1997 Financial Statements and Reports

21

1997 Financial Statements and Reports

Cochlear Limited and its controlled entitiesfor the year ended 30 June 1997

Contents

Directors’ report 22

Profit and loss accounts 26

Balance sheets 27

Statements of cash flows 28

Notes to the financial statements 29

Statement by Directors 54

Independent auditors’ report 55

Stock Exchange information 56

22

Directors’ report

The Directors present their report, together with the financial statements of CochlearLimited (the Company) and the consolidated financial statements of the Economic Entity,being the Company and its controlled entities, for the year ended 30 June 1997, and theAuditors’ Report thereon.

DirectorsThe Directors of the Company in office at the date of this report and particulars of their ages,

qualifications and experience are set out on page 18 of the Annual Report.

Directors’ meetingsThe number of Directors’ meetings (including meetings of Committees of Directors) and number of

meetings attended by each of the Directors of the Company during the financial year are:

Directors’ Remuneration AuditMeetings Committee Committee

Meetings Meetings Meetings Meetings Meetings Meetingsheld (1) attended held (1) attended held (1) attended

Prof DG Penington, AC 10 10 1 1 4 4

Ms CB Livingstone (2) 10 10

Prof BDO Anderson, AO 10 9 1 0

Mr JA Calvert-Jones 10 9 1 1

Ms EC Holley 10 10 4 4

Mr JH Veeneklaas 4 4 1 1

Mr PJ North 4 4 1 1

1. Reflects the number of meetings held during the time the Director was a member of the Board

and/or Committee.

2. Although not a member of the Remuneration and Audit Committees, Ms Livingstone attended four

Audit Committee meetings and one Remuneration Committee meeting by invitation.

Principal activities and review of operations and resultsThe principal activities and a review of the operations of the Economic Entity during the year ended

30 June 1997, and the results of those operations are set out on pages 2 to 20 of the Annual Report.

Other than as discussed in this report, there were no significant changes in the nature of those activities

during the year ended 30 June 1997 and the results of those operations are set out on pages 6 to 7.

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Consolidated resultsThe consolidated results for the year attributable to the members of the Company are:

Sales revenue 71,913 72,275

Operating profit before tax 14,845 13,676

Operating profit after tax 10,809 10,863

Earnings per share (cents) 21.6c 21.7c

DividendsDividends paid or declared by the Company since listing on the Australian Stock Exchange were:

As proposed and provided for in last year’s report:

A final ordinary dividend of 7.5 cents per share, unfranked, amounting to $3,750,000, in respect of the

year ended 30 June 1996, paid on 22 October 1996

In respect of the current year:

Interim ordinary dividend of 5 cents per share, franked to 100% withClass C (36%) franking credits, paid on 24 April 1997 2,500

Final ordinary dividend recommended by the Directors of the Companyof 7.5 cents per share, franked to 38% with Class C (36%) franking credits,to be paid on 21 October 1997 3,750

Total dividends provided for and paid in respect of the year ended30 June 1997 6,250

Changes in state of affairsThere were no significant changes in the state of affairs of the Economic Entity during the year ended

30 June 1997.

There has not arisen in the interval between the end of the financial year and the date of this report,

any item or transaction or event of a material and unusual nature likely, in the opinion of the Directors

of the Company, to affect significantly the operations of the Economic Entity, the results of those

operations or the state of affairs of the Economic Entity in subsequent financial years.

Directors’ report


1997 1996$000 $000

$000

24

Likely developmentsFurther information as to likely developments in the operations of the Economic Entity and the

expected results of those operations in subsequent financial years has not been included in this report

because the Directors believe, on reasonable grounds, that to include such information would be likely

to result in unreasonable prejudice to the Economic Entity.

OptionsOn 20 February 1997, the Company granted options over 35,000 unissued ordinary shares to one

employee under an Executive Share Option Plan. The options are exercisable in two approximately

equal tranches in the month following lodgement with the Australian Stock Exchange of the

Company’s preliminary financial statements for the financial years ending in June 1999 and 2000. The

number of options which will be exercisable by the executive will depend upon the compound annual

growth rate of the earnings per share achieved by the Economic Entity since 1 July 1995. Three

different levels of growth rates have been set which will determine the number of options which will

be exercisable by the executive in any particular year.

The names of the persons who currently hold options in the above plan are entered in the Register of

Options kept by the Company pursuant to Section 216C of the Corporations Law. The Register may

be inspected free of charge. Pursuant to Australian Securities Commission Class Order 97/1011 dated

9 July 1997, the Directors have taken advantage of relief available from the requirements to disclose

the names of the person, not being a Director, to whom options were issued during the year.

Directors’ interestsThe relevant interest of each Director in the share capital of the Company, as notified by the Directors

to the securities exchange in accordance with Section 235(1)(a) of the Corporations Law at the date of

this report, is as follows:

Prof DG Penington, AC 25,000

Ms CB Livingstone 20,000

Prof BDO Anderson, AO 4,000

Mr JA Calvert-Jones (1) 180,000

Ms EC Holley 8,000

Mr PJ North -

1. Mr JA Calvert-Jones is Chairman of the Bionic Ear Institute which also owns 400,000 ordinary shares.

Cochlear Limited$0.10 ordinary shares

Directors’ report


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Directors’ benefitsSince the end of the previous financial year, no Director of the Company has received or become

entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration

received or due and receivable by Directors shown in the consolidated accounts), because of a contract

made by the Company, its controlled entities or a related body corporate with the Director, or with a firm

of which the Director is a member, or with an entity with which the Director has a substantial interest.

Indemnification of officersUnder the terms of Article 35 of the Company’s Articles of Association, and to the extent permitted by

law, the Company has indemnified the Directors of the Company, named in this report, the Company

Secretary (Mr NJ Mitchell) and other persons concerned in or taking part in the management of the Company.

The indemnity applies when persons are acting in their capacity as officers of the Company in respect of:

• liability to third parties (other than the Company or related bodies corporate), if the relevant officer

has acted in good faith; and

• the cost and expenses of successfully defending legal proceedings in which relief under the

Corporations Law is granted to the relevant officer.

Insurance of Directors and officersDuring the year, the Company has paid a premium for a Directors’ and Officers’ Liability Insurance

contract. The insurance provides cover for the Directors named in this report, the Company Secretary

(Mr NJ Mitchell), officers and former directors and officers of the Company. The policy also provides

cover for present and former Directors and officers of the Economic Entity. The Directors have not

included details of the nature of the liabilities covered and the amount of the premium paid in respect

of the Directors’ and Officers’ Liability Insurance contract, as such disclosure is prohitibed under the

terms of the contract.

Rounding offThe Company is of a kind referred to in Regulation 3.6.05(6) of the Corporations Regulations and

the amounts in this report and the accompanying financial statements have been rounded off to the

nearest one thousand dollars, in accordance with Section 311 of the Corporations Law, unless

otherwise indicated.

Dated at Sydney this 26th day of August 1997

Signed in accordance with a resolution of the Directors:

Director Director

Directors’ report


Consolidated Company

1997 1996 1997 1996Note $000 $000 $000 $000

Operating profit before income tax 14,845 13,676 11,102 17,448

Income tax expense attributable to operating profit 4 4,036 2,813 3,055 524

Operating profit after income tax 10,809 10,863 8,047 16,924

Retained profits at the beginning of the financial year 14,213 42,401 7,597 30,465

Aggregate of amounts transferredfrom reserves 21 34 741 - -

Total available for appropriation 25,056 54,005 15,644 47,389

Dividends provided for or paid 5 6,250 38,878 6,250 38,878

Bonus share issue 20 - 914 - 914

Retained profits at the end of the financial year 18,806 14,213 9,394 7,597

Basic earnings per share (cents) 7 21.6 c 21.7c

The profit and loss accounts are to be read in conjunction with the notes to and forming part of the

financial statements set out on pages 29 to 53.

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Profit and loss accounts



1997 1996 1997 1996Note $000 $000 $000 $000

Current assets

Cash 22 12,958 16,079 8,246 9,374Receivables 8 15,482 11,786 4,707 3,657Inventories 9 8,089 5,800 5,810 3,847Other 10 1,662 1,558 349 547

Total current assets 38,191 35,223 19,112 17,425

Non current assets

Receivables 8 326 267 - -Investments 11 - - 3,944 3,944Plant and equipment 12 6,291 6,204 4,920 4,919Other 13 6,479 6,548 3,865 4,095

Total non current assets 13,096 13,019 12,729 12,958

Total assets 51,287 48,242 31,841 30,383

Current liabilities

Creditors and borrowings 14 14,445 15,762 7,488 8,900Provisions 18 13,170 13,649 9,594 8,575

Total current liabilities 27,615 29,411 17,082 17,475

Non current liabilities

Creditors and borrowings 14 - 93 - 29Provisions 18 365 282 365 282

Total non current liabilities 365 375 365 311

Total liabilities 27,980 29,786 17,447 17,786

Net assets 23,307 18,456 14,394 12,597

Shareholders’ equity

Share capital 20 5,000 5,000 5,000 5,000Reserves 21 (499) (757) - -Retained profits 18,806 14,213 9,394 7,597

Total shareholders’ equity 23,307 18,456 14,394 12,597

The balance sheets are to be read in conjunction with the notes to and forming part of the financial

statements set out on pages 29 to 53.

Balance sheets

Cochlear Limited and its controlled entitiesas at 30 June 1997

Cut off


1997 1996 1997 1996Note $000 $000 $000 $000

Cash flows from operating activitiesCash receipts in the course of operations 67,757 74,674 45,152 39,366Cash payments in the course of operations (58,309) (52,518) (36,829) (31,966)Dividends received - - - 10,416Grants received 470 601 470 601Interest received 733 367 596 289Interest paid (119) (77) - (22)Income taxes paid (4,299) (3,569) (1,800) (905)

Net cash provided by operating activities 22(ii) 6,233 19,478 7,589 17,779

Cash flows from investing activities

Payment for plant and equipment (2,029) (1,574) (1,469) (1,210)Proceeds from sale of non current assets 2(a) 23 139 18 70Investment in controlled entities 22(iv) - (3,123) - (3,250)

Net cash used in investing activities (2,006) (4,558) (1,451) (4,390)

Cash flows from financing activities

Proceeds from borrowings - 2,788 - -Repayment of borrowings (257) - - -Lease payments (35) (164) (35) (158)Dividends paid (6,250) (4,141) (6,250) (4,141)

Net cash used in financing activities (6,542) (1,517) (6,285) (4,299)

Net (decrease)/increase in cash held (2,315) 13,403 (147) 9,090

Cash at the beginning of the financial year 22(i) 15,098 2,393 8,393 (697)Foreign exchange adjustment to beginning cash 175 (698) - -

Cash at the end of the financial year 22(i) 12,958 15,098 8,246 8,393

The statements of cash flows are to be read in conjunction with the notes to and forming part of the

financial statements set out on pages 29 to 53.

Statements of cash flows


Cut off

Notes to the accounts

Note Page

1. Statement of significant accounting policies 29

2. Operating profit 34

3. Auditors’ remuneration 35

4. Taxation 36

5. Dividends 37

6. Geographical segments 38

7. Earnings per share 38

8. Receivables 39

9. Inventories 39

10. Other current assets 39

11. Investments 39

12. Plant and equipment 40

13. Other non current assets 40

14. Creditors and borrowings 40

15. Commitments 41

16. Financial arrangements 42

17. Amount payable/receivable in foreign currencies 43

18. Provisions 43

19. Contingent liabilities 44

20. Share capital 44

21. Reserves 45

22. Notes to the statements of cash flows 46

23. Particulars in relation to controlled entities 48

24. Directors’ remuneration 49

25. Executives’ remuneration 50

26. Employee entitlements 51

27. Related parties 52

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1. Statement of significant accounting policiesThe significant policies which have been adopted in the preparation of these financial statements are:

a. Basis of preparation

The financial statements are a general purpose financial report which has been prepared in accordance

with Accounting Standards, Urgent Issues Group Consensus Views, and the Corporations Law. They

have been prepared on the basis of historical costs and do not take into account changing money values

or, except where stated, current valuations of non current assets.

These accounting policies have been consistently applied by each entity in the Economic Entity and,

except where there is a note of change in accounting policy, are consistent with those of the previous

year. Unless otherwise stated, these accounts have been prepared in Australian dollars.

b. Principles of consolidation

The consolidated accounts of the Economic Entity include the financial statements of the Company,

being the chief entity, and its controlled entities.

Where an entity either began or ceased to be controlled during the year, the results are included only

from the date control commenced or up to the date control ceased.

The balances, and effects of transactions, between entities in the Economic Entity included in the

consolidated accounts have been eliminated.

c. Revenue recognition

Sales revenue

Sales revenue comprises revenue earned (net of returns, discounts and allowances) from the provision

of products or services to entities outside the Economic Entity. Sales revenue is recognised when the

goods are provided, or when the fee in respect of services provided is receivable.

Interest income

Interest income is recognised as it accrues.

Other revenue

Other revenue, including government grants, is recognised as it accrues.

Notes to and forming part of the financial statements


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d. Foreign currency

Transactions

Foreign currency transactions are translated to Australian dollars at the rates of exchange ruling at the

dates of the transactions. Amounts payable and receivable in foreign currencies at balance date are

translated at the rates of exchange ruling on that date.

Exchange differences relating to amounts payable and receivable in foreign currencies are brought to

account as exchange gains or losses in the profit and loss account in the financial year in which the

exchange rates change.

Where a specific hedge is in place, the foreign currency transactions are translated to Australian dollars

at the specific hedge rate.

Hedges

All non specific hedge transactions are initially recorded at the spot rate at the date of the transaction.

Hedges outstanding at balance date are translated at the rates of exchange ruling on that date and any

exchange differences are brought to account in the profit and loss account. Costs or gains arising at the

time of entering into the hedge are deferred and amortised over the life of the hedge.

Where hedge transactions are designed to hedge the purchase or sale of goods or services, exchange

differences arising up to the date of purchase or sale, together with any costs or gains arising at the time

of entering into the hedge, are deferred and included in the measurement of the purchase or sale. Any

exchange differences on the hedge transaction after that date are included in the profit and loss account.

Translation of controlled foreign entities

The balance sheets of overseas controlled entities that are self sustaining foreign operations are

translated at the rates of exchange ruling at balance date. The profit and loss accounts are translated at

a weighted average rate for the year. Exchange differences arising on translation are taken directly to

the foreign currency translation reserve.

Derivatives

The Economic Entity is exposed to changes in foreign exchange rates from its activities. It is the

Economic Entity’s policy to use derivative financial instruments to hedge these risks. The Economic

Entity does not enter, hold or issue derivative financial instruments for trading purposes.

e. Provision for warranties

Provision is made for the estimated liability on all products still under warranty and includes claims

already received. The amount provided each year for warranty is calculated as a percentage of sales

revenue. Warranty claims, when paid, are charged against this provision. In addition, any specific

warranty concerns are assessed and provided for if considered appropriate.



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f. Classification of assets and liabilities

Assets and liabilities have been classified in the balance sheets of the Economic Entity and the

Company as either current or non current. Current assets are cash and other assets that would in the

ordinary course of business be consumed or converted to cash within 12 months. Current liabilities

are liabilities that would in the ordinary course of business be due and payable within 12 months.

g. Research and development expenditure

Research and development expenditure is expensed as incurred.

h. Non current assets

The carrying amounts of non current assets are reviewed to determine whether they are in excess of

their recoverable amount at balance date. If the carrying amount of a non current asset exceeds the

recoverable amount, the asset is written down to the lower amount. In assessing recoverable amounts

of non current assets, the relevant cash flows have not been discounted to their present value.

i. Plant and equipment

Acquisition

Items of plant and equipment are recorded at cost and depreciated as outlined below.

The cost of plant and equipment constructed by the Economic Entity includes the cost of material and

direct labour and an appropriate proportion of fixed and variable overheads.

Carrying value

All items of plant and equipment are carried at the lower of cost, less accumulated depreciation, and

their recoverable amount.

Depreciation and amortisation

Items of plant and equipment, including leasehold assets are depreciated or amortised over their

estimated useful lives ranging from three to ten years. The straight line method is used.

Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed

assets, from the time an asset is completed and held ready for use.

Leased plant and equipment

Leases of plant and equipment under which the Economic Entity assumes substantially all the risks and

benefits of ownership are classified as finance leases. Other leases are classified as operating leases.

Finance leases are capitalised. A lease asset and a liability equal to the present value of the minimum

lease payments are recorded at the inception of the lease. Contingent rentals are written off as an

expense of the financial year in which they are incurred. Capitalised lease assets are amortised on a

straight line basis over the term of the relevant lease, or where it is likely the Economic Entity will



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obtain ownership of the asset, the life of the asset. Lease liabilities are reduced by repayments of

principal. The interest components of the lease payments are charged to the profit and loss account.

Payments made under operating leases are charged against profits in equal instalments over the financial

years covered by the lease term, except where an alternative basis is more representative of the pattern

of benefits to be derived from the leased property.

j. Inventories

Inventories are carried at the lower of cost and net realisable value.

Manufacturing activities

Cost is based on the first-in-first-out principle and includes expenditure incurred in acquiring the

inventories and bringing them to their existing condition and location. In the case of manufactured

inventories and work in progress, cost includes an appropriate share of both variable and fixed costs.

Fixed costs are allocated on the basis of normal operating capacity.

Net realisable value

Net realisable value is determined on the basis of each entity’s normal selling pattern. Expenses of

marketing, selling and distribution to customers are estimated and are deducted to establish net

realisable value.

k. Investments

Investments in controlled entities are carried at the lower of cost and recoverable amount. Dividends

and distributions are brought to account in the profit and loss account when they are proposed by the

controlled entities. All intra group transactions are eliminated on consolidation.

l. Employee entitlements

Wages, salaries and annual leave

The provisions for employee entitlements to wages, salaries and annual leave represent the amount

which the Economic Entity has a present obligation to pay resulting from employees’ services provided

up to the balance date. The provisions have been calculated at nominal amounts based on current wage

and salary rates and include related on costs.

Long service leave

The provision for employee entitlements to long service leave represents the present value of the

estimated future cash outflows to be made by the Economic Entity resulting from employees’ services

provided up to the balance date.

Provisions for employee entitlements which are not expected to be settled within 12 months are

discounted using the rates attaching to national government securities at balance date, which most

closely match the terms of maturity of the related liabilities.



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In determining the liability for employee entitlements, consideration has been given to future increases

in wage and salary rates, and having regard to the probability that employees will remain in the entity’s

employ for the period of time necessary to qualify for long service leave. Related on costs have also

been included in the provision.

Share options

The Company has granted options to certain employees under an Executive Share Option Plan.

Further information is set out in the Directors’ Report to the financial statements. Other than the

costs incurred in administering the Plan, which are expensed as incurred, the Plan does not result in

any expense to the Economic Entity.

Superannuation funds

The Economic Entity contributes to various employee superannuation funds. The liabilities of these

superannuation funds are covered by the assets in the funds. The Economic Entity is obliged to

contribute to the superannuation funds as a consequence of legislation or trust deeds; legal

enforceability is dependent on the terms of the legislation and the trust deeds. Contributions are

charged against profit as they are made. Further information is set out in Note 26.

m. Doubtful debts

The charge to the provision for doubtful debts is calculated using a percentage of the sales revenue

derived in the Economic Entity’s sales and marketing regions. Where specific material doubtful debts

are identified, an additional amount is provided.

n. Taxation

The Economic Entity adopts the liability method of tax effect accounting. Income tax expense is

calculated on operating profit adjusted for permanent differences between taxable and accounting

income. The tax effect of timing differences which arise from items being brought to account in

different years for income tax and accounting purposes, is carried forward in the balance sheet as a

future income tax benefit or a provision for deferred income tax.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond

reasonable doubt. Future income tax benefits relating to tax losses are only brought to account when

their realisation is virtually certain.

o. Accounts payable

Liabilities are recognised for amounts to be paid in the future for goods and services received, whether

or not billed to the Company or Economic Entity. Trade accounts are normally settled within 60 days.



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p. Comparatives

Where necessary, comparative information has been reclassified to achieve consistency in disclosure

with current financial year amounts and other disclosures.

q. Rounding off

Amounts have been rounded to the nearest one thousand dollars unless otherwise indicated.

2. Operating profit

(a) Operating revenue and expenses

Operating profit has been arrived at

after including:

Operating revenue:

Sales revenue 71,913 72,275 46,658 39,206

Other revenueInterest received or due and receivable from:

Related bodies corporate - - - 25Other persons 680 455 544 352

Dividends received from related bodies corporate - - - 10,416

Proceeds from sale of non current assets 23 139 18 70

Government grant received or due and receivable 203 798 203 798

Net foreign exchange gain 6 58 6 107

Other income 98 160 1 1,035

72,923 73,885 47,430 52,009

Operating expenses:

Interest paid or due and payable to other parties 119 55 - -

Finance charges on capitalised leases - 22 - 22

119 77 - 22

Bad trade debts written off to profit and loss account 52 27 4 2


1997 1996 1997 1996$000 $000 $000 $000



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1997 1996 1997 1996$000 $000 $000 $000

Operating profit – continued

(a) Operating revenue and expenses (continued)

Amortisation of capitalised leased assets 10 111 10 109

Depreciation of property, plant and equipment 1,587 1,439 1,118 992

Total amount charged for depreciation and amortisation of assets 1,597 1,550 1,128 1,101

Amounts set aside to provision for:Warranties 1,800 2,013 1,800 2,013Doubtful trade debts 189 237 185 144Employee entitlements 2,843 3,045 1,320 1,811Other 160 272 160 272

Total amount set aside to provisions 4,992 5,567 3,465 4,240

Operating lease rental expense 1,764 1,540 580 715

Research and development expenditure expensed as incurred 10,633 11,015 10,283 10,650

(b) Disposals of non current assets

Loss/(profit) on disposal of property, plant and equipment 216 3 216 (53)

3. Auditors’ remuneration

Amounts received or due and receivablefor audit services by:

Auditors of the Company 65 63 65 63Other KPMG member firms 86 65 - -

151 128 65 63

Amounts received or due and receivablefor other services by:

Auditors of the Company 106 32 106 24Other KPMG member firms 17 - - -Other auditors - 96 - 60

123 128 106 84



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1997 1996 1997 1996Note $000 $000 $000 $000

4. Taxation

(a) Income tax expensePrima facie income tax expensecalculated at 36% on the operating profit 5,344 4,923 3,997 6,281

Increase in income tax expense due to non tax deductible items:

Non allowable permanent differences 486 144 18 25Net higher overseas tax rate 82 155 - -

Decrease in income tax expense due to:Exempt dividends - - - (3,750)Research and development allowance (987) (1,698) (987) (1,698)Other allowable permanent differences (667) (711) - (360)

Income tax expense on operating profit 4,258 2,813 3,028 498

Income tax (over)/under provided in prior years (222) - 27 26

Total income tax expense 4,036 2,813 3,055 524

Total income tax expense is made up of:Current income tax provision 3,994 3,266 2,798 1,431Future income tax benefit 264 (453) 230 (933)(Over)/under provision in prior years (222) - 27 26

4,036 2,813 3,055 524

(b) Provision for current income tax

Balance at the end of the year 18 2,615 2,992 2,429 1,405

(c) Prepaid income tax

Balance at the end of the year 10 371 - - -

(c) Future income tax benefit

Future income tax benefit comprises the estimated future benefit at current income tax rates of:

Provisions and other timing differences not currently deductible 13 6,479 6,548 3,865 4,095



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1997 1996 1997 1996Note $000 $000 $000 $000

5. Dividends

Dividends provided for or paid by the Company are:

Ordinary dividends

• An interim ordinary dividend of 5 cents per share, franked to100% (1996: nil%) with Class C (36%) franking credits, was paid on 24 April 1997 2,500 2,500 2,500 2,500

• A final ordinary dividend of 7.5 cents per share, franked to 38% (1996: nil%) with Class C (36%) franking credits, is recommended by the Directors of the Company 18 3,750 3,750 3,750 3,750

6,250 6,250 6,250 6,250

Capital restructuring dividendAs part of the reconstruction prior to listing on 4 December 1995, the Company declared a dividend of $32,628,000 by way of:

• elimination of net recoverable from its parent entity as at 1 July 1995 - 30,987 - 30,987

• payment of a cash dividend - 1,641 - 1,641

- 32,628 - 32,628

6,250 38,878 6,250 38,878



6. Geographical segments

7. Earnings per share

Basic earnings per share (cents) 21.6c 21.7c

Weighted average number of ordinary shares used in the calculation of basic earnings per share 50,000,000 50,000,000

There is no difference between basic earnings per share and diluted earnings per share.

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Consolidated1997 1996

Asia-Pacific Europe Americas Unallocated Eliminations Consolidated1997 1996 1997 1996 1997 1996 1997 1996 1997 1996 1997 1996$000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000



Revenue

Revenue outside the Economic Entity 15,021 12,045 26,037 31,476 30,855 28,754 - - - - 71,913 72,275

Inter segment revenue 38,238 33,370 - - - - - - (38,238) (33,370) - -

Profit

Operating profit/(loss) before interest and tax 3,927 3,374 4,566 9,149 6,991 4,535 (1,200) (3,760) - - 14,284 13,298

Net interest revenue 561 378

Operating profit before tax 14,845 13,676

Income tax expense attributable to operating profit 4,036 2,813

Operating profit after tax 10,809 10,863

Total assets 6,400 5,615 11,749 12,637 14,168 10,569 12,191 12,922 6,779 6,499 51,287 48,242

Industry segment

The economic entity operates in the cochlear implant industry.

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1997 1996 1997 1996Note $000 $000 $000 $000

8. Receivables

Current

Trade debtors 16,286 12,177 1,812 1,328Provision for doubtful trade debts 929 783 829 644

15,357 11,394 983 684

Amount receivable from controlled entities 27 - - 3,599 2,581

Other amounts receivable 125 392 125 392

15,482 11,786 4,707 3,657

Non currentOther amounts receivable 326 267 - -

9. Inventories

Current

Raw materials and stores, at net realisable value 2,356 1,009 2,356 1,009Work in progress, at net realisable value 2,725 2,601 2,725 2,601Finished goods, at net realisable value 3,008 2,190 729 237

8,089 5,800 5,810 3,847

10. Other current assets

Prepayments and other debts 1,291 1,558 349 547Prepaid income tax 371 - - -

1,662 1,558 349 547

11. Investments

Non current

Shares in controlled entities,unquoted at cost 23 - - 3,944 3,944



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1997 1996 1997 1996Note $000 $000 $000 $000

12. Plant and equipment

Plant and equipmentAt cost 12,941 11,101 9,321 8,002Accumulated depreciation 6,650 5,165 4,401 3,351

6,291 5,936 4,920 4,651

Leased plant and equipment At capitalised cost - 811 - 662Accumulated amortisation - 543 - 394

- 268 - 268

Total plant and equipment, at net book value 6,291 6,204 4,920 4,919

13. Other non current assets

Future income tax benefit 6,479 6,548 3,865 4,095

14. Creditors and borrowings

Current

Trade creditors and other creditors 12,129 11,923 7,161 7,459Amounts owing to controlled entities 27 - - 327 327Bank loans, secured 16 2,316 2,725 - -Bank overdraft, unsecured 16, 22(i) - 981 - 981Lease liabilities 15,16 - 133 - 133

14,445 15,762 7,488 8,900

Non current

Other creditors - 21 - 21Bank loans, unsecured 16 - 64 - -Lease liabilities 15,16 - 8 - 8

- 93 - 29



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1997 1996 1997 1996$000 $000 $000 $000

15. Commitments

Operating lease commitments

Future non cancellable operating lease rentals not provided for in the financial statements are payable as follows:

not later than one year 1,773 1,363 590 646later than one year but not later than two years 1,537 1,066 589 646later than two years but not later than five years 1,801 870 100 108

5,111 3,299 1,279 1,400

Finance lease commitments

Finance lease rentals are payable as follows:

not later than one year - 137 - 137later than one year but not laterthan two years - 8 - 8

- 145 - 145

Future lease finance charges - (4) - (4)

- 141 - 141

Lease liabilities provided for in the financial statements:

current - 133 - 133non current - 8 - 8

Total lease liability - 141 - 141



42


1997 1996 1997 1996$000 $000 $000 $000

16. Financing arrangements

The Economic Entity has access to the following lines of credit:

Bank overdraft 3,158 3,266 2,000 2,000Bank loans 2,316 4,322 - -Bill acceptance facility 3,000 3,000 3,000 3,000Leasing facility - 1,000 - 1,000Standby letters of credit 732 500 500 500

9,206 12,088 5,500 6,500

Facilities utilised at balance date:Bank overdraft - 981 - 981Bank loans - current 2,316 2,725 - -

- non current - 64 - -Bill acceptance facility - - - -Leasing facility - 141 - 141Standby letters of credit 232 - - -

2,548 3,911 - 1,122

Facilities not utilised at balance date:Bank overdraft 3,158 2,285 2,000 1,019Bank loans - 1,533 - -Bill acceptance facility 3,000 3,000 3,000 3,000Lease facility - 859 - 859Standby letters of credit 500 500 500 500

6,658 8,177 5,500 5,378

Bank overdrafts

The bank overdrafts are payable on demand and are subject to annual review.

Bank loans

The bank loans are secured by a letter of credit with a charge over an offsetting term deposit.

Bill acceptance facility

The bill aceptance facility is reviewed on an annual basis with the renewal due on 30 November 1997.



43


1997 1996 1997 1996$000 $000 $000 $000

17. Amounts payable/receivable in foreign currencies

The Australian dollar equivalent of unhedged amounts payable/receivable in foreign currencies, calculated at year end exchange rates, is as follows:

CurrentAmounts payableJapanese Yen 31 - - -German Deutschmark 36 - - -

Amounts receivableHong Kong Dollars - 350 - 350

18. Provisions

Current

Income tax 2,615 2,992 2,429 1,405Dividends 3,750 3,750 3,750 3,750Employee entitlements * 3,516 3,351 1,710 1,595Warranties 1,345 1,625 1,345 1,625Other 1,944 1,931 360 200

13,170 13,649 9,594 8,575

Non current

Employee entitlements * 365 282 365 282

* Employee entitlements include entitlements measured at present values of future amounts expected

to be paid based on a 4% per annum projected weighted averaged increase in wage and salary rates

over an average period of 8 years. Present values are calculated using a weighted average rate of 6%

per annum based on government guaranteed securities with similar maturity terms.




1997 1996 1997 1996$000 $000 $000 $000

44

19. Contingent liabilitiesA third party has made allegations, originally raised in 1992, that the Economic Entity has infringed

that party’s patent rights. The Company believes, based on legal advice provided to it, that it has valid

defences to the allegations raised, including the defence of non infringement.

There are no contingent liabilities for termination benefits under service agreements with Directors or

persons who take part in the management of the Company.

20. Share capital

Authorised capital

100,000,000 (1996: 100,000,000) ordinary shares of $0.10 each 10,000 10,000 10,000 10,000

Issued and paid-up capital

50,000,000 (1996: 50,000,000) ordinary shares of $0.10 each, fully paid 5,000 5,000 5,000 5,000

Restructuring prior to public listing

On 1 July 1995, the issued capital of 1,497,600 ordinary shares of $1.00 each was divided into

14,976,000 ordinary shares of $0.10 each. The authorised capital of 7,250,000 ordinary shares of $1.00

each and 2,750,000 non cumulative preference shares of $1.00 each was changed to 100,000,000

ordinary shares of $0.10 each.

On 1 July 1995, 25,880,000 ordinary shares of $0.10 each were issued to Nucleus Limited from the

share premium reserve.

On 1 July 1995, 9,144,000 ordinary shares of $0.10 each were issued to Nucleus Limited from

retained profits.




1997 1996 1997 1996$000 $000 $000 $000

45

21. Reserves

General 70 73 - -Foreign currency translation (569) (830) - -

(499) (757) - -

Movements during the year

Share premium

Balance at beginning of year - 2,588 - 2,588Conversion to ordinary shares - (2,588) - (2,588)

Balance at end of year - - - -

General

Balance at beginning of year 73 25 -Translation adjustment (3) - - -Transfers from retained profits - 48 - -

Balance at end of year 70 73 - -

Foreign currency translation

Balance at beginning of year (830) 2,150 - -Translation adjustment on controlled foreign entity’s financial statements 295 (2,191) - -Crystallisation of reserve following dividend paid by controlled entities (34) (789) - -

Balance at end of year (569) (830) - -




1997 1996 1997 1996$000 $000 $000 $000

46

22. Notes to the statements of cash flows

i. Reconciliation of cash

For the purposes of the statements of cash flows, cash includes cash on hand and at bank and deposits at

call, net of outstanding bank overdraft. Cash as at the end of the financial year as shown in the

statements of cash flows is reconciled to the related items in the balance sheets as follows:

Cash 12,958 16,079 8,246 9,374Bank overdraft - (981) - (981)

12,958 15,098 8,246 8,393

ii. Reconciliation of operating profit after tax to net cash provided by operating activities

Operating profit after income tax 10,809 10,863 8,047 16,924

Add/(less) items classified as investing/financial activities:

Loss/(profit) on disposal of non current assets 216 3 216 (53)

Add non cash items:

Amounts set aside to provisions 4,992 5,567 3,465 4,240Depreciation and amortisation 1,597 1,550 1,128 1,101Bad trade debts written-off 52 27 4 2

Net cash provided by operating activities before changes in assets and liabilites 17,666 18,010 12,860 22,214

Change in assets and liabilities:

(Increase)/decrease in inventories (2,289) 2,308 (1,963) 272

(Increase)/ decrease in prepayments and other debtors (104) (731) 198 (523)

(Increase)/decrease in trade debtors and other amounts receivable (3,996) 2,366 (1,235) (603)

(Decrease) in loans from related entities - - - (4,005)

Increase/(decrease) in trade and other creditors 185 1,015 (320) (633)

(Decrease)/increase in provisions (4,822) (609) (3,205) 1,446

(Decrease)/increase in income taxes payable (377) (302) 1,024 526

Increase/(decrease) in deferred taxes payable 69 (1,086) 230 (915)

Exchange rate adjustment (99) (1,493) - -

Net cash provided by operating activities 6,233 19,478 7,589 17,779



47

22. Notes to the statements of cash flows – continued

iii. Financing facilities

Refer Note 16

iv. Acquisition of controlled entity

Effective 1 July 1995, the Economic Entity acquired 100% of the ordinary shares of Cochlear

Corporation. Details of the acquisition are as follows:

Consideration 3,250Cash acquired (127)

Outflow of cash (3,123)

Fair value of net assets of entity acquired

Cash 127Receivables 4,038Inventories 1,251Other debtors 163Plant and equipment 519Future income tax benefit 137Trade creditors (845)Income tax provision (6)Lease liabilities (4)Other creditors and accruals (2,130)

Consideration 3,250

1996$000



23. Particulars in relation to controlled entities

The Company

Cochlear Limited 8,047 16,924 Australia

Controlled Entities

Cochlear Corporation b Ord 100 100 3,250 3,250 3,284 3,097 United States of America

Cochlear AG b Ord 100 100 124 124 (868) 702 Switzerland

Cochlear (UK) Ltd b Ord 100 100 25 25 181 182 United Kingdom

Cochlear GmbH b Ord 100 100 45 45 64 83 Germany

Cochlear Australia Pty Ltd a Ord 100 100 - - - - Australia

Cochlear (HK) Limited b Ord 100 100 27 27 - - Hong Kong

Nihon Cochlear Co Ltd b Ord 100 100 543 543 380 765 Japan

Elimination of inter company transactions (70) (70) (279) (10,890)

3,944 3,944 10,809 10,863

Notes

a. Cochlear Australia Pty Ltd has an investment book value of $2 (1996: $2).b. These entities are audited by other member firms of KPMG.

48

Name Note Class Interest held Book value of Contribution to Country ofof each parent consolidated profit incorporation

share entity’s investment

1997 1996 1997 1996 1997 1996% % $000 $000 $000 $000



49


1997 1996 1997 1996No. No.

24. Directors’ remuneration

Directors’ income

The number of directors of the Company whose income from the Company or related bodies corporate falls within the following bands:

$ 10,000 - $ 19,999 2 3$ 20,000 - $ 29,999 2 1$ 30,000 - $ 39,999 1 -$ 60,000 - $ 69,999 - 1$ 70,000 - $ 79,999 1 -$380,000 - $389,999 - 1$400,000 - $409,999 1 -

7 6

Total income paid or payable or otherwise made available to all Directors of the Company from the Company or any related party 593 519

Total income paid or payable or otherwise made available to all directors of each entity in the Economic Entity from the Company, or any related party 593 519

Directors’ income does not include insurance premiums paid by the Company or related parties in

respect of Directors’ and Officers’ Liabilities Insurance contract, as the insurance policies do not specify

premiums paid in respect of individual directors.

$000 $000 $000 $000



Executive officers of Executive officersentities in the of the Company

Economic Entity

1997 1996 1997 1996No. No. No. No.

50

25. Executives’ remuneration

Executives’ remuneration

The income of executives who work wholly or mainly outside Australia is not included in this disclosure. The number of executive officers of the Company whose income from the Company or related bodies corporate falls within the following bands:

$100,000 - $109,999 2 - 2 -$110,000 - $119,999 3 2 3 2$120,000 - $129,999 1 1 1 1$130,000 - $139,999 - 4 - 4$140,000 - $149,999 2 - 2 -$150,000 - $159,999 3 2 3 2$170,000 - $179,999 1 - 1 -$180,000 - $189,999 - 1 - 1$210,000 - $219,999 1 1 1 1$230,000 - $239,999 1 1 1 1$280,000 - $289,999 - 1 - 1$380,000 - $389,999 - 1 - 1$400,000 - $409,999 1 - 1 -

15 14 15 14

Total remuneration received or due and receivable by Australian based executive officers whose income is $100,000 or more:

• from the Company or related parties 2,470 2,516

• from entities in the Economic Entity or related parties 2,470 2,516

Executives’ remuneration does not include insurance premiums paid by the Company and related

parties in respect of Directors’ and Officers’ Liabilities Insurance contract, as the insurance policies do

not specify premiums paid in respect of individual executives.

$000 $000 $000 $000



51

26. Employee entitlements

Superannuation plans

In the Economic Entity, there are a number of superannuation plan including one defined benefit fund

(the “Plan”) to which the Company contributes. Employer contributions are based on the advice of

the Plan’s actuary. Contributions in excess of those specified in Superannuation Guarantee legislation

are not legally enforceable. Employee contributions are based on various percentages of their gross

salaries. After serving a qualifying period, eligible employees are entitled to benefits on retirement,

disability or death.

The Plan provides defined benefits based on years of service and final average salary. In accordance

with the trust deed, the Company is under no legal obligation to make up any shortfall in the Plan’s

assets to meet payments due to eligible employees.

An actuarial assessment of the Plan as at 1 December 1995 was carried out by Mr D O’Keefe, FIAA in

February 1996. The actuary concluded that the assets of the Plan were sufficient to meet all benefits

payable in the event of the Plan’s termination, or the voluntary or compulsory termination of

employment of each employee of the Company who is covered by the Plan.

The amounts included in the table below are the total net assets, accrued benefits and vested benefits of

the Plan. Accrued benefits are benefits which the Plan is presently obliged to pay at some future date,

as a result of membership of the Plan. Vested benefits are benefits which are not conditional upon the

continued membership of the Plan or any factor, other than resignation from the Plan.

The Directors, based on the advice of the trustees of the Plan, are not aware of any changes in

circumstances since the actuarial assessment of the Plan as at 1 December 1995, which have a material

impact on the overall financial position of the Plan.

(i) Plan assets at net market value and vested benefits and accrued benefits have been calculated at 30

June 1996, being the date of the most recent financial statements of the Plan.

(ii) Plan assets at net market value, vested benefits and accrued benefits were obtained from the

actuarial assessment of the Plan as at 1 December 1995, being the date of the establishment of the Plan.



Plan assets at Total accrued Excess Total vestednet market value benefits benefits

(i) (ii) (i) (ii) (i) (ii)

1997 1996 1997 1996 1997 1996 1997 1996$000 $000 $000 $000 $000 $000 $000 $000

Cochlear Defined Benefit 3,947 2,158 3,811 2,158 136 - 3,647 2,098Superannuation Plan

52


1997 1996 1997 1996$000 $000 $000 $000

Details of contributions to the Plan during

the year ended 30 June 1997 are as follows:

Employer contributions to the Plan 363 659 363 659

27. Related parties

Directors

The names of each person holding the position of Director of Cochlear Limited during the financial

year are Prof DG Penington, AC, Ms CB Livingstone, Prof BDO Anderson, AO, Mr JA Calvert-

Jones, Ms EC Holley and Mr PJ North. Mr JH Veeneklaas resigned as a Director during the year.

Details of Directors’ remuneration are set out in Note 24.

Apart from the details disclosed in this Note, no Director has entered into a material contract with the

Company or the Economic Entity since the end of the previous financial year and there were no

material contracts involving Directors’ interests existing at year end.

Directors’ holdings of shares and share options

The relevant interests of Directors of the reporting entity in shares and share options of Cochlear

Limited are set out below:

Cochlear Limited

10c ordinary shares 237,000 253,000Options over 10c ordinary shares 240,000 240,000

Other transactions with the Company or its controlled entities

Dr ML Lehnhardt is a Director of Cochlear (UK) Ltd. Prof Dr Dr E Lehnhardt, a related party,

provided advisory and consulting services to the Company.

Other transactions

The Company engages in purchases and sales with its controlled entities. These transactions are in the

ordinary course of business and normal terms and conditions apply.

Consolidated number held

1997 1996



53

Balances with entities within the wholly owned group

The aggregate dividends received and amounts receivable from, and payable to, wholly owned

controlled entities by the Company:

Dividends

Dividends received by the Company from wholly owned controlled entities - 10,416

Current receivables

Amounts receivable from controlled entities 3,599 2,581

Current creditors and borrowings

Amounts owing to controlled entities 327 327

1997 1996$000 $000



54

Statement by Directors1. In the opinion of the Directors of Cochlear Limited:

(a) the financial statements as set out on pages 26 to 53 are drawn up so as to give a true and fair view

of the results and cash flows for the financial year ended 30 June 1997, and the state of affairs as at

30 June 1997, of the Company and the Economic Entity;

(b) the consolidated accounts have been made out in accordance with Divisions 4A and 4B of Part 3.6

of the Corporations Law; and

(c) at the date of this statement, there are reasonable grounds to believe that the Company will be able

to pay its debts as and when they fall due.

2. The financial statements have been made out in accordance with applicable Accounting Standards

and Urgent Issues Group Consensus Views.

Dated at Sydney this 26th day of August 1997

Signed in accordance with a resolution of the Directors:

Director Director

Statement by directors


55

Independent auditors’ report to members


Independent Auditors’ Report to the Members of Cochlear Limited

Scope

We have audited the financial statements of Cochlear Limited for the financial year ended 30 June

1997, consisting of the profit and loss accounts, balance sheets, statements of cash flows, accompanying

notes, and statement by Directors set out on pages 26 to 53. The financial statements comprise the

accounts of the Company and the consolidated accounts of the Economic Entity, being the Company

and its controlled entities. The Company’s Directors are responsible for the financial statements. We

have conducted an independent audit of these financial statements in order to express an opinion on

them to the members of the Company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable

assurance whether the financial statements are free of material misstatement. Our procedures included

examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial

statements, and the evaluation of accounting policies and significant accounting estimates. These

procedures have been undertaken to form an opinion whether, in all material respects, the financial

statements are presented fairly in accordance with Accounting Standards and other mandatory

professional reporting requirements (Urgent Issues Group Consensus Views) and statutory

requirements so as to present a view which is consistent with our understanding of the Company’s and

the Economic Entity’s financial position, the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit opinion

In our opinion, the financial statements of Cochlear Limited are properly drawn up:

(a) so as to give a true and fair view of:

(i) the state of affairs of the Company and the Economic Entity at 30 June 1997, and the results and

cash flows of the Company and the Economic Entity for the financial year ended on that date; and

(ii) the other matters required by Divisions 4, 4A and 4B of Part 3.6 of the Corporations Law to

be dealt with in the financial statements;

(b) in accordance with the provisions of the Corporations Law; and(c) in accordance with applicable Accounting Standards and other mandatory professional

reporting requirements.

KPMG Roger M Amos

Chartered Accountants Partner

Sydney 26 August 1997

56

Stock Exchange information


Australian Stock Exchange additional informationAdditional information required by the Australian Stock Exchange Listing Rules and not disclosed

elsewhere in this Annual Report. The information presented is as at 29 August 1997.

Shareholdings

Substantial Shareholders

Bankers Trust Australia Limited 9,199,668 18.4National Mutual Holdings Limited 5,074,735 10.1Deutsche Australia Ltd 4,607,489 9.2Australian Mutual Provident Society 2,858,528 5.7

Total 21,740,420 43.4

Distribution of Shareholders

1-1,000 4311,001-5,000 2,9975,001-10,000 24210,001-over 160

Total 3,830

Non marketable parcels – two shareholders held less than a marketable parcel.

Twenty largest shareholders

Permanent Trustee Company Limited 6,043,607Westpac Custodian Nominees Limited 4,703,222SAS Trustee Corporation 3,737,617The National Mutual Life Association of Australasia Limited 3,030,438Pendal Nominees Pty Limited 2,720,480National Nominees Limited 2,666,962Chase Manhattan Nominees Limited 2,478,742Perpetual Trustees Victoria Limited 1,700,397Australian Mutual Provident Society 1,151,235ANZ Nominees Limited 821,300Westpac Life Insurance Services Limited 749,717Suncorp Life and Superannuation Limited 487,500Caledonia Investments Limited 472,000AMP Custodian Services Pty Limited 444,960LGSS Pty Limited 440,494Suncorp General Insurance Limited 423,854BT Custodians Limited 415,482The Bionic Ear Institute 400,000FSS Trustee Corporation 312,224The Australian National University 300,000

The twenty largest shareholders held 67% of the ordinary shares of the Company.

Number of ordinary %shares held

Category Number of shareholders

Name Number of ordinaryshares held

COCHLEAR LIMITED

ACN 002 618 073

Stock Exchange Listing

Australian Stock Exchange Limited

ASX code COH

Share Register

Corporate Registry

Services Pty Limited

Level 4

55 Hunter Street

Sydney NSW 2000

AUSTRALIA

Telephone: 61 2 9232 4211

Auditors

KPMG

Chartered Accountants

Bankers

Australia

Westpac Banking Corporation

United States of America

Norwest Bank

Switzerland

Union Bank of Switzerland

Japan

The Bank of Tokyo

Mitsubishi Limited

Solicitors

Clayton Utz

ACE

(Advanced Combination Encoders)

The new generation of speech coding strategies

using features of both SPEAK and CIS.

BTE

A Behind-The-Ear speech processor. BTE is

also used to refer to hearing aids which are

placed behind the ear.

channel

Pairs of electrodes available to convey

information to the cochlea (inner ear).

CIS

(Continuous Interleaved Sampling)

Speech coding strategy.

ENT

Ear, nose and throat.

ESPrit

The Ear level Speech Processor for Nucleus 24.

FDA

(Food and Drug Administration)

The principal regulatory body for medical

devices in the United States.

NRT

(Neural Response Telemetry)

The measurement (via telemetry) of the neural

response to electrical stimulation.

PHI

(Profoundly Hearing Impaired)

Hearing loss of more than 90 decibels (dB),

ie. no useful hearing.

SHI

(Severely Hearing Impaired)

Hearing loss of 70dB to 90dB,

ie. some residual hearing.

SPEAK

The speech coding strategy used in the

Nucleus 22 and Nucleus 24.

speech coding strategy

The algorithm used in the speech processor to

convert the sound information from the

microphone to stimulation information which

is sent to the implant.

Spectra

The body worn speech processor for Nucleus 22.

SPrint

The body worn speech processor for Nucleus 24.

Glossary Company information

Des

ign:

Blu

e Sk

y D

esig

n Pt

y Lt

d

Edi

tori

al A

dvis

ors:

Gav

in A

nder

son

& K

ortla

ng

The Annual General Meeting of shareholders of

Cochlear Limited will be held on Level B1, ASX

Auditorium, at the Australian Stock Exchange,

20 Bond Street, Sydney on Tuesday 21 October

1997 at 2.00pm. A formal notice of meeting is

enclosed with this Annual Report setting out the

business of the meeting.

Financial Calendar

21 October 1997 Annual General Meeting

21 October 1997 Final dividend payable

10 February 1998 Interim profit announcement

14 April 1998 Interim dividend payable

19 August 1998 Final profit announcement

Nucleus® is a registered trademark of Cochlear Limited.SPrint, ESPrit, ACE, Smart Speed, custom sound, NRT and BEAMformer are trademarks of Cochlear Limited.Audallion® is a registered trademark of AudioLogic, Inc. in the United States.

Annual Report 1997

Co

chlear A

nn

ual R

epo

rt 1997

Cochlear Corporation61 Inverness Drive EastSuite 200Englewood Colorado 80112USATelephone: 1 303 790 9010Facsimile: 1 303 792 9025

Cochlear AGMargarethenstrasse 47CH-4053 BaselSWITZERLAND

Telephone: 41 61 205 0404Facsimile: 41 61 205 0405

Cochlear(UK) LimitedMill House8 Mill StreetLondon SE1 2BAUNITED KINGDOMTelephone: 44 171 231 6323Facsimile: 44 171 231 3371

Cochlear GmbHKarl-Wiechert-Allee 76 AD-30625 HannoverGERMANY

Telephone: 49 511 5 42 77 0Facsimile: 49 511 5 42 77 70

Nihon Cochlear Co LimitedKizu Building, 8th Floor3-12 Hongo, 3 chomeBunkyo-ku Tokyo 113JAPANTelephone: 81 3 3817 0241Facsimile: 81 3 3817 0245

Cochlear(HK) Limited12B Shun Ho Tower24-30 Ice House StreetCentral HONG KONGTelephone: 852 2530 5773Facsimile: 852 2530 5183

Cochlear Limited14 Mars Road(PO Box 629)Lane Cove NSW 2066AUSTRALIATelephone: 61 2 9428 6555Facsimile: 61 2 9428 6352

1997 Financial Statements and Reports

Documents

mr nj mitchell

mr ja calvert

speech coding

weighted average

bill acceptance

australian

related bodies

long service