-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JtjFAubwc74hmkd3WcYHvPvQmrWDGBsO+UNHKiSoxnGQi3MiSu3f2MWVdywPGVAc weoVQxFJSu/zQmbKwsSrXA== 0001169232-07-002308.txt : 20070514 0001169232-07-002308.hdr.sgml : 20070514 20070514105729 ACCESSION NUMBER: 0001169232-07-002308 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20070514 DATE AS OF CHANGE: 20070514 GROUP MEMBERS: NIERENBERG INVESTMENT MANAGEMENT OFFSHORE, INC. GROUP MEMBERS: THE D3 FAMILY BULLDOG FUND, L.P. GROUP MEMBERS: THE D3 FAMILY FUND, L.P. GROUP MEMBERS: THE DIII OFFSHORE FUND, L.P SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NATUS MEDICAL INC CENTRAL INDEX KEY: 0000878526 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 770154833 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-77922 FILM NUMBER: 07844568 BUSINESS ADDRESS: STREET 1: 1501 INDUSTRIAL ROAD CITY: SAN CARLOS STATE: CA ZIP: 94070 BUSINESS PHONE: 6508020400 MAIL ADDRESS: STREET 1: 1501 INDUSTRIAL ROAD CITY: SAN CARLOS STATE: CA ZIP: 94070 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NIERENBERG INVESTMENT MANAGEMENT CO CENTRAL INDEX KEY: 0001282683 IRS NUMBER: 911677205 FILING VALUES: FORM TYPE: SC 13D/A MAIL ADDRESS: STREET 1: 19605 NE 8TH ST CITY: CAMAS STATE: WA ZIP: 98607 SC 13D/A 1 d71953_sc13da.txt AMENDMENT NO. 10 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 10) NATUS MEDICAL INCORPORATION (BABY) - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 639050103 - -------------------------------------------------------------------------------- (CUSIP Number) David Nierenberg The D3 Family Funds 19605 NE 8th Street Camas, WA 98607 (360) 604-8600 With a copy to: Henry Lesser, Esq. DLA Piper US LLP 2000 University Avenue East Palo Alto, CA 94303 (650) 833-2000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 9, 2007 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box(TM). - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only) The D3 Family Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Washington - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 702,291 Common shares (3.3%) OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON 0 WITH ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 702,291 ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 702,291; for all reporting persons as a group, 4,083,914 shares (18.9%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) (TM) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) PN - -------------------------------------------------------------------------------- 2 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only) The DIII Offshore Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Bahamas - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 957,628 common shares (4.4%) OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON 0 WITH ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 957,628 ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 957,628; for all reporting persons as a group, 4,083,914 shares (18.9%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) (TM) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- 3 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only) The D3 Family Bulldog Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Washington - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 2,423,995 common shares (11.2%) OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON 0 WITH ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 2,423,995 ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 2,423,995; for all reporting persons as a group, 4,083,914 shares (18.9%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) (TM) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- 4 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only) Nierenberg Investment Management Company, Inc. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Washington - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 0 OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON 4,083,914 shares (18.9%) WITH ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 0 ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,083,914 shares - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 4,083,914; for all reporting persons as a group, 4,083,914 shares (18.9%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) (TM) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- 5 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only) Nierenberg Investment Management Offshore, Inc. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Bahamas - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 0 OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON 957,628 common shares (4.4%) WITH ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 0 ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 957,628 common shares - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON For the reporting person listed on this page, 957,628; for all reporting persons as a group, 4,083,914 shares (18.9%) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) (TM) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- 6 This Amendment No. 10 to Schedule 13D (this "Amendment") amends the below-indicated items from the Schedule 13D previously filed by or on behalf of the undersigned parties (the "Reporting Persons") (the "Schedule 13D"), by supplementing such Items with the information below: Item 4. Purpose of Transaction The Street threw BABY out with the bathwater after the company missed consensus earnings estimates by a penny on March 3. Over the next five trading days, until its intra-day low May 9, BABY's share price fell 19%. We concluded that this sell-off was excessive; therefore, we bought 225,000 more shares on May 9, 2007. In addition to being BABY's largest shareholder today, the President of our General Partner has been an investor in BABY since 1989 and served on its Board of Directors from 1989-2005. We believe that the company has strong management and governance, an enviable market share in its newborn hearing screening business, substantial recurring revenues, exciting new products, and a proven growth strategy, which combines 10%+ organic growth with shrewd acquisitions. Jim Hawkins, BABY's CEO, has an excellent track record finding, making, and assimilating acquisitions. He consummated six at his prior company and five so far at BABY. Typically BABY acquires companies at a small premium to their revenue run rates. The acquisitions have been immediately accretive. Investors should remember several things about BABY's acquisition plans: Mr. Hawkins has said on each of his last two earnings calls that he intends to resume making acquisitions in the second half of this year and that he expects, through acquisitions and organic growth, to exit 2008 at a $250 million revenue run rate. If he were to buy $50 million of incremental revenue in the second half of this year, so that his year end 2007 revenue run rate were approximately $170 million, and if the market were to value BABY at three times that revenue run rate, BABY's market cap could end this year at over $500 million, approximately $22 per share (assuming two million more shares). Given the company's rapid recent growth, and its excellent growth prospects, we support management's recent decisions to invest in infrastructure to better manage the growth and to invest in new hearing and neurology products, even at the expense of a penny per share in the March quarter. In closing, we note one additional possible reason for BABY's earnings miss, something nobody mentioned on the May 3 earnings call, and one for which we believe BABY itself is blameless. In the company's proxy statement for its 2007 annual meeting, BABY disclosed that its 2006 audit and audit related bill from Deloitte & Touche had ballooned from $584,000 in 2005 to $1.369 million! We suspect that some of this expense may have impacted BABY's first quarter 2007 results. Deloitte & Touche's 2006 charges strike us as extraordinary and excessive for a company as small as BABY: to extract $1.369 million to audit a company with only $90 million of revenues is outrageous. In the post-Sarbanes-Oxley world we find ourselves in today, too many audit firms are abusing their oligopolistic pricing power to the detriment of their clients and their clients' shareholders. We will not stand for it. It is wasting money and eroding the competitiveness of 7 America's companies and our capital markets. We are voting all of our shares against the reappointment of Deloitte & Touche as BABY's auditor. We urge BABY's board and management to return audit costs to 2005 levels, with or without Deloitte. We do not blame BABY's management and board for this problem; the problem is much bigger than this small company. BABY should not be thrown out which the bathwater just because Deloitte gave it a bath. ***** By reporting the information contained in this Amendment, the Reporting Persons do not intend to solicit, nor are they soliciting, proxies or consents from, nor seeking or requesting any other action by, any of the other stockholders of BABY. The previous statements as to the views of the Reporting Persons regarding their investment in BABY represent solely their own analyses and judgments, based on publicly-available information and their own internal evaluation thereof. Those statements are not intended, and should not be relied on, as investment advice to any other investor or prospective investor. To the extent those statements reflect assessments of possible future developments, those assessments are inherently subject to the uncertainties associated with all assessments of future events; actual developments may materially differ as a result of circumstances affecting BABY and/or extrinsic factors such as developments in the company's industry and the economic environment. The Reporting Persons reserve the right to change their internal evaluation of this investment in the future, as well as to increase or decrease their investment depending on their evaluation, without further amending the Schedule 13D except as required by applicable rules. Item 5. Interest in Securities of the Issuer. (a, b) The Reporting Persons, in the aggregate, beneficially own 4,083,914 common shares, constituting approximately 18.9% of the outstanding Shares. (c) During the past sixty (60) days the following purchases of Shares were made by D3 Family Funds in open market transactions: Fund Transaction Date Shares Bought Price ---- ---------------- ------------- ----- D3 Family Fund, L.P 5/9/2007 12,720 14.86 D3 Family Bulldog, LP 5/9/2007 146,810 14.86 DIII Offshore Fund, LP 5/9/2007 65,470 14.86 Item 6. Material to be filed as Exhibits Exhibit 1 to this Amendment is the joint filing agreement pursuant to which all of the filing persons have authorized the filing of this Amendment as a group. 8 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, each of the undersigned certifies that the information set forth in the Statement is true, complete and correct. D3 Family Fund, L.P., and D3 Bulldog Fund, L.P., By: Nierenberg Investment Management Company, Inc. Its: General Partner May 14, 2007 By: /s/ David Nierenberg - ------------ ------------------------------------ David Nierenberg, President DIII Offshore Fund, L.P. By: Nierenberg Investment Management Offshore, Inc. Its: General Partner May 14, 2007 By: /s/ David Nierenberg - ------------ ------------------------------------ David Nierenberg, President Nierenberg Investment Management Company, Inc. May 14, 2007 By: /s/ David Nierenberg - ------------ ------------------------------------ David Nierenberg, President Nierenberg Investment Management Offshore, Inc. May 14, 2007 By: /s/ David Nierenberg - ------------ ------------------------------------ David Nierenberg, President 9 Exhibit 1 JOINT FILING AGREEMENT WHEREAS, the undersigned (collectively, the "Reporting Persons") from time to time make filings with the Securities and Exchange Commission pursuant to Regulation 13D-G under the Securities Exchange Act of 1934, as amended; and WHEREAS, the Reporting Persons prefer to make joint filings on behalf of all Reporting Persons rather than individual filings on behalf of each of the Reporting Persons; NOW, THEREFORE, the undersigned hereby agree as follows with each of the other Reporting Persons: 1. Each of the Reporting Persons is individually eligible to make joint filings. 2. Each of the Reporting Persons is responsible for timely making joint filings and any amendments thereto. 3. Each of the Reporting Persons is responsible for the completeness and accuracy of the information concerning such person contained in joint filings. 4. None of the Reporting Persons is responsible for the completeness or accuracy of the information concerning the other Reporting Persons contained in joint filings, unless such person knows or has reason to believe that such information is inaccurate. 5. This Joint Filing Agreement amends, restates and supersedes the Joint Filing Agreement dated July 5, 2006 by and among the undersigned, D(3) Children's Fund, L.P. and D(3) Family Retirement Fund, L.P. 10 6. The undersigned agree that each joint filing made on or after the date hereof will be, and any amendment thereto will be, made on behalf of each of the Reporting Persons. D3 Family Fund, L.P., and D3 Bulldog Fund, L.P. By: Nierenberg Investment Management Company, Inc. Its: General Partner July 24, 2006 By: /s/ David Nierenberg - ------------- ------------------------------------ David Nierenberg, President DIII Offshore Fund, L.P. By: Nierenberg Investment Management Offshore, Inc. Its: General Partner July 24, 2006 By: /s/ David Nierenberg - ------------- ------------------------------------ David Nierenberg, President Nierenberg Investment Management Company, Inc. July 24, 2006 By: /s/ David Nierenberg - ------------- ------------------------------------ David Nierenberg, President Nierenberg Investment Management Offshore, Inc. July 24, 2006 By: /s/ David Nierenberg - ------------- ------------------------------------ David Nierenberg, President 11 -----END PRIVACY-ENHANCED MESSAGE-----