Stockholders' Equity

12 Months Ended

Jun. 30, 2011

Stockholders' Equity

Stockholders' Equity

(11) Stockholders' Equity

Common Stock.    On May 27, 2009, our board of directors approved a new share repurchase program, authorizing us to acquire up to an aggregate of 10.0 million shares of our common stock. The program allows us to repurchase shares of our common stock from time to time for cash in the open market, or in negotiated or block transactions, as market and business conditions warrant. This program canceled and replaced our previous share repurchase program previously authorized on June 6, 2002 for 8.0 million shares. The new program authorizes us to purchase shares in addition to the shares we repurchased under our previous program. There is no expiration date for this program. All share repurchases after May 29, 2009 have been executed in accordance with this program.

During fiscal years 2011 and 2010, we repurchased 4,892,962 and 2,519,843 shares at a cost of $160.1 million and $135.8 million, respectively. At June 30, 2011, we have repurchased a total of 14.1 million shares at a cost of $504.6 million, of which 6.6 million shares were repurchased pursuant to the repurchase program approved on June 6, 2002 and 7.5 million were repurchased pursuant to the new repurchase program approved on May 27, 2009. Shares that are repurchased are classified as treasury stock pending future use and reduce the number of shares outstanding used in calculating earnings per share. At June 30, 2011, there is a remaining 9.7 million shares that can be repurchased under the approved share repurchase program.

Stock Split.    On August 5, 2010, our board of directors declared a two-for-one split of our common stock to be payable in the form of a 100% stock dividend. On August 30, 2010, shareholders received one additional share of common stock for every share held on August 17, 2010. All share and per share information has been adjusted to reflect the stock split.

Preferred Stock.    In April 1997, our board of directors authorized 2,000,000 shares of $0.01 par value preferred stock. No such shares were issued or outstanding at June 30, 2011.

Employee Stock Purchase Plan (the "ESPP").    The ESPP was approved at the annual meeting of our stockholders on November 18, 2009, as an amendment to the previously approved employee stock purchase plan. Under the ESPP, we offer participants the right to purchase shares of our common stock at a discount during successive offering periods. Each offering period under the ESPP will be for a period of time determined by the board of directors' compensation committee of no less than 3 months and no more than 27 months. The purchase price for our common stock under the ESPP will be the lower of 85% of the fair market value of our common stock on the date of grant or 85% of the fair market value of our common stock on the date of purchase. An individual participant cannot subscribe for more than $25,000 in common stock during any calendar year. As part of the approval of the ESPP at the annual meeting of the stockholders of ResMed Inc. on November 18, 2009, the number of shares of our common stock available for grant under the ESPP increased by 600,000, from 500,000 to 1,100,000. In connection with the August 2010 stock split, our board of directors approved a doubling of the number of shares remaining available for future issuance under the ESPP, as at the date of stock split, from 540,000 to 1,080,000. At June 30, 2011, the number of shares remaining available for future issuance under the ESPP is 775,000.

During fiscal years 2011 and 2010, we issued 305,000 and 324,000 shares to our employees in two offerings and we recognized $2.4 million and $1.9 million, respectively, of stock compensation expense associated with the ESPP.

Stock Options and Restricted Stock Units.    We have granted stock options and restricted stock units to personnel, including officers and directors, under our 2009 Plan. These options and restricted stock units have expiration dates of seven years after the grant date and vest over one or four years. We granted the options with an exercise prices equal to the market value as determined at the date of grant.

The maximum number of shares of our common stock authorized for issuance under the 2009 Plan is 22,921,650. The number of securities remaining available for future issuance under the 2009 Plan at June 30, 2011 is 5,286,658. The number of shares of our common stock available for issuance under the 2009 Plan will be reduced by (i) two shares for each one share of common stock delivered in settlement of any "full-value award," which is any award other than a stock option, stock appreciation right or other award for which the holder pays the intrinsic value and (ii) one share for each share of common stock delivered in settlement of all other awards. The maximum number of shares which may be subject to awards granted under the 2009 Plan to any individual during any calendar year, may not exceed 3,000,000 shares of our common stock (except in a participant's initial year of hiring up to 4,500,000 shares of our common stock may be granted).

At June 30, 2011, there was $60.2 million in unrecognized compensation costs related to unvested stock-based compensation arrangements. We expect to recognize these costs over a weighted average period of 2.8 years. The aggregate intrinsic value of the stock-based compensation arrangements outstanding and exercisable at June 30, 2011 was $195.9 million and $97.7 million, respectively. The aggregate intrinsic value of the options exercised during the years ended June 30, 2011, 2010 and 2009 was $66.4 million, $65.3 million and $17.8 million, respectively. The following table summarizes option activity during the year ended June 30, 2011:

	2011			Weighted Average Exercise Price		Weighted Average Remaining Term to Vest in Years
Outstanding at beginning of year		16,835,936		$	18.35		4.44
Granted		1,032,800			33.62
Exercised		(4,722,554	)		18.43
Forfeited		(915,498	)		23.33
Outstanding at end of year		12,230,684		$	19.24		4.63
Exercise price range of granted options	$	29.81-$33.70
Options exercisable at end of year		7,473,770		$	17.88

The following table summarizes the activity of restricted stock units during the year ended June 30, 2011:

	2011			Weighted Average Grant- Date Fair Value		Weighted Average Remaining Term to Vest in Years
Outstanding at beginning of year		1,072,740		$	25.90		1.97
Granted		992,479			33.59
Exercised*		(257,252	)		25.89
Forfeited		(172,281	)		29.82
Outstanding at end of year		1,635,686		$	30.16		1.73

* Includes 68,127 shares netted for tax

The following table summarizes the total stock-based compensation costs incurred and the associated tax benefit recognized during the year ended June 30, 2011, 2010 and 2009 (in thousands):

	2011			2010			2009
Cost of sales - capitalized as part of inventory	$	1,496		$	1,354		$	996
Selling, general and administrative expenses		26,163			25,682			21,704
Research and development expenses		3,150			2,698			2,815
Stock-based compensation costs		30,809			29,734			25,515
Tax benefit		(9,474	)		(8,985	)		(7,016	)
Stock-based compensation costs, net of tax benefit	$	21,335		$	20,749		$	18,499