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Cupertino, CA - (October 14, 1998) - General Surgical Innovations, Inc. (GSI) (Nasdaq NMS: GSII) announced today financial results for the first quarter of fiscal 1999 ended September 30, 1998.

For the first quarter of fiscal year 1999, the company reported revenues of approximately $2.0 million compared with revenues of $1.3 million in the fourth quarter of fiscal 1998 and $2.3 million in the first quarter of fiscal 1998. Revenues for the first quarter of fiscal 1999 and the fourth quarter of fiscal 1998 consisted entirely of product sales while revenues for the first quarter of fiscal 1998 consisted of approximately $1.6 million in product sales and approximately $700,000 in guaranteed payments from Ethicon Endo-Surgery. Product sales for the first quarter of fiscal year 1999 reflect an increase of 54 percent over product sales for the fourth quarter of fiscal 1998 and 25 percent over product sales for the first quarter of fiscal 1998.

GSI reported a net loss of approximately $2.5 million, or $0.19 per share, for the quarter compared to a net loss of $1.3 million, or $0.09 per share, for the same quarter of fiscal 1998. The company continues to maintain a healthy balance sheet with approximately $34.0 million in cash, cash equivalents and available-for-sale securities and virtually no long-term debt.

"We are pleased with the growth in product sales, reflecting the increased demand for GSI's proprietary SPACEMAKERÒ balloon dissection technology," said Gregory D. Casciaro, President and Chief Executive Officer of GSI. "Our focus has been on developing product kits for physicians and we are starting to see the results of these efforts in our target markets and the expansion of our distribution network worldwide."

During the quarter, GSI signed two non-exclusive agreements with United States Surgical Corporation (USS) in the hernia repair and stress urinary incontinence (SUI) markets. The first agreement provides USS with non-exclusive rights to market and distribute GSI's SPACEMAKER surgical balloon dissectors worldwide for use in hernia repair and SUI procedures. Under the terms of the second agreement, GSI has secured non-exclusive worldwide rights to market and distribute several products, including USS' five millimeter mesh fixation device, the ProTack™, which will be offered with GSI's balloon dissectors in a hernia repair kit.

Additionally, GSI announced today that it signed non-exclusive agreements with seven leading surgical suppliers to distribute its recently released SPACEMAKER surgical balloon dissector kits for hernia repair in the United States

Casciaro commented, "We made significant progress in the first quarter in moving forward with our strategy to further penetrate the hernia repair and SUI markets. We have focused on a total solution approach and have recently released SPACEMAKER surgical balloon dissection kits for use in hernia procedures. Also, with the signing of our agreement with US Surgical Corporation in addition to our current agreement with Ethicon Endo Surgery, we have aligned GSI with two of the leading players in the industry. The expansion of our distribution network with the recent addition of seven independent distributors, will further our efforts to effectively capitalize on this large market opportunity. Additionally, we continue to focus internal resources on leveraging our proprietary balloon dissection technology and expanding our presence in the cardiovascular markets."

GSI's SPACEMAKER tissue dissection systems, based on the company's patented balloon technology, rapidly and gently create surgical working spaces by separating natural tissue planes without resorting to blunt dissection used in conventional open surgery or minimally invasive surgery conducted outside of a natural body cavity. In procedures using SPACEMAKER dissectors, a surgeon makes a small incision through which the balloon is inserted and placed between naturally occurring tissue layers such as muscle, fat and skin. Subsequently, the balloon is filled to a specific volume with air or saline, causing the desired dissection of the tissue planes. The system is then removed and the dissected space can be insufflated with gas to create a surgical operating space.

Headquartered in Cupertino, California, General Surgical Innovations, Inc. develops, manufactures and sells tissue dissection systems based on the company's patented balloon technology for minimally invasive surgical procedures. The company's products are specifically designed for endoscopic and laparoscopic techniques used in general, cardiovascular, orthopedic, cosmetic and reconstructive surgeries to create an operating space at the surgical site, lessen tissue damage and improve patient recovery time. The company has developed a broad range of balloon shapes and sizes to be used for various surgical techniques, procedures, and market segments. GSI distributes its products worldwide through a network of distribution partners and a direct sales force. For additional information, please visit the company's World Wide Web site at www.gsii.com.

Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements, the accuracy of which is necessarily subject to risks and uncertainties. Future market development, distribution relationships and demand for the company's products, among other matters discussed in this release, may differ significantly from the discussion of such matters in the forward-looking statements. Such differences may be based upon factors within General Surgical Innovations' control, such as strategic planning decisions by management and reallocation of internal resources, or on factors outside of General Surgical Innovations' control, such as scientific advances by third parties, introduction of competitive products and delays by regulatory authorities, as well as those factors set forth under the heading "Factors Affecting Future Results" in General Surgical Innovations' Annual Report on Form 10-K for the year ended June 30, 1998 and other company filings with the Securities and Exchange Commission.

For more information on General Surgical Innovations, via fax at no cost,
dial 800-PRO-INFO (908-544-2850 outside the U.S.) ticker symbol: GSII.