Good day ladies and gentlemen, and welcome to the Third Quarter 2009 ResMed, Inc. Earnings Conference Call. My name is Tania, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions). The company has asked me to address certain matters. First, ResMed does not authorize recording of any portion of this conference call for any purpose. Second, during the conference call, ResMed may make forward-looking statements, such as projection of forward... of future revenue of earnings, new product developments or new markets for the company's products. These statements are made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Risks and uncertainties exist that could cause actual results to materially differ from the forward-looking statements. These factors are discussed in ResMed's SEC filings such Forms 10-Q and 10-K, which maybe accessed through the company's website at www.resmed.com. With that said, I will like to turn the call over to Kieran Gallahue, ResMed's President and CEO. Mr. Gallahue, please go ahead, sir.

Thanks Tania. Well, good afternoon, welcome to ResMed's third quarter earnings call. As with our previous calls, I'm going to begin with some summary remarks and then turn the call over to Brett Sandercock, our Chief Financial Officer. He will go through the numbers in more detail, and then we'll take your questions. So for those of you, who have seen the press release, you know the we had another very solid quarter. Once again, we demonstrated the power of being a well balanced geographically diversified company with well accepted high quality diverse mix of profits. We are pleased to report the global revenue in the third quarter 2009 grew 8%, or up 16% on a constant currency basis. Revenue growth in the Americas accelerated to 23% year-over-year, which is the same growth we experience in Q2 of 2009. ROW revenue declined by 6% in constant currency terms... excuse me, but in constant currency terms, it grew 10%, which is also a sequential improvement. As expected, currency had a significant effect on ROW revenue. GAAP EPS increased 34% to $0.51, excluding amortization of acquired intangibles, EPS was one penny better at $0.52. We also experienced balanced growth across product categories with global flow generator sales, up 7% or at 16% in constant currency. And mask segments growing at 9% during the quarter, which also translates to a 16% increase in constant currency. We saw significant growth in all product segments of flow generators. Globally, the growth was mainly driven by strong sales of our high-end sleep devices, especially the S8 AutoSet II and VPAP Auto. We also had solid growth in our mid-range S8 Escape II now with EPR patient comfort functionality. Both revenue and unit volumes increased across the flow generator product line in Americas and Europe. Sales of…

Thanks, Kieran. Let's briefly run through our March quarter results. And as Kieran added, revenue for the March quarter was 227.9 million, an increase of 8% over the prior year quarter. As expected unfavorable currency movements reduced our third quarter revenues by approximately 17.6 million. So in constant currency terms, revenue increased by 16% over the prior year quarter. Our income from operations for the quarter was 52.5 million, an increase of 40% over the prior year quarter and net income for the quarter was 39.2 million, an increase of 32% over the prior year quarter. Excluding amortization of acquired intangibles, our diluted earnings per share for the quarter was $0.52. Our gross margin for the quarter was 61%, which is up sequentially from Q2, FY '09, reflecting foreign currency movements, favorable product mix and manufacturing improvements. The product mix impact was largely attributable to the continuation of strong sales in a new available range in all our safety devices, particularly in our domestic market. Our third quarter margin now reflects the full benefits associated with the deprecation in the Australian dollar, relative to the U.S. dollar. Looking forward, we expect this currency impact together with our ongoing margin improvement initiatives in supply chain, manufacturing and product development, should say our gross margin keep continue in the range of 60 to 62% for the balance of fiscal year '09. SG&A expenses for the quarter was 70.9 million, an increase of 1% over the prior year quarter. In constant currency terms, SG&A expenses increased by 13% over the prior year quarter. SG&A, as a percentage of revenue improved to 31% compared to the year ago figure of 33%. The modest growth in headline SG&A expenses reflects the impact of the depreciation of international currencies against the U.S. dollar. R&D expenses for…

Great. Thanks, Brett. And thank you for reviewing those numbers again, certainly another strong quarter. Tanya, why don't we open it up for questions now?

Thank you. (Operator Instructions). And your first question will come from the line of David Clair with Piper Jaffray. Please proceed.

Yeah. Hey guys, congratulations on a great quarter.

Thank you.

I guess first question for, Brett. I was hoping you could maybe split out currency and mix from the gross margin improvement, and give us the currency impact on EPS for the quarter?

Yeah, I mean if you look to the sequential increases, you see majority would be currency driven, but there's certainly a decent amount of that of the margin improvement is product mix or favorable product mix. Some kind of small improvements with... through manufacturing improvements, but I think most of those improvements will start to manifest themselves in FY '10. But certainly, we had a measurable contribution form both product mix and foreign currency movements or more specifically the falling Australian dollar. If you look... if you want everything clear, it's pretty complex, but you're probably talking in the order of... for instance on the bottom line on currency impact, if you wash it all through.

Okay, great. And then I guess for Kieran, you talked about over the next 12 to 15 months we should see some more product on the full generator masks side. Can you give us a little bit more color? Are these just product extensions, brand new products? How should we be thinking about that?

Yeah. I mean I know it's a bit of a teaser and there's always the desire to get a lot more detail in there. Obviously for competitive reasons, we need to be a bit quiet on that. I can tell you that it's a very exiting product line as... is across flow generators and masks; some of them will be line extensions and some of them will be very different fundamental platforms.

Okay. And then sorry, one last one for Brett: I didn't catch the U.S. and OUS flow generating or mask growth rates?

Yeah. For the U.S. flow generators, the increase was 24%.

Okay.

And mask and other was 22%.

Okay, thank you.

All right, thanks, David.

And your next question will come from the line of Joshua Zable with Natixis. Please go ahead.

Hey guys congrats on a great quarter here. Thanks for taking my question.

Yeah, thanks Jessie (ph).

Just... can you just make couple of comments about the market in general? I know there were concerns about sort of the U.S. obviously the economy and clearly your numbers don't show that. But maybe just talk about what's going on dynamics in the market right now?

Sure. The fundamentals here are that we remain in a market that is 80% to 90% untapped, right? So, depending on where you are in the world, we are still in an education phase. We are still in the phase of engaging and endocrinologists, cardiologists, primary care physicians. So, fundamentally underlying this business, nothing has really changed from that perspective, we continue to drive awareness and continue to try to grow the pie overall. The big question has come to us certainly over the last nine month is what's going on the economy; is anything happening on the marketplace. And is there some evidence of some sleep labs having bit of a slow down, yeah, I mean, I think we've seen that probably over the last six months that some sleep labs are doing extremely well, some are being hit a bit, and they are slowing down of patient volumes. But it doesn't appear to be dramatically impacting the market anyway. Our view is that it still appears that the market is certainly growing in double-digits and historically, we've said it's been about that 15% plus or minus a few. It's probably still around that, maybe 14% plus or minus a 2. But it's still quite strong and the fundamentals remain very much intact.

Great. And then just internationally, I know a lot of other people are having trouble in France and Germany. You guys mentioned that those kind of seem to be all right, you grew constant currency 10%. So, again things are okay. But can you just comment through the environment there, is there anything changing over that affects you guys?

No. I mean look, markets are always dynamic and you are always trying to stay ahead of them. And each of those countries has their own special dynamics that's going on in a given quarter. The fundamentals really haven't changed in any of those areas, we had said, we thought we'd see some improvement this quarter, in fact we did see the improvement, we expect it this quarter. Underlying that no dramatic shifts in the way that governments are looking at sleep. And again, I'll say it's very much similar to the U.S. in the sense that it's about education, it's about getting into the co-morbidities about engaging more healthcare practitioners. So, I think fundamentally, there is just... there's more similarity than differences.

Great. And then just quick one for Brett, and I'll get back in queue here, basically. Can you just breakout the actual revenue numbers for U.S. flow generator masks, OUS, I know you gave growth rates, can you just break that out?

Yeah, Kevin, normally we've just given the growth rates, but we've got in Americas the flow generators around, actually pretty balanced around the 61.4 million mask, and accessory 61.1.

Okay, great. Thanks very much. Congrats guys.

Thanks.

And your next question will come from the line of Ben Andrew with William Blair. Please proceed. Benjamin Andrew - William Blair & Company, LLC.: Hi, good afternoon. Thanks. Just wanted to follow-up a little bit on Germany. Obviously, the performance overall looks like it improved a bit here in international markets. Can you just... can you narrow in on Germany and maybe tell us what growth rates are doing there and how your outlook looks over the next several quarters?

Sure. As you know, we don't get into growth rates individually by countries, but I can say that from sort of a flavor, both France and Germany have been doing quite well. The fundamentals in those market places really remain strong. As you know, we are both a homecare dealer and also we have a wholesale distribution business there. So, they have their own dynamics around when you see improvements in leading indicators versus when you see the improvements in revenue. And quite frankly, we have seen improvements in both. So, I think the team in Germany is executing quite well. There has been some changes in some of the ways that inventory is handled in Germany over the last several months. It's not a massive change the way we do business. It's just sort of the ongoing changes that you see in Germany. And it seems every year there is some tweak to the system. No, I mean the business looks good there. Team is really doing a great job in both Germany and France, and we remain optimistic. Benjamin Andrew - William Blair & Company, LLC.: And with that change in inventory, would you expect any impact this quarter or should we anticipate just directionally not percentage wise, directionally that that business continues to improve?

Yeah, I think that we are going to continue to see in that business as we'll continue to see improvement in execution. I don't think there is going to be any fundamental change because of what's going on the inventory perspective. It's really not that big of deal over the marketplace. Benjamin Andrew - William Blair & Company, LLC.: Okay. And then thinking bigger picture as you work on the referral channel, we always struggle to figure out what percentage of patience were coming in through the cardiologist and things like that. But what other steps can the company take, relatively cost effectively to try to push that and obviously you can't put a sales force in place. But the things you're going to do above and beyond liberty and some of the other historical initiatives to try to accelerate that and are you going down that path?

Yeah, look we spend a lot our time and energy in trying to determine how we can and executing our plan to grow the marketplace. And a large part of that has to do with creating the push and the pull within the cycle. When you look fundamentally what's going on in the marketplace, you've got a few things that are coming together. One is you have excellent clinical data that continues to be available and continues to be published in the voice of the more co-morbidities, right? So, these are articles, these are papers that are in journals that are meaningful to a chronologist or cardiologist. I know that there is paper out today in this month in chest that's talking about cardiac surgery, and if you use CPAP following cardiac surgery that you can expect improved outcomes. I mean that's just news that we crossed the wire today. So, those are very important leading elements in educating that population. Now internally, we have groups that are specifically focused on how we can get the word out to those various healthcare providers, and how we can do it in a way that helps them cost effectively treat their patients. A good example of that is a group that we have in home sleep testing. We are working very closely with our sleep positioned partners and trying to help them understand how they can leverage home sleep test in United States. At the same time, we are begin approached by just as our competitors are being approached by many other types of players in the health care channel, be they primary care physicians, be they independent diagnostic testing facilities et cetera that are piloting at this point home sleep testing, right? And their part of the way, they're providing enablers for these healthcare providers to get engaged in the process of identifying and diagnosing these patients. We have efforts in continuing education, medical education units, where we are either working with partners to help provide them content, so that they can pay for these as well as funding someone on our own. Many those things are not oriented towards ResMed alone there, you're growing the pie, but when you have as much of the market as we do, it's very cost effective and the right thing to do. We continue to drive our public relations efforts, in order to keep sleep disorder breathing and the news. So, it is a... there is no silver bullets here. It's about executing everyday, it's about having a strategy that you focus on, not just in the short-term but the long-term and you hammer at it, you hammer at it, you hammer at it, and we continue to do that. Benjamin Andrew - William Blair & Company, LLC.: Okay. Thanks Kieran.

And your next question will come from the line of Andrew Goodsall with UBS. Please proceed.

All right, thanks very much guys, great results. Actually, just I guess, following on from the question about the U.S. market. Could you perhaps just characterize what you are seeing happening with market share, perhaps what's the success you are having with some of the large distributors, and maybe if I could just throw in anything you are seeing on home diagnosis as well?

Sure. So, the U.S. market continues as I mentioned before to have a number of very positive things that are affecting it. Obviously, we do have some levels impacting the economy, but because we are so under penetrated, it's just very clear that we continue to have some very positive momentum in that marketplace. I am sure whoever in this business are not trying to sell big iron to hospital, I can tell you that. From a market share perspective, we released the Easy-Breathe technology just about a year ago, right? It was basically this quarter last year, and it's been a very successful product introduction, technology introduction that has allowed us to gain share over the past year. We also... the team has been executing very well. We've had a series of new masks. I mean, it was basically a year ago, this month that we released the Swift LT as an example. So we've had some stiller products that have come on the market that have helped us along with execution in gaining market share. With that being said, we have very worthy competitors. And the competitors I think have also done a good job. I think we've been very fortunate to be able to chip away of that market share, and we certainly appreciate the business that we've been awarded, because of those good products and our hard work at the customer level.

I was just going to ask... maybe just with... for instance is that still growing perhaps above what your underlying market growth would be?

So, I'd say certainly the U.S. number, we grew about 23% this quarter. That's certainly would be above market growth this quarter. I don't...

Right.

We certainly gain share.

Yeah. And is there a large part of that coming through from... just I guess maybe otherwise decided the contracts still maturing for you?

Yeah, look, as we say every quarter, we don't talk specifically about any given customer, but certainly large customers such as the Abrio (ph) we continue to have very strong relationships with. And we're doing quite well with them, and I think they appreciate what we provide and we certainly appreciate their loyalty. So we continue to make strides and good strides with those large customers.

And just home diagnosis, just any update or any sort stepping stones you're seeing there?

On the home sleep testing?

Yeah.

Yeah, home sleep testing... one of the things that we were... we we've been saying is that last year was sort of a year of clarity, right? We'd said that home sleep testing is here to stay and there is lots of back and forth on the NCDs and then clarification of the LCDs and going out to other insurance providers. And this year is the year of piloting; and it's quite frankly, it's been rolling out exactly as we'd expected it to. There are pilots that some of our sleep position partners have engaged in. We're seeing independent diagnostic testing facilities in particular, which the guys that have made a living on for instance doing O2 saturation testing and doing logistics for that. They get paid about 15 to $24. They've built a business on it. Now there's an opportunity, where maybe you can make 150 to $250 on a sleep test. So you might imagine they're extremely excited about it, and they're testing out their models of implementation. We've seen HMEs that have begun to get engaged in this. We've seen other types of docs. So this year's playing out as we expected it, which is this is the year of piloting home sleep testing. And we'd expect that to continue throughout this calendar year.

And then 2010 start to see more roll out?

Yeah, I think you'll see a ramp over time. The inflection point, nobody's got a crystal ball. So you don't know exactly when the inflection point's going to hit. But every quarter that we continue to see these... this expansion of piloting says that this is moving beyond early adopters, and it's getting statement that's required for the general marks and that's good, and that's very good.

Thanks very much. Great results. I'll get back in queue.

Yeah, great. Thanks, Andrew.

Thank you.

Your next question will come from the line of Jason Mills with Canaccord Adams. Please proceed

Hey, good afternoon. This Jim Orith (ph) for Jason.

Hi, Jim.

All right. It's Jim. I know... coming up against the tough comp in the U.S. from the S8 launch last year, I know you don't want to give specific product launch guidance, but over the next 15 months of deposit you see are there going to be any significant new U.S. products?

So, yeah, you're right. We are annualizing some of those product launches and yes, we will be seeing over the next 12 to 15 months products that are global. So U.S. and across the globe that will be as I said across both the masks and the flow generator lines, there will be... some will be line extensions and some will be total platform changes. So it's the whole game. And I do appreciate you realize that those are teasers and you'd always like more information. But really for competitive reasons, we just... we feel uncomfortable going beyond that.

Okay. My next question is thinking about the mix shift that's going on in the U.S. and thinking about more high end devices being sold, what do you think is driving that in the United States?

I think there's a couple of things that are involved here. One is there... some of the larger customers in particular I think have recognized the strength of using appropriate technology in the treatment of these patients and the fact that when you use autosetting technology that it is in many cases will help support compliance to the patients, and they don't get paid unless they have compliant patients and it helps to maintain compliance overtime, because it adapts as the patient adapts. The customers are more and more recognizing that the value of the patient is not just in that initial setup, but rather it is getting the patient compliance and having an annuity stream over, literally in some cases could be decades, because these people that are being diagnosed are frequently in their 30s and 40s, And we don't cure sleep disorder breathing, we treat it and they recognize the revenue streams from that. So adaptive therapy changes with the patient and they see that. But really this whole... it's fascinating this whole move by CMS to key on compliance, to say that there is a stick that comes along with not maintaining compliance on this patient as well as the obvious karat of having an annuity stream, and that's getting a lot of players to look more closely at what it requires to get those patient compliant. A large part of it is masks, it's one of the reasons why our masks, which are market leading, very simple used and very, very comfortable continued to be very well. But it also says, that on the flow generators if they can reduce labor, simplify the process of getting people compliant and then actually adapt with them, so that overtime you can maintain compliance; this is the way to build the business and it's very encouraging to see the evolution of thought.

All right, thanks a lot.

You bet.

Your next question will come from the line of Joanne Wuensch with BMO Securities. Please proceed.

Thank you very much for taking my question. Could you give us an update on competitive bidding?

Sure. So, what has been released so far is that, in fact competitive bidding will go through, so no real surprise there. That it's been reduced by one MSA. And that we would expect, I guess towards the end of the year, October timeframe that we should start finding out how it rolls out. So, not a lot of surprises there. What's interesting from a field perspective, in fact I was just with number of our senior sales team just yesterday and was just getting an update on what's going on, what's the buzz in the field around competitive bidding. It's just very dissimilar from what we saw a year ago. Year ago, there was just a lot of angst around what we are gong to do, how we are going to do on the part of the customers. This year, there is a calmness about it at this point in the marketplace, because people have been through it. I think they recognize that there was already 9.5% taken out of the pricing in the beginning of year, so there is going to be a bit more rationality I think in the marketplace. So, it's every different feel than it was last year.

Okay. And, could you comment on your uses of cash. I mean, so far you've been using it for share repurchases. Anything else you might have in mind?

Sure. Yeah, I mean, let's say over the last 18 months, we've used about a $135 million to buyback our shares. We continue to think that that's a good investment. And so, as we still have some approval of shares that are remaining. We'll be finishing up the building and in this kind of environment, we keep our eyes open for a potential M&A or investment and technology kind of opportunities. So, we are very actively keeping our eyes open. But I will say, we are going to also be very careful not to let cash burn a hole on our pocket. We will do, we have always done, which is we will be very cautious, but very open minded when we look at opportunities in marketplace.

Okay. And then finally, can you comment on price, it's interesting to me that, it wasn't that long that we were talking about the market moving more and more towards lower priced products and with the introduction of better products from you guys, the market is shifting back towards higher price products.

Yeah, you're absolutely right. But if it is to show that all crystal balls have a little bit of fuzziness to them. But this is a case, where I think that it's some of the fundamentals, have really been recognized by the market as I was mentioning before. This whole focus on compliance that CMS is driving is, really wonderful, because when push comes to shelve (ph) that's we're all here for, right? We are here for patients, we are here to help them manage their disorder, and nobody gets helped unless they're compliant. And the more parts of the channel that get rewarded by being the highest compliance oriented firms and that includes HMEs in the industry, then we all went, because most importantly, the patient wins impairs recognize that. So, overall pricing in the marketplace, I think it's sort of in that normalized range now. We always say there's sort of that 3 to 5% decline in an annual basis. You always see some high-end features that has a bit of more a law in it. I'd expect we're sort of in a steady state zone right now, it's a good place to be.

Sounds great. Thank you.

And your next question will come from the line of Alex Smith with JPMorgan. Please proceed.

Hi, Kieran. If you can just... has there been any coverage on the insurance front with respect to lead testing extending coverage in circle?

Yes. So, we continue to see movement particularly on regional basis and piloting. So just as you see several different types of business models, I mentioned IDTFs, I mentioned certain HMEs. And of course, most importantly to out certain sleep docs, which have been piloting opportunities in home sleep testing. You also see some of the insurance providers on one side having come out with coverage decisions, most all of which favors some form of the use of home sleep testing, some type IV devices, some type III et cetera. Most of them are less restricted for instance, even at CMS. But you also see them regionally trying to figure out how to drive more activity to home sleep testing. It is not yet broad scale, it is truly piloting, for an example you see on a regional basis some, one firm I am thinking of is sending letters to many of its physicians that are very engaged in having recommendations for sleep test, saying: I'd like you to consider home sleep testing as part of the mix. So, there are cases where they are actually getting actively engaged. I think what they going to have to do is, this is why that you are the pilot, even the insurance companies are going to want to figure out the best way of implementing it, and they're going to test their way through, which is great. Because, as they do that, they can roll it out, they can roll out the most efficient programs across the nation. And therefore, it has the opportunity for success, and therefore for long-term impact on the business.

I think this also on about half of the U.S. was probably coming for home sleep testing. So, they have the mood to the insurance doing their products and so forth.

Yes.

All coverage; that number go up, I think to a month.

Yes. See, there is well over half the lives in the United States now can be covered or they could use home sleep testing. Again, depending which insurance you have there are different requirements, some want a type III, some want a type IV device, some want you to go to sleep docs, some want you... you can go to any treating physicians. So, it really varies, but that's, I think it's very natural sort of in the beginning of this type of transition. And I suspect over time that we'll see those things converge. So, yeah, I mean mine net is, I think it's where we expect to be and it's very positive.

Okay. Another question for Brett, you gave us some rest of the world (ph) split up for flow generation masks in constant currencies. Can you give it to us in actual, what the actual growth rates were?

Yeah, the headline international.

Yes.

Flow gens was minus 5 and some marking accessories is minus 8.

And SG&A was basically flat in the last quarter. Is that entirely related to the foreign currency, type of foreign currency movements or is this some addition sort of savings going on in the cost base?

No, I mean that the flat result on the headline basis is pretty much the currency; and if you strip that out and you look at the constant currency terms, the SG&A increased by 13%.

Okay. And then just last on 9.5 % cost cut that went for Medicare, how much of that has ended up and borne by yourselves and how much for the delays?

Yeah, first of all, the DMEs clearly get all of the impact, right? And it's just a matter of your negotiations with them. How much they do pass on or don't pass on. Remember when you go back a year ago, we were sort of at the tail end of some activity in the industry where there was quite a bit of price taken out of the industry from the supplier perspective, from our perspective. So there was really a lot of price movement ahead of that. And I think that's part of the reason why at this point, we were still sort of in that, more normalized environment of the 3 to 5% on an annualized basis.

Okay. Thanks Kieran.

You bet.

Your next question will come from the line of Michael Matson with Wachovia Securities. Please proceed.

Hi, guys this is actually Benson on (ph) for Michael. First question for you guys in terms of your R&D spend, I think this is the third consecutive quarter, where you guys had the constant currency?

Hello. You're still on? Tania, it seems like we might have lost him.

Okay. Your next question will come from the line of David Low with Deutsche Bank. Please proceed.

Thanks very much. Brett, it's a question for you, the gross margin guidance that you've given. We've clearly seen the LT development about quite significantly in the last little while. I just want to understand what assumptions you've made in giving that guidance range.

I mean we've looked... on the forecast, we've looked at obviously bring the currency being a little bit higher than if you look to the average for the key around that sort of 66, $0.67 mark. And as you know the, you already know trying closer to mid 70s. But in terms... so we haven't really taken that into account, but while assigned that really... you're looking at a lag impact. Anyway, I remember we spoke about that two or three quarters ago. The benefit is lagged by inventory has to roll through manufacture and warehouse and then ultimately sell it. So, there would be some lag impact there anyway. So whatever the currency was, four, five, six months ago, what it is flowing through into Q4 for example. A sustained level of like that, we'd be pretty comfortable in the 70s to be frank. But that would have an impact that we'll been seen several quarter down the track.

Okay. So given the guidance range of 60 to 62 in 2009, you would be comfortable with where the dollar is now that you're still going to be in the range. Is that what I am to understand?

Yeah I mean, we don't want to give guidance long way down the track. There's a lot of volatility and there is a lot of things that'll change. But if you look at it and look at the initiatives that we are undertaking in supply chain, in manufacturing, for example Singapore, in terms of product development pipeline, a lot of these will impact meaningfully in FY10. So we won't necessarily have a currency impact and I am confident we are definitely working on initiatives that can improve the margin with that currency.

That's really helpful, thanks. And Kieran just a question SAIMI (ph) can we get an update on, I know you had the product with number one last around but also if could touch on that and then also touch on the big picture opportunity where you expect to or when you expect to bring those products into other markets?

Sure. So the question is on the ventilation of course, on the volumes and all. So we can't express of course -- we continue to make progress with the let's call the SAIMI business of ResMed Paris business. We - a couple of quarters ago I think you're referring to we had a launch of the VS-III which we had sort of announced a few months early and it took our lucks a little bit in Q2. We have been shipping that product now. The product's doing quite well in the marketplace, it's received well. So we're feeling that we continue to make progress in that product range. And we look forward to continue to make progress on it. As far as when do we expand and I think in particular people are interested in when do we expand it into the United States marketplace; that really hasn't changed too in the proceeding months. We will not be - we do not plan on taking the current product series into the United States. We do plan on when we come out with a totally new platform, that's a couple of years hence. So we're not giving any specific dates on that but when that comes, that would be what we would expect to be the product introduced into the marketplace in the U.S. So in the foreseeable future, looking over the next 12 months, I wouldn't be building in any entry into the U.S.

Right. Thanks very much.

Your next question will come from the line of Dan Herron (ph) with UBS. Please proceed.

Hi, good morning gentlemen. I just want to ask about the uptake of order machines in the U.S. and sort of magnitude change of its own I mean on our coming back couple of years all ways popular there now. So, as a rough percentage of sales what do orders represent in that market?

So, in the U.S. mix what would you say next, would you run that business or what would say in the U.S. rough percentages for generics?

The order of 20 % customers the growing significantly this quarter year-on-year and I think the whole segment is growing and somewhat our share taking there as well, given some of the changes Ken talked about.

Yeah, so that's up from where we were few years ago, 12% obviously we don't have the ventilators and what not in that mix so it keeps up pretty strong, so that's a good movement overtime.

And to put you on the spot, can that continue to grow at that rate, the next sort of 12 months, or will it back off?

We certainly don't try to predict on that sort of line item level. I think its obviously hard to but I think we can do is go back and talk about the fundamentals of the drivers. The fundamentals driving it are desire for the adaptive therapy. Also the fact that these kinds of products are the ones that we interface with the Regis tracks data center both the Elite products as well as this product we do have in fact even the Escape II. So we do have a number of products which can interface but this in particularly as a very convenient product and its one that supports driving of patient compliance at a time when the HMEs are very sensitive to the fact that compliance means getting paid alright. And so I think fundamentally while that continues and there is no suggestion of that backing off quite the opposite we may see other insurance companies which put in similar requirements overtime. I think that the fundamentals that drive these higher data oriented machines as well as the ones that support patient comfort and therefore health compliance are going to naturally play a more important role, all right. So we're not at the level where I think we want to predict exactly what percentage of flow generator sales. But the fundamentals remains strong and I don't see that changing.

okay. So in other words with, you're not talking percentages to drive this of the order switch up far from over?

Exactly.

Okay, thank you.

You Bet.

Your next question will come from the line of Brian Kennedy, with Jefferies. Please proceed. Brian Kennedy - Jefferies & Co.: Hi this is Brian here for Peter. I want to ask about the clinical data, specifically can you talk a bit about the European AFE study, what the timing of the data release is and what are some of your goals and when you have the data, something it's positive?

Sure. So your question regards to the hard failure studies that we're engaged and its multinational, multi-site, heart failure study, we call survey chip. And it's the use of adaptive servo-ventilation in heart failure patients, Class 2, 3, and 4, heart failure patients and the end-point -- primary end-points are mortality and hospitalizations, and there's a whole series of secondary end-points. Adaptive servo-ventilation is a very unique product that, and it is very dependent on how you applied specific algorithms. And our algorithm which has been designed and tested over multiple years over thousands of patients is extremely robust. The study itself began last year. We continue to recruit like most clinical studies, you always have hope this things to go off like a shotgun and be then used on the recruitment side, and like normally you go through all your bumps in the beginning. But we've been actually have seen a nice improvement in recruitment rates over the last X number of months. And we're hearing of some very positive results both in those studies but also in some patients and, lets call it sister studies that also use adaptive servo-ventilation, where we've seen, as an example, of Class 4 heart failure patients which have been released from hospital and have been... have seen their health significantly improved, in fact they've been down graded from Class 4 down to Class 3, heart failure, I mean its just really, really dramatic improvements in some of these cases. So, these are multi-year studies, you shouldn't expect to see data from it, certainly not in this calendar year and then may be a bit of time after that. In fact before you even see some interim reports, that's the nature of these studies. But we're pleased with the progress to-date and particularly we're just pleased at the use and the understanding, and the acceptance of use of the ATS II product which is what we call it there in heart failure. And in fact, if you look at Japan as an example, where we have two distributors there selling the product under different brand names. And you look over the last year, one of the most impressive growth categories for us very significant has been the use of these adaptive servo-ventilation products by cardiologists, and in fact its been the cardiologist who are directly engaged with the patients in these cases. So, a very different model over there but indicative of the potential of this area so we remain extremely excited about the benefits that we can bring to that very costly commodity and the role that adaptive servo-ventilation can play in that. Brian Kennedy - Jefferies & Co.: Thanks. I appreciate the response.

You bet.

And there are no further questions at this time. I will now like to turn the call back over to Mr. Kieran Gallahue, for his final remarks.

Great. Well thanks, Tanya. Well thank you all for joining us today and as always, I want to thank our employees our ResMed employees all over the globe in various functions, has clearly been their stellar efforts to drive ResMed's performance. We are to some of our people and I am very proud of that team throughout the globe. We remain excited about our future, we've got high margin, exciting new products rolling our of the next 12 to 15 months, we've got a stellar balance sheet which in today's environment is something to be both proud of and very comfortable with. We've got significant operating cash-flow and as I mentioned an absolutely first rated team with strong execution. So, we've got lot of the things going on in the industry, a lot of good things going off the company and I look forward to update you again next quarter. Thanks everybody.

Ladies and gentleman, thank you for your participation in today's conference. And this concludes the presentation. You may now disconnect and have a great day.