Aspect Medical Systems Repurchases $10 Million of Its 2.5% Convertible Senior Notes Due 2014

NORWOOD, Mass.--(BUSINESS WIRE)--Aspect Medical Systems, Inc. (NASDAQ: ASPM) today announced that it has repurchased, in privately negotiated transactions, an aggregate of approximately $10 million face value of its 2.5% Convertible Senior Notes due 2014, for aggregate consideration of approximately $6 million in cash, including accrued interest. In June 2007, Aspect issued $125 million of 2.5% Notes. As a result of these repurchases, $115 million of the 2.5% Notes remain outstanding.

As of March 29, 2008, Aspect had approximately $111 million in cash and marketable securities, without giving effect to the $6 million used by Aspect to repurchase a portion of the 2.5% Notes.

Aspect’s 2.5% Notes are currently trading at discounts to their respective face amounts. Accordingly, in order to reduce future cash interest payments, as well as future payments due at maturity, Aspect may, from time to time, depending on market conditions, repurchase additional outstanding convertible debt for cash and/or in exchange for shares of Aspect common stock, debt, or other consideration, in each case in open market purchases and/or privately negotiated transactions. Aspect will evaluate any such transactions in light of then-existing market conditions, taking into account its current liquidity and prospects for future access to capital. The amounts involved in any such transactions, individually or in the aggregate, may be material.

“This repurchase of our notes enables us to favorably restructure our balance sheet by reducing our debt position while maintaining an adequate level of cash,” said Mike Falvey, Chief Financial Officer of Aspect. “Because this repurchase was done at a discount to face value, we will record a one-time gain of approximately $4 million on a pre-tax basis during our second quarter ending June 28, 2008. This gain was not reflected in our Q2 2008 guidance."

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 26 million patients and has been the subject of more than 3,300 published articles and abstracts. BIS technology is installed in approximately 80 percent of hospitals listed in the July 2007 U.S News and World Report ranking of America's Best Hospitals and in approximately 60 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, including without limitation statements with respect to potential future repurchases of the Company’s 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, if Aspect exchanges shares of its common stock for outstanding convertible debt, such exchanges could result in material dilution to holders of Aspect’s common stock. Moreover, any such repurchase could result in a tax liability for Aspect, if made at a discount to the face amount of the convertible debt, and/or could otherwise adversely affect Aspect’s financial condition or results of operations. Repurchases of the convertible debt could also adversely affect the trading market for such debt if, for example, the public float on such debt is materially reduced. Furthermore, there can be no assurance that Aspect will repurchase or exchange any additional outstanding convertible debt and even if, in the future, the Company elects to repurchase a portion of its outstanding convertible debt, any such repurchase may not be successfully completed or, if completed, may not be on terms that are favorable to the Company or that result in expected benefits for the Company. 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 March 29, 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.