UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For
the quarterly period ended June 28, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For
the transition period from
 to
 Commission File Number: 00030733
 AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
 
 Delaware
    
    41-1978822(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 10700 Bren Road West, Minnetonka, Minnesota
    
    55343(Address of principal executive offices)
    
    (Zip Code)
 952-930-6000
 
  þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ




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##### 



INDEX
 PagePART I FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS (UNAUDITED)Consolidated Statements of Operations for the
three and six month periods ended June 28, 2008
and June 30, 2007
    
    
    3Consolidated Balance Sheets as of June 28, 2008 and
December 29, 2007
    
    
    4Consolidated Statements of Cash Flow for the six
month periods ended June 28, 2008 and June 30,
2007
    
    
    5Notes to Consolidated Financial Statements
    
    
    6ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    26ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    39ITEM 4. CONTROLS AND PROCEDURES
    
    
    39PART II OTHER INFORMATIONITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    40ITEM 6. EXHIBITS
    
    
    40SIGNATURES
    
    
    41EXHIBIT INDEX
    
    
    42
  2




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##### 



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 American Medical Systems Holdings, Inc.
 
 Consolidated Statements of Operations
   Three Months Ended
    
    
    Six Months EndedJune 28, 2008
    
    
    June 30, 2007
    
    
    June 28, 2008
    
    
    June 30, 2007Net sales
    
    $
    129,797
    
    
    $
    116,453
    
    
    $
    250,159
    
    
    $
    224,838Cost of sales
    
    
    29,185
    
    
    
    27,129
    
    
    
    58,175
    
    
    
    53,484Gross profit
    
    
    100,612
    
    
    
    89,324
    
    
    
    191,984
    
    
    
    171,354Operating expensesMarketing and selling
    
    
    46,301
    
    
    
    41,694
    
    
    
    91,382
    
    
    
    81,124Research and development
    
    
    11,366
    
    
    
    10,979
    
    
    
    22,666
    
    
    
    22,129General and administrative
    
    
    10,552
    
    
    
    10,587
    
    
    
    20,707
    
    
    
    21,576Integration costs
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    1,103Amortization of intangibles
    
    
    4,300
    
    
    
    4,749
    
    
    
    8,647
    
    
    
    9,453Total operating expenses
    
    
    72,519
    
    
    
    68,101
    
    
    
    143,402
    
    
    
    135,385Operating income
    
    
    28,093
    
    
    
    21,223
    
    
    
    48,582
    
    
    
    35,969Other (expense) incomeRoyalty income
    
    
    2,476
    
    
    
    503
    
    
    
    2,831
    
    
    
    1,182Interest income
    
    
    157
    
    
    
    293
    
    
    
    352
    
    
    
    629Interest expense
    
    
    (6,819
    )
    
    
    (9,588
    )
    
    
    (14,876
    )
    
    
    (19,221
    )Amortization of financing costs
    
    
    (1,429
    )
    
    
    (755
    )
    
    
    (2,139
    )
    
    
    (1,537
    )Other income
    
    
    585
    
    
    
    351
    
    
    
    1,930
    
    
    
    1,974Total other (expense) income
    
    
    (5,030
    )
    
    
    (9,196
    )
    
    
    (11,902
    )
    
    
    (16,973
    )Income from continuing operations before income taxes
    
    
    23,063
    
    
    
    12,027
    
    
    
    36,680
    
    
    
    18,996Provision for income taxes
    
    
    9,069
    
    
    
    4,701
    
    
    
    14,475
    
    
    
    7,287Net income from continuing operations
    
    
    13,994
    
    
    
    7,326
    
    
    
    22,205
    
    
    
    11,709Loss from discontinued operations, net of tax benefit of $0.4 million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (691
    )Net income
    
    $
    13,994
    
    
    $
    7,326
    
    
    $
    22,205
    
    
    $
    11,018Net income (loss) per shareBasic net income from continuing operations
    
    $
    0.19
    
    
    $
    0.10
    
    
    $
    0.31
    
    
    $
    0.16Discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )Basic net income
    
    $
    0.19
    
    
    $
    0.10
    
    
    $
    0.31
    
    
    $
    0.15Diluted net income from continuing operations
    
    $
    0.19
    
    
    $
    0.10
    
    
    $
    0.30
    
    
    $
    0.16Discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )Diluted net income
    
    $
    0.19
    
    
    $
    0.10
    
    
    $
    0.30
    
    
    $
    0.15Weighted average common shares used in calculationBasic
    
    
    72,814
    
    
    
    72,061
    
    
    
    72,645
    
    
    
    71,921Diluted
    
    
    73,928
    
    
    
    73,593
    
    
    
    73,718
    
    
    
    73,536
 The accompanying notes are an integral part of the consolidated financial statements.
 3




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##### 



American
Medical Systems Holdings, Inc.
 
 Consolidated Balance Sheets
  June 28, 2008
    
    
    December 29, 2007(Unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    26,195
    
    
    $
    34,044Short term investments
    
    
    16,181
    
    
    
    1,137Accounts receivable, net
    
    
    105,326
    
    
    
    106,457Inventories, net
    
    
    47,335
    
    
    
    60,707Deferred income taxes
    
    
    11,999
    
    
    
    13,105Other current assets
    
    
    5,383
    
    
    
    9,935Total current assets
    
    
    212,419
    
    
    
    225,385Property, plant and equipment, net
    
    
    51,560
    
    
    
    53,126Goodwill
    
    
    691,580
    
    
    
    690,478Developed and core technology, net
    
    
    86,944
    
    
    
    94,452Other intangibles, net
    
    
    48,353
    
    
    
    49,337Other long-term assets, net
    
    
    1,898
    
    
    
    3,655Total assets
    
    $
    1,092,754
    
    
    $
    1,116,433Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    9,788
    
    
    $
    13,364Accrued compensation expenses
    
    
    19,315
    
    
    
    19,258Accrued warranty expense
    
    
    3,598
    
    
    
    3,001Other accrued expenses
    
    
    26,569
    
    
    
    46,464Total current liabilities
    
    
    59,270
    
    
    
    82,087Long-term debt
    
    
    627,443
    
    
    
    666,234Deferred income taxes
    
    
    26,449
    
    
    
    23,333Long-term income taxes payable
    
    
    13,856
    
    
    
    13,414Long-term employee benefit obligations
    
    
    3,175
    
    
    
    3,175Total liabilities
    
    
    730,193
    
    
    
    788,243Stockholders equityCommon stock, par value $.01 per share; authorized 200,000,000 shares;
issued and outstanding: 72,895,138 shares at June 28, 2008 and
72,258,512 shares at December 29, 2007
    
    
    729
    
    
    
    723Additional paid-in capital
    
    
    294,175
    
    
    
    284,751Accumulated other comprehensive income
    
    
    9,647
    
    
    
    6,910Retained earnings
    
    
    58,010
    
    
    
    35,806Total stockholders equity
    
    
    362,561
    
    
    
    328,190Total liabilities and stockholders equity
    
    $
    1,092,754
    
    
    $
    1,116,433
 The accompanying notes are an integral part of the consolidated financial statements.
 4




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##### 



American Medical Systems Holdings, Inc.
 
 Consolidated Statements of Cash Flow
   Six Months EndedJune 28, 2008
    
    
    June 30, 2007Cash flows from operating activitiesNet income
    
    $
    22,205
    
    
    $
    11,018Net loss from discontinued operations
    
    
    
    
    
    
    (691
    )Net income from continuing operations
    
    
    22,205
    
    
    
    11,709Adjustments to reconcile net income from continuing operations to net cash
provided by operating activitiesDepreciation
    
    
    4,764
    
    
    
    3,966(Gain) loss on asset disposals
    
    
    53
    
    
    
    (15
    )Amortization of intangibles
    
    
    8,647
    
    
    
    9,453Amortization of financing costs
    
    
    2,139
    
    
    
    1,537Non-cash impairment of available-for-sale
securities
    
    
    843
    
    
    
    Excess tax benefit from excercise of stock options
    
    
    (1,045
    )
    
    
    (178
    )Tax benefit on exercised stock option arrangements
    
    
    1,104
    
    
    
    715Change in net deferred income taxes
    
    
    5,064
    
    
    
    462Stock based compensation
    
    
    4,611
    
    
    
    5,766Changes in operating assets and liabilities:Accounts receivable
    
    
    3,071
    
    
    
    (6,980
    )Inventories
    
    
    13,632
    
    
    
    (14,039
    )Accounts payable and accrued expenses
    
    
    (20,456
    )
    
    
    (13,697
    )Other assets
    
    
    1,869
    
    
    
    14,872Net cash provided by operating activities
    
    
    46,501
    
    
    
    13,571Cash flows from investing activitiesPurchase of property, plant and equipment
    
    
    (3,148
    )
    
    
    (12,456
    )Purchase of business, net of cash acquired
    
    
    
    
    
    
    (781
    )Disposal of business
    
    
    3,330
    
    
    
    21,676Purchase of other intangibles
    
    
    (1,167
    )
    
    
    (263
    )Purchase of short-term investments
    
    
    (15,066
    )
    
    
    (137
    )Sale of short-term investments
    
    
    73
    
    
    
    10Net cash (used in) provided by investing activities
    
    
    (15,978
    )
    
    
    8,049Cash flows from financing activitiesIssuance of common stock
    
    
    3,748
    
    
    
    8,913Excess tax benefit from exercise of stock options
    
    
    1,045
    
    
    
    178Payments on long-term debt
    
    
    (41,718
    )
    
    
    (28,123
    )Proceeds from short-term borrowings
    
    
    12,000
    
    
    
    Repayments of short-term borrowings
    
    
    (12,000
    )
    
    
    Net cash used in financing activities
    
    
    (36,925
    )
    
    
    (19,032
    )Cash (used in) provided by continuing operations
    
    
    (6,402
    )
    
    
    2,588Cash used in discontinued operationsOperating activities
    
    
    
    
    
    
    (691
    )Cash used in discontinued operations
    
    
    
    
    
    
    (691
    )Effect of currency exchange rates on cash
    
    
    (1,447
    )
    
    
    (152
    )Net (decrease) increase in cash and cash equivalents
    
    
    (7,849
    )
    
    
    1,745Cash and cash equivalents at beginning of period
    
    
    34,044
    
    
    
    29,051Cash and cash equivalents at end of period
    
    $
    26,195
    
    
    $
    30,796Supplemental disclosureCash paid for interest
    
    $
    17,996
    
    
    $
    19,835Cash paid (refunded) for taxes
    
    $
    1,990
    
    
    $
    (11,705
    )Stock issued to settle contingent liabilities under InnovaQuartz purchase agreement
    
    $
    
    
    
    $
    7,371
 The accompanying notes are an integral part of the consolidated financial statements.
 5




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##### 



AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. Basis of Presentation
     NOTE 2. Discontinued Operations and Sale of Aesthetics Business
    Accounting for Certain Investments in
Debt
 6




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##### 



and Equity Securities,
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Period fromDecember 31, 2006(in thousands)
    
    to January 16, 2007Net sales
    
    $
    515Loss from discontinued operations before income taxes
    
    
    (1,075
    )Income tax benefit
    
    
    384Loss from discontinued operations, net of taxes
    
    $
    (691
    )
 Allocation of Interest to Discontinued Operations
 Applying the Conditions in Paragraph 42 of FASB Statement No. 144 in Determining Whether to
Report Discontinued Operations
 NOTE 3. Restructuring Costs
   7




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##### 



Recognition of
Liabilities in Connection with a Purchase Business Combination
  Restructuring
    
    
    
    
    
    
    
    
    
    
    RestructuringLiability as of
    
    
    Adjustment to
    
    
    Cash Payments /
    
    
    Liability as of(in thousands)
    
    December 29, 2007
    
    
    Liability
    
    
    Settlements
    
    
    June 28, 2008Severance and benefits
    
    $
    216
    
    
    $
    
    
    
    $
    (162
    )
    
    $
    54Contract terminations and other
    
    
    3,904
    
    
    
    1,062
    
    
    
    (4,869
    )
    
    
    97Total restructuring
    
    $
    4,120
    
    
    $
    1,062
    
    
    $
    (5,031
    )
    
    $
    151
 Integration Costs
  NOTE 4. Stock-Based Compensation
  Three Months Ended
    
    
    Six Months Ended(in thousands)
    
    June 28, 2008
    
    
    June 30, 2007
    
    
    June 28, 2008
    
    
    June 30, 2007Cost of sales
    
    $
    646
    
    
    $
    112
    
    
    $
    1,003
    
    
    $
    776Marketing and selling
    
    
    847
    
    
    
    937
    
    
    
    1,691
    
    
    
    2,084Research and development
    
    
    558
    
    
    
    615
    
    
    
    1,116
    
    
    
    1,403General and administrative
    
    
    435
    
    
    
    1,066
    
    
    
    801
    
    
    
    1,503Total stock-based compensation expense
    
    $
    2,486
    
    
    $
    2,730
    
    
    $
    4,611
    
    
    $
    5,766
    Weighted average
    
    
    AggregateOptions
    
    
    exercise price
    
    
    Intrinsicoutstanding
    
    
    per share
    
    
    Value(in thousands)Balance at December 29, 2007
    
    
    7,587,892
    
    
    $
    14.82Granted
    
    
    1,333,540
    
    
    
    14.37Exercised
    
    
    (462,164
    )
    
    
    4.89Cancelled or expired
    
    
    (511,517
    )
    
    
    19.47Balance at June 28, 2008
    
    
    7,947,751
    
    
    $
    15.02
    
    
    $
    16,014Options exercisable at June 28, 2008
    
    
    4,834,614
    
    
    $
    13.95
    
    
    $
    14,838
 8




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##### 



NOTE 5. Earnings per Share
  Three Months Ended
    
    
    Six Months Ended(in thousands, except per share data)
    
    June 28, 2008
    
    
    June 30, 2007
    
    
    June 28, 2008
    
    
    June 30, 2007Net income from continuing operations
    
    $
    13,994
    
    
    $
    7,326
    
    
    $
    22,205
    
    
    $
    11,709Weighted-average shares outstanding for basic net income per share
    
    
    72,814
    
    
    
    72,061
    
    
    
    72,645
    
    
    
    71,921Dilutive effect of stock options and restricted shares
    
    
    1,114
    
    
    
    1,532
    
    
    
    1,073
    
    
    
    1,615Adjusted weighted-average shares outstanding for diluted net
income per share
    
    
    73,928
    
    
    
    73,593
    
    
    
    73,718
    
    
    
    73,536Net income per shareBasic net income from continuing operations
    
    $
    0.19
    
    
    $
    0.10
    
    
    $
    0.31
    
    
    $
    0.16Diluted net income from continuing operations
    
    $
    0.19
    
    
    $
    0.10
    
    
    $
    0.30
    
    
    $
    0.16
  NOTE 6. Inventories
  (in thousands)
    
    June 28, 2008
    
    
    December 29, 2007Raw materials
    
    $
    14,775
    
    
    $
    21,335Work in process
    
    
    4,943
    
    
    
    7,587Finished goods
    
    
    32,472
    
    
    
    34,673Obsolescence reserve
    
    
    (4,855
    )
    
    
    (2,888
    )Net inventories
    
    $
    47,335
    
    
    $
    60,707
 NOTE 7. Warranties
   Three Months Ended
    
    
    Six Months Ended(in thousands)
    
    June 28, 2008
    
    
    June 30, 2007
    
    
    June 28, 2008
    
    
    June 30, 2007Balance, beginning of period
    
    $
    3,554
    
    
    $
    2,899
    
    
    $
    3,001
    
    
    $
    2,715Provisions for warranty
    
    
    1,597
    
    
    
    1,641
    
    
    
    3,734
    
    
    
    2,514Claims processed
    
    
    (1,553
    )
    
    
    (1,732
    )
    
    
    (3,137
    )
    
    
    (2,421
    )Balance, end of period
    
    $
    3,598
    
    
    $
    2,808
    
    
    $
    3,598
    
    
    $
    2,808
 9




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##### 



NOTE 8. Comprehensive Income
  Three Months Ended
    
    
    Six Months Ended(in thousands)
    
    June 28, 2008
    
    
    June 30, 2007
    
    
    June 28, 2008
    
    
    June 30, 2007Net income
    
    $
    13,994
    
    
    $
    7,326
    
    
    $
    22,205
    
    
    $
    11,018Foreign currency translation (loss) gain, net of taxes
    
    
    (191
    )
    
    
    614
    
    
    
    1,793
    
    
    
    1,242Recognition of previously unrealized losses on
available-for-sale securities, net of taxes
    
    
    
    
    
    
    
    
    
    
    433
    
    
    
    Unrealized gains on available-for-sale securities, net of taxes
    
    
    108
    
    
    
    
    
    
    
    108
    
    
    
    Unrealized gain on interest rate swap, net of taxes
    
    
    620
    
    
    
    
    
    
    
    403
    
    
    
    Comprehensive income
    
    $
    14,531
    
    
    $
    7,940
    
    
    $
    24,942
    
    
    $
    12,260
 NOTE 9. Goodwill and Intangible Assets
  Six Months Ended(in thousands)
    
    June 28, 2008Goodwill, beginning of the period
    
    $
    690,478Effect of currency translation
    
    
    1,102Goodwill, end of the period
    
    $
    691,580
  June 28, 2008
    
    
    December 29, 2007Gross carrying
    
    
    Accumulated
    
    
    Net book
    
    
    Gross carrying
    
    
    Accumulated
    
    
    Net book(in thousands)
    
    amount
    
    
    amortization
    
    
    value
    
    
    amount
    
    
    amortization
    
    
    valueDeveloped and core technology
    
    $
    137,553
    
    
    $
    (50,609
    )
    
    $
    86,944
    
    
    $
    137,553
    
    
    $
    (43,101
    )
    
    $
    94,452Other intangiblesAmortizedPatents
    
    
    11,440
    
    
    
    (9,128
    )
    
    
    2,312
    
    
    
    11,325
    
    
    
    (8,964
    )
    
    
    2,361Licenses
    
    
    9,198
    
    
    
    (7,070
    )
    
    
    2,128
    
    
    
    9,158
    
    
    
    (6,507
    )
    
    
    2,651Royalty agreement
    
    
    2,970
    
    
    
    (958
    )
    
    
    2,012
    
    
    
    2,970
    
    
    
    (767
    )
    
    
    2,203Trademarks
    
    
    2,208
    
    
    
    (1,107
    )
    
    
    1,101
    
    
    
    2,208
    
    
    
    (886
    )
    
    
    1,322Total amortized other
intangible assets
    
    
    25,816
    
    
    
    (18,263
    )
    
    
    7,553
    
    
    
    25,661
    
    
    
    (17,124
    )
    
    
    8,537UnamortizedTrademarks
    
    
    40,800
    
    
    
    
    
    
    
    40,800
    
    
    
    40,800
    
    
    
    
    
    
    
    40,800Total other intangibles
    
    
    66,616
    
    
    
    (18,263
    )
    
    
    48,353
    
    
    
    66,461
    
    
    
    (17,124
    )
    
    
    49,337Total intangible assets
    
    $
    204,169
    
    
    $
    (68,872
    )
    
    $
    135,297
    
    
    $
    204,014
    
    
    $
    (60,225
    )
    
    $
    143,789
 Three Months Ended
    
    
    Six Months Ended(in thousands)
    
    June 28, 2008
    
    
    June 30, 2007
    
    
    June 28, 2008
    
    
    June 30, 2007Amortization expense
    
    $
    4,300
    
    
    $
    4,749
    
    
    $
    8,647
    
    
    $
    9,453
  NOTE 10. Litigation Settlements
  10




---



##### 



Her Option ®
 NOTE 11. Debt
 Senior Secured Credit Facility
  Note 10, Litigation Settlements
     11




---



##### 



Amendment of Credit Facility
  Convertible Senior Subordinated Notes; Supplemental Guarantor Information
      12




---



##### 



13




---



##### 



American Medical Systems Holdings, Inc.
Notes to Consolidated Financial Statements  (Continued)
Condensed Consolidating Statement of Operations
 Three Months Ended June 28, 2008AmericanMedical
    
    
    
    
    
    
    Non-Systems
    
    
    Guarantor
    
    
    Guarantor
    
    
    
    
    
    
    ConsolidatedHoldings, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    
    
    
    $
    116,693
    
    
    $
    31,097
    
    
    $
    (17,993
    )
    
    $
    129,797Cost of sales
    
    
    
    
    
    
    28,482
    
    
    
    19,081
    
    
    
    (18,378
    )
    
    
    29,185Gross profit
    
    
    
    
    
    
    88,211
    
    
    
    12,016
    
    
    
    385
    
    
    
    100,612Operating expensesMarketing and selling
    
    
    
    
    
    
    36,217
    
    
    
    10,084
    
    
    
    
    
    
    
    46,301Research and development
    
    
    
    
    
    
    11,366
    
    
    
    
    
    
    
    
    
    
    
    11,366General and administrative
    
    
    
    
    
    
    10,552
    
    
    
    
    
    
    
    
    
    
    
    10,552Amortization of intangibles
    
    
    
    
    
    
    3,430
    
    
    
    870
    
    
    
    
    
    
    
    4,300Total operating expenses
    
    
    
    
    
    
    61,565
    
    
    
    10,954
    
    
    
    
    
    
    
    72,519Operating income
    
    
    
    
    
    
    26,646
    
    
    
    1,062
    
    
    
    385
    
    
    
    28,093Other (expense) incomeRoyalty income
    
    
    
    
    
    
    976
    
    
    
    1,500
    
    
    
    
    
    
    
    2,476Interest income
    
    
    
    
    
    
    232
    
    
    
    21
    
    
    
    (96
    )
    
    
    157Interest expense
    
    
    (3,037
    )
    
    
    (3,777
    )
    
    
    (101
    )
    
    
    96
    
    
    
    (6,819
    )Amortization of financing costs
    
    
    (105
    )
    
    
    (1,324
    )
    
    
    
    
    
    
    
    
    
    
    (1,429
    )Other income (expense)
    
    
    
    
    
    
    647
    
    
    
    (53
    )
    
    
    (9
    )
    
    
    585Total other (expense) income
    
    
    (3,142
    )
    
    
    (3,246
    )
    
    
    1,367
    
    
    
    (9
    )
    
    
    (5,030
    )(Loss) income before income taxes
    
    
    (3,142
    )
    
    
    23,400
    
    
    
    2,429
    
    
    
    376
    
    
    
    23,063Provision for income taxes
    
    
    (994
    )
    
    
    9,177
    
    
    
    768
    
    
    
    118
    
    
    
    9,069Equity in earnings of subsidiary
    
    
    15,884
    
    
    
    1,661
    
    
    
    
    
    
    
    (17,545
    )
    
    
    Net income
    
    $
    13,736
    
    
    $
    15,884
    
    
    $
    1,661
    
    
    $
    (17,287
    )
    
    $
    13,994
 14




---



##### 



American Medical Systems Holdings, Inc.
Notes to Consolidated Financial Statements  (Continued)
Condensed Consolidating Statement of Operations
 Six Months Ended June 28, 2008AmericanMedical
    
    
    
    
    
    
    Non-Systems
    
    
    Guarantor
    
    
    Guarantor
    
    
    
    
    
    
    ConsolidatedHoldings, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    
    
    
    $
    226,485
    
    
    $
    58,835
    
    
    $
    (35,161
    )
    
    $
    250,159Cost of sales
    
    
    
    
    
    
    57,178
    
    
    
    36,081
    
    
    
    (35,084
    )
    
    
    58,175Gross profit
    
    
    
    
    
    
    169,307
    
    
    
    22,754
    
    
    
    (77
    )
    
    
    191,984Operating expensesMarketing and selling
    
    
    
    
    
    
    70,164
    
    
    
    21,218
    
    
    
    
    
    
    
    91,382Research and development
    
    
    
    
    
    
    22,666
    
    
    
    
    
    
    
    
    
    
    
    22,666General and administrative
    
    
    
    
    
    
    20,706
    
    
    
    1
    
    
    
    
    
    
    
    20,707Amortization of intangibles
    
    
    
    
    
    
    6,907
    
    
    
    1,740
    
    
    
    
    
    
    
    8,647Total operating expenses
    
    
    
    
    
    
    120,443
    
    
    
    22,959
    
    
    
    
    
    
    
    143,402Operating income
    
    
    
    
    
    
    48,864
    
    
    
    (205
    )
    
    
    (77
    )
    
    
    48,582Other (expense) incomeRoyalty income
    
    
    
    
    
    
    1,331
    
    
    
    1,500
    
    
    
    
    
    
    
    2,831Interest income
    
    
    
    
    
    
    1,041
    
    
    
    33
    
    
    
    (722
    )
    
    
    352Interest expense
    
    
    (6,074
    )
    
    
    (8,792
    )
    
    
    (732
    )
    
    
    722
    
    
    
    (14,876
    )Amortization of financing costs
    
    
    (209
    )
    
    
    (1,930
    )
    
    
    
    
    
    
    
    
    
    
    (2,139
    )Other income (expense)
    
    
    
    
    
    
    1,944
    
    
    
    (39
    )
    
    
    25
    
    
    
    1,930Total other (expense) income
    
    
    (6,283
    )
    
    
    (6,406
    )
    
    
    762
    
    
    
    25
    
    
    
    (11,902
    )(Loss) income before income taxes
    
    
    (6,283
    )
    
    
    42,458
    
    
    
    557
    
    
    
    (52
    )
    
    
    36,680Provision for income taxes
    
    
    (2,141
    )
    
    
    16,570
    
    
    
    84
    
    
    
    (38
    )
    
    
    14,475Equity in earnings of subsidiary
    
    
    26,361
    
    
    
    473
    
    
    
    
    
    
    
    (26,834
    )
    
    
    Net income
    
    $
    22,219
    
    
    $
    26,361
    
    
    $
    473
    
    
    $
    (26,848
    )
    
    $
    22,205
 15




---



##### 



American Medical Systems Holdings, Inc.
Notes to Consolidated Financial Statements  (Continued)
Condensed Consolidating Statement of Operations
 Three Months Ended June 30, 2007AmericanMedical
    
    
    
    
    
    
    Non-Systems
    
    
    Guarantor
    
    
    Guarantor
    
    
    
    
    
    
    ConsolidatedHoldings, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    
    
    
    $
    105,513
    
    
    $
    23,472
    
    
    $
    (12,532
    )
    
    $
    116,453Cost of sales
    
    
    
    
    
    
    26,589
    
    
    
    13,393
    
    
    
    (12,853
    )
    
    
    27,129Gross profit
    
    
    
    
    
    
    78,924
    
    
    
    10,079
    
    
    
    321
    
    
    
    89,324Operating expensesMarketing and selling
    
    
    
    
    
    
    33,137
    
    
    
    8,557
    
    
    
    
    
    
    
    41,694Research and development
    
    
    
    
    
    
    10,891
    
    
    
    88
    
    
    
    
    
    
    
    10,979General and administrative
    
    
    
    
    
    
    10,565
    
    
    
    22
    
    
    
    
    
    
    
    10,587Integration costs
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    
    
    
    
    92Amortization of intangibles
    
    
    
    
    
    
    3,878
    
    
    
    871
    
    
    
    
    
    
    
    4,749Total operating expenses
    
    
    
    
    
    
    58,563
    
    
    
    9,538
    
    
    
    
    
    
    
    68,101Operating income
    
    
    
    
    
    
    20,361
    
    
    
    541
    
    
    
    321
    
    
    
    21,223Other (expense) incomeRoyalty income
    
    
    
    
    
    
    503
    
    
    
    
    
    
    
    
    
    
    
    503Interest income
    
    
    
    
    
    
    278
    
    
    
    15
    
    
    
    
    
    
    
    293Interest expense
    
    
    (2,893
    )
    
    
    (6,536
    )
    
    
    (159
    )
    
    
    
    
    
    
    (9,588
    )Amortization of financing costs
    
    
    (212
    )
    
    
    (543
    )
    
    
    
    
    
    
    
    
    
    
    (755
    )Other income (expense)
    
    
    
    
    
    
    512
    
    
    
    (164
    )
    
    
    3
    
    
    
    351Total other (expense) income
    
    
    (3,105
    )
    
    
    (5,786
    )
    
    
    (308
    )
    
    
    3
    
    
    
    (9,196
    )(Loss) income before income taxes
    
    
    (3,105
    )
    
    
    14,575
    
    
    
    233
    
    
    
    324
    
    
    
    12,027Provision for income taxes
    
    
    (1,214
    )
    
    
    5,697
    
    
    
    91
    
    
    
    127
    
    
    
    4,701Equity in earnings of subsidiary
    
    
    9,020
    
    
    
    142
    
    
    
    
    
    
    
    (9,162
    )
    
    
    Net income
    
    $
    7,129
    
    
    $
    9,020
    
    
    $
    142
    
    
    $
    (8,965
    )
    
    $
    7,326
 16




---



##### 



American Medical Systems Holdings, Inc.
Notes to Consolidated Financial Statements  (Continued)
Condensed Consolidating Statement of Operations
 Six Months Ended June 30, 2007AmericanMedical
    
    
    
    
    
    
    Non-Systems
    
    
    Guarantor
    
    
    Guarantor
    
    
    
    
    
    
    ConsolidatedHoldings, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    
    
    
    $
    204,789
    
    
    $
    46,084
    
    
    $
    (26,035
    )
    
    $
    224,838Cost of sales
    
    
    
    
    
    
    51,791
    
    
    
    27,423
    
    
    
    (25,730
    )
    
    
    53,484Gross profit
    
    
    
    
    
    
    152,998
    
    
    
    18,661
    
    
    
    (305
    )
    
    
    171,354Operating expensesMarketing and selling
    
    
    
    
    
    
    64,584
    
    
    
    16,540
    
    
    
    
    
    
    
    81,124Research and development
    
    
    
    
    
    
    22,041
    
    
    
    88
    
    
    
    
    
    
    
    22,129General and administrative
    
    
    
    
    
    
    21,515
    
    
    
    61
    
    
    
    
    
    
    
    21,576Integration costs
    
    
    
    
    
    
    1,103
    
    
    
    
    
    
    
    
    
    
    
    1,103Amortization of intangibles
    
    
    
    
    
    
    7,712
    
    
    
    1,741
    
    
    
    
    
    
    
    9,453Total operating expenses
    
    
    
    
    
    
    116,955
    
    
    
    18,430
    
    
    
    
    
    
    
    135,385Operating income
    
    
    
    
    
    
    36,043
    
    
    
    231
    
    
    
    (305
    )
    
    
    35,969Other (expense) incomeRoyalty income
    
    
    
    
    
    
    1,182
    
    
    
    
    
    
    
    
    
    
    
    1,182Interest income
    
    
    
    
    
    
    604
    
    
    
    25
    
    
    
    
    
    
    
    629Interest expense
    
    
    (5,915
    )
    
    
    (13,000
    )
    
    
    (306
    )
    
    
    
    
    
    
    (19,221
    )Amortization of financing costs
    
    
    (315
    )
    
    
    (1,222
    )
    
    
    
    
    
    
    
    
    
    
    (1,537
    )Other income (expense)
    
    
    
    
    
    
    2,226
    
    
    
    (247
    )
    
    
    (5
    )
    
    
    1,974Total other (expense) income
    
    
    (6,230
    )
    
    
    (10,210
    )
    
    
    (528
    )
    
    
    (5
    )
    
    
    (16,973
    )(Loss) income from continuing operations
before income taxes
    
    
    (6,230
    )
    
    
    25,833
    
    
    
    (297
    )
    
    
    (310
    )
    
    
    18,996Provision for income taxes
    
    
    (2,373
    )
    
    
    9,874
    
    
    
    (106
    )
    
    
    (108
    )
    
    
    7,287Net (loss) income from continuing operations
    
    
    (3,857
    )
    
    
    15,959
    
    
    
    (191
    )
    
    
    (202
    )
    
    
    11,709Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (691
    )
    
    
    
    
    
    
    
    
    
    
    (691
    )Equity in earnings (loss) of subsidiary
    
    
    15,077
    
    
    
    (191
    )
    
    
    
    
    
    
    (14,886
    )
    
    
    Net income (loss)
    
    $
    11,220
    
    
    $
    15,077
    
    
    $
    (191
    )
    
    $
    (15,088
    )
    
    $
    11,018
 17




---



##### 



American Medical Systems Holdings, Inc.
Notes to Consolidated Financial Statements  (Continued)
Condensed Consolidating Balance Sheet
 As of June 28, 2008AmericanMedical
    
    
    
    
    
    
    Non-Systems
    
    
    Guarantor
    
    
    Guarantor
    
    
    
    
    
    
    ConsolidatedHoldings, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assetsCash and cash equivalents
    
    $
    32
    
    
    $
    18,628
    
    
    $
    7,535
    
    
    $
    
    
    
    $
    26,195Short term investments
    
    
    3,000
    
    
    
    12,811
    
    
    
    370
    
    
    
    
    
    
    
    16,181Accounts receivable, net
    
    
    639,497
    
    
    
    71,111
    
    
    
    34,166
    
    
    
    (639,448
    )
    
    
    105,326Inventories, net
    
    
    
    
    
    
    44,991
    
    
    
    7,891
    
    
    
    (5,547
    )
    
    
    47,335Deferred income taxes
    
    
    
    
    
    
    11,324
    
    
    
    675
    
    
    
    
    
    
    
    11,999Other current assets
    
    
    
    
    
    
    4,039
    
    
    
    1,344
    
    
    
    
    
    
    
    5,383Total current assets
    
    
    642,529
    
    
    
    162,904
    
    
    
    51,981
    
    
    
    (644,995
    )
    
    
    212,419Property, plant and equipment, net
    
    
    
    
    
    
    49,856
    
    
    
    1,704
    
    
    
    
    
    
    
    51,560Goodwill
    
    
    
    
    
    
    627,812
    
    
    
    87,789
    
    
    
    (24,021
    )
    
    
    691,580Developed and core technology, net
    
    
    
    
    
    
    68,215
    
    
    
    18,729
    
    
    
    
    
    
    
    86,944Other intangibles, net
    
    
    
    
    
    
    46,340
    
    
    
    2,013
    
    
    
    
    
    
    
    48,353Investment in subsidiaries
    
    
    108,164
    
    
    
    21,021
    
    
    
    
    
    
    
    (129,185
    )
    
    
    Other long-term assets, net
    
    
    1,323
    
    
    
    466
    
    
    
    109
    
    
    
    
    
    
    
    1,898Total assets
    
    $
    752,016
    
    
    $
    976,614
    
    
    $
    162,325
    
    
    $
    (798,201
    )
    
    $
    1,092,754Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    20,159
    
    
    $
    531,003
    
    
    $
    109,210
    
    
    $
    (650,584
    )
    
    $
    9,788Accrued compensation expenses
    
    
    
    
    
    
    16,352
    
    
    
    2,963
    
    
    
    
    
    
    
    19,315Accrued warranty expense
    
    
    
    
    
    
    3,618
    
    
    
    (20
    )
    
    
    
    
    
    
    3,598Other accrued expenses
    
    
    6,006
    
    
    
    17,337
    
    
    
    3,226
    
    
    
    
    
    
    
    26,569Total current liabilities
    
    
    26,165
    
    
    
    568,310
    
    
    
    115,379
    
    
    
    (650,584
    )
    
    
    59,270Non-current liabilitiesLong-term debt
    
    
    363,290
    
    
    
    264,153
    
    
    
    
    
    
    
    
    
    
    
    627,443Intercompany loans payable
    
    
    
    
    
    
    
    
    
    
    18,432
    
    
    
    (18,432
    )
    
    
    Deferred income taxes
    
    
    
    
    
    
    18,956
    
    
    
    7,493
    
    
    
    
    
    
    
    26,449Long-term income taxes payable
    
    
    
    
    
    
    13,856
    
    
    
    
    
    
    
    
    
    
    
    13,856Long-term employee benefit obligations
    
    
    
    
    
    
    3,175
    
    
    
    
    
    
    
    
    
    
    
    3,175Total non-current liabilities
    
    
    363,290
    
    
    
    300,140
    
    
    
    25,925
    
    
    
    (18,432
    )
    
    
    670,923Total liabilities
    
    
    389,455
    
    
    
    868,450
    
    
    
    141,304
    
    
    
    (669,016
    )
    
    
    730,193Stockholders equityCommon stock
    
    
    729
    
    
    
    
    
    
    
    9
    
    
    
    (9
    )
    
    
    729Additional paid-in capital
    
    
    294,175
    
    
    
    3,424
    
    
    
    67,349
    
    
    
    (70,773
    )
    
    
    294,175Accumulated other comprehensive income
    
    
    9,647
    
    
    
    1,726
    
    
    
    9,032
    
    
    
    (10,758
    )
    
    
    9,647Retained earnings (deficit)
    
    
    58,010
    
    
    
    103,014
    
    
    
    (55,369
    )
    
    
    (47,645
    )
    
    
    58,010Total stockholders equity
    
    
    362,561
    
    
    
    108,164
    
    
    
    21,021
    
    
    
    (129,185
    )
    
    
    362,561Total liabilities and stockholders equity
    
    $
    752,016
    
    
    $
    976,614
    
    
    $
    162,325
    
    
    $
    (798,201
    )
    
    $
    1,092,754
 18




---



##### 



American Medical Systems Holdings, Inc.
Notes to Consolidated Financial Statements  (Continued)
Condensed Consolidating Balance Sheet
 As of December 29, 2007AmericanMedical
    
    
    
    
    
    
    Non-Systems
    
    
    Guarantor
    
    
    Guarantor
    
    
    
    
    
    
    ConsolidatedHoldings, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assetsCash and cash equivalents
    
    $
    32
    
    
    $
    21,671
    
    
    $
    12,341
    
    
    $
    
    
    
    $
    34,044Short term investments
    
    
    
    
    
    
    792
    
    
    
    345
    
    
    
    
    
    
    
    1,137Accounts receivable, net
    
    
    637,000
    
    
    
    72,207
    
    
    
    34,094
    
    
    
    (636,844
    )
    
    
    106,457Inventories, net
    
    
    
    
    
    
    58,545
    
    
    
    7,314
    
    
    
    (5,152
    )
    
    
    60,707Deferred income taxes
    
    
    
    
    
    
    12,522
    
    
    
    583
    
    
    
    
    
    
    
    13,105Other current assets
    
    
    
    
    
    
    8,062
    
    
    
    1,873
    
    
    
    
    
    
    
    9,935Total current assets
    
    
    637,032
    
    
    
    173,799
    
    
    
    56,550
    
    
    
    (641,996
    )
    
    
    225,385Property, plant and equipment, net
    
    
    
    
    
    
    51,623
    
    
    
    1,503
    
    
    
    
    
    
    
    53,126Goodwill
    
    
    
    
    
    
    627,813
    
    
    
    86,686
    
    
    
    (24,021
    )
    
    
    690,478Developed and core technology, net
    
    
    
    
    
    
    74,173
    
    
    
    20,279
    
    
    
    
    
    
    
    94,452Other intangibles, net
    
    
    
    
    
    
    47,134
    
    
    
    2,203
    
    
    
    
    
    
    
    49,337Investment in subsidiaries
    
    
    80,318
    
    
    
    27,312
    
    
    
    
    
    
    
    (107,630
    )
    
    
    Other long-term assets, net
    
    
    1,346
    
    
    
    2,199
    
    
    
    110
    
    
    
    
    
    
    
    3,655Total assets
    
    $
    718,696
    
    
    $
    1,004,053
    
    
    $
    167,331
    
    
    $
    (773,647
    )
    
    $
    1,116,433Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    21,397
    
    
    $
    531,104
    
    
    $
    106,050
    
    
    $
    (645,187
    )
    
    $
    13,364Accrued compensation expenses
    
    
    
    
    
    
    16,419
    
    
    
    2,839
    
    
    
    
    
    
    
    19,258Accrued warranty expense
    
    
    
    
    
    
    3,001
    
    
    
    
    
    
    
    
    
    
    
    3,001Other accrued expenses
    
    
    6,005
    
    
    
    37,677
    
    
    
    2,782
    
    
    
    
    
    
    
    46,464Total current liabilities
    
    
    27,402
    
    
    
    588,201
    
    
    
    111,671
    
    
    
    (645,187
    )
    
    
    82,087Non-current liabilitiesLong term debt
    
    
    363,104
    
    
    
    303,130
    
    
    
    
    
    
    
    
    
    
    
    666,234Intercompany loans payable
    
    
    
    
    
    
    
    
    
    
    20,830
    
    
    
    (20,830
    )
    
    
    Deferred income taxes
    
    
    
    
    
    
    15,815
    
    
    
    7,518
    
    
    
    
    
    
    
    23,333Long-term income taxes payable
    
    
    
    
    
    
    13,414
    
    
    
    
    
    
    
    
    
    
    
    13,414Long-term employee benefit obligations
    
    
    
    
    
    
    3,175
    
    
    
    
    
    
    
    
    
    
    
    3,175Total non-current liabilities
    
    
    363,104
    
    
    
    335,534
    
    
    
    28,348
    
    
    
    (20,830
    )
    
    
    706,156Total liabilities
    
    
    390,506
    
    
    
    923,735
    
    
    
    140,019
    
    
    
    (666,017
    )
    
    
    788,243Stockholders equityCommon stock
    
    
    723
    
    
    
    
    
    
    
    9
    
    
    
    (9
    )
    
    
    723Additional paid-in capital
    
    
    284,751
    
    
    
    3,424
    
    
    
    75,683
    
    
    
    (79,107
    )
    
    
    284,751Accumulated other comprehensive income
    
    
    6,910
    
    
    
    242
    
    
    
    7,462
    
    
    
    (7,704
    )
    
    
    6,910Retained earnings (deficit)
    
    
    35,806
    
    
    
    76,652
    
    
    
    (55,842
    )
    
    
    (20,810
    )
    
    
    35,806Total stockholders equity
    
    
    328,190
    
    
    
    80,318
    
    
    
    27,312
    
    
    
    (107,630
    )
    
    
    328,190Total liabilities and stockholders equity
    
    $
    718,696
    
    
    $
    1,004,053
    
    
    $
    167,331
    
    
    $
    (773,647
    )
    
    $
    1,116,433
 19




---



##### 



American Medical Systems Holdings, Inc.
Notes to Consolidated Financial Statements  (Continued)
Condensed Consolidating Statement of Cash Flows
 Six Months Ended June 28, 2008AmericanMedical
    
    
    
    
    
    
    Non-Systems
    
    
    Guarantor
    
    
    Guarantor
    
    
    
    
    
    
    ConsolidatedHoldings, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCash
flows from operating activitiesNet cash (used in) provided by operating activities
    
    $
    (4,793
    )
    
    $
    50,588
    
    
    $
    706
    
    
    $
    
    
    
    $
    46,501Cash flows from investing activitiesPurchase of property, plant and equipment
    
    
    
    
    
    
    (2,860
    )
    
    
    (288
    )
    
    
    
    
    
    
    (3,148
    )Disposal of business
    
    
    
    
    
    
    3,330
    
    
    
    
    
    
    
    
    
    
    
    3,330Purchase of other intangibles
    
    
    
    
    
    
    (1,167
    )
    
    
    
    
    
    
    
    
    
    
    (1,167
    )Purchase of short-term investments
    
    
    
    
    
    
    (15,066
    )
    
    
    
    
    
    
    
    
    
    
    (15,066
    )Sale of short-term investments
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    73Net cash used in investing activities
    
    
    
    
    
    
    (15,690
    )
    
    
    (288
    )
    
    
    
    
    
    
    (15,978
    )Cash flows from financing activitiesIntercompany notes
    
    
    
    
    
    
    3,777
    
    
    
    (3,777
    )
    
    
    
    
    
    
    Issuance of common stock
    
    
    3,748
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,748Excess tax benefit from exercise of stock options
    
    
    1,045
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,045Payments on long-term debt
    
    
    
    
    
    
    (41,718
    )
    
    
    
    
    
    
    
    
    
    
    (41,718
    )Proceeds from short-term borrowings
    
    
    
    
    
    
    12,000
    
    
    
    
    
    
    
    
    
    
    
    12,000Repayments of short-term borrowings
    
    
    
    
    
    
    (12,000
    )
    
    
    
    
    
    
    
    
    
    
    (12,000
    )Net cash provided by (used in) financing activities
    
    
    4,793
    
    
    
    (37,941
    )
    
    
    (3,777
    )
    
    
    
    
    
    
    (36,925
    )Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    (1,447
    )
    
    
    
    
    
    
    (1,447
    )Net decrease in cash and cash equivalents
    
    
    
    
    
    
    (3,043
    )
    
    
    (4,806
    )
    
    
    
    
    
    
    (7,849
    )Cash and cash equivalents at beginning of period
    
    
    32
    
    
    
    21,671
    
    
    
    12,341
    
    
    
    
    
    
    
    34,044Cash and cash equivalents at end of period
    
    $
    32
    
    
    $
    18,628
    
    
    $
    7,535
    
    
    $
    
    
    
    $
    26,195
 20




---



##### 



American Medical Systems Holdings, Inc.
Notes to Consolidated Financial Statements  (Continued)
Condensed Consolidating Statement of Cash Flows
 Six Months Ended June 30, 2007AmericanMedical
    
    
    
    
    
    
    Non-Systems
    
    
    Guarantor
    
    
    Guarantor
    
    
    
    
    
    
    ConsolidatedHoldings, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCash flows from operating activitiesNet cash (used in) provided by operating activities
    
    $
    (10,143
    )
    
    $
    16,688
    
    
    $
    7,026
    
    
    $
    
    
    
    $
    13,571Cash flows from investing activitiesPurchase of property, plant and equipment
    
    
    
    
    
    
    (11,576
    )
    
    
    (880
    )
    
    
    
    
    
    
    (12,456
    )Purchase of business, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (781
    )
    
    
    
    
    
    
    (781
    )Disposal of business
    
    
    
    
    
    
    21,676
    
    
    
    
    
    
    
    
    
    
    
    21,676Purchase of other intangibles
    
    
    
    
    
    
    (263
    )
    
    
    
    
    
    
    
    
    
    
    (263
    )Purchase of short-term investments
    
    
    
    
    
    
    (28
    )
    
    
    (109
    )
    
    
    
    
    
    
    (137
    )Sale of short-term investments
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Net cash provided by (used in) investing activities
    
    
    
    
    
    
    9,809
    
    
    
    (1,760
    )
    
    
    
    
    
    
    8,049Cash flows from financing activitiesIssuance of common stock
    
    
    8,913
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,913Excess tax benefit from exercise of stock options
    
    
    178
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178Payments on long-term debt
    
    
    
    
    
    
    (28,123
    )
    
    
    
    
    
    
    
    
    
    
    (28,123
    )Net cash provided by (used in) financing activities
    
    
    9,091
    
    
    
    (28,123
    )
    
    
    
    
    
    
    
    
    
    
    (19,032
    )Cash used in discontinued operationsOperating activities
    
    
    
    
    
    
    (691
    )
    
    
    
    
    
    
    
    
    
    
    (691
    )Net cash used in discontinued operations
    
    
    
    
    
    
    (691
    )
    
    
    
    
    
    
    
    
    
    
    (691
    )Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    (152
    )
    
    
    
    
    
    
    (152
    )Net (decrease) increase in cash and cash equivalents
    
    
    (1,052
    )
    
    
    (2,317
    )
    
    
    5,114
    
    
    
    
    
    
    
    1,745Cash and cash equivalents at beginning of period
    
    
    1,138
    
    
    
    22,905
    
    
    
    5,008
    
    
    
    
    
    
    
    29,051Cash and cash equivalents at end of period
    
    $
    86
    
    
    $
    20,588
    
    
    $
    10,122
    
    
    $
    
    
    
    $
    30,796
 21




---



##### 



NOTE 12. Fair Value Measurements and Derivative Financial Instruments
 Fair Value Measurements,
  Level 1
 Level 2
 
    
    Quoted prices for similar assets or liabilities in active markets;
    
    Quoted prices for identical or similar assets or liabilities in non-active markets;
    
    Inputs other than quoted prices that are observable for substantially the full term of
the asset or liability; and
    
    Inputs that are derived principally from or corroborated by observable market data for
substantially the full term of the asset or liability.
 Level 3
  Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableDescription
    
    Identical Assets (Level 1)
    
    
    Inputs (Level 2)
    
    
    Inputs (Level 3)Money market funds
    
    $
    15,038
    
    
    $
    
    
    
    $
    Available-for-sale securities
    
    
    530
    
    
    
    
    
    
    
    Other short-term investments
    
    
    243
    
    
    
    370
    
    
    
    Derivatives
    
    
    
    
    
    
    648
    
    
    
    Total
    
    $
    15,811
    
    
    $
    1,018
    
    
    $
    
   Note 2 Discontinued Operations and Sale of Aesthetics Business
   22




---



##### 



Accounting for Derivative Instruments and Hedging Activity
  Foreign currency derivatives (subsequent event)
  
 NOTE 13. Industry Segment Information and Foreign Operations
 Note 2, Discontinued Operations and Sale of Aesthetics Business)
  23




---



##### 



Three Months Ended
    
    Six Months Ended(in thousands)
    
    June 28, 2008
    
    June 30, 2007
    
    June 28, 2008
    
    June 30, 2007United StatesNet sales
    
    $
    89,818
    
    
    $
    85,136
    
    
    $
    174,211
    
    
    $
    164,076Long-lived assets
    
    
    862,211
    
    
    
    894,430
    
    
    
    862,211
    
    
    
    894,430InternationalNet sales
    
    
    39,979
    
    
    
    31,317
    
    
    
    75,948
    
    
    
    60,762Long-lived assets
    
    
    19,468
    
    
    
    16,919
    
    
    
    19,468
    
    
    
    16,919
 NOTE 14. Recently Adopted Accounting Pronouncements and New Accounting Pronouncements
 Fair Value Measurements The Effective Date of FASB Statement No. 157 Note 12, Fair Value Measurements and Derivative Financial Instruments,
 Accounting for Nonrefundable
Advance Payments for Goods or Services Received for Use in Future Research and Development
Activities.
 Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning of The Meaning of
 24




---



##### 



Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)
 25




---



##### 



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following Managements Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995. Any statements not of historical fact may be considered forward-looking statements.
Written words such as may, expect, believe, anticipate, or estimate, or other variations
of these or similar words, identify such forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, and actual results may differ materially from
those expressed in such forward-looking statements as a result of many factors, including, but not
limited to, those included on our Form 10-K , Part I, Item 1A for the year ended December 29, 2007.
We undertake no obligation to correct or update any forward-looking statements, whether as a result
of new information, future events, or otherwise. You are advised, however, to consult any future
disclosures we make on related subjects in future filings with the SEC.
 Critical Accounting Policies and Estimates
  Overview
  www.AmericanMedicalSystems.com.
 26




---



##### 



Results of Operations
  Three Months Ended
    
    
    
    
    
    
    
    
    
    Six Months Ended(in thousands)
    
    June 28, 2008
    
    June 30, 2007
    
    $ Increase
    
    % Increase
    
    June 28, 2008
    
    June 30, 2007
    
    $ Increase
    
    % IncreaseSalesMens health
    
    $
    84,932
    
    
    $
    78,267
    
    
    $
    6,665
    
    
    
    8.5
    %
    
    $
    168,540
    
    
    $
    151,938
    
    
    $
    16,602
    
    
    
    10.9
    %Womens health
    
    
    44,865
    
    
    
    38,186
    
    
    
    6,679
    
    
    
    17.5
    %
    
    
    81,619
    
    
    
    72,900
    
    
    
    8,719
    
    
    
    12.0
    %Total
    
    $
    129,797
    
    
    $
    116,453
    
    
    $
    13,344
    
    
    
    11.5
    %
    
    $
    250,159
    
    
    $
    224,838
    
    
    $
    25,321
    
    
    
    11.3
    %GeographyUnited States
    
    $
    89,818
    
    
    $
    85,136
    
    
    $
    4,682
    
    
    
    5.5
    %
    
    $
    174,211
    
    
    $
    164,076
    
    
    $
    10,135
    
    
    
    6.2
    %International
    
    
    39,979
    
    
    
    31,317
    
    
    
    8,662
    
    
    
    27.7
    %
    
    
    75,948
    
    
    
    60,762
    
    
    
    15,186
    
    
    
    25.0
    %Total
    
    $
    129,797
    
    
    $
    116,453
    
    
    $
    13,344
    
    
    
    11.5
    %
    
    $
    250,159
    
    
    $
    224,838
    
    
    $
    25,321
    
    
    
    11.3
    %Three Months Ended
    
    
    
    
    
    
    
    
    
    Six Months EndedPercent of total sales
    
    June 28, 2008
    
    June 30, 2007
    
    
    
    
    
    
    
    
    
    June 28, 2008
    
    June 30, 2007Mens health
    
    
    65.4
    %
    
    
    67.2
    %
    
    
    
    
    
    
    
    
    
    
    67.4
    %
    
    
    67.6
    %Womens health
    
    
    34.6
    %
    
    
    32.8
    %
    
    
    
    
    
    
    
    
    
    
    32.6
    %
    
    
    32.4
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    
    
    
    
    
    
    
    
    100.0
    %
    
    
    100.0
    %GeographyUnited States
    
    
    69.2
    %
    
    
    73.1
    %
    
    
    
    
    
    
    
    
    
    
    69.6
    %
    
    
    73.0
    %International
    
    
    30.8
    %
    
    
    26.9
    %
    
    
    
    
    
    
    
    
    
    
    30.4
    %
    
    
    27.0
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    
    
    
    
    
    
    
    
    100.0
    %
    
    
    100.0
    %
 27




---



##### 



Three Months Ended
    
    $ Increase
    
    % Increase
    
    Six Months Ended
    
    $ Increase
    
    % Increase(in thousands)
    
    June 28, 2008
    
    June 30, 2007
    
    (Decrease)
    
    (Decrease)
    
    June 28, 2008
    
    June 30, 2007
    
    (Decrease)
    
    (Decrease)Net sales
    
    $
    129,797
    
    
    $
    116,453
    
    
    $
    13,344
    
    
    
    11.5
    %
    
    $
    250,159
    
    
    $
    224,838
    
    
    $
    25,321
    
    
    
    11.3
    %Cost of sales
    
    
    29,185
    
    
    
    27,129
    
    
    
    2,056
    
    
    
    7.6
    %
    
    
    58,175
    
    
    
    53,484
    
    
    
    4,691
    
    
    
    8.8
    %Gross profit
    
    
    100,612
    
    
    
    89,324
    
    
    
    11,288
    
    
    
    12.6
    %
    
    
    191,984
    
    
    
    171,354
    
    
    
    20,630
    
    
    
    12.0
    %Operating expensesMarketing
and selling
    
    
    46,301
    
    
    
    41,694
    
    
    
    4,607
    
    
    
    11.0
    %
    
    
    91,382
    
    
    
    81,124
    
    
    
    10,258
    
    
    
    12.6
    %Research and development
    
    
    11,366
    
    
    
    10,979
    
    
    
    387
    
    
    
    3.5
    %
    
    
    22,666
    
    
    
    22,129
    
    
    
    537
    
    
    
    2.4
    %General and administrative
    
    
    10,552
    
    
    
    10,587
    
    
    
    (35
    )
    
    
    -0.3
    %
    
    
    20,707
    
    
    
    21,576
    
    
    
    (869
    )
    
    
    -4.0
    %Integration costs
    
    
    
    
    
    
    92
    
    
    
    (92
    )
    
    
    n/a
    
    
    
    
    
    
    
    1,103
    
    
    
    (1,103
    )
    
    
    n/aAmortization
of intangibles
    
    
    4,300
    
    
    
    4,749
    
    
    
    (449
    )
    
    
    -9.5
    %
    
    
    8,647
    
    
    
    9,453
    
    
    
    (806
    )
    
    
    -8.5
    %Total operating expenses
    
    
    72,519
    
    
    
    68,101
    
    
    
    4,418
    
    
    
    6.5
    %
    
    
    143,402
    
    
    
    135,385
    
    
    
    8,017
    
    
    
    5.9
    %Operating income
    
    
    28,093
    
    
    
    21,223
    
    
    
    6,870
    
    
    
    32.4
    %
    
    
    48,582
    
    
    
    35,969
    
    
    
    12,613
    
    
    
    35.1
    %Royalty income
    
    
    2,476
    
    
    
    503
    
    
    
    1,973
    
    
    
    392.2
    %
    
    
    2,831
    
    
    
    1,182
    
    
    
    1,649
    
    
    
    139.5
    %Interest income
    
    
    157
    
    
    
    293
    
    
    
    (136
    )
    
    
    -46.4
    %
    
    
    352
    
    
    
    629
    
    
    
    (277
    )
    
    
    -44.0
    %Interest expense
    
    
    (6,819
    )
    
    
    (9,588
    )
    
    
    (2,769
    )
    
    
    -28.9
    %
    
    
    (14,876
    )
    
    
    (19,221
    )
    
    
    (4,345
    )
    
    
    -22.6
    %Amortization of financing costs
    
    
    (1,429
    )
    
    
    (755
    )
    
    
    674
    
    
    
    89.3
    %
    
    
    (2,139
    )
    
    
    (1,537
    )
    
    
    602
    
    
    
    39.2
    %Other income
    
    
    585
    
    
    
    351
    
    
    
    234
    
    
    
    66.7
    %
    
    
    1,930
    
    
    
    1,974
    
    
    
    (44
    )
    
    
    -2.2
    %Income from continuing operations
before income taxes
    
    
    23,063
    
    
    
    12,027
    
    
    
    11,036
    
    
    
    91.8
    %
    
    
    36,680
    
    
    
    18,996
    
    
    
    17,684
    
    
    
    93.1
    %Provision for income taxes
    
    
    9,069
    
    
    
    4,701
    
    
    
    4,368
    
    
    
    92.9
    %
    
    
    14,475
    
    
    
    7,287
    
    
    
    7,188
    
    
    
    98.6
    %Income from continuing operations
    
    
    13,994
    
    
    
    7,326
    
    
    
    6,668
    
    
    
    91.0
    %
    
    
    22,205
    
    
    
    11,709
    
    
    
    10,496
    
    
    
    89.6
    %Loss from discontinued operations,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    
    (691
    )
    
    
    (691
    )
    
    
    n/aNet income
    
    $
    13,994
    
    
    $
    7,326
    
    
    $
    6,668
    
    
    
    91.0
    %
    
    $
    22,205
    
    
    $
    11,018
    
    
    $
    11,187
    
    
    
    101.5
    %Percent of Sales
    
    
    
    
    
    
    
    
    
    Percent of SalesFor the Three Months Ended
    
    
    
    
    
    
    
    
    
    For the Six Months EndedJune 28, 2008
    
    June 30, 2007
    
    
    
    
    
    
    
    
    
    June 28, 2008
    
    June 30, 2007Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    
    
    
    
    
    
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    22.5
    %
    
    
    23.3
    %
    
    
    
    
    
    
    
    
    
    
    23.3
    %
    
    
    23.8
    %Gross profit
    
    
    77.5
    %
    
    
    76.7
    %
    
    
    
    
    
    
    
    
    
    
    76.7
    %
    
    
    76.2
    %Operating expensesMarketing and selling
    
    
    35.7
    %
    
    
    35.8
    %
    
    
    
    
    
    
    
    
    
    
    36.5
    %
    
    
    36.1
    %Research and development
    
    
    8.8
    %
    
    
    9.4
    %
    
    
    
    
    
    
    
    
    
    
    9.1
    %
    
    
    9.8
    %General and administrative
    
    
    8.1
    %
    
    
    9.1
    %
    
    
    
    
    
    
    
    
    
    
    8.3
    %
    
    
    9.6
    %Integration costs
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    0.5
    %Amortization of intangibles
    
    
    3.3
    %
    
    
    4.1
    %
    
    
    
    
    
    
    
    
    
    
    3.5
    %
    
    
    4.2
    %Total operating expenses
    
    
    55.9
    %
    
    
    58.5
    %
    
    
    
    
    
    
    
    
    
    
    57.3
    %
    
    
    60.2
    %Operating income
    
    
    21.6
    %
    
    
    18.2
    %
    
    
    
    
    
    
    
    
    
    
    19.4
    %
    
    
    16.0
    %Royalty income
    
    
    1.9
    %
    
    
    0.4
    %
    
    
    
    
    
    
    
    
    
    
    1.1
    %
    
    
    0.5
    %Interest income
    
    
    0.1
    %
    
    
    0.3
    %
    
    
    
    
    
    
    
    
    
    
    0.1
    %
    
    
    0.3
    %Interest expense
    
    
    -5.3
    %
    
    
    -8.2
    %
    
    
    
    
    
    
    
    
    
    
    -5.9
    %
    
    
    -8.5
    %Amortization of financing costs
    
    
    -1.1
    %
    
    
    -0.6
    %
    
    
    
    
    
    
    
    
    
    
    -0.9
    %
    
    
    -0.7
    %Other income
    
    
    0.5
    %
    
    
    0.3
    %
    
    
    
    
    
    
    
    
    
    
    0.8
    %
    
    
    0.9
    %Income from continuing operations
before income taxes
    
    
    17.8
    %
    
    
    10.3
    %
    
    
    
    
    
    
    
    
    
    
    14.7
    %
    
    
    8.4
    %Provision for income taxes
    
    
    7.0
    %
    
    
    4.0
    %
    
    
    
    
    
    
    
    
    
    
    5.8
    %
    
    
    3.2
    %Income from continuing operations
    
    
    10.8
    %
    
    
    6.3
    %
    
    
    
    
    
    
    
    
    
    
    8.9
    %
    
    
    5.2
    %Loss from discontinued operations,
net of tax
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    -0.3
    %Net income
    
    
    10.8
    %
    
    
    6.3
    %
    
    
    
    
    
    
    
    
    
    
    8.9
    %
    
    
    4.9
    %
 28




---



##### 



Comparison of the Three Months Ended June 28, 2008 to the Three Months Ended June 30, 2007
 Net sales. AdVance ® MiniArc ® Single-Incision Sling InhibiZone ® AMS 800 ® AMS 700 ® MS
 Net sales mens health products. AdVance ® AMS 800 ® InhibiZone ® AMS 700 ® MS AMS 700 ® LGX TherMatrx ®
 Net sales womens health products. MiniArc ® Apogee ® Perigee ® Her Option ®
 Net sales by geography and foreign exchange effects.
 Cost of sales
 Marketing and selling.
 Research and development. GreenLight HPS ® High-Performance System
 In-process research and development.
 29




---



##### 



General and administrative.
 Integration costs
 Amortization of intangibles.
 Royalty income.
 Interest income.
 Interest expense.
 30




---



##### 



Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)
 Amortization of financing costs.
 Other income
 Provision for income taxes.
 Comparison of the Six Months Ended June 28, 2008 to the Six Months Ended June 30, 2007
 Net sales. MiniArc ® Single-Incision Sling InhibiZone ® AMS 800 ® AdVance ® AMS 700 ® MS
 Net sales mens health products. AdVance ® AMS 800 ® InhibiZone ® AMS 700 ® MS AMS
700 ® LGX TherMatrx ®
 Net sales womens health products. MiniArc ® Apogee ® Perigee ®
 31




---



##### 



Her Option ®
 Net sales by geography and foreign exchange effects.
 Cost of sales
 Marketing and selling.
 Research and development. GreenLight HPS ® High-Performance System
 General and administrative.
 Integration costs
 Amortization of intangibles.
 Royalty income.
 Interest income.
 Interest expense.
 32




---



##### 



Amortization of financing costs.
 Other income
 Provision for income taxes.
 Liquidity and Capital Resources
  Cash flows from operating activities. Notes to Consolidated Financial Statements 
No. 10, Litigation Settlements
 Cash flows from investing activities. Notes to Consolidated Financial Statements  No. 2, Discontinued
Operations and Sale of Aesthetics Business
 Cash flows from financing activities.
  33




---



##### 



The number of shares issued uponIf the market price of our stock is:
    
    full conversion would be (1):$25.00
    
    4.3 million$30.00
    
    6.8 million$35.00
    
    8.6 million
 
 (1)
    
    The formula to calculate the shares issued upon full conversion of our Convertible Notes is as
follows: 
    34




---



##### 



The number of common share equivalentsIf the average market
    
    potentially included in the computation of
    
    Percentprice of our stock is:
    
    diluted EPS would be (1):
    
    Dilution (2)$
19.00
    
    
    
    
    (anti-dilutive)
    
    
    0.0
    %$
25.00
    
    
    4.3
    
    million
    
    
    5.6
    %$
30.00
    
    
    6.8
    
    million
    
    
    8.5
    %$
35.00
    
    
    8.6
    
    million
    
    
    10.5
    %
 
 (1)
    
    Common share equivalents are calculated using the treasury stock method, in accordance with
EITF 90-19, Convertible Bonds with Issuer Option to Settle for Cash upon Conversion.(2)
    
    The percent dilution is based on 72,895,138 outstanding shares as of June 28, 2008.   Notes to Consolidated Financial Statements  No. 10, Litigation Settlements
   35




---



##### 



For The Fiscal
    
    AmendedFinancial
    
    Periods Ending
    
    RequiredCovenants
    
    Closest to
    
    RatioTotal Leverage Ratio
    
    6/30/08
9/30/08
12/31/08
3/31/09
Reductions continuing until 6/30/10
    
    5.00:1.00 (maximum)
4.75:1.00
4.50:1.00
4.25:1.00
3.00:1.00Senior Leverage Ratio
    
    6/30/08
9/30/08
12/31/08
3/31/09
Thereafter
    
    2.50:1.00 (maximum)
2.50:1.00
2.25:1.00
2.00:1.00
2.00:1.00Interest Coverage Ratio
    
    6/30/08
9/30/08
12/31/08
3/31/09
Increases continuing until 9/30/09
    
    3.50:1.00 (minimum)
3.50:1.00
3.75:1.00
3.75:1.00
4.00:1.00Fixed Charge Coverage Ratio
    
    6/30/08
9/30/08
12/31/08
3/31/09
Thereafter
    
    1.25:1.00 (minimum)
1.40:1.00
1.40:1.00
1.50:1.00
1.50:1.00Maximum Capital Expenditures
    
    12/31/08
12/31/09
    
    $15.0 million
$17.5 million
  Financial Covenant
    
    Required Covenant
    
    Actual ResultTotal Leverage Ratio (1)
    
    5.00:1.00 (maximum)
    
    
    4.46Senior Leverage Ratio (2)
    
    2.50:1.00 (maximum)
    
    
    1.88Interest Coverage Ratio (3)
    
    3.50:1.00 (minimum)
    
    
    4.34Fixed Charge Coverage Ratio (4)
    
    1.25:1.00 (minimum)
    
    
    2.20Maximum Capital Expenditures (5)
    
    $15.0 million
    
    $3.1 million
 
 (1)
    
    Total outstanding debt to Consolidated Adjusted EBITDA for the trailing four quarters.(2)
    
    Total outstanding senior secured debt to Consolidated Adjusted EBITDA for the trailing four
quarters.(3)
    
    Ratio of Consolidated EBITDA for the trailing four quarters to interest expense for such period.(4)
    
    Ratio of Consolidated EBITDA for the trailing four quarters to fixed charges (cash interest
expense, scheduled principal payments on debt, capital expenditures, income taxes paid,
earn-out and milestone payments) for such period.(5)
    
    Limit of capital expenditures for the full year.  36




---



##### 



Notes to Consolidated Financial Statements 
No. 11, Debt.
 Cash commitments.
 Ovion TM
    Additional Information on AMS
 http://www.sec.gov.
 37




---



##### 



www.AmericanMedicalSystems.com
 38




---



##### 



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rates
  Currency
    
 Inflation
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  39




---



##### 



PART II. OTHER INFORMATION
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
     For
    
    Withheld1. Election of DirectorsTerm expiring in 2011:Richard B. Emmitt
    
    
    68,438,334
    
    
    
    723,949Christopher H. Porter, Ph.D.
    
    
    68,686,037
    
    
    
    476,246D. Verne Sharma
    
    
    68,656,987
    
    
    
    505,296
 For
    
    
    Against
    
    
    Abstain
    
    

Broker
Non-Votes2. Approval of amendment to Employee Stock
Purchase Plan
    
    
    63,982,035
    
    
    
    569,398
    
    
    
    30,704
    
    
    
    4,580,1463. Ratification of Ernst & Young LLP as independent
auditor for fiscal year 2008
    
    
    68,866,868
    
    
    
    261,898
    
    
    
    33,517
    
    
    
    
 
 ITEM 6. EXHIBITS
 ItemNo.
    
    Item
    
    Method of Filing10.1
    
    Employment agreement, dated
April 22, 2008, between
Anthony P. Bihl, III and
American Medical Systems,
Inc.
    
    Incorporated by reference to
Exhibit 10.1 of the Companys
Form 8-K filed on April 29,
2008 (File No. 000-30733).10.2
    
    Change in Control Severance
Agreement, dated April 22,
2008, between Anthony P.
Bihl, III and American
Medical Systems Holdings,
Inc.
    
    Incorporated by reference to
Exhibit 10.2 of the Companys
Form 8-K filed on April 29,
2008 (File No. 000-30733).10.3
    
    Confidential separation
agreement between Stephen J.
McGill and American Medical
Systems, Inc.
    
    Incorporated by reference to
Exhibit 10.1 of the Companys
Form 8-K filed on May 30,
2008 (File No. 000-30733).31.1
    
    Certification by Chief
Executive Officer pursuant to
Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    Filed with this Quarterly
Report on Form 10-Q.31.2
    
    Certification by Chief
Financial Officer pursuant to
Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    Filed with this Quarterly
Report on Form 10-Q.32.1
    
    Certification pursuant to 18
U.S.C. Section 1350, as
adopted pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002.
    
    Filed with this Quarterly
Report on Form 10-Q.
 40




---



##### 



SIGNATURES
  AMERICAN MEDICAL SYSTEMS HOLDINGS, INCAugust 7, 2008
    
    
    
    By
    
    /s/ Anthony P. Bihl, IIIDate
    
    
    
    
    
    Anthony P. Bihl, IIIPresident and Chief Executive OfficerAugust 7, 2008
    
    
    
    By
    
    /s/ Mark A. HeggestadDate
    
    
    
    
    
    Mark A. HeggestadExecutive Vice President and Chief Financial
Officer
 41




---



##### 



AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
 
 EXHIBIT
INDEX TO QUARTERLY REPORT ON FORM 10-Q
 For the Fiscal Quarter Ended June 28, 2008
 Item No.
    
    Item
    
    Method of Filing10.1
    
    Employment agreement, dated
April 22, 2008, between
Anthony P. Bihl, III and
American Medical Systems,
Inc.
    
    Incorporated by reference to
Exhibit 10.1 of the Companys
Form 8-K filed on April 29,
2008 (File No. 000-30733).10.2
    
    Change in Control Severance
Agreement, dated April 22,
2008, between Anthony P.
Bihl, III and American
Medical Systems Holdings,
Inc.
    
    Incorporated by reference to
Exhibit 10.2 of the Companys
Form 8-K filed on April 29,
2008 (File No. 000-30733).10.3
    
    Confidential separation
agreement between Stephen J.
McGill and American Medical
Systems, Inc.
    
    Incorporated by reference to
Exhibit 10.1 of the Companys
Form 8-K filed on May 30,
2008 (File No. 000-30733).31.1
    
    Certification by Chief
Executive Officer pursuant to
Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    Filed with this Quarterly
Report on Form 10-Q.31.2
    
    Certification by Chief
Financial Officer pursuant to
Section 302 of the
Sarbanes-Oxley Act of 2002.
    
    Filed with this Quarterly
Report on Form 10-Q.32.1
    
    Certification pursuant to 18
U.S.C. Section 1350, as
adopted pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002.
    
    Filed with this Quarterly
Report on Form 10-Q.
 42