contractual Obligations	$	67,842,000	$	21,847,000	$	26,952,000	$	12,683,000	$	6,360,000
			Amount of Commitment Expiration Per Period
Other Commercial Commitments	Total Amounts Committed		Less Than 1 Year		1-3 Years		4-5 Years		Over 5 Years
Letters of Credit	$	1,860,000	$	1,860,000	$	—	$	—	$	—

In addition to the amounts payable to the selling shareholder of Fuji that are set forth in the contractual obligations and commercial commitments table above, the Company is obligated to make future payments under earn-out provisions pertaining to the acquisitions of Fuji and BiliChek, for which the amount of the obligations will not be known until the occurrence of future events. See Note I to the Consolidated Financial Statements for additional information about these obligations.

In connection with customer leasing programs, the Company uses independent leasing companies for the purpose of providing financing to certain customers for the purchase of the Company’s products. The Company is contingently liable, in the event of a customer default, to the leasing companies within certain limits for unpaid installment receivables initiated by or transferred to the leasing companies. The transfer of certain of these installment receivables meets the criteria of Financial Accounting Standards Board (“FASB”) Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities,” and therefore are not recorded on the Company’s financial statements. The total exposure for unpaid installment receivables meeting these criteria and not recorded on the Company’s financial statements was approximately $12,499,000 at September 30, 2003 as compared to $12,147,000 at June 30, 2003. Approximately 8% of the Company’s net sales were made under these financing arrangements during the three-month periods ended September 30, 2003 and 2002, of which a portion was made with recourse. The Company is not dependent on these off-balance sheet arrangements.

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The remainder of these installment receivables (consisting of installment receivables acquired as part of the Novametrix acquisition) do not meet the criteria of FASB No. 140 and therefore are recorded as collateralized borrowing arrangements. Accordingly, at September 30, 2003 and June 30, 2003, the Company has included $1,049,000 of receivables sold with recourse in prepaid expenses and other current assets, and has recorded offsetting amounts at those dates in accrued expenses and other current liabilities.

CRITICAL ACCOUNTING POLICIES

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Company to make estimates and assumptions that may affect the reported financial condition and results of operations should actual results differ. The Company bases its estimates and assumptions on the best available information and believes them to be reasonable under the circumstances. There has been no change in the Company’s critical accounting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended June 30, 2003. In addition, no new critical accounting policies have been adopted during the first three months of fiscal year 2004, except where impacted by new accounting rules disclosed in Note J to the consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The Company is exposed to market risk from changes in interest rates and foreign currency exchange rates.

Interest Rates - The Company’s primary interest rate risk relates to its long-term debt obligations. Information relating to the sensitivity to interest rate changes is omitted because interest rate risk has not materially changed from that disclosed in the Company’s Annual Report on Form 10-K for the year ended June 30, 2003.

Foreign Currency Exchange Rates - The Company’s functional currency is the U.S. dollar, and a substantial majority of the Company’s sales, expenses, and cash flows are transacted in U.S. dollars. The Company also does business in various foreign currencies, primarily the Japanese yen, the Euro, the Hong Kong dollar and the Chinese yuan. As part of the Company’s risk management strategy, management put in place a hedging program beginning on July 1, 2003 under which the Company enters into foreign currency option and forward contracts to hedge a portion of cash flows denominated in Japanese Yen. These contracts are entered into to reduce the risk that the Company’s earnings and cash flows, resulting from certain forecasted and recognized currency transactions, will be affected by changes in foreign currency exchange rates. See Note D to the Consolidated Financial Statements for additional information about the Company’s foreign currency hedging activities.

For the three-month period ended September 30, 2003, sales denominated in currencies other than the U.S. dollar totaled $22,127,000, or approximately 13% of total sales. An adverse change of 10% in exchange rates would have resulted in a decrease in sales of $2,012,000 for the three-month period ended September 30, 2003. Foreign currency (gains) losses included in the determination of the Company’s net income, including amounts related to designated cash flow hedges, were ($316,000) for the three-month period ended September 30, 2003.

Inflation - Inflation has not had a significant effect on the Company’s business during the periods discussed.

Item 4. Controls and Procedures

The Chief Executive Officer and the Chief Financial Officer of the Company (its principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of the end of the period covered by this quarterly report, that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of such evaluation.

PART 2 OTHER INFORMATION

Item 1: Legal Proceedings

On September 4, 2003, the Company and ResMed Corp., ResMed, Inc., and ResMed Ltd. reached a settlement on all previously disclosed litigation. The settlement is not material to the Company’s results of operations, financial condition, or cash flows.

The Company is, as a normal part of its business operations, a party to other legal proceedings in addition to those previously described in 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 10.51	Amendment No. 4 to the Employment Agreement between the Company and John L. Miclot dated October 1, 2003.
		Exhibit 15	Acknowledgement of Ernst & Young LLP.
		Exhibit 31.1	Section 302 Certification of James W. Liken, President and Chief Executive Officer.
		Exhibit 31.2	Section 302 Certification of Daniel J. Bevevino, Vice President and Chief Financial Officer.
		Exhibit 32	Section 906 Certifications of James W. Liken, President and Chief Executive Officer and Daniel J. Bevevino, Vice President and Chief Financial Officer.

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(b) Reports on Form 8-K

Current Report on Form 8-K of Respironics, Inc. with a report date of July 24, 2003, announcing the Company’s financial results for the three months and fiscal year ended June 30, 2003.

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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 12, 2003	/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

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EX-10.51

EXHIBIT 10.51

EMPLOYMENT AGREEMENT

John L. Miclot

THIS AGREEMENT, made as of October 1, 2003 by and between RESPIRONICS, INC., a Delaware corporation (the “Company”), and John L. Miclot, of Pittsburgh, Pennsylvania (“Executive”).

W I T N E S S E T H:

WHEREAS, the Company is engaged in the business of the design, development, manufacture, marketing and sale principally of respiratory and other medical equipment and services;

WHEREAS, Executive possesses valuable knowledge and skills that have contributed and will contribute to the successful operation of the Company’s business;

WHEREAS, the Company and Executive have agreed to execute and deliver this Agreement in consideration, among other things, of (i) the access Executive will have to confidential or proprietary information of the Company, (ii) the access Executive will have to confidential or proprietary information to be acquired hereafter by the Company, (iii) the willingness of the Company to make valuable benefits available hereafter to Executive, (iv) Executive’s receipt of compensation from time to time by the Company; (v) Executive’s promotion; and

WHEREAS, the Company desires to retain the services of Executive, and Executive is willing to accept employment with the Company, upon the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, intending to be legally bound, the Company agrees to employ Executive, and Executive hereby agrees to be employed by the Company, upon the following terms and conditions:

ARTICLE I

EMPLOYMENT

1.01. Office. Executive is hereby employed as Chief Executive Officer of the Company and in such other executive and managerial capacities as the Board of Directors of the Company may from time to time determine, and in such capacity or capacities shall use his best energies or abilities in the performance of his duties hereunder and as prescribed in the By-Laws of the Company.

1.02. Term. Subject to the terms and provisions of Article II hereof, Executive shall be employed by the Company for a period of three (3) years (the “Term”), commencing on December 1, 2003 (the first date of employment in the new position) and ending November 30, 2006, (3) years thereafter. Subject to the terms and provisions of Article II hereof, the Term shall automatically be extended for an additional year (i.e., a rolling three-year Term) unless, not less than ninety (90) days prior to the expiration of the then-current first year of the Term, either Executive or the Company shall advise the other that the Term will not be further extended.

1.03. Base Salary. During the Term, compensation shall be paid to Executive by the Company at the rate of $500,000.00 per annum (the “Base Salary”), payable every other week. The Base Salary to be paid to Executive may be adjusted upward or downward (but not below the amount specified in the preceding sentence) by the Board of Directors of the Company at any time (but not less frequently than annually) based upon Executive’s contribution to the success of the Company and on such other factors as the Board of Directors of the Company shall deem appropriate.

1.04. Executive Benefits. At all times during the Term, Executive shall have the right to participate in and receive benefits under and in accordance with the then-current provisions of all incentive, profit sharing, retirement, stock option or purchase plans, life, health and accident insurance, hospitalization and other incentive and benefit plans or programs (except for any such plan in which Executive may not participate pursuant to the terms of such plan or Executive’s geographic location) which the Company may at any time or from time to time have in effect for executive employees of the Company or its subsidiaries, Executive’s participation to be on a basis commensurate with other executive employees considering their respective responsibilities and compensation. Executive shall also be entitled to be reimbursed for all reasonable expenses incurred by him in the performance of his duties hereunder.

1.05. Principal Place of Business. The headquarters and principal place of business of the Company is located in Murrysville, Pennsylvania. Executive’s principal place of business will be in Murrysville, Pennsylvania, and he will reside within a reasonable distance thereof.

ARTICLE II

TERMINATION

2.01. Illness, Incapacity. If, during the Term of Executive’s employment hereunder, the Board of Directors of the Company shall determine that Executive shall be prevented from effectively performing all his duties hereunder by reason of illness or disability and such failure so to perform shall have continued for a period of not less than three months, then the Company may, by written notice to Executive, terminate Executive’s employment hereunder effective at any time after such three month period.

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Upon delivery to Executive of such notice, together with payment of any salary accrued and unpaid under Section 1.03 hereof, Executive’s employment and all obligations of the Company under Article I hereof shall forthwith terminate. The obligations of Executive under Article IV hereof shall continue notwithstanding termination of Executive’s employment pursuant to this Section 2.01.

2.02. Death. If Executive dies during the Term of his employment hereunder, Executive’s employment hereunder shall terminate and all obligations of the Company hereunder, other than any obligations with respect to the payment of accrued and unpaid salary, shall terminate.

2.03. Company Termination. (a) For Cause. In the event that, in the reasonable judgment of the Board of Directors of the Company, Executive shall have (a) been guilty of any act of dishonesty material with respect to the Company, (b) been convicted of a crime involving moral turpitude, (c) intentionally disregarded the provisions of this Agreement or d) intentionally disregarded express instructions of the Board of Directors of the Company with respect to matters of policy continuing (in the case of clause (d)) for a period of not less than thirty (30) days after notice of such disregard, the Company may terminate this Agreement effective at such date as it shall specify in a written notice to Executive. Any such termination by the Company shall be deemed to be termination “for cause”. Upon delivery to Executive of such notice of termination, together with payment of any salary accrued and unpaid under Section 1.03 hereof, Executive’s employment and all obligations of the Company under Articles I and II hereof shall forthwith terminate. The obligations of Executive under Article IV hereof shall continue notwithstanding termination of Executive’s employment pursuant to this Section 2.03(a).

(b) Without Cause. Executive’s employment hereunder may be terminated at any time by the Company without cause if the Board of Directors of the Company, by resolution duly adopted by the Board, so determines. Except as set forth in Section 2.05 hereof, all obligations of the Company under Article I cease upon termination. The obligations of Executive under Article IV hereof shall continue notwithstanding termination of Executive’s employment pursuant to this Section 2.03(b).

2.04. Executive Termination. Executive agrees to give the Company ninety (90) days prior written notice of the termination of his employment with the Company. Simultaneously with such notice, Executive shall inform the Company in writing as to his employment/consulting plans following the termination of his employment with the Company. In the event Executive has terminated his employment with the Company because, in his reasonable judgment, there has been: (a) a material downgrading in Executive’s duties, titles or responsibilities, (b) a change in Executive’s principal place of business to a location not within 30 miles of its present location, (c) any significant and prolonged increase in the traveling requirements applicable to the discharge of Executive’s responsibilities or (d) any other significant material adverse

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change in working conditions, responsibilities or prestige (including a notice under Section 1.02 hereof that the Term will not be further extended), Executive shall be entitled to the compensation provided for in Section 2.05 upon such termination; provided that Executive must provide notice of termination within ninety (90) days of the occurrence of a change Executive believes to be covered by clause (a), (b) or (d) herein in order to claim that the termination is because of such change. Otherwise, all obligations of the Company under Article I cease upon termination, except for the payment of any salary accrued and unpaid under Section 1.03 hereof. The obligations of Executive under Article IV hereof shall continue notwithstanding termination of Executive’s employment pursuant to this Section 2.04.

2.05. Termination Payments - Discharge Without Cause. If the Company terminates Executive’s employment without cause pursuant to Section 2.03(b), Executive shall be paid for the balance of the Term the Base Salary then in effect; provided that if Executive’s notice of termination occurs within ninety (90) days of a reduction in Executive’s Base Salary, the Base Salary prior to the reduction shall be used for purposes of this Section 2.05. In addition to these termination payments, for the balance of the Term, the Company will provide Executive with health and dental insurance coverage as though Executive remained an employee. Executive will be required to pay the same portion of the premium for such insurance coverage as if Executive remained an employee. Executive agrees to inform the Company of his employment/consulting jobs during the period of time which Executive is receiving money under this Section.

2.06. Termination Payments - After Change of Control.

(a) Change of Control shall mean the occurrence of any of the following events:

(i) Individuals who on December 1, 1999 constitute the Board of Directors (“Board”) of the Company (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to December 1, 1999, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection by such Incumbent Directors to such nomination) shall be deemed to be an Incumbent Director.

(ii) Any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d)(3) and

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14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing a majority of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (“Company Voting Securities”); provided, however, that the event described in this paragraph (ii) shall not be deemed to be a Change of Control by virtue of any of the following acquisitions: (A) by the Company or any subsidiary, (B) by any employee benefit plan sponsored or maintained by the Company or any subsidiary, or by any employee stock benefit trust created by the Company or any subsidiary or (C) by any underwriter temporarily holding securities pursuant to an offering of such securities.

(iii) Consummation of any merger, consolidation, stock-for-stock exchange or similar transaction (collectively, “Business Combination”) involving the Company or any of its subsidiaries that requires the approval of the Company’s shareholders (whether for such transaction or the issuance of securities in the transaction), in which the holders of Company Voting Securities immediately prior to consummation of the Business Combination own, as a group, immediately after consummation of the Business Combination, voting securities of the Company (or, if the Company does not survive the Business Combination, voting securities of the corporation surviving the Business Combination) having less than 50% of the total voting power in an election of directors of the Company (or such other surviving corporation), excluding securities received by any holders of Company Voting Securities in the Business Combination which represent disproportionate percentage increases in their shareholdings in comparison to other holders of Company Voting Securities.

(iv) Consummation of any sale, lease, exchange or other transfer (in one transaction or a series of related transactions, excluding any Business Combination) of all or substantially all of the assets of the Company to a person or entity which is not controlled by or under common control with the Company.

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(b) If Executive is terminated without cause upon or within eighteen (18) months after a Change of Control, or if Executive provides notice (as provided for in Section 2.04) to the Company upon or within eighteen (18) months after the occurrence of a Change of Control that he is terminating employment with the Company because, in his reasonable judgment, there has been: (i) a material downgrading in Executive’s duties, titles or responsibilities, (ii) a change in Executive’s principal place of business to a location not within 30 miles of its present location, (iii) any significant and prolonged increase in the traveling requirements applicable to the discharge of Executive’s responsibilities or (iv) any other significant material adverse change in working conditions, responsibilities or prestige, Executive shall be entitled to the payments and other benefits provided for in Section 2.05 upon such termination; provided that in this Change of Control circumstance, notwithstanding Section 2.05, the termination payments shall be in an amount equal to (i) two (2) full years of Executive’s base salary (regardless of the remaining Term) and (ii) two (2) times the average “year end” bonus paid to Executive over the prior two (2) years, and such payment shall be made to Executive in a lump sum to be paid to Executive within five (5) business days after the termination of employment. Otherwise, all obligations of the Company under Article I cease upon termination, except for the payment of any salary accrued and unpaid under Section 1.03 hereof. The obligations of Executive under Article IV hereof shall continue notwithstanding termination of Executive’s employment pursuant to this Section 2.06.

(c) After a Change of Control, Executive has the option to terminate his employment with the Company for any reason by providing notice (as provided for in Section 2.04) of termination to the Company, such notice to be provided to the Company at any time within six (6) months after the Change of Control. Within five (5) business days after a termination of employment governed by this provision, Executive shall receive from the Company a lump sum payment equal to (i) one (1) year of Executive’s base salary and (ii) the average of the “year end” bonuses paid to Executive over the prior three (3) years. Additionally, for one year after the termination, the Company will provide Executive with health and dental insurance coverage as though Executive remained an employee. Executive will be required to pay the same portion of the premium for such insurance coverage as if Executive remained an employee. Otherwise, all obligations of the Company under Article I cease upon termination, except for the payment of any

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salary accrued and unpaid under Section 1.03 hereof. The obligations of Executive under Article IV hereof shall continue notwithstanding termination of Executive’s employment pursuant to this Section 2.06.

ARTICLE III

EXECUTIVE’S ACKNOWLEDGMENTS

Executive recognizes and acknowledges that: (a) in the course of Executive’s employment by the Company it will be necessary for Executive to acquire information including, without limitation, information concerning the Company’s sales, sales volume, sales methods, sales proposals, customers and prospective customers, identity of customers and prospective customers, identity of key purchasing personnel in the employ of customers and prospective customers, amount or kind of customer’s purchases from the Company, the Company’s sources of supply, the Company’s computer programs, system documentation, special hardware, product hardware, related software development, the Company’s manuals, formulae, processes, methods, machines, compositions, ideas, improvements, inventions or other confidential or proprietary information belonging to the Company or relating to the Company’s affairs (collectively referred to herein as the “Confidential Information”); (b) for purposes of this Employment Agreement, confidential information of an affiliate of the Company or of a person or entity with which the Company explores or conducts business is considered to be Confidential Information; (c) the Confidential Information is the property of the Company; (d) the use, misappropriation or disclosure of the Confidential Information would constitute a breach of trust and could cause irreparable injury to the Company; and (e) it is essential to the protection of the Company’s good will and to the maintenance of the Company’s competitive position that the Confidential Information be kept secret and that Executive not disclose the Confidential Information to others or use the Confidential Information to Executive’s own advantage or the advantage of others. For purposes of this Agreement, Confidential Information shall not include any information that is in the public domain, so long as such information is not in the public domain as a result of any action or inaction by Executive which would constitute a violation of this Agreement or the Company’s policies with respect to such information.

Executive further recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Executive be restrained, but only to the extent hereinafter provided (a) from soliciting or inducing any employee of the Company to leave the employ of the Company, (b) from hiring or attempting to hire any employee of the Company, (c) from soliciting the trade of or trading with the customers and suppliers of the Company, and (d) from competing against the Company for a reasonable period following the termination of Executive’s employment with the Company.

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Executive further recognizes and understands that his duties at the Company may include the preparation of materials, including written or graphic materials, and that any such materials conceived or written by him shall be done as “work made for hire” as defined and used in the Copyright Act of 1976, 17 USC § 1 et seq. In the event of publication of such materials, Executive understands that the Company will solely retain and own all rights in said materials, including right of copyright, and that the Company may, at its discretion, on a case-by-case basis, grant Executive by-line credit on such materials as the Company may deem appropriate.

For purposes of interpreting Article III and Article IV hereof, the acknowledgments, covenants and obligations of Executive with respect to the Company apply equally with respect to its affiliates.

ARTICLE IV

EXECUTIVE’S COVENANTS AND AGREEMENTS

4.01. Non-Disclosure of Confidential Information. Executive agrees to hold and safeguard the Confidential Information in trust for the Company, its successors and assigns and agrees that he shall not, without the prior written consent of the Company, misappropriate or disclose or make available to anyone for use outside the Company’s organization at any time, either during his employment with the Company or subsequent to the termination of his employment with the Company for any reason, including without limitation termination by the Company for cause or without cause, any of the Confidential Information, whether or not developed by Executive, except as required in the performance of Executive’s duties to the Company.

4.02. Disclosure of Works and Inventions/Assignment of Patents and Other Rights. (a) Executive shall disclose promptly to the Company or its nominee any and all works, inventions, discoveries and improvements authored, conceived or made by Executive during the period of employment and related to the business, prospective business or activities of the Company, and hereby assigns and agrees to assign all his interest therein to the Company or its nominee. Whenever requested to do so by the Company, Executive shall execute any and all applications, assignments or other instruments, and otherwise cooperate with the Company at no expense to Executive, to assist the Company in applying for and obtaining Letters Patent or Copyrights of the United States or any foreign country or to otherwise protect the Company’s interest therein. Such obligations shall continue beyond the termination of employment with respect to works, inventions, discoveries and improvements authored, conceived or made by Executive during the period of employment, and shall be binding upon Executive’s assigns, executors, administrators and other legal representatives.

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(b) Executive agrees that in the event of publication by Executive of written or graphic materials the Company will retain and own all rights in said materials, including right of copyright.

4.03. Duties. Executive agrees to be a loyal employee of the Company. Executive agrees to devote his best efforts full time to the performance of his duties for the Company, to give proper time and attention to furthering the Company’s business, and to comply with all rules, regulations and instruments established or issued by the Company. Executive further agrees that during the term of this Agreement, Executive shall not, directly or indirectly, engage in any business which would detract from Executive’s ability to apply his best efforts to the performance of his duties hereunder. Executive also agrees that he shall not usurp any corporate opportunities of the Company.

4.04. Return of Materials. Upon the termination of Executive’s employment with the Company for any reason, including without limitation termination by the Company for cause or without cause, Executive shall promptly deliver to the Company all correspondence, drawings, blueprints, manuals, letters, notes, notebooks, reports, flow-charts, programs, proposals and any documents concerning the Company’s customers or concerning products or processes used by the Company and, without limiting the foregoing, will promptly deliver to the Company any and all other documents or materials containing or constituting Confidential Information.

4.05. Restrictions on Competition. Executive covenants and agrees that during the period of Executive’s employment hereunder plus a period of two years (or such longer period, not in excess of three years, in respect of which base salary is paid to Executive pursuant to § 2.04 or 2.05) following the termination of Executive’s employment, including without limitation termination by the Company for cause or without cause, Executive shall not, in the United States of America or in any other country of the world in which the Company has done business at any time during the last three years prior to termination of Executive’s employment with the Company, engage, directly or indirectly, whether as principal or as agent, officer, director, employee, consultant, shareholder, or otherwise, alone or in association with any other person, corporation or other entity, in any Competing Business. For purposes of this Agreement, the term “Competing Business” shall mean and include any person, corporation or other entity which develops, manufactures, sells, markets or attempts to develop, manufacture, sell or market any product or services which are the same as, similar to or compete with the Products and services (i) sold by the Company at any time and from time to time during the last three years prior to the termination of Executive’s employment hereunder or (ii) which are active research and development projects of the Company of which Executive is aware at the time of termination; provided, however, that for purposes of determining what constitutes a Competing Business there shall not be included (x) any product or service of any entity which

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product or service Executive determines is not material to the business or prospects of the Company and which product or service the Company’s Board, having been requested to do so by Executive, also so determines; or (y) any product or service of any entity so long as the Executive and such entity can demonstrate to the reasonable satisfaction of the Company that Executive is and will continue to be effectively isolated from and not participate in the development, manufacture, sale or marketing of such product or service, but only so long as Executive is effectively so isolated and does not so participate (i.e., Executive can work for an entity that has products that compete with the Company if he is appropriately isolated from the portions of that entity that compete). In the event the employment of Executive terminates at the conclusion of the Term before Executive obtains the age of 65 and because the Company has elected not to further extend the Term pursuant to § 1.02, then the provisions of this § 4.05 and §’s 4.06 and 4.07 shall not be applicable after the conclusion of the Term unless the Company advises Executive at least six months prior to conclusion of the Term that it will continue to pay the Base Salary in effect at conclusion of the Term for such two-year period or such shorter portion thereof as the Company may specify (which specification shall foreshorten such two-year period accordingly) and the Company pays such amounts during such two-year or shorter period.

4.06. Non-Solicitation of Customers and Suppliers. Executive agrees that during his employment with the Company he shall not, directly or indirectly, solicit the trade of, or trade with, any customer, prospective customer, supplier, or prospective supplier of the Company for any business purpose other than for the benefit of the Company, with respect to any products competitive with those of the Company. Executive further agrees that for two years following termination of his employment with the Company, including without limitation termination by the Company for cause or without cause, Executive shall not, directly or indirectly, solicit the trade of, or trade with, any customers or suppliers, or prospective customers or suppliers, of the Company with respect to any products competitive with those of the Company.

4.07. Non-Solicitation of Employees. Executive agrees that, during his employment with the Company and for two years following termination of Executive’s employment with the Company, including without limitation termination by the Company for cause or without cause, Executive shall not, directly or indirectly, solicit or induce, or attempt to solicit or induce, any employee of the Company to leave the Company for any reason whatsoever, or hire any employee of the Company.

ARTICLE V

EXECUTIVE’S REPRESENTATIONS AND WARRANTIES

5.01. No Prior Agreements. Executive represents and warrants that he is not a party to or otherwise subject to or bound by the terms of any contract, agreement or understanding which in any manner would limit or otherwise affect his ability

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perform his obligations hereunder, including without limitation any contract, agreement or understanding containing terms and provisions similar in any manner to those contained in Article IV hereof. Executive further represents and warrants that his employment with the Company will not require him to disclose or use any confidential information belonging to prior employers or other persons or entities.

5.02. Executive’s Abilities. Executive represents that his experience and capabilities are such that the provisions of Article IV will not prevent him from earning his livelihood, and acknowledges that it would cause the Company serious and irreparable injury and cost if Executive were to use his ability and knowledge in competition with the Company or to otherwise breach the obligations contained in Article IV.

5.03. Remedies. In the event of a breach by Executive of the terms of this Agreement, the Company shall be entitled, if it shall so elect, to institute legal proceedings to obtain damages for any such breach, or to enforce the specific performance of this Agreement by Executive and to enjoin Executive from any further violation of this Agreement and to exercise such remedies cumulatively or in conjunction with all other rights and remedies provided by law. Executive acknowledges, however, that the remedies at law for any breach by him of the provisions of this Agreement may be inadequate and that the Company shall be entitled to injunctive relief against him in the event of any breach.

ARTICLE VI

MISCELLANEOUS

6.01. Authorization to Modify Restrictions. It is the intention of the parties that the provisions of Article IV hereof shall be enforceable to the fullest extent permissible under applicable law, but that the unenforceability (or modification to conform to such law) of any provision or provisions hereof shall not render unenforceable, or impair, the remainder thereof. If any provision or provisions hereof shall be deemed invalid or unenforceable, either in whole or in part, this Agreement shall be deemed amended to modify, as necessary, the offending provision or provisions and to alter the bounds thereof in order to render it valid and enforceable or, if necessary, to delete the offending provision.

6.02. Tolling Period. The non-competition, non-disclosure and non-solicitation obligations contained in Article IV hereof shall be extended by the length of time during which Executive shall have been in breach of any of the provisions of such Article IV.

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6.03. Entire Agreement. This Agreement represents the entire agreement of the parties with respect to the employment of Executive by the Company and may be amended only by a writing signed by each of them. Once effective, this Agreement will replace the existing Employment Agreement between Executive and Respironics.

6.04. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.

6.05. Consent to Jurisdiction; Venue. Executive hereby irrevocably submits to the personal jurisdiction of the United States District Court for the Western District of Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania in any action or proceeding arising out of or relating to this Agreement, and Executive hereby irrevocably agrees that all claims in respect of any such action or proceeding may be heard and determined in either such court. Executive hereby irrevocably waives any objection which he now eafter may have to the laying of venue of any action or proceeding arising out of or relating to this Agreement brought in the United States District Court for the Western District of Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania and any objection on the ground that any such action or proceeding in either of such Courts has been brought in an inconvenient forum. Nothing in this Section 6.05 shall affect the right of the Company to bring any action or proceeding against Executive or his property in the courts of other jurisdictions where the Executive resides or has his principal place of business or where such property is located.

6.06. Service of Process. Executive hereby irrevocably consents to the service of any summons and complaint and any other process which may be served in any action or proceeding arising out of or related to this Agreement brought in the United States District Court for the Western District of Pennsylvania or the Court of Common Pleas of Allegheny County by the mailing by certified or registered mail of copies of such process to Executive at his address as set forth on the signature page hereof.

6.07. Agreement Binding. The obligations of Executive under this Agreement shall continue after the termination of his employment with the Company for any reason, with or without cause, and shall be binding on, and inure to the benefit of, his heirs, executors, legal representatives and assigns. If the Executive should die while any amounts are still payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or designee or, if there be no such designee, to the Executive’s estate. This Agreement also shall be binding upon, and inure to the benefit of, any successors and assigns of the Company.

6.08. Successor to the Company. The Company will require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise)

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to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, to expressly, absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. Any failure of the Company to obtain such agreement prior to the effectiveness of any such succession or assignment shall be a material breach of this Agreement and shall entitle the Executive to terminate the Executive’s employment and to receive the payments and other benefits set forth in Section 2.06(b) as if Executive had been terminated without cause upon a Change of Control. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor or assign to its business and/or assets as aforesaid.

6.09. Counterparts, Section Headings. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. The section headings of this Agreement are for convenience of reference only and shall not affect the construction or interpretation of any of the provisions hereof.

6.10. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (a) hand delivered, (b) mailed, registered mail, first class postage paid, return receipt requested, (c) sent via overnight delivery service or courier, delivery acknowledgment requested, or (d) sent via any other delivery service with proof of delivery:

if to the Company:

1010 Murry Ridge Lane

Murrysville, PA 15668

Attn: General Counsel

if to Executive, at the address set forth on the signature page hereof or to such other address or to such other person as either party hereto shall have last designated by notice to the other party.

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Executive acknowledges that he has read and understands the foregoing provisions and that such provisions are reasonable and enforceable.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be executed the day and year first above written.

Witness:

/s/ Steven P. Fulton		/s/ John L. Miclot
		Address: 5005 Old Orchard Lane          Gibsonia, PA 15044
Attest
	RESPIRONICS, INC.
/s/ Dorita A. Pishko	By:	/s/ Sean McDonald
Secretary	Print Name: Sean McDonald Title: Chairman – Comp. Comm.

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EX-15

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 and Form S-8 No. 333-74510) pertaining to the 1992 Stock Incentive Plan; (Form S-8 No. 33-44716 and Form S-8 No. 333-74504) 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; (Form S-8 No. 333-56812) pertaining to the Respironics, Inc. 2000 Stock Incentive Plan; (Form S-8 No. 333-74506) pertaining to the Respironics, Inc. 2002 Employee Stock Purchase Plan; (Post Effective Amendment No. 1 on Form S-8 to Form S-4 No. 333-77048) pertaining to the Novametrix Medical Systems Inc. 1990 Stock Option Plan, Novametrix Medical Systems Inc. 1994 Stock Option Plan, Novametrix Medical Systems Inc. 1997 Long Term Incentive Plan, Novametrix Medical Systems Inc. 1999 Incentive Plan, Novametrix Medical Systems Inc. 2000 Long Term Incentive Plan, and Novametrix Medical Systems Inc. President & COO Stock Options and (Form S-3 Amendment No. 1 No. 333-101411) pertaining to the registration of 71,956 shares of Respironics, Inc. common stock available for exercise of common stock warrants of our report dated October 21, 2003 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, 2003.

/s/ Ernst & Young LLP

Pittsburgh, Pennsylvania

November 12, 2003

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATIONS

I, James W. Liken, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Respironics, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation;

(c) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2003

/s/ James W. Liken

Name: James W. Liken

Title: President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Daniel J. Bevevino, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Respironics, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation;

(c) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2003

/s/ Daniel J. Bevevino

Name: Daniel J. Bevevino

Title: Vice President and Chief Financial Officer

EX-32

Exhibit 32

SECTION 906 CERTIFICATIONS

Pursuant to 18 U.S.C. § 1350, the undersigned officers of Respironics, Inc. (the “Company”), hereby certify that the Company’s Quarterly Report on Form 10-Q for the three-month period ended September 30, 2003 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 12, 2003	/s/ James W. Liken
	Name: James W. Liken Title: President and Chief Executive Officer
	/s/ Daniel J. Bevevino
	Name: Daniel J. Bevevino Title: Vice President and Chief Financial Officer

This certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of the written statement required by Section 906 has been provided to Respironics, Inc. and will be retained by Respironics, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.