American Medical Systems (AMMD) 8-K Other Events

Exhibit 99.1

EXPLANATORY NOTE

As further discussed in Note 1 to our consolidated financial statements contained in Exhibit 99.3 of this Current Report on Form 8-K, our consolidated financial statements for the periods presented have been adjusted for the retrospective application of FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). The financial information contained in the selected financial data below reflects only the adjustments described in Note 1 of Exhibit 99.3. The retrospective application of FSP APB 14-1 affected our fiscal years 2006 through 2008. No other modifications or updates to the disclosures have been made in this Current Report on Form 8-K for events occurring after March 3, 2009, the date of filing our Annual Report on Form 10-K for the fiscal year ended January 3, 2009, with the Securities and Exchange Commission.

Item 6. Selected Financial Data

The following tables present five years of data (in thousands) from our statement of operations and balance sheet.

Statement of Operations Data	2008			2007			2006			2005			2004
Net sales	$	501,641		$	463,928		$	358,318		$	262,591		$	208,772
Cost of sales		111,097			105,592			68,872			46,111			38,331
Gross profit		390,544			358,336			289,446			216,480			170,441
Operating expenses
Marketing and selling		175,670			169,495			123,204			92,001			72,910
Research and development		46,247			43,315			33,877			20,966			15,786
In-process research and development (1)		7,500			7,500			94,035			9,220			35,000
General and administrative		39,281			43,070			34,417			21,713			21,617
Integration costs (2)		—			1,103			1,712			—			—
Litigation settlement (3)		—			14,303			—			—			—
Amortization of intangibles (4)		34,465			18,264			12,393			7,884			5,708
Total operating expenses		303,163			297,050			299,638			151,784			151,021
Operating income (expense)		87,381			61,286			(10,192	)		64,696			19,420
Other (expense) income
Royalty and other		2,279			8,099			1,984			500			2,249
Interest income		747			1,153			2,754			1,246			517
Interest expense (5)		(27,398	)		(37,760	)		(18,395	)		(217	)		(783	)
Amortization of financing costs (6)		(18,482	)		(16,145	)		(14,434	)		—			—
Gain on extinguishment of debt (7)		5,631			—			—			—			—
Investment impairment (8)		—			—			—			—			(4,500	)
Total other (expense) income		(37,223	)		(44,653	)		(28,091	)		1,529			(2,517	)
Income (loss) from continuing operations before income taxes		50,158			16,633			(38,283	)		66,225			16,903
Provision for income taxes (9)		19,323			11,888			9,469			26,950			20,023
Net income (loss) from continuing operations		30,835			4,745			(47,752	)		39,275			(3,120	)
Loss from discontinued operations, net of tax benefit of $0.4 million and $2.7 million for 2007 and 2006, respectively(10)		—			(691	)		(5,435	)		—			—
Net income (loss)	$	30,835		$	4,054		$	(53,187	)	$	39,275		$	(3,120	)
Net income (loss) per share
Basic net income (loss) from continuing operations	$	0.42		$	0.07		$	(0.68	)	$	0.57		$	(0.05	)
Discontinued operations, net of tax		—			(0.01	)		(0.08	)		—			—
Basic net income (loss)	$	0.42		$	0.06		$	(0.76	)	$	0.57		$	(0.05	)
Diluted net income (loss) from continuing operations	$	0.42		$	0.06		$	(0.68	)	$	0.55		$	(0.05	)
Discontinued operations, net of tax		—			(0.01	)		(0.08	)		—			—
Diluted net income (loss)	$	0.42		$	0.06		$	(0.76	)	$	0.55		$	(0.05	)

Balance Sheet Data	2008		2007		2006		2005		2004
Cash, cash equivalents, and short-term investments	$	42,965	$	35,181	$	29,541	$	46,390	$	51,168
Working capital		130,999		143,298		135,635		69,533		79,575
Total assets		1,044,497		1,115,868		1,126,620		359,326		300,550
Long-term liabilities		553,705		650,410		678,897		3,072		3,126
Stockholders’ equity		427,482		383,371		345,189		302,879		249,172

(1)	In 2008 and 2007, we recognized $7.5 million each year for in-process research and development charges related to the payments for achieving certain milestones related to our BioControl acquisition. In 2006, we recognized $25.6 million, $2.1 million, $62.1 million and $4.3 million, respectively, for in-process research and development charges related to the acquisitions of BioControl, Solarant, Laserscope and Ovion. In 2005 and 2004, we recognized in-process research and development charges of $9.2 million and $35.0 million, respectively, related to the acquisitions of Ovion and TherMatrx.
(2)	In 2007 and 2006, we recorded $1.1 million and $1.7 million, respectively, of integration costs associated with the 2006 Laserscope acquisition, primarily related to travel, legal, consulting and retention bonuses.
(3)	During 2007, we recorded a charge of $14.3 million for litigation settlements, primarily for the arbitration award to the former shareholders of CryoGen, Inc. (CryoGen) concerning an earnout payment related to our 2002 acquisition of CryoGen. SeeNotes to Consolidated Financial Statements — No. 4, Litigation Settlementsfor more information.
(4)	In 2008, we recorded additional amortization expense of $17.1 million for the acceleration of amortization to adjust the carrying value of certain intangible assets to their current fair values. For more information regarding this acceleration of of amortization, seeNotes to Consolidated Financial Statements — No. 6, Goodwill and Intangible Assets.
(5)	During 2008, 2007 and 2006, interest expense included interest incurred on $373.8 million principal amount of convertible notes we issued on June 27, 2006. Average borrowings under the convertible notes were $371.1 million during 2008, and $373.8 million during 2007 and 2006. Interest expense also included interest incurred on our senior secured credit facility entered into on July 20, 2006. Our average borrowings under this facility were approximately $281.7 million and $332.3 million during 2008 and 2007, respectively, and $366.0 million from inception through December 30, 2006. We also incurred interest expense related to short-term borrowing activity during 2006. For a more complete description of these items, seeNotes to Consolidated Financial Statements — No. 9, Debt, and No. 8, Credit Agreements.
(6)	Amortization of financing costs relates to the deferred financing costs and debt discount for our convertible notes and our senior secured credit facility. Charges during 2006 also include a $7.0 million commitment fee for a bridge loan of up to $180 million in preparation for the acquisition of Laserscope. We did not use this financing for the Laserscope acquisition. SeeNotes to Consolidated Financial Statements — No. 9, Debt and No. 8, Credit Agreementsfor more information.
(7)	During the fourth quarter of 2008, we recognized a $5.6 million gain on extinguishment of $34.5 million of convertible notes. SeeNotes to Consolidated Financial Statements — No. 9,Debtfor more information.
(8)	During the fourth quarter of 2004, we recognized an investment impairment loss of $4.5 million related to our investment in InjecTx, when we determined that the likelihood of commercialization of the product had diminished dramatically.
(9)	In 2007, we experienced adverse tax effects from the $14.3 million of litigation settlement charges primarily resulting from the resolution of the CryoGen arbitration (seeNotes to Consolidated Financial Statements — No. 4, Litigation Settlements). Partially offsetting this unfavorable impact was the favorable settlement of a tax audit for $0.9 million, which allowed us to release a reserve for uncertain tax benefits. The in-process research and development charges described above for 2004 through 2006, as well as the investment impairment charge in 2004, have no related tax benefit, except for BioControl. In 2006, we received a $2.4 million tax refund associated with the favorable agreement reached with the IRS involving the review of our 2001 and 2002 federal income tax returns.
(10)	In conjunction with our acquisition of Laserscope in the third quarter of 2006, we committed to a plan to divest Laserscope’s aesthetics business. On January 16, 2007, we sold the aesthetics business to Iridex Corporation. The financial results of the aesthetics business have been reported as discontinued operations beginning from the date of acquisition of July 20, 2006 through the date of sale of January 16, 2007. The income tax benefit from the loss from discontinued operations was $0.4 million and $2.7 million in 2007 and 2006, respectively. For a more complete description of the discontinued operations and the related impact on our financial results, refer toNotes to Consolidated Financial Statements — No. 3, Discontinued Operations and Sale of Aesthetics Business.