American Medical Systems (AMMD) 8-K Women’s Health Revenues Grow 79 Percent

DATE: October 22, 2003

American Medical Systems
Reports 21% Sales Growth
for Third Quarter

Women’s Health Revenues
Grow 79 Percent

     MINNEAPOLIS, October 22 — American Medical Systems Holdings Inc. (Nasdaq: AMMD) reported sales in the third quarter of 2003 of $39.6 million, a 21 percent increase over sales of $32.8 million in the comparable quarter of 2002 (19 percent without gain from currency exchange rate changes). Net income in the quarter was $6.9 million, or $0.20 per share, up 28 percent from $5.4 million, or $0.16 per share, in the comparable quarter of 2002. Net income in the third quarter of 2003 included a non-recurring tax benefit which increased net income by $1.1 million or $0.03 per share. Without this tax benefit, net income for the quarter would have been $5.8 million or $0.17 per share.

     Sales in the nine months through September 2003 were $121.1 million, up 17 percent from sales of $103.8 million in 2002 (14 percent without gain from currency exchange rate changes). Net income in the nine months was $18.7 million, or $0.55 per share, up 13 percent from $16.6 million, or $0.48 per share in 2002. Net income in the first three quarters of 2002 benefited from a one-time gain with the company’s pension fund termination, without which 2002 net income would have been $16.1 million, or $0.47 per share. Net income in the first three quarters of 2003 benefited from the third quarter tax benefit of $1.1 million, without which 2003 net income would have been $17.6 million, or $0.52 per share. A summary of the adjustments is attached.

     Douglas W. Kohrs, president and CEO, commented, “We are proud of our sales performance and the progress we are making with our expanded range of women’s health offerings. We have returned the company to a 20 percent growth rate with third quarter revenue increasing in all major categories, led by women’s health products growing 79 percent over the comparable period last year.”

Outlook

     For the fourth quarter of 2003, AMS expects total revenues to be in the range of $45.0 to $47.0 million, a 19 to 24 percent increase over 2002. Operating margin as a percent of sales for the fourth quarter of 2003 is expected to be better than the first nine months of 2003 and lower than the fourth quarter of 2002.

Earnings Call Information

     American Medical Systems will host a conference call today at 5:00 p.m. eastern time to discuss its third quarter 2003 results. A live web cast of the call is available from the Company’s corporate website atwww.AmericanMedicalSystems.com and via replay two hours after the completion of the call.

American Medical Systems
October 22, 2003
Page 2 of 7

About American Medical Systems

     American Medical Systems, headquartered in Minnetonka, Minnesota, is a world leader in medical devices and procedures to treat erectile dysfunction (ED); other men’s health problems, (including incontinence, BPH, and stricture); and women’s health problems, including menorrhagia, incontinence, and other pelvic floor defects. Although not often life-threatening, 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 life expectancy, higher quality-of-life expectations, and greater awareness of new treatment alternatives. Physicians use American Medical Systems’ products to reduce or eliminate the incapacitating effects of these diseases, often through minimally invasive surgery. The company believes its products were used to treat 90,000 patients in 54 countries during the last 12 months. More information about the company and its products may be found at the company’s website: www.AmericanMedicalSystems.com.

Forward-Looking Statements

     Statements about the company’s future sales and financial results are forward-looking statements subject to risks and uncertainties including the timing and success of new product introductions, continued physician endorsement and use of the company’s products, competitor activities, changes in reimbursement rates, potential product recalls, and the integration of acquired businesses and product lines. These risks and uncertainties are more fully described in the company’s Annual Report on Form 10-K for the year ended December 28, 2002, and its other SEC filings. Actual results may differ materially from anticipated results.

Contact:	Doug Kohrs President and Chief Executive Officer 952-930-6118 Doug.Kohrs@AmericanMedicalSystems.com
	Jim Call Executive Vice President  and Chief Financial Officer 952-930-6238 Jim.Call@AmericanMedicalSystems.com

American Medical Systems
October 22, 2003
Page 3 of 7

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

		Three months through						Nine months through
		September						September
		2002			2003			2002			2003
Sales		$	32,771		$	39,559		$	103,816		$	121,130
Operating expenses
	Cost of goods sold		6,233			7,110			20,485			21,434
	Marketing and selling		11,277			15,245			37,195			47,026
	Research and development		2,696			3,739			8,727			11,013
	General and administrative		3,178			4,110			9,814			12,025
	Amortization of intangibles		939			1,150			2,817			3,254
	Total operating expenses		24,323			31,354			79,038			94,752
Operating income			8,448			8,205			24,778			26,378
Other income (expense)
	Royalty income		749			711			2,279			2,175
	Interest expense, net		(129	)		(128	)		(852	)		(1,310	)
	Other income (expense)		(204	)		113			962			434
	Total other income		416			696			2,389			1,299
Income before income taxes			8,864			8,901			27,167			27,677
Provision for income taxes			3,456			1,961			10,612			8,946
Net income		$	5,408		$	6,940		$	16,555		$	18,731
Net income per share
	Basic	$	0.17		$	0.21		$	0.51		$	0.57
	Diluted	$	0.16		$	0.20		$	0.48		$	0.55
Weighted average shares used in calculation
	Basic		32,321			32,974			32,155			32,773
	Diluted		34,205			34,455			34,230			34,193

American Medical Systems
October 22, 2003
Page 4 of 7

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

			December 28, 2002		September 27, 2003
Assets
	Current assets
		Cash and short-term investments	$	79,429	$	53,949
		Accounts receivable, net		27,208		29,823
		Inventories		13,475		18,688
		Deferred taxes and other current assets		5,697		6,812
		Total current assets		125,809		109,272
	Property, plant and equipment, net			21,328		24,505
	Goodwill and intangibles, net			96,298		123,283
	Deferred taxes and other assets			8,210		16,910
	Total assets		$	251,645	$	273,970
Liabilities and Stockholders’ Equity
	Current liabilities
		Accounts payable	$	3,000	$	3,966
		Accrued liabilities		19,523		21,125
		Current portion of notes payable		6,000		6,750
		Total current liabilities		28,523		31,841
	Long-term notes payable			18,000		12,886
	Other long-term liability			860		0
	Stockholders’ equity			204,262		229,243
	Total liabilities and stockholders’ equity		$	251,645	$	273,970

American Medical Systems
October 22, 2003
Page 5 of 7

American Medical Systems Holdings Inc.
Consolidated Statements of Cash Flow
(In thousands)

			Nine months through
			September
			2002			2003
Cash flows from operating activities
	Net income		$	16,555		$	18,731
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation		2,873			4,447
		Amortization of intangibles, including deferred financing costs		3,022			3,457
		Income tax benefit related to stock option plans		1,124			1,227
		Non-cash deferred compensation		136			108
		Stock-based compensation costs		9			21
		Change in net deferred taxes		1,264			822
		Changes in operating assets and liabilities		(7,498	)		(6,423	)
	Net cash provided by operating activities			17,485			22,390
Cash flows from investing activities
	Purchase of property, plant and equipment			($1,195	)		($3,202	)
	Purchases of businesses, net of cash acquired			0			(43,152	)
	Sales of investments, net of purchases			27,796			0
	Net cash provided by (used for) investing activities			26,601			(46,354	)
Cash flows from financing activities
	Issuance of common stock		$	1,936		$	2,064
	Payments on long-term debt			(3,546	)		(4,956	)
	Net cash used for financing activities			(1,610	)		(2,892	)
Effect of exchange rates				570			1,376
Net increase (decrease) in cash and cash equivalents			$	43,046			($25,480	)

American Medical Systems
October 22, 2003
Page 6 of 7

American Medical Systems Holdings Inc.
Selected Sales Information
(In thousands)

				Three months through				Nine months through
				September				September
				2002		2003		2002		2003
Sales
	Product line
		Erectile restoration		$	16,205	$	17,059	$	51,293	$	52,877
		Other men’s health
			Male urinary control		8,294		8,774		26,438		29,784
			Other		1,269		1,188		4,584		3,696
			Total		9,563		9,962		31,022		33,480
		Women’s health			7,003		12,538		21,501		34,773
		Total		$	32,771	$	39,559	$	103,816	$	121,130
	Geography
			United States	$	27,376	$	33,023	$	86,203	$	99,289
			Outside United States		5,395		6,536		17,613		21,841
			Total	$	32,771	$	39,559	$	103,816	$	121,130

American Medical Systems
October 22, 2003
Page 7 of 7

American Medical Systems Holdings Inc.
Adjustments to Operating Income, Net Income,
and Earnings Per Share for Consistent
Presentation from 2002 to 2003
(In thousands, except per share data)

			Three months through					Nine months through
			September					September
			2002		2003			2002			2003
Adjustments in Operating Income
	Reported operating income		$	8,448	$	8,205		$	24,778		$	26,378
	Add back operating loss for CryoGen			0		1,705			0			6,069
	Adjusted operating income			8,448		9,910			24,778			32,447
Adjustments in net income
	Reported net income			5,408		6,940			16,555			18,731
	Add back after tax loss for CryoGen
		Operating loss for CryoGen		0		1,705			0			6,069
		Tax impact		0		(648	)		0			(2,306	)
		Increase in net income		0		1,057			0			3,763
	Adjust for 2002 pension fund termination
		Pension accrual reversal		0		0			(716	)		0
		Tax impact		0		0			272			0
		Decrease in net income		0		0			(444	)		0
	Adjust for non-recurring tax benefit			0		(1,100	)		0			(1,100	)
	Total increase (decrease) in net income			0		(43	)		(444	)		2,663
	Adjusted net income		$	5,408	$	6,897		$	16,111		$	21,394
Net income per share
	Reported
		Basic	$	0.17	$	0.21		$	0.51		$	0.57
		Diluted	$	0.16	$	0.20		$	0.48		$	0.55
	Adjusted
		Basic	$	0.17	$	0.21		$	0.50		$	0.65
		Diluted	$	0.16	$	0.20		$	0.47		$	0.63