N@N

Aspect Medical Systems Repurchases $35 Million of Its 2.5% Convertible Senior Notes Due 2014

^{Published on 2008-12-03 10:09:59 - Market Wire}
 

NORWOOD, Mass.--([ BUSINESS WIRE ])--Aspect Medical Systems, Inc. (NASDAQ: ASPM) today announced that it has repurchased, in privately negotiated transactions, an aggregate of $35 million face value of its 2.5% Convertible Senior Notes due 2014, for aggregate consideration of approximately $16 million in cash, including accrued interest. In June 2007, Aspect issued $125 million of its 2.5% Notes. As a result of these and prior repurchases, $65 million of the 2.5% Notes remain outstanding.

"The repurchase of our notes enables us to continue to favorably restructure our balance sheet by reducing debt while maintaining an adequate level of cash," said Michael Falvey, Chief Financial Officer of Aspect. "As a result of this transaction, we will recognize a one time pre-tax gain of $18 million that was not factored into our Q4 2008 guidance. Together with our repurchases conducted in Q2 and Q3, we have been able to reduce the face value of our debt by $60 million on terms that we believe are favorable to our shareholders. We expect to end Q4 with approximately $80 million in cash and $65 million face value of debt."

About Aspect Medical Systems, Inc.

Aspect Medical Systems, Inc. (NASDAQ: ASPM) is a global market leader in brain monitoring technology. To date, the Company's Bispectral Index (BIS) technology has been used to assess approximately 29 million patients and has been the subject of over 3,100 published articles and abstracts. BIS technology is installed in approximately 80 percent of hospitals listed in the July 2008 U.S News and World Report ranking of America's Best Hospitals and in approximately 75 percent of all U.S. operating rooms. In the last twelve months BIS technology was used in approximately 19 percent of all U.S. surgical procedures requiring general anesthesia or deep sedation. BIS technology is available in more than 160 countries. Aspect Medical Systems has OEM agreements with nine leading manufacturers of patient monitoring systems. The Company is also investigating how other methods of analyzing brain waves may aid in the diagnosis and management of neurological diseases, including depression and Alzheimer's disease. For more information, visit Aspect's Web site at [ http://www.aspectmedical.com ].

Cautionary Statement Regarding Forward Looking Information

Certain statements in this press release are forward-looking and may involve risks and uncertainties. These statements include the Company's expectations with respect to its cash balances, financial condition and financial results, after giving effect to the repurchase of a portion of the 2.5% notes. There are a number of factors that could cause actual results to differ materially from those indicated by these forward-looking statements. For example, the Company may not be able to achieve widespread market acceptance of its BIS monitoring technology, or to compete with new products or alternative techniques that may be developed by others.Cases of awareness with recall during monitoring with the BIS system and significant product liability claims are among the factors that could limit market acceptance. The Company will not sustain profitability unless hospitals and anesthesia providers buy and use its BIS systems and purchase its BIS sensors in sufficient quantities.Moreover, the Company may not be able to grow its business if its sales and marketing strategies are not successful.The Company also faces competitive and regulatory risks relating to its ability to successfully develop and introduce enhancements and new products.The Company has incurred substantial indebtedness in connection with the issuance of the 2.5% notes and a substantial portion of its cash flows from operations may be dedicated to interest and principal payments on such notes. The Company may elect to make additional material repurchases of its 2.5% notes in the future and any such repurchase may not be successfully completed or, if completed, may not be on terms that are favorable to the Company, could result in material dilution to holders of Aspect's common stock if the Company issues shares of its capital stock in connection with any such repurchase, could result in a tax liability for Aspect, if made at a discount to the face amount of the notes, and/or could otherwise adversely affect Aspect's financial condition or results of operations. Repurchases of the notes could also adversely affect the trading market for such notes if, for example, the public float on such notes is materially reduced. There are other factors that could cause the Company's actual results to vary from its forward-looking statements, including without limitation those set forth under the heading "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 27, 2008 as filed with the Securities and Exchange Commission.

In addition, the statements in this press release represent the Company's expectations and beliefs as of the date of this press release. The Company anticipates that subsequent events and developments may cause these expectations and beliefs to change. However, while the Company may elect to update these forward-looking statements at some point in the future; it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's expectations or beliefs as of any date subsequent to the date of this press release.Aspect, Bispectral Index and BIS are registered trademarks of Aspect Medical Systems, Inc.All other trademarks, service marks and company names are the property of their respective owners.