American Medical Systems (AMMD) 8-K American Medical Systems Announces Third Quarter 2010 Financial Results

Exhibit 99.1

DATE: November 3, 2010

FOR IMMEDIATE RELEASE

AMERICAN MEDICAL SYSTEMS ANNOUNCES THIRD QUARTER 2010 FINANCIAL RESULTS

• Third quarter sales of $124.0 million grows 0.6%; up 2.9% excluding impact of currency and previously divested Uterine Health product line

• Non-GAAP adjusted EPS of $0.29 grows 7.4% over prior year

MINNEAPOLIS, November 3, 2010 — American Medical Systems Holdings, Inc. (NASDAQ: AMMD) reported sales of $124.0 million for the third quarter of 2010, a 0.6 percent increase over sales of $123.2 million in the comparable quarter of 2009. The strengthening of the U.S. dollar compared to the third quarter of 2009 negatively affected revenue comparisons for the quarter by $1.4 million. Adjusting for the impact of foreign currency results in third quarter revenue growth of 1.8 percent over the same quarter last year. Further adjusting revenue for the impact of theHer Option®uterine health product line, which was sold during the first quarter of 2010, results in constant currency growth of 2.9 percent.

The Company reported third quarter net income of $18.6 million, or $0.24 per share. This compares to net income and earnings per share in the same quarter last year of $28.6 million, or $0.38, which included a $17.4 million gain on the sale of the Ovion technology and a $5.6 million gain on the exchange of convertible notes. Non-GAAP adjusted earnings per share of $0.29 compares to $0.27 in the same quarter last year, a growth of 7.4%, and finishing at the top of guidance despite softer revenue than planned. Non-GAAP adjusted earnings per share excludes the gains noted above, as well as the impact of the amortization of intangible assets and amortization of financing costs, both significant non-cash items affecting comparability to other companies. A reconciliation of reported net income to non-GAAP adjusted net income is provided in the attached schedules.

Softness in the U.S. market was a significant driver in revenue falling short of earlier expectations, resulting in U.S. revenue growth of 2.1 percent compared to the same quarter last year. This compares to revenue growth of 10.6 percent in the U.S. in the first half of 2010.

Men’s Health sales of $55.2 million in the third quarter represented an increase of 0.9 percent on a reported basis compared to the same quarter last year and 2.4 percent on a constant currency basis, with the Male Continence product line growing in mid-single digits and the Erectile Restoration product line experiencing relatively flat growth. The BPH Therapy business declined 2.9 percent on a reported basis and 1.7 percent on a constant currency basis, to $26.9 million during the quarter. Sales were negatively impacted as customers awaited the launch of the MoXy™ Liquid Cooled Fiber which did not occur until late in the last week of the third quarter. The Women’s Health business, excluding theHer Option®product line that was sold in the first quarter, increased 6.0 percent on a reported basis and 6.8 percent on a constant currency basis to $41.2 million in the third quarter. The Pelvic floor repair product line, which continued its strong performance driven by the success of both theElevate® anterior and posterior systems was partially offset by flat sales in the Female Continence product line.

“We were impacted more significantly than anticipated in the third quarter by softness in U.S. procedure volume. In addition, we experienced a longer than expected validation process to

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ensure the successful introduction of our new MoXy^™ Liquid Cooled Fiber,” noted Tony Bihl, Chief Executive Officer. Mr. Bihl further stated, “We again demonstrated solid operational performance in both net income and cash management, and we are pleased to have delivered solid earnings at the high end of our guidance, despite challenging revenue results in the third quarter.”

Outlook

The Company estimates fourth quarter revenue in the range of $141 to $146 million, resulting in full year 2010 revenue guidance of $536 to $541 million, a reduction from previous 2010 guidance of $544 to $560 million. This guidance assumes foreign currency exchange rates remain constant with current rates.

Consistent with 2009, the Company has two significant non-cash charges in GAAP earnings that create inconsistencies in comparisons to many other companies; amortization of financing costs and amortization of intangible assets. Accordingly, the Company guides to non-GAAP adjusted earnings per share, which the Company defines as GAAP earnings per share excluding the impact of amortization of intangible assets and amortization of financing costs.

Despite the slower than anticipated revenue growth in the second half of 2010, the Company increased the lower end of its full year 2010 non-GAAP adjusted earnings per share guidance to $1.24 to $1.27 from previous guidance of $1.19 to $1.27. Fourth quarter non-GAAP adjusted earnings per share is expected to be in the range of $0.35 to $0.38. Both the full year and fourth quarter guidance excludes the impact of amortization of intangible assets which is approximately $0.025 and $0.10 for the fourth quarter and full year 2010, respectively, and amortization of financing costs, which is approximately $0.025 and $0.11 for the fourth quarter and full year 2010, respectively. Guidance for both periods excludes the impact of any unusual non-recurring items, such as gain or loss on early debt extinguishments, sale of non-strategic assets or IPRD charges on milestone payments related to prior acquisitions.

Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), management provides non-GAAP adjusted net income, non-GAAP adjusted earnings per share and constant currency revenue growth rates because management believes that in order to properly understand the Company’s short-term and long-term financial trends and for purposes of comparability to other companies, investors may wish to consider the impact of certain adjustments (such as gain on extinguishment of debt, gain on sale of non-strategic assets, IPRD charges, amortization of intangible assets, amortization of financing costs and related income tax adjustments and the impact of foreign currency translation on reported revenue). These adjustments result from facts and circumstances (such as acquisition and business development activities and other non-recurring items) that vary in frequency and impact on the Company’s results of operations, represent significant items, which when excluded provide a useful measure to determine the health of the business and earnings by the business before significant non-cash charges or in the case of foreign currency translation, are highly variable and difficult to predict. Management uses non-GAAP adjusted net income, non-GAAP adjusted earnings per share and constant currency revenue growth rates to forecast and evaluate the operational performance of the Company as well as to compare results of current periods to prior periods on a consistent basis.

A reconciliation of net income and revenue growth rate percentages, the GAAP measure most directly comparable to non-GAAP adjusted earnings per share and constant currency revenue growth rates, respectively, are provided on the attached schedules.

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Non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.

Earnings Call Information

American Medical Systems will host a conference call on Wednesday, November 3, 2010 at 5:00 p.m. eastern time to discuss its third quarter results and guidance for the fourth quarter. Those without internet access may join the call from within the U.S. by dialing 888-263-1724; outside the U.S., dial 970-315-0301.

A live web cast of the call will be available through the Company’s corporate website atwww.AmericanMedicalSystems.com and will be available for replay three hours after the completion of the call.

About American Medical Systems

American Medical Systems, headquartered in Minnetonka, Minnesota, is a diversified supplier of medical devices and procedures to cure incontinence, erectile dysfunction, benign prostate hyperplasia (BPH), pelvic floor prolapse and other pelvic disorders in men and women. These disorders can significantly diminish one’s quality of life and profoundly affect social relationships. In recent years, the number of people seeking treatment has increased markedly as a result of longer lives, higher-quality-of-life expectations and greater awareness of new treatment alternatives. American Medical Systems’ products reduce or eliminate the incapacitating effects of these diseases, often through minimally invasive therapies. The Company’s products were used to treat approximately 335,000 patients in 2009.

Forward-Looking Statements

This press release contains forward-looking statements relating to the market opportunities, future products, sales and financial results of American Medical Systems. These statements and other statements contained in this press release that are not purely historical fact are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are based on management’s beliefs, certain assumptions and current expectations. These forward-looking statements are subject to risks and uncertainties such as successfully competing against competitors; physician acceptance, endorsement, and use of AMS products; potential product recalls or technological obsolescence; healthcare reform legislation in the U.S.; successfully managing debt leverage and related credit facility financial covenants; current worldwide economic conditions and the impact on operations of the disruption in global financial markets; factors impacting the stock market and share price and its impact on the dilution of convertible securities; ability of the Company’s manufacturing facilities to meet customer demand; reliance on single or sole-sourced suppliers; loss or impairment of a principal manufacturing facility; clinical and regulatory matters; timing and success of new product introductions; patient acceptance of the Company’s products and therapies; changes in and adoption of reimbursement rates; adequate protection of the Company’s intellectual property rights; product liability claims; currency and other economic risks inherent in selling our products internationally and other risks and uncertainties described in the Company’s Annual Report on Form 10-K for the year ended January 2, 2010, and its other SEC filings. Actual results may differ materially from anticipated results. The forward-looking statements contained in this press release are made as of the date hereof, and AMS undertakes no obligation to update any forward-looking statements to reflect

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events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

More information about the Company and its products can be found at its websitewww.AmericanMedicalSystems.com and in the Company’s Annual Report on Form 10-K for 2009 and its other SEC filings.

Contact:	Mark Heggestad Executive Vice President and Chief Financial Officer 952-930-6495 Mark.Heggestad@AmericanMedicalSystems.com
	Anthony Bihl President and Chief Executive Officer 952-930-6334 Tony.Bihl@AmericanMedicalSystems.com

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American Medical Systems Holdings, Inc.
Statements of Operations
(Unaudited)
(In thousands, except per share data)

	Three Months Ended						Nine Months Ended
	October 2, 2010			October 3, 2009			October 2, 2010			October 3, 2009
Net sales	$	124,029		$	123,231		$	395,323		$	373,257
Cost of sales		21,963			21,284			65,795			66,234
Gross profit		102,066			101,947			329,528			307,023
Operating expenses
Marketing and selling		42,637			42,489			136,948			128,690
Research and development		12,630			12,434			39,976			38,411
General and administrative		10,850			10,459			35,337			32,898
Amortization of intangibles		3,053			3,358			9,130			10,024
Total operating expenses		69,170			68,740			221,391			210,023
Operating income		32,896			33,207			108,137			97,000
Other (expense) income
Royalty income		153			961			508			2,768
Interest expense		(3,329	)		(4,674	)		(10,867	)		(15,050	)
Amortization of financing costs		(3,503	)		(4,395	)		(10,542	)		(12,350	)
Gain on extinguishment of debt		—			5,563			—			10,125
Gain on sale of non-strategic assets		—			17,446			7,719			17,446
Other income (expense)		1,883			(324	)		1,852			1,098
Total other (expense) income		(4,796	)		14,577			(11,330	)		4,037
Income before income taxes		28,100			47,784			96,807			101,037
Provision for income taxes		9,528			19,163			37,010			38,471
Net income	$	18,572		$	28,621		$	59,797		$	62,566
Net income per share
Basic net income	$	0.24		$	0.39		$	0.79		$	0.85
Diluted net income		0.24			0.38			0.77			0.84
Weighted average common shares used in calculation
Basic		76,151			74,278			75,627			73,939
Diluted		78,545			74,998			77,643			74,456

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American Medical Systems Holdings, Inc.
Condensed Balance Sheets
(In thousands)

	October 2, 2010		January 2, 2010
	(Unaudited)
Assets
Current assets
Cash and short-term investments	$	61,777	$	50,538
Accounts receivable, net		91,561		102,590
Inventories, net		35,254		30,276
Other current assets		19,897		20,937
Total current assets		208,489		204,341
Property, plant and equipment, net		42,481		44,120
Goodwill and intangibles, net		777,442		792,467
Other long-term assets		5,347		6,223
Total assets	$	1,033,759	$	1,047,151
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	7,866	$	9,114
Accrued liabilities and taxes		51,640		62,151
Total current liabilities		59,506		71,265
Debt and other long term liabilities		340,967		430,527
Total liabilities		400,473		501,792
Stockholders’ equity		633,286		545,359
Total liabilities and stockholders’ equity	$	1,033,759	$	1,047,151

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American Medical Systems Holdings, Inc.
Condensed Statements of Cash Flows
(Unaudited)
(In thousands)

	Nine Months Ended
	October 2, 2010			October 3, 2009
Cash flows from operating activities
Net income	$	59,797		$	62,566
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including deferred financing costs		26,874			29,664
Gain on extinguishment of debt		—			(10,125	)
Gain on sale of non-strategic assets		(7,719	)		(17,446	)
Stock-based compensation		6,284			6,649
Other adjustments, including changes in operating assets and liabilities		(11,011	)		25,877
Net cash provided by operating activities		74,225			97,185
Cash flows from investing activities
Purchase of property, plant and equipment		(5,826	)		(3,688	)
Purchase of other intangibles		(2,438	)		(5,392	)
(Purchase) sale of short term investments, net		(24,084	)		11,895
Sale of non-strategic assets, net		19,043			18,982
Other cash flows from investing activities		970			(171	)
Net cash (used in) provided by investing activities		(12,335	)		21,626
Cash flows from financing activities
Payments on senior secured credit facility		(96,963	)		(78,173	)
Repurchase of convertible senior subordinated notes		—			(21,125	)
Debt issuance costs		—			(7,697	)
Other cash flows from financing activities		22,762			6,902
Net cash used in financing activities		(74,201	)		(100,093	)
Effect of currency exchange rates on cash and cash equivalents		(523	)		(614	)
Net (decrease) increase in cash and cash equivalents		(12,834	)		18,104
Cash and cash equivalents at beginning of period		30,670			11,642
Cash and cash equivalents at end of period	$	17,836		$	29,746

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American Medical Systems Holdings, Inc.
Selected Sales Information and Constant Currency Growth Reconciliation
(Unaudited)
(In thousands)

							Constant Currency Growth Reconciliation (a)
													Percent Growth
	Three Months Ended						Percent			Currency			at Constant
	October 2, 2010			October 3, 2009			Growth			Impact			Currency
Sales
Men’s health	$	55,177		$	54,666			0.9	%	$	(816	)		2.4	%
BPH therapy		26,890			27,686			-2.9	%		(330	)		-1.7	%
Women’s health		41,192			38,848			6.0	%		(293	)		6.8	%
Sub-total		123,259			121,200			1.7	%		(1,439	)		2.9	%
Uterine health (b)		770			2,031			-62.1	%		—			-62.1	%
Total	$	124,029		$	123,231			0.6	%	$	(1,439	)		1.8	%
Geography
United States	$	92,136		$	90,231			2.1	%	$	—			2.1	%
International		31,123			30,969			0.5	%		(1,439	)		5.1	%
Sub-total		123,259			121,200			1.7	%		(1,439	)		2.9	%
United States-Uterine health (b)		770			2,031			-62.1	%		—			-62.1	%
Total	$	124,029		$	123,231			0.6	%	$	(1,439	)		1.8	%
Percent of total sales
Men’s health		44	%		44	%
BPH therapy		22	%		22	%
Women’s health		33	%		32	%
Sub-total		99	%		98	%
Uterine health (b)		1	%		2	%
Total		100	%		100	%
Geography
United States		75	%		75	%
International		25	%		25	%
Total		100	%		100	%

(a)	To calculate the currency impact on revenue growth rates, the Company compares each period’s sales, assuming no fluctuation in foreign currency exchange rates between periods. The generally accepted accounting principle (GAAP) measure most comparable to this non-GAAP measure is growth rate percentages based on GAAP revenue.
(b)	The uterine health product line,Her Option ®was sold in February, 2010. Revenues in the third quarter of 2010 include revenue earned as part of the product supply agreement, which was part of the divestiture agreement with CooperSurgical, Inc.

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American Medical Systems Holdings, Inc.
Selected Sales Information and Constant Currency Growth Reconciliation
(Unaudited)
(In thousands)

							Constant Currency Growth Reconciliation (a)
												Percent Growth
	Nine Months Ended						Percent			Currency		at Constant
	October 2, 2010			October 3, 2009			Growth			Impact		Currency
Sales
Men’s health	$	181,018		$	171,090			5.8	%	$	651		5.4	%
BPH therapy		81,977			81,159			1.0	%		225		0.7	%
Women’s health		128,431			113,617			13.0	%		551		12.6	%
Sub-total		391,426			365,866			7.0	%		1,427		6.6	%
Uterine health (b)		3,897			7,391			-47.3	%		—		-47.3	%
Total	$	395,323		$	373,257			5.9	%	$	1,427		5.5	%
Geography
United States	$	284,189		$	263,946			7.7	%	$	—		7.7	%
International		107,237			101,920			5.2	%		1,427		3.8	%
Sub-total		391,426			365,866			7.0	%		1,427		6.6	%
United States-Uterine health (b)		3,897			7,391			-47.3	%		—		-47.3	%
Total	$	395,323		$	373,257			5.9	%	$	1,427		5.5	%
Percent of total sales
Men’s health		46	%		46	%
BPH therapy		21	%		22	%
Women’s health		32	%		30	%
Sub-total		99	%		98	%
Uterine health (b)		1	%		2	%
Total		100	%		100	%
Geography
United States		73	%		73	%
International		27	%		27	%
Total		100	%		100	%

(a)	To calculate the currency impact on revenue growth rates, the Company compares each period’s sales, assuming no fluctuation in foreign currency exchange rates between periods. The generally accepted accounting principle (GAAP) measure most comparable to this non-GAAP measure is growth rate percentages based on GAAP revenue.
(b)	The uterine health product line,Her Option ®was sold in February, 2010. Revenues in the first nine months of 2010 consist of end-customer revenue earned prior to the date of sale, in addition to revenue earned as part of the product supply agreement, which was part of the divestiture agreement with CooperSurgical, Inc.

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American Medical Systems Holdings, Inc.
Reconciliation of Reported Net Income to Non-GAAP Adjusted Net Income
(Adjustments are presented on a pre-tax basis)
(Unaudited)
(In thousands, except per share data)

	Three Months Ended						Nine Months Ended
	October 2, 2010			October 3, 2009			October 2, 2010			October 3, 2009
Net income, as reported	$	18,572		$	28,621		$	59,797		$	62,566
Adjustments to net income:
Amortization of intangibles (a)		3,053			3,358			9,130			10,024
Amortization of financing costs (b)		3,503			4,395			10,542			12,350
Gain on extinguishment of debt (c)		—			(5,563	)		—			(10,125	)
Gain on sale of non-strategic assets (d)		—			(17,446	)		(7,719	)		(17,446	)
Tax effect of adjustments to net income (e)		(2,472	)		6,615			(2,343	)		2,976
Non-GAAP adjusted net income	$	22,656		$	19,980		$	69,407		$	60,345
Net income per share, as reported
Basic	$	0.24		$	0.39		$	0.79		$	0.85
Diluted	$	0.24		$	0.38		$	0.77		$	0.84
Non-GAAP adjusted earnings per share
Basic	$	0.30		$	0.27		$	0.92		$	0.82
Diluted	$	0.29		$	0.27		$	0.89		$	0.81
Weighted average common shares used in calculation:
Basic		76,151			74,278			75,627			73,939
Diluted		78,545			74,998			77,643			74,456

(a)	Consists of amortization of intangible assets, primarily developed and core technology.
(b)	Consists of amortization of financing costs on our convertible senior subordinated notes and senior secured credit facility.
(c)	Relates to the $5.6 million gain in the third quarter 2009 on exchanging $250.0 million of 2036 convertible senior subordinated notes for a like amount of 2041 convertible senior subordinated notes and year-to-date 2009 also includes the $4.6 million gain in the first quarter of 2009 on retiring approximately $27.3 million of 2036 convertible senior subordinated notes.
(d)	Relates to the gain on the sale of ourHer Option® Global Endometrial Ablation product line in the first quarter of 2010 and the gain on sale of our Ovion female sterilization and technology assets in the third quarter of 2009.
(e)	Includes the tax effect of each of the above items in each of the periods.