Natus Medical to Acquire Olympic Medical - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Natus Medical conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being presented today on October 16, 2006 and contains time sensitive information that is accurate only as of today.

I would now like to turn the call over to Brianne Fischer at Natus Medical. Please go ahead.

BRIANNE FISCHER, DIRECTOR LEGAL SERVICES, NATUS MEDICAL: Good morning. This is Brianne Fischer. I'm the Director of Legal Services with Natus Medical, and I would like to thank you all for participating in today's call. Earlier today Natus Medical issued a press release concerning an event that is the subject of this call. If you have not received this news release or if you would like to be added to the Company's distribution list, please call Natus Medical in San Carlos, California at 650-802-0400 or email your request to Investor Relations at Natus.com.

In terms of structure for today's call, Jim Hawkins, President and Chief Executive Officer of Natus will present opening comments, and then we will open up your call to questions. Steve Murphy, Vice President Finance and Chief Financial Officer; Ken Traverso, Vice President global marketing and sales; and Dr. Chris Chung, Vice President of medical affairs, R&D and engineering of Natus will join Jim in answering your questions. I would like to remind you that some of the information to be furnished in today's session will constitute forward-looking statements within the meaning of the Privacy Securities Litigation Reform Act of 1995. Forward-looking statements are those focused on future performance, results, plans and events. We remind you that our future results may differ materially from these forward-looking statements due to a number of risk factors. For a description of the relevant risks and uncertainties that may affect our business, see our periodic reports on form 10-K and form 10-Q filed with the Securities and Exchange Commission.

I would now like to turn the call over to Jim Hawkins, President and Chief Executive Officer of Natus Medical.

JIM HAWKINS, PRESIDENT & CEO, NATUS MEDICAL: Thank you Brianne. I am very pleased to report that Natus Medical will acquire Olympic Medical Corporation today. Based in Seattle, Washington, Olympic Medical develops and manufactures products for the neonatal, pediatric and operating room markets and currently sells its products through telemarketing, mail-order and distributors primarily in the United States. The proprietary Cerebral Function Monitor can be used in the NICU to continuously monitor an infant's brain activity. It enables clinical staff to assess a neurological status of the brain as an aid to both diagnosis and treatment.

We have agreed to acquire the stock of Olympic in an all-cash transaction that is valued at approximately $19.3 million, including $16.6 million that will be paid today at closing and the assumption of Olympic's existing payables including approximately $2.7 million of obligations due immediately following the closing. We also expect that prior to the closing Olympic will have approximately $1.2 million of cash on its balance sheet. Olympic has been a profitable company for many years and recorded $16 million of revenues in calendar 2005.

The acquisition of Olympic strengthens our position as the market leader in the development of products for the detection, treatment, monitoring and tracking of common disorders in newborns and children. Olympic has a number of product lines that fall into several broad market opportunities. Products sold into the nursery in the hospital including weighing scales and blanket warmers, products sold into the operating room in the hospital including operating tables, sterile dryers and pasteurizing units used to clean durable medical goods, and products sold into the hospital to diagnose a treatment, diagnose and treat neurological disorders in newborns.

Olympic's proprietary Cerebral Function Monitor is used in the neonatal intensive care unit and other acute care departments to continuously monitor an infant's brain activity. This product, which uses EEG technology, enables clinical staff to assess the neurological status of the brain of newborns as an aid to both diagnose and treatment. Olympic is also in the final stage of an FDA approval process for a product called CoolCap. This is a product that has been under development for more than five years and is designed to mitigate the effects of birth asphyxia by lowering the cerebral temperature of children born with this condition.

Birth asphyxia is a condition that results when the newborn does not receive sufficient oxygen during delivery and occurs in up to six out of every 1000 births. It has been well known for years that lowering the body temperature of these kids after birth will limit the amount of brain damage caused by birth asphyxia. If approved, this device will become the only FDA approved device on the market for lowering body temperature as a treatment for birth asphyxia.

Since the CoolCap product has not yet received FDA approval, we expect to incur a charge in our fourth quarter of 2006 results for the write-off of in process research and development associated with the product. We expect that this charge will be in the range of $4 to $6 million and possibly more based on the value of the technology as of the purchase date.

As with our acquisition of Bio-logic Systems Corporation earlier this year, the acquisition of Olympic Medical is an excellent fit for Natus as we have very little product or market overlaps. We are excited about the opportunity to enter the new…