American Medical Systems Reports First-Quarter Gains in Sales and Earnings

Earning $1.4 Million Versus $200,000 Last Year;

Year 2001 Product Launches in Progress



Apr 19, 2001, 01:00 ET from American Medical Systems

    MINNEAPOLIS, April 19 /PRNewswire/ --
     American Medical Systems (Nasdaq:   AMMD), the leading independent
 manufacturer of urological surgical devices, reported net sales for the first
 quarter ended March 31, 2001, of $27.5 million, a 10.3 percent increase over
 sales of $25.0 million in the same quarter last year.  First-quarter 2001
 revenue gains would have been 11.5 percent if not offset by negative currency
 exchange rate fluctuations of approximately $308,000 compared to the 2000
 first quarter.  The company reported net income for the first quarter of
 $1.4 million, or $0.05 per share, a 571 percent increase over net income of
 $209,000 in the year-ago quarter.  First-quarter operating income increased
 56 percent from the year-ago quarter, and the first-quarter operating margin
 expanded to 9.5 percent versus 6.7 percent in the year-ago quarter.
 First-quarter earnings before interest, taxes and amortization (EBITA)
 increased 34 percent versus the year-ago quarter, representing 21.4 percent of
 sales versus 17.6 percent of sales in the year-ago quarter.
     (PHOTO:  http://www.newscom.com/cgi-bin/prnh/20000710/AMSLOGO )
     First-quarter revenue gains included a 19 percent rise in the company's
 line of incontinence products compared to the year-ago quarter.  Within this
 category, sling products for men and women showed a 53 percent increase from
 the first quarter of 2000.  Sales of erectile dysfunction products increased
 2 percent versus the prior-year period.  First-quarter sales of prostate
 disease products generated a 31 percent gain over the same quarter in 2000.
 Manufacturing problems at an outside supplier negatively affected sales of
 prostate disease products in the prior year.
     Douglas W. Kohrs, AMS president and CEO, commented:  "In the first
 quarter, we were especially pleased to see the strong growth in AMS'
 incontinence products, which affirms our strategy to broaden our product lines
 and focus on minimally invasive treatment options.  Incontinence product sales
 are now approaching erectile dysfunction sales, a notable shift in our product
 mix."
     AMS achieved a gross margin of 80.4 percent, which improved over both the
 77.1 percent gross margin in the year-ago period and the 79.5 percent in the
 fourth quarter of 2000.  Kohrs noted, "With our fixed-cost in-house
 manufacturing capabilities, we believe we can maintain our high gross margins
 as we launch new products."  These products, including the SPARC(TM) Sling
 System, ProstaJect(TM) Ethanol Injection System, Parylene(TM) Micro Coating
 and Inhibizone(TM) Antibiotic Treatment, are expected to begin generating
 revenues in the second quarter.  Marketing and sales expenses in the first
 quarter included costs associated with training programs and materials,
 promotional literature and advertising necessary to launch these new products.
     Interest expense was $1.0 million in the quarter, or $817,000 less than in
 the first quarter of 2000 as a result of significantly lower debt levels.  Net
 income also includes a non-recurring pretax payment to AMS of $375,000, or
 less than $0.01 per share.  This payment represented reimbursement to resolve
 a quality issue with a materials supplier dating back to the fourth quarter of
 1999.
 
     Product Development Update
     "AMS has recently announced product innovations in each of our three core
 product areas -- incontinence, erectile dysfunction and prostate disease,"
 added Kohrs.  "In 2001, we are on track to introduce several significant
 products.  Our investments in R&D over the past year are beginning to generate
 customer enthusiasm and revenues."
     At the European Association of Urology Annual Meeting in early April in
 Geneva, AMS exhibited the SPARC Sling System, which was developed in
 consultation with physicians.  This system is designed to offer a novel,
 minimally invasive surgical approach that may provide greater safety over
 current treatments for women with stress incontinence.  AMS is planning a
 staged rollout of the product in Europe in the second quarter, pending CE Mark
 approval.  In the United States, the company expects to make a 510(k)
 submission to the Food and Drug Administration (FDA) in the second quarter to
 request marketing clearance.
     The introduction of the TransFix Female Sling Fixation System, another
 option complementing the successful In-Fast(TM) Female Sling Fixation System,
 is now scheduled for the second quarter.
     The available supply of the Urogen(TM) Dermis Allogaft sling material,
 used in both male and female sling products, has improved but not yet filled
 supply lines.
     AMS is expecting FDA approval for an antibiotic coating for its penile
 implant products in the second quarter.  The innovative coating was developed
 by AMS to help reduce the risk of infection. The company recently received a
 Premarket Approval Supplement (PMAS) in the United States from the FDA for
 Parylene, a coating designed to strengthen and extend the service of the
 700(TM) Series inflatable penile implants.  In laboratory testing, Parylene
 has added millions of cycles in which the device's components were folded or
 stretched without detectable wear.  The U.S. launch of
 Parylene-coated products is planned for the second quarter.
     U.S. clinical trials have begun to evaluate safety and tolerability of the
 ProstaJect Ethanol Injection System, a new technology for the treatment of
 benign prostatic hyperplasia (BPH or enlarged prostate disease).  AMS expects
 to enroll 150 patients in the phase I and II study, and submit six-month
 patient data to the FDA in the first quarter of 2002.  ProstaJect has CE Mark
 approval and is on schedule for a launch in European markets in May 2001.
     In March, AMS launched a series of testicular prosthetic implants outside
 the United States.  These implants are designed for cosmetic use in men who
 have lost a testicle to cancer or through other traumatic or congenital
 defects.  Approximately 15,000 cases of testicular cancer are diagnosed
 annually worldwide.
 
     Outlook
     For the second quarter of 2001, Kohrs said AMS expects net sales in the
 range of $27.0 million to $28.5 million, with EBITA margin approximating the
 first-quarter rate.  For the full year 2001, management anticipates net sales
 growth of between 12 and 16 percent with EBITA margin improvement.  In
 addition to the risks and uncertainties described further below, the company's
 second-quarter 2001 sales are subject to specific risks regarding the
 availability of dermis supply and foreign currency fluctuations.
 
     Urological Disorders
     The three most prevalent urological disorders are male and female
 incontinence, erectile dysfunction and enlarged prostate disease.
 Approximately 60 million people in the United States suffer from one or more
 of these disorders.  An estimated 11 million of these people have a disorder
 severe enough to be candidates for treatment with AMS products.  Although not
 life-threatening, these disorders can diminish quality of life significantly.
 In recent years, the number of people seeking treatment has increased markedly
 as a result of greater awareness of new treatment alternatives, especially new
 drug therapies.
 
     About AMS
     American Medical Systems (AMS), headquartered in Minneapolis, is a medical
 technology company with 500 employees worldwide.  AMS products include a large
 portfolio of devices to treat both male and female incontinence, devices for
 the diagnosis and treatment of erectile dysfunction; devices for urethral
 obstruction caused by benign prostatic hyperplasia (BPH) or (enlarged prostate
 disease) and advanced surgical products used in transurethral resection of the
 prostate.  The company markets its products in more than 60 countries
 worldwide.  For more information about AMS, visit our Web site at
 http://www.visitAMS.com
 
     Except for historical information contained herein, the disclosures in
 this news release are forward-looking statements made under the Safe Harbor
 Provisions of the Private Securities Litigation Reform Act of 1995.  These
 forward-looking statements are subject to certain risks and uncertainties that
 could cause actual results to differ materially from those anticipated.  These
 risks and uncertainties include: continued use of non-invasive treatment
 alternatives; continued physician use and endorsement of the company's
 products; increased supply of sling material; increasing penetration of the
 penile implant market; successful introduction of new products and product
 improvements; actions related to reimbursement for the company's products and
 potential product recalls.  These risks and other relevant risks are described
 in more detail in the company's Annual Report on Form 10-K for the year ended
 December 31, 2000.
 
 
     AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
     STATEMENTS OF OPERATIONS
     (in thousands, except per share data)
     (Unaudited)
 
                                                        Three months ended
                                                              March 31,
                                                        2001           2000
 
     Net sales                                        $27,548        $24,986
     Cost of sales                                      5,397          5,730
 
       Gross profit                                    22,151         19,256
     Operating expenses:
       Marketing and sales                             11,409          9,864
       General and administrative                       2,726          2,694
       Research and development                         3,190          3,028
       Amortization of intangibles                      2,200          1,991
 
     Total operating expenses                          19,525         17,577
 
     Operating income                                   2,626          1,679
     Royalty and other income                           1,075            726
     Interest expense, net                             (1,027)        (1,844)
 
     Income before income taxes                         2,674            561
     Income tax expense                                (1,270)          (352)
 
     Net income                                        $1,404           $209
 
     Net income per share (a) --
       basic                                            $0.05
       diluted                                          $0.05
 
     Weighted average shares used in computation --
       basic                                           27,813
       diluted                                         29,892
 
     EBITA (b)                                         $5,901         $4,396
     EBITA as a percent of net sales                     21.4%          17.6%
 
 
     NOTES
     (a) No common shares were outstanding during 2000; therefore no net income
         per share is presented.
     (b) EBITA consists of net income excluding net interest, taxes and
         amortization of intangibles.
 
 
     AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
     CONDENSED CONSOLIDATED BALANCE SHEETS
     (In thousands, except per share data)
 
     Assets                                           March 31,    December 31,
                                                        2001           2000
     Current assets:                                 (Unaudited)
       Cash and cash equivalents                       $8,596        $12,165
       Accounts receivable, net                        23,596         23,616
       Inventories                                     10,108          9,674
       Deferred taxes and other current assets          3,485          6,050
         Total current assets                          45,785         51,505
 
     Property, plant and equipment, net                24,142         24,773
     Intangibles, net                                  98,504         97,731
     Deferred taxes and other assets                   12,890          7,253
 
         Total assets                                $181,321       $181,262
 
     Liabilities and Stockholders' Equity
 
     Current liabilities:
       Accounts payable                                $2,519         $2,431
       Accrued liabilities and taxes                   24,216         24,295
       Current portion of notes payable                 6,033          6,033
         Total current liabilities                     32,768         32,759
 
     Long-term notes payable                           36,951         38,459
     Minority interest                                    521            521
     Other long-term liability                          1,482             --
 
     Stockholders' equity                             109,599        109,523
 
         Total liabilities and stockholders' equity  $181,321       $181,262
 
 
     AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
     CONDENSED STATEMENTS OF CASH FLOWS
     (In thousands, except share data)
     (Unaudited)
 
                                                     For the three months ended
                                                             March 31,
                                                        2001            2000
     Cash flows from operating activities:
       Net income                                      $1,404           $209
       Adjustments to reconcile net loss to net
        cash provided by (used in) operating activities:
         Depreciation                                     947            919
         Amortization of intangibles, including
          deferred financing costs                      2,268          1,991
         Noncash pension charge                           278            355
         Noncash deferred compensation                    118             94
         Change in net deferred taxes                   1,577           (234)
         Changes in operating assets and liabilities   (1,781)        (3,667)
           Net cash provided by (used in)
            operating activities                        4,811           (333)
 
     Cash flows from investing activities:
       Purchase of property, plant and equipment         (316)          (988)
       Purchase of businesses, net of cash acquired    (3,041)        (2,472)
       Purchase of investments in technology           (4,500)            --
       Purchase of other intangibles                       --         (1,000)
         Net cash used in investing activities         (7,857)        (4,460)
 
     Cash flows from financing activities:
       Issuance of common stock                           343             --
       Net borrowings on long-term debt                (1,508)         2,800
         Net cash provided by (used in)
          financing activities                         (1,165)         2,800
 
     Effect of exchange rates                             642            159
 
     Net decrease in cash and cash equivalents        ($3,569)       ($1,834)
 
 

SOURCE American Medical Systems
    MINNEAPOLIS, April 19 /PRNewswire/ --
     American Medical Systems (Nasdaq:   AMMD), the leading independent
 manufacturer of urological surgical devices, reported net sales for the first
 quarter ended March 31, 2001, of $27.5 million, a 10.3 percent increase over
 sales of $25.0 million in the same quarter last year.  First-quarter 2001
 revenue gains would have been 11.5 percent if not offset by negative currency
 exchange rate fluctuations of approximately $308,000 compared to the 2000
 first quarter.  The company reported net income for the first quarter of
 $1.4 million, or $0.05 per share, a 571 percent increase over net income of
 $209,000 in the year-ago quarter.  First-quarter operating income increased
 56 percent from the year-ago quarter, and the first-quarter operating margin
 expanded to 9.5 percent versus 6.7 percent in the year-ago quarter.
 First-quarter earnings before interest, taxes and amortization (EBITA)
 increased 34 percent versus the year-ago quarter, representing 21.4 percent of
 sales versus 17.6 percent of sales in the year-ago quarter.
     (PHOTO:  http://www.newscom.com/cgi-bin/prnh/20000710/AMSLOGO )
     First-quarter revenue gains included a 19 percent rise in the company's
 line of incontinence products compared to the year-ago quarter.  Within this
 category, sling products for men and women showed a 53 percent increase from
 the first quarter of 2000.  Sales of erectile dysfunction products increased
 2 percent versus the prior-year period.  First-quarter sales of prostate
 disease products generated a 31 percent gain over the same quarter in 2000.
 Manufacturing problems at an outside supplier negatively affected sales of
 prostate disease products in the prior year.
     Douglas W. Kohrs, AMS president and CEO, commented:  "In the first
 quarter, we were especially pleased to see the strong growth in AMS'
 incontinence products, which affirms our strategy to broaden our product lines
 and focus on minimally invasive treatment options.  Incontinence product sales
 are now approaching erectile dysfunction sales, a notable shift in our product
 mix."
     AMS achieved a gross margin of 80.4 percent, which improved over both the
 77.1 percent gross margin in the year-ago period and the 79.5 percent in the
 fourth quarter of 2000.  Kohrs noted, "With our fixed-cost in-house
 manufacturing capabilities, we believe we can maintain our high gross margins
 as we launch new products."  These products, including the SPARC(TM) Sling
 System, ProstaJect(TM) Ethanol Injection System, Parylene(TM) Micro Coating
 and Inhibizone(TM) Antibiotic Treatment, are expected to begin generating
 revenues in the second quarter.  Marketing and sales expenses in the first
 quarter included costs associated with training programs and materials,
 promotional literature and advertising necessary to launch these new products.
     Interest expense was $1.0 million in the quarter, or $817,000 less than in
 the first quarter of 2000 as a result of significantly lower debt levels.  Net
 income also includes a non-recurring pretax payment to AMS of $375,000, or
 less than $0.01 per share.  This payment represented reimbursement to resolve
 a quality issue with a materials supplier dating back to the fourth quarter of
 1999.
 
     Product Development Update
     "AMS has recently announced product innovations in each of our three core
 product areas -- incontinence, erectile dysfunction and prostate disease,"
 added Kohrs.  "In 2001, we are on track to introduce several significant
 products.  Our investments in R&D over the past year are beginning to generate
 customer enthusiasm and revenues."
     At the European Association of Urology Annual Meeting in early April in
 Geneva, AMS exhibited the SPARC Sling System, which was developed in
 consultation with physicians.  This system is designed to offer a novel,
 minimally invasive surgical approach that may provide greater safety over
 current treatments for women with stress incontinence.  AMS is planning a
 staged rollout of the product in Europe in the second quarter, pending CE Mark
 approval.  In the United States, the company expects to make a 510(k)
 submission to the Food and Drug Administration (FDA) in the second quarter to
 request marketing clearance.
     The introduction of the TransFix Female Sling Fixation System, another
 option complementing the successful In-Fast(TM) Female Sling Fixation System,
 is now scheduled for the second quarter.
     The available supply of the Urogen(TM) Dermis Allogaft sling material,
 used in both male and female sling products, has improved but not yet filled
 supply lines.
     AMS is expecting FDA approval for an antibiotic coating for its penile
 implant products in the second quarter.  The innovative coating was developed
 by AMS to help reduce the risk of infection. The company recently received a
 Premarket Approval Supplement (PMAS) in the United States from the FDA for
 Parylene, a coating designed to strengthen and extend the service of the
 700(TM) Series inflatable penile implants.  In laboratory testing, Parylene
 has added millions of cycles in which the device's components were folded or
 stretched without detectable wear.  The U.S. launch of
 Parylene-coated products is planned for the second quarter.
     U.S. clinical trials have begun to evaluate safety and tolerability of the
 ProstaJect Ethanol Injection System, a new technology for the treatment of
 benign prostatic hyperplasia (BPH or enlarged prostate disease).  AMS expects
 to enroll 150 patients in the phase I and II study, and submit six-month
 patient data to the FDA in the first quarter of 2002.  ProstaJect has CE Mark
 approval and is on schedule for a launch in European markets in May 2001.
     In March, AMS launched a series of testicular prosthetic implants outside
 the United States.  These implants are designed for cosmetic use in men who
 have lost a testicle to cancer or through other traumatic or congenital
 defects.  Approximately 15,000 cases of testicular cancer are diagnosed
 annually worldwide.
 
     Outlook
     For the second quarter of 2001, Kohrs said AMS expects net sales in the
 range of $27.0 million to $28.5 million, with EBITA margin approximating the
 first-quarter rate.  For the full year 2001, management anticipates net sales
 growth of between 12 and 16 percent with EBITA margin improvement.  In
 addition to the risks and uncertainties described further below, the company's
 second-quarter 2001 sales are subject to specific risks regarding the
 availability of dermis supply and foreign currency fluctuations.
 
     Urological Disorders
     The three most prevalent urological disorders are male and female
 incontinence, erectile dysfunction and enlarged prostate disease.
 Approximately 60 million people in the United States suffer from one or more
 of these disorders.  An estimated 11 million of these people have a disorder
 severe enough to be candidates for treatment with AMS products.  Although not
 life-threatening, these disorders can diminish quality of life significantly.
 In recent years, the number of people seeking treatment has increased markedly
 as a result of greater awareness of new treatment alternatives, especially new
 drug therapies.
 
     About AMS
     American Medical Systems (AMS), headquartered in Minneapolis, is a medical
 technology company with 500 employees worldwide.  AMS products include a large
 portfolio of devices to treat both male and female incontinence, devices for
 the diagnosis and treatment of erectile dysfunction; devices for urethral
 obstruction caused by benign prostatic hyperplasia (BPH) or (enlarged prostate
 disease) and advanced surgical products used in transurethral resection of the
 prostate.  The company markets its products in more than 60 countries
 worldwide.  For more information about AMS, visit our Web site at
 http://www.visitAMS.com
 
     Except for historical information contained herein, the disclosures in
 this news release are forward-looking statements made under the Safe Harbor
 Provisions of the Private Securities Litigation Reform Act of 1995.  These
 forward-looking statements are subject to certain risks and uncertainties that
 could cause actual results to differ materially from those anticipated.  These
 risks and uncertainties include: continued use of non-invasive treatment
 alternatives; continued physician use and endorsement of the company's
 products; increased supply of sling material; increasing penetration of the
 penile implant market; successful introduction of new products and product
 improvements; actions related to reimbursement for the company's products and
 potential product recalls.  These risks and other relevant risks are described
 in more detail in the company's Annual Report on Form 10-K for the year ended
 December 31, 2000.
 
 
     AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
     STATEMENTS OF OPERATIONS
     (in thousands, except per share data)
     (Unaudited)
 
                                                        Three months ended
                                                              March 31,
                                                        2001           2000
 
     Net sales                                        $27,548        $24,986
     Cost of sales                                      5,397          5,730
 
       Gross profit                                    22,151         19,256
     Operating expenses:
       Marketing and sales                             11,409          9,864
       General and administrative                       2,726          2,694
       Research and development                         3,190          3,028
       Amortization of intangibles                      2,200          1,991
 
     Total operating expenses                          19,525         17,577
 
     Operating income                                   2,626          1,679
     Royalty and other income                           1,075            726
     Interest expense, net                             (1,027)        (1,844)
 
     Income before income taxes                         2,674            561
     Income tax expense                                (1,270)          (352)
 
     Net income                                        $1,404           $209
 
     Net income per share (a) --
       basic                                            $0.05
       diluted                                          $0.05
 
     Weighted average shares used in computation --
       basic                                           27,813
       diluted                                         29,892
 
     EBITA (b)                                         $5,901         $4,396
     EBITA as a percent of net sales                     21.4%          17.6%
 
 
     NOTES
     (a) No common shares were outstanding during 2000; therefore no net income
         per share is presented.
     (b) EBITA consists of net income excluding net interest, taxes and
         amortization of intangibles.
 
 
     AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
     CONDENSED CONSOLIDATED BALANCE SHEETS
     (In thousands, except per share data)
 
     Assets                                           March 31,    December 31,
                                                        2001           2000
     Current assets:                                 (Unaudited)
       Cash and cash equivalents                       $8,596        $12,165
       Accounts receivable, net                        23,596         23,616
       Inventories                                     10,108          9,674
       Deferred taxes and other current assets          3,485          6,050
         Total current assets                          45,785         51,505
 
     Property, plant and equipment, net                24,142         24,773
     Intangibles, net                                  98,504         97,731
     Deferred taxes and other assets                   12,890          7,253
 
         Total assets                                $181,321       $181,262
 
     Liabilities and Stockholders' Equity
 
     Current liabilities:
       Accounts payable                                $2,519         $2,431
       Accrued liabilities and taxes                   24,216         24,295
       Current portion of notes payable                 6,033          6,033
         Total current liabilities                     32,768         32,759
 
     Long-term notes payable                           36,951         38,459
     Minority interest                                    521            521
     Other long-term liability                          1,482             --
 
     Stockholders' equity                             109,599        109,523
 
         Total liabilities and stockholders' equity  $181,321       $181,262
 
 
     AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
     CONDENSED STATEMENTS OF CASH FLOWS
     (In thousands, except share data)
     (Unaudited)
 
                                                     For the three months ended
                                                             March 31,
                                                        2001            2000
     Cash flows from operating activities:
       Net income                                      $1,404           $209
       Adjustments to reconcile net loss to net
        cash provided by (used in) operating activities:
         Depreciation                                     947            919
         Amortization of intangibles, including
          deferred financing costs                      2,268          1,991
         Noncash pension charge                           278            355
         Noncash deferred compensation                    118             94
         Change in net deferred taxes                   1,577           (234)
         Changes in operating assets and liabilities   (1,781)        (3,667)
           Net cash provided by (used in)
            operating activities                        4,811           (333)
 
     Cash flows from investing activities:
       Purchase of property, plant and equipment         (316)          (988)
       Purchase of businesses, net of cash acquired    (3,041)        (2,472)
       Purchase of investments in technology           (4,500)            --
       Purchase of other intangibles                       --         (1,000)
         Net cash used in investing activities         (7,857)        (4,460)
 
     Cash flows from financing activities:
       Issuance of common stock                           343             --
       Net borrowings on long-term debt                (1,508)         2,800
         Net cash provided by (used in)
          financing activities                         (1,165)         2,800
 
     Effect of exchange rates                             642            159
 
     Net decrease in cash and cash equivalents        ($3,569)       ($1,834)
 
 SOURCE  American Medical Systems