ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations
Key Trends and Economic Factors Affecting Our Business
In most markets, diagnostic pathways for sleep apnea treatment, including physician practices, home medical equipment ("HME") distributors, and sleep clinics have largely recovered towards pre-pandemic levels as vaccines and boosters roll out globally. Likewise, we have continued to observe stabilizing patient flow in our out-of-hospital care settings within our SaaS business.
Management's Discussion and Analysis of Financial Condition and Results of Operations
guiding principles that give priority to the production and delivery of devices to meet the needs of the highest acuity patients first.
Fiscal Year Ended June 30, 2022 Compared to Fiscal Year Ended June 30, 2021
Total Sleep and Respiratory Care $ 1,981,807 $ 1,705,113
Total Sleep and Respiratory Care $ 1,195,491 $ 1,118,122
Total Sleep and Respiratory Care $ 3,177,298 $ 2,823,235
*Constant currency numbers exclude the impact of movements in international currencies.
Management's Discussion and Analysis of Financial Condition and Results of Operations
recovery of core sleep patient flow that was previously impacted by the pandemic, partially offset by decreased COVID-19-related demand for our ventilators.
The following table summarizes our operating expenses (in thousands):
Selling, General and Administrative Expenses
The constant currency increase in selling, general and administrative expenses was primarily due to increases in employee-related costs for the year ended June 30, 2022 compared to the year ended June 30, 2021.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The constant currency increase in research and development expenses was primarily due to increased investment in our digital health technologies and SaaS solutions.
Amortization of Acquired Intangible Assets
Amortization of acquired intangible assets was consistent at $31.1 million for the years ended the year ended June 30, 2022 and June 30, 2021.
Total Other Income (Loss), Net
The following table summarizes our other income (loss) (in thousands):
Management's Discussion and Analysis of Financial Condition and Results of Operations
On September 28, 2021, we remitted final payment to the ATO of $284.8 million, consisting of the agreed settlement amount of $381.7 million less prior remittances made to the ATO of $96.9 million.
Net Income and Earnings per Share
Summary of Non-GAAP Financial Measures
Management's Discussion and Analysis of Financial Condition and Results of Operations
These non-GAAP measures are reconciled to their most directly comparable GAAP financial measures below (in thousands, except percentages):
Less: Amortization of acquired intangibles (39,650) (45,127) Less: Restructuring - cost of sales
The measure "non-GAAP income from operations" is equal to GAAP income from operations once adjusted for amortization of acquired intangibles, acquisition-related expenses and restructuring expense associated with the closure of the portable oxygen concentrator business. Non-GAAP income from operations is reconciled with GAAP income from operations below (in thousands):
Amortization of acquired intangibles - operating expenses 31,078
Amortization of acquired intangibles - operating expenses, net of tax 23,589
As of June 30, 2022, we had $1.4 billion available for draw down under the revolving credit facility and a combined total of $1.7 billion in cash and available liquidity under the revolving credit facility.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Revolving Credit Agreement, Term Credit Agreement and Senior Notes
On June 30, 2022, there was a total of $780.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes. We expect to satisfy all of our liquidity and long-term debt requirements through a combination of cash on hand, cash generated from operations and debt facilities.
The following table summarizes our cash flow activity (in thousands):
Net cash provided by operating activities $ 351,147 $ 736,718 Net cash used in investing activities (229,918) (158,462) Net cash used in financing activities (128,363) (764,632) Effect of exchange rate changes on cash (14,434) 18,498 Net decrease in cash and cash equivalents $ (21,568) $ (167,878)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Details of contractual obligations at June 30, 2022 are as follows (in thousands):
Details of other commercial commitments at June 30, 2022 are as follows (in thousands):
Amount of Commitment Expiration Per Period
Refer to Note 16 - Legal Actions, Contingencies and Commitments of the Notes to the Consolidated Financial Statements (Part II, Item 8) for details of our contingent obligations under recourse provisions.
Critical Accounting Principles and Estimates
Management's Discussion and Analysis of Financial Condition and Results of Operations
We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements:
We conduct an annual review for goodwill impairment at our reporting unit level based on the following steps:
Management's Discussion and Analysis of Financial Condition and Results of Operations
assessment, we may adjust the income tax provision and deferred taxes in the period in which the facts that give rise to a revision become known.
On September 28, 2021, we remitted final payment to the ATO of $284.8 million, consisting of the agreed settlement amount of $381.7 million less prior remittances made to the ATO of $96.9 million.
Tax years 2018 to 2021 remain subject to future examination by the major tax jurisdictions in which we are subject to tax.
Management's Discussion and Analysis of Financial Condition and Results of Operations
See Note 3 - New Accounting Pronouncements of the Notes to Consolidated Financial Statements (Part II, Item 8) for a description of recently issued accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial positions and cash flows.
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