The only problem is that the dividends have been sourced from...

The only problem is that the dividends have been sourced from borrowings, not free cash flow. I expect that it's just a hiccup from the recall and that they will correct it as the current model is not sustainable going forward.

$100+ million on R&D a year that is expensed as a tax deduction. I see this the same as retained earnings used to grow the business and sustain a competitive advantage. When we see net profit of $130 million for the year, I think the $100 million on R&D needs to be considered, that's another ~$70 million after tax if they elected not to invest in R&D.

$200 million "profit" including the R&D expenses is $200 million a year and on a market cap of $3 billion is a PE ratio of 15.

Going forward, they will be able to utilize nearly all their free cash flow to throw off dividends as their main expenses outside the costs of selling the goods are the R&D costs with other costs being minimal.

The new facility at Macquarie is up and running. I can't see another company coming close to spending the time or money Cochlear do on R&D.

I may be biased and blinded because I have an implant, but considering my situation for an implant was not the most ideal and it works amazingly well it's a buy for me.