American Medical Systems Announces New Sales Record.

Business Editors & Health/Medical Writers

MINNEAPOLIS--(BW HealthWire)--Jan. 7, 2002

Company Also Adds DermMatrix(R) to Product Portfolio

American Medical Systems (AMS) (Nasdaq:AMMD) announced net sales for the fourth quarter, through December 2001, of $33.3 million, up 25 percent from the fourth quarter of 2000. Full-year sales were $117.9 million, up 18 percent from 2000.

"Revenues from all product lines showed strong growth, with incontinence products growing 27 percent from last year's fourth quarter, and erectile dysfunction products growing 24 percent," said president and chief executive officer Doug Kohrs. "For the full year, revenues from incontinence products increased 22 percent, and revenues from erectile dysfunction products increased 15 percent. This remarkable growth comes from our success in meeting surgeons' needs with new and better products. We are very pleased with these results." Management will discuss more of the quarter's results after its earnings announcement on January 28, 2002.

American Medical Systems also announced it has become the exclusive distributor of DermMatrix(R) porcine tissue from Carbon Medical Technologies. DermMatrix has been successfully used in more than 2,000 surgical procedures for urinary incontinence and other pelvic repairs. Kohrs commented, "DermMatrix will enhance our position in the surgical tissue market by reducing our supply constraints for urethral sling procedures and adding product sizes and price points to expand our market to include the estimated 150,000 cystocele and rectocele repairs performed each year."

American Medical Systems has been supplying human tissue for urology procedures as a distributor of products made by Collagenesis Corporation, and had made an investment in Collagenesis to improve their dependability as a supplier. Jim Call, American Medical Systems' executive vice president and chief financial officer, said that in light of Collagenesis' recent bankruptcy filing, AMS has elected to write off its Collagenesis investment in the fourth quarter of 2001. The impact on pre-tax earnings will be approximately $3.6 million (reducing net income approximately $.06 per share), and will have no material effect on AMS' ongoing operations or cash position. Kohrs added, "While we would like to continue to have human tissue for our surgeons, the availability of DermMatrix will meet most of our physicians' needs, and may open new markets we could not serve with the Collagenesis products."

Carbon Medical Technologies is a privately-owned St. Paul, Minnesota, supplier of bulking agents for treating urinary incontinence. It has been selling the DermMatrix tissue since April 2000. Collagenesis Corporation is a privately-owned Massachusetts company.

American Medical Systems, headquartered in Minnetonka, Minnesota, is a medical technology company with 500 employees worldwide. The company is a world leader in medical devices and procedures that treat three major diseases: incontinence, erectile dysfunction (ED) and benign prostate hyperplasia (BPH). Any one of these conditions can profoundly diminish a patient's quality of life and significantly impact relationships. The company's products provide a cure or reduce the incapacitating effects of these diseases, often through minimally invasive surgery. It sells to physicians in more than 60 countries worldwide. More information about American Medical Systems may be found at http://www.visitAMS.com.

Statements about the company's future financial results and regulatory approvals are forward-looking statements subject to risks and uncertainties such as those described in the company's Registration Statement on Forms S-1 dated June 26, 2001, and its Annual Report on Form 10-K for the year ended December 31, 2000. Actual results may differ materially from anticipated results.