Aspect Medical Systems, Inc. Announces Reduction in Workforce.

Business Editors/Health/Medical Writers

NEWTON, Mass.--(BUSINESS WIRE)--Nov. 20, 2002

Aspect today announced a headcount reduction of approximately 12% of the Company's 220 employees. Together with reductions in other operating expenses, the Company expects that these changes will result in cost savings of approximately $4 million in calendar year 2003 compared to the Company's current annual running rate. The majority of the reductions will be completed in November and the balance is expected to be completed by the middle of the first quarter of 2003. The principal goal of these actions, according to Nassib Chamoun, Aspect's president and chief executive officer, is to achieve profitability sooner, and to assure adequate funding for critical programs in the coming years.

"It is never an easy process to make decisions that affect employees who have contributed so much to the Company's success to date", said Chamoun. "The decisions made today, however, are designed to ensure that Aspect retains the financial resources and time to achieve our goals. It also provides us with the flexibility to fund critical programs and initiatives where they are most needed and when they are most needed. We remain confident that BIS monitoring will become a routine part of the practice of anesthesia and sedation monitoring and we believe that the actions taken today leave Aspect in a stronger position to capitalize on the opportunities before us".

About the Company

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 more than 5.5 million patients and has been the subject of more than 1,000 published articles and abstracts. The worldwide installed base of monitors and BIS modules was approximately 15,500 at September 28, 2002. BIS technology is installed in approximately 27 percent of all domestic operating rooms. BIS is currently in use in more than 50 percent of the best hospitals with operating rooms in the U.S. (based on a U.S. News & World Report ranking) and is available in more than 160 countries. Aspect Medical Systems has OEM agreements with the six largest manufacturers of patient monitoring systems and partnerships with six of the largest group purchasing organizations in the United States.

Safe Harbor Statement

Certain statements in this release are forward-looking and may involve risks and uncertainties, including statements with respect to the timing of the Company's workforce reductions, worldwide market acceptance of the Company's products, and statements concerning the Company's expected results of operations for future periods. 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 complete the workforce reductions in the expected time frame, 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, including the third-party anesthesia monitoring product approved by the FDA, and also faces competitive and regulatory risks relating to its ability to successfully develop and introduce enhancements and new products, including regulatory approval of its XP technology in Japan. In addition, the Company has limited sales and marketing experience both in the U.S. and internationally and if it is unable to develop and implement a successful sales and marketing strategy, including with respect to its own sales force, domestic and international distributors, original equipment manufacturers and other direct and indirect sales channels, it will not be able to generate meaningful product revenue. In addition, the Company's ability to become and remain profitable will depend upon its ability to promote frequent use of the BIS system so that sales of its BIS sensors increase. The Company will not be profitable if hospitals and anesthesia providers do not buy and use its BIS systems in sufficient quantities. Cases of surgical awareness during monitoring with the BIS system and significant product liability claims are among the factors that could limit market acceptance. 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 "Factors Affecting Future Operating Results" in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2002, 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.

For further information regarding Aspect Medical Systems, Inc., visit the Aspect Medical Systems, Inc. website at www.aspectmedical.com