<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                       -----------------------------------

                                   FORM 10-K/A

        [X]    AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
               OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the Fiscal Year Ended December 31, 2000, or

        [ ]    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: 0-18053

                                   LASERSCOPE
             (Exact name of Registrant as Specified in its Charter)

               California                                 77-0049527
      (State or Other Jurisdiction of                  (I.R.S. Employer
      Incorporation or Organization)                  Identification No.)

               3070 Orchard Drive San Jose, California 95134-2011
                    (Address of Principal Executive Offices)

       Registrant's telephone number, including area code: (408) 943-0636

                           -------------------------

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value
                          Common Share Purchase Rights
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO _

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the Registrant's voting and non-voting common
equity held by non-affiliates of the Registrant was approximately $15,588,000 as
of March 16, 2001, based upon the closing sale price on the NASDAQ National
Market System reported for such date. Shares of Common Stock held by each
officer and director and by each person who owns 5% of more of the outstanding
Common Stock have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

There were 15,883,937 shares of Registrant's Common Stock issued and outstanding
as of March 16, 2001.


<PAGE>   2


                                EXPLANATORY NOTE


        Pursuant to Rule 12b-15 of the Securities Exchange Act of 1934, as
amended, the Registrant is filing this Amendment No. 1 to its Annual Report on
Form 10-K (Commission File Number 0-18053) as filed with the Securities and
Exchange Commission on March 28, 2001 (the "Form 10-K") to cure a typographical
error in Item 14 of such Form 10-K. The value of Inventory on the Consolidated
Balance Sheets for year 1999 as well as 2000 was inadvertently shown in the
column for year 2000 data, and this amendment is being filed solely to cure such
defect. This Amendment No. 1 to the Form 10-K on Form 10-K/A amends and restates
in its entirety Part IV of the Form 10-K.


                                       2
<PAGE>   3

                                     PART IV

ITEM 14. EXHIBITS FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1)  Financial Statements:

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                 <C>
        Report of Ernst & Young LLP, Independent Auditors.                F-1

        Consolidated Balance Sheets at December 31, 2000 and 1999.        F-2

        Consolidated Statements of Operations - Years ended
        December 31, 2000, 1999 and 1998.                                 F-3


        Consolidated Statements of Cash Flows - Years ended
        December 31, 2000, 1999 and 1998.                                 F-4

        Consolidated Statements of Shareholders' Equity - Years
        ended December 31, 2000, 1999 and 1998.                           F-5

        Notes to Consolidated Financial Statements.                 F-6 through F-19

(2)     The following financial statement schedule for the years
        ended December 31, 2000, 1999 and 1998 is submitted
        herewith:
</TABLE>

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                       <C>
        Schedule II - Valuation and Qualifying Accounts                   S-1

        All other schedules are omitted because they are not
        applicable or the required information is shown in the
        consolidated financial statements or notes thereto.

(3)     Exhibits included herein (numbered in accordance with Item
        601 of Regulation S-K):
</TABLE>


                                3
<PAGE>   4


<TABLE>
<CAPTION>
Exhibit
Number              Description
-------             -----------
<S>         <C>
2.1         Acquisition Agreement between Laserscope and Heraeus Med GmbH.(9)

2.1A        Amendment Number One to Acquisition Agreement between Laserscope and
            Heraeus Med GmbH.(11)

3.3         Seventh Amended and Restated Articles of Incorporation of
            Registrant.(1)

3.4         By-laws of Registrant, as amended.(3)

4.1         Common Shares Rights Agreement dated as of October 31, 1991 between
            Laserscope and American Stock Transfer & Trust Company as Rights
            Agent.(6)

4.1A        First Amendment to Common Shares Rights Agreements between the
            Company and American Stock Transfer & Trust Company as Rights Agent
            dated as of April 22, 1996.(7)

4.1B        Second Amendment to Common Shares Rights Agreement between the
            Company and American Stock Transfer & Trust Company as Rights Agent
            dated as of August 6, 1996.(8)

10.1A       1984 Stock Option Plan, as amended, and forms of Incentive Stock
            Option Agreement and Non-statutory Stock Option Agreement.(3)

10.1B       1994 Stock Option Plan and forms of Incentive Stock Option Agreement
            and Non-statutory Stock Option Agreement.(4)

10.2        1984 Stock Purchase Plan and form of Common Stock Purchase
            Agreement.(2)

10.3        1989 Employee Stock Purchase Plan and form of Subscription
            Agreement.(3)

10.3A       1999 Employee Stock Purchase Plan and form of Subscription
            Agreement.(15)

10.4        401(k) Plan.(2)

10.6        Net Lease Agreement between the Registrant and Realtec Properties
            dated June 20, 2000.(18)

10.6A       Net Lease Agreement between the Registrant and Realtec Properties
            dated October 18, 2000.(18)
</TABLE>

                                       4
<PAGE>   5

<TABLE>
<CAPTION>
Exhibit
Number              Description
-------             -----------
<S>         <C>
10.10       Form of indemnification agreement.(2)

10.11       Amended and Restated Loan and Security Agreement between the
            Registrant and Silicon Valley Bank Dated November 23, 1996.(10)

10.11A      Loan Modification Agreement between the Registrant and Silicon
            Valley Bank dated November 26, 1997.(11)

10.11B      Loan Modification Agreement between the Registrant and Silicon
            Valley Bank dated March 18, 1998.(11)

10.11C      Loan Modification Agreement between the Registrant and Silicon
            Valley Bank dated September 3, 1998.(12)

10.11D      Loan Modification Agreement between the Registrant and Silicon
            Valley Bank dated November 25, 1998.(13)

10.11E      Loan Modification Agreement between the Registrant and Silicon
            Valley Bank dated March 17, 1999.(13)

10.11F      Loan Modification Agreement between the Registrant and Silicon
            Valley Bank dated March 30, 1999.(14)

10.11G      Loan and Security Agreement between the Registrant and Silicon
            Valley Bank dated October 1, 1999.(15)

10.13       1990 Directors' Stock Option Plan and form of Option Agreement.(3)

10.14       Form of Laserscope Management Continuity Agreement, as amended.(16)

10.18       1995 Directors' Stock Option Plan and form of Option agreement.(5)

10.18A      1999 Director's Stock Option Plan.(15)

10.19       Common Stock Placement Agreement.(15)

10.19A      Form of Common Stock Purchase Agreement.(15)

10.20       Convertible Loan Agreement.(15)

22.1        Subsidiaries of Registrant, as amended.(18)

23.1        Consent of Independent Auditors.(18)

25.1        Power of Attorney (see page30).(18)
</TABLE>



                                       5
<PAGE>   6

Reports on Form 8-K:

On February 10, 2000 the Company filed a Form 8-K referring to a press release
it had issued on January 18, 2000 announcing that it had completed a private
placement of common stock providing net proceeds to the Company of approximately
$1.8 million. Taglich Brothers Inc. managed the placement of common stock to
accredited investors.

On March 1, 2000 the Company filed a Form 8-K referring to a press release it
had issued on February 22, 2000 announcing that it had completed a private
placement of subordinate convertible debentures providing net proceeds to the
Company of approximately $2.9 million. Taglich Brothers Inc. managed the
placement to affiliates of Renaissance Capital Group Inc.

--------------------------------------------------------------------------------

(1)     Incorporated by reference to identically numbered exhibits filed in
        response to Item 14(a)(3), "Exhibits," of the Registrant's Annual Report
        on Form 10-K for the year ended December 31, 1989.

(2)     Incorporated by reference to identically numbered exhibits filed in
        response to Item 16(a), "Exhibits," of the Registrant's Registration
        Statement on Form S-1 and Amendment No. 1 and Amendment No. 2 thereto
        (File No. 33-31689), which became effective on November 29, 1989.

(3)     Incorporated by reference to identically numbered exhibits filed in
        response to Item 14(a)(3), "Exhibits", of the Registrant's Annual Report
        on Form 10-K for the year ended December 31, 1991.

(4)     Incorporated by reference to identically numbered exhibits filed in
        response to Item 14(a)(3), "Exhibits", of the Registrant's Annual Report
        on Form 10-K for the year ended December 31, 1994.

(5)     Incorporated by reference to identically numbered exhibits filed in
        response to Item 14(a)(3), "Exhibits", of the Registrant's Annual Report
        on Form 10-K/A for the year ended December 31, 1995.

(6)     Incorporated by reference to Exhibit 1 of the Registrant's Registration
        Statement on Form 8-A filed November 15, 1991.

(7)     Incorporated by reference to identically numbered exhibits filed in
        response to Item 6(a), "Exhibits", of the Registrant's Quarterly Report
        on Form 10-Q for the quarterly period ended June 30, 1996.


                                       6
<PAGE>   7


(8)     Incorporated by reference to identically numbered exhibits filed in
        response to Item 6(a), "Exhibits", the Company's Form 8-A/A filed
        September 4, 1996.

(9)     Incorporated by reference to Exhibit A to the Definitive Proxy Statement
        for the Special Meeting of Shareholders held August 29, 1996.

(10)    Incorporated by reference to identically numbered exhibits filed in
        response to Item 14(a)(3), "Exhibits", of the Registrant's Annual Report
        on Form 10-K/A for the year ended December 31, 1996.

(11)    Incorporated by reference to identically numbered exhibits filed in
        response to Item 14(a)(3), "Exhibits", of the Registrant's Annual Report
        on Form 10-K/A for the year ended December 31, 1997.


(12)    Incorporated by reference to identically numbered exhibits filed in
        response to Item 6(a), "Exhibits", of the Registrant's Quarterly Report
        on Form 10-Q for the quarterly period ended September 30, 1998.

(13)    Incorporated by reference to identically numbered exhibits filed in
        response to Item 14(a)(3), "Exhibits", of the Registrant's Annual Report
        on Form 10-K/A for the year ended December 31, 1998.

(14)    Incorporated by reference to identically numbered exhibits filed in
        response to Item 6(a), "Exhibits", of the Registrant's Quarterly Report
        on Form 10-Q for the quarterly period ended March 31, 1999.

(15)    Incorporated by reference to identically numbered exhibits filed in
        response to Item 14(a)(3), "Exhibits", of the Registrant's Annual Report
        on Form 10-K for the year ended December 31, 1999.

(16)    Incorporated by reference to identically numbered exhibits filed in
        response to Item 6(a), "Exhibits", of the Registrant's Quarterly Report
        on Form 10-Q for the quarterly period ended March 31, 2000.

(17)    Incorporated by reference to identically numbered exhibits filed in
        response to Item 6(a), "Exhibits", of the Registrant's Quarterly Report
        on Form 10-Q for the quarterly period ended September 30, 2000.

(18)    Incorporated by reference to identically numbered exhibits filed in
        response to Item 14(a)(3), "Exhibits", of the Registrant's Annual Report
        on Form 10-K for the year ended December 31, 2000.


                                       7
<PAGE>   8


REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


The Board of Directors and Shareholders
Laserscope

We have audited the accompanying consolidated balance sheets of Laserscope as of
December 31, 2000 and 1999, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 2000. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Laserscope at December 31, 2000 and 1999, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the information set forth
therein.





                                                  /s/Ernst & Young LLP


San Jose, California
February 16, 2001


                                      F-1
<PAGE>   9


                                   LASERSCOPE
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                December 31,
                                                                        ---------------------------
(dollars in thousands)                                                     2000             1999
----------------------                                                  ----------       ----------
<S>                                                                     <C>              <C>
ASSETS
Current Assets:
     Cash and cash equivalents                                          $    2,698       $    1,449
     Accounts receivable, net                                                9,549            9,500
     Inventories                                                             8,279           10,052
     Other current assets                                                      963            1,281
                                                                        ----------       ----------
     Total current assets                                                   21,489           22,282
Property and equipment, net                                                  1,944            3,949
Developed technology and other intangibles, net                                 --            2,598
Other assets                                                                   654              127
                                                                        ----------       ----------
Total assets                                                            $   24,087       $   28,956
                                                                        ==========       ==========
LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
     Short-term bank loans                                              $      702       $    7,361
     Accounts payable                                                        1,444            3,412
     Accrued compensation                                                    1,290            1,453
     Warranty                                                                  497              329
     Deferred revenue                                                        1,022              717
     Other accrued liabilities                                               1,446            1,885
     Current obligations under capital leases                                  295              319
                                                                        ----------       ----------
     Total current liabilities                                               6,696           15,476
Long-term liabilities:
     Convertible subordinated debentures                                     3,000               --
     Obligations under capital leases                                          277              534
     Mortgages & other long term loans                                          --              862
                                                                        ----------       ----------
     Total long term liabilities                                             3,277            1,396
Commitments and contingencies
Minority interest                                                               --               37

Shareholders' equity:
     Common stock, no par value:
         Authorized shares -- 25,000,000 for Dec 31, 1999 and 2000
         Issued and outstanding shares - 14,193,043 and 15,883,026
         for December 31, 1999 and 2000 respectively                             -                -
     Additional paid-in capital                                             54,480           52,467
     Accumulated deficit                                                   (39,014)         (39,200)
     Accumulated other comprehensive income (loss)                          (1,218)          (1,027)
     Notes receivable from shareholder                                        (134)            (193)
                                                                        ----------       ----------
     Total shareholders' equity                                             14,114           12,047
                                                                        ----------       ----------
Total liabilities and shareholders' equity                              $   24,087       $   28,956
                                                                        ==========       ==========
</TABLE>

See notes to consolidated financial statements


                                      F-2
<PAGE>   10



                                   LASERSCOPE
                      CONSOLIDATED STATEMENTS OF OPERATIONS




<TABLE>
<CAPTION>
                                                                       Years Ended December 31,
(thousands, except per share amounts)                            2000             1999             1998
-------------------------------------                        ----------       ----------       ----------
<S>                                                          <C>              <C>              <C>
Net revenues:

     Products                                                $   29,694       $   34,846       $   46,148
     Services                                                     5,705            6,144            6,580
                                                             ----------       ----------       ----------
                                                                 35,399           40,990           52,728
Cost of products and services:

     Products                                                    14,914           19,088           25,417
     Services                                                     3,660            4,558            6,155
                                                             ----------       ----------       ----------
                                                                 18,574           23,646           31,572
                                                             ----------       ----------       ----------

Gross margin                                                     16,825           17,344           21,156

Operating expenses:

     Research and development                                     3,284            4,504            5,225
     Selling, general and administrative                         13,005           19,595           21,657
     Impairment of intangible assets                                  -                -            1,937
                                                             ----------       ----------       ----------
                                                                 16,289           24,099           28,819

Operating income (loss)                                             536           (6,755)          (7,663)

Interest income (expense) and other, net                           (350)            (910)            (701)
Loss on sale of AMS                                                   -                -           (1,082)
                                                             ----------       ----------       ----------
Income (loss) before income taxes and minority interest             186           (7,665)          (9,446)

Provision for income taxes                                            -               13              184
                                                             ----------       ----------       ----------

Income loss before minority interest                                186           (7,678)          (9,630)

Minority interest                                                     -              105             (166)
                                                             ----------       ----------       ----------
Net income (loss)                                            $      186       $   (7,573)      $   (9,796)
                                                             ==========       ==========       ==========

Basic and diluted net income (loss) per share                $     0.01       $    (0.60)      $    (0.79)
                                                             ==========       ==========       ==========

Shares used in basic per share calculations                      15,489           12,580           12,423
                                                             ==========       ==========       ==========

Shares used in diluted per share calculations                    16,504           12,580           12,423
                                                             ==========       ==========       ==========
</TABLE>



See notes to consolidated financial statements


                                      F-3
<PAGE>   11


                                   LASERSCOPE
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                  Years Ended December 31,
(thousands)                                                                 2000             1999             1998
-----------                                                              ----------       ----------       ----------
<S>                                                                      <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net Income/(loss)                                                  $      186       $   (7,573)      $   (9,796)

      Adjustments to reconcile net income/(loss) to cash
         used by operating activities:
         Depreciation                                                         1,569            1,835            1,915
         Amortization of licenses and intangibles                               141              977              976
         Repayment and write-off of shareholder notes                            59              178                -
         Excess inventory charges                                                 -              750            2,063
         Impairment of intangible assets                                          -                -            1,937
         Loss on sale of AMS                                                      -                -            1,082
      Increase (decrease) from changes in:
         Accounts receivable                                                 (2,127)           2,833              449
         Inventories                                                           (741)           3,282              473
         Other current assets                                                   (95)            (414)             250
         Other assets                                                           (77)               -             (295)
         Accounts payable                                                      (738)          (1,948)            (773)
         Accrued compensation                                                  (163)            (206)             (51)
         Warranty                                                               168             (507)            (206)
         Deferred revenue                                                       305             (343)            (453)
         Other accrued liabilities                                              (88)            (437)             636
         Minority interest                                                        -             (105)             165
                                                                         ----------       ----------       ----------
      Cash used by operating activities                                      (1,601)          (1,678)             (82)
                                                                         ----------       ----------       ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures                                                     (401)            (562)            (987)
      NWL acquisition                                                             -           (1,278)               -
      NWL Divestiture                                                         3,133                -                -
      Cash received from the sale of AMS                                          -              100              805
      Other                                                                    (296)            (428)              21
                                                                         ----------       ----------       ----------

      Cash provided (used) by investing activities                            2,436           (2,168)            (161)
                                                                         ----------       ----------       ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Payment on obligations under capital leases                              (301)            (352)            (249)
      Proceeds from the sale of common stock under stock plans                  992              175              329
      Proceeds from the sale of common stock in private placement               710            1,024                -
      Proceeds from the sale of convertible subordinated debentures           2,632                -                -
      Proceeds from bank loans                                               18,162           13,382            1,563
      Repayment of bank loans                                               (21,781)         (10,390)          (2,409)
                                                                         ----------       ----------       ----------

      Cash provided (used) by financing activities                              414            3,839             (766)
                                                                         ----------       ----------       ----------

      Increase (decrease) in cash and cash equivalents                        1,249               (7)          (1,009)
      Cash and cash equivalents, beginning of year                            1,449            1,456            2,465
                                                                         ----------       ----------       ----------

      Cash and cash equivalents, end of year                             $    2,698       $    1,449       $    1,456
                                                                         ==========       ==========       ==========

Supplemental cash flow information:

Cash paid for income taxes (net of refunds)                              $       15       $       17       $       25
                                                                         ==========       ==========       ==========
Cash paid for interest                                                   $      562       $      572       $      394
                                                                         ==========       ==========       ==========

Non cash financing activities:
Equipment leases                                                         $        -       $       77       $      891
                                                                         ==========       ==========       ==========
</TABLE>

See notes to consolidated financial statements


                                      F-4
<PAGE>   12


                                   LASERSCOPE
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                  Accumulated
                                                                                      Other           Notes            Total
                                                                  Accumulated     Comprehensive  Receivable from    Shareholders'
(dollars in thousands)                          Common Stock        Deficit           loss         Shareholders        Equity
-------------------------------------------     ------------      -----------     -------------  ---------------    -------------
<S>                                             <C>               <C>             <C>            <C>                <C>
Balance at December 31, 1997                     $   50,939       $  (21,831)      $     (616)      $     (375)      $   28,117

Components of comprehensive income (loss):
     Net loss                                                         (9,796)                                            (9,796)
     Translation adjustments                                                               17                                17
         Total comprehensive income (loss)                                                                               (9,779)

Issuance of 178,372 shares
   under stock plans                                    329                                                                 329

Repayment of shareholder notes                                                                               4                4
                                                 ----------       ----------       ----------       ----------       ----------

Balance at December 31, 1998                     $   51,268       $  (31,627)      $     (599)      $     (371)      $   18,671

Components of comprehensive income (loss):
     Net loss                                                         (7,573)                                            (7,573)
     Translation adjustments                                                             (428)                             (428)
         Total comprehensive income (loss)                                                                               (8,001)

Issuance of 162,225 shares
   under stock plans                                    175                                                                 175

Issuance of 1,505,000 shares in
   private placement, net of issuance costs           1,024                                                               1,024

Repayment and write off
   of shareholder notes                                                                                    178              178
                                                 ----------       ----------       ----------       ----------       ----------

Balance at December 31, 1999                     $   52,467       $  (39,200)      $   (1,027)      $     (193)      $   12,047

Components of comprehensive income (loss):
     Net Income                                                          186                                                186
     Translation adjustments                                                             (191)                             (191)
         Total comprehensive income (loss)                                                                                   (5)

Issuance of 694,983 shares                              992                                                                 992
   under stock plans

Issuance of 995,000 shares in
   private placement, net of issuance costs             710                                                                 710

Issuance of 240,000 warrants in connection
   With convertible debenture issuance                  311                                                                 311

Repayment and write off
   of shareholder notes                                                                                     59               59
                                                 ----------       ----------       ----------       ----------       ----------

Balance at December 31, 2000                     $   54,480       $  (39,014)      $   (1,218)      $     (134)      $   14,114
</TABLE>


See notes to consolidated financial statements


                                      F-5
<PAGE>   13


                                   LASERSCOPE
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business
The Company primarily operates in one business segment, the medical systems
business. The Company develops, manufactures, markets and supports surgical
lasers and other surgical systems, related instrumentation and disposable
supplies. The Company markets its products and services in over thirty-five
countries worldwide to hospitals, outpatient surgery centers and physicians.

Basis of presentation
The accompanying consolidated financial statements include the Company and its
wholly and majority-owned subsidiaries. All intercompany transactions and
balances have been eliminated.

Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

Cash equivalents and short-term investments
The Company considers cash equivalents to be short-term financial instruments
that are readily convertible to cash, subject to no more than insignificant
interest rate risk and that have original maturities of three months or less.

At December 31, 2000 and 1999 the Company had no investments in debt or equity
securities. At December 31, 1999, the Company had no cash equivalents.

Revenue recognition and product warranty
The company recognizes revenue when the persuasive evidence of an arrangement is
in place, the price is fixed or determinable, delivery is completed, and
collectibility is reasonably assured. Revenue related to the sale of systems,
instrumentation and disposables is recognized upon delivery. The company
provides currently for the estimated cost to repair or replace products under
warranty provisions in effect at the time of sale. Service revenue is recognized
as the services are provided or for service contracts pro rata over the period
of the applicable service contract.

Property and equipment
Property and equipment is stated at cost less accumulated depreciation and
amortization.

Equipment is depreciated using principally accelerated methods over estimated
useful lives of three to seven years. Equipment under capital leases is
amortized over the period of the lease. Leasehold improvements are amortized
using the straight-line method over the remaining term of the lease or useful
life if shorter.


                                      F-6
<PAGE>   14


Inventories
Inventories are stated at the lower of cost (computed on a first-in, first-out
basis) or market.

Net Income (loss) per share
Basic net income/(loss) per share is calculated using the weighted average of
common stock outstanding. Diluted net income/(loss) per share is calculated
using the weighted average of common stock outstanding plus dilutive common
equivalent shares from stock options.

The following table sets forth the computation of basic and diluted net income
(loss) per common share.

<TABLE>
<CAPTION>
                                                                          2000            1999             1998
                                                                       ----------      ----------       ----------
(thousands except per share data)
<S>                                                                    <C>             <C>              <C>

Numerator:

    Numerator for basic and diluted income (loss) per share            $      186      $   (7,573)      $   (9,796)

Denominator:

    Denominator for basic net income (Loss) per share --
       weighted average basis                                              15,489          12,580           12.423

    Effect of dilutive securities:
    Employee stock options                                                    613               -                -
    Warrants                                                                  402               -                -
                                                                       ----------      ----------       ----------
    Dilutive potential common shares                                        1,015               -                -
                                                                       ----------      ----------       ----------
    Denominator for diluted net income (loss) per common share --          16,504          12,580           12,423
       Adjusted weighted-average shares

Net Income Per Common Share:

Basic                                                                  $     0.01      $    (0.60)      $    (0.79)

Diluted                                                                $     0.01      $    (0.60)      $    (0.79)
</TABLE>

Options to purchase 2,819,606, 3,443,978, and 2,615,317 shares of common stock
were outstanding at December 31, 2000, 1999, and 1998, respectively. In
addition, warrants to purchase 402,000 shares of common stock were outstanding
at December 31, 2000. During 1999 and 1998, the options were not included in the
computation of diluted net loss per share because the Company reported losses
for the periods that ended at these dates and, therefore, the effect would be
antidilutive.

At December 31, 2000 the Company had outstanding debentures convertible into 2.4
million shares of common stock. The interest on these debentures and the shares
has been excluded from the calculation of diluted net income per share in 2000
because the effect of including them would be antidilutive.

Foreign currency translation
The functional currencies of the Company's foreign subsidiaries are their local
currencies. Accordingly, all assets and liabilities related to their operations
are translated at the current exchange rates at the end of each period. The
resulting cumulative translation adjustments


                                      F-7
<PAGE>   15

are recorded directly to the translation adjustments account, a component of the
comprehensive income (loss), and are included in shareholders' equity. Revenues
and expenses are translated at average exchange rates in effect during the
period.

Impairment of assets
The Company will recognize impairment losses on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amounts. During the year ended December 31, 1998, the Company
recognized such a loss related to the write down of certain intangible assets
acquired in the acquisition of Heraeus Surgical, Inc. (See Note 3). There were
no such losses recognized during the years ended December 31, 2000 and 1999.

Intangible assets related to acquisitions
Intangible assets related to the acquisitions of Heraeus Surgical, Inc. and NWL
Laser-Technologie GmbH included developed technology, distribution channels and
established workforces. These assets are amortized on a straight-line basis over
their estimated useful lives from five to seven years. During the year ended
December 31, 1998, the Company recorded an impairment loss to the intangible
assets related to the acquisition of Heraeus Surgical, Inc. In 2000, NWL
LaserTechnologie GmbH was sold, and intangible assets associated with Heraeus
Surgical, Inc. had been fully amortized. (See Note 3) As of December 31, 2000
the Company had no intangible assets.

Advertising expense
Advertising is expensed as incurred. Advertising costs were not significant in
2000, 1999, and 1998.

Comprehensive income

The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (SFAS 130) during the year ended December 31,
1998. SFAS 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements and is effective for fiscal years beginning after
December 15, 1997. For the Company, comprehensive income is comprised of net
income (loss) and foreign currency translation adjustments.

New Accounting Pronouncements

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" or SAB 101. SAB
101 provides guidance on the recognition, presentation and disclosure of revenue
in financial statements. In recent actions, the SEC further delayed the required
implementation date which, for Laserscope, was the fourth quarter of 2000,
retroactive to the beginning of the fiscal year. The implementation of SAB 101
did not have a material impact on Laserscope's financial position, results of
operations or cash flows for the year ending December 31, 2000. In June 1998,
the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes methods for
accounting for derivative financial



                                      F-8
<PAGE>   16

instruments and hedging activities related to those instruments, as well as
other hedging activities. The Company will be required to implement SFAS 133, as
amended, for the quarter beginning January 1, 2001. Because the Company does do
not currently hold any derivative instruments and does not engage in hedging
activities, the adoption of SFAS 133 will not have a material impact on
Laserscope's financial position, results of operations or cash flows.

In March 2000, FASB Interpretation, No. 44, "Accounting for Certain Transactions
Involving Stock Compensation -- An Interpretation of APB Opinion No. 25", (FIN
44) was issued. FIN 44 clarifies the application of APB No. 25 for certain
stock-based compensation issues. FIN 44 clarifies the definition of employee for
purposes of applying APB No. 25, the criteria for determining whether a plan
qualifies as a non-compensatory plan, the accounting consequences of various
modifications to the terms of a previously fixed option or award, and the
accounting for an exchange of share compensation awards in a business
combination, among other matters. FIN 44 was effective July 1, 2000, but certain
conclusions in this interpretation cover specific events that occurred after
either December 15, 1998 or January 12, 2000. The implementation of FIN 44 did
not have a significant impact on Laserscope's financial position or results of
operations.


2. SALE AND IMPAIRMENT OF ASSETS AND LIABILITIES ACQUIRED IN THE ACQUISITION OF
HERAEUS SURGICAL, INC.

During November 1998, the Company and Heraeus Medical, Inc. (a division of
Heraeus Med GmbH), signed a definitive agreement for the sale of certain assets
and liabilities related to the AMS product line. The product line was originally
purchased by Laserscope in the acquisition of Heraeus Surgical, Inc. The Company
received $905,000 in exchange for certain assets and liabilities relating to the
product line.

In December 1998, the Company concluded that the majority of the remaining book
value of the intangible assets acquired in the acquisition of Heraeus Surgical,
Inc. had been impaired and recorded an impairment loss. In addition, the Company
determined that specific inventories relating to certain product lines acquired
in the acquisition were excessive, and the Company adjusted the value of these
inventories accordingly. Laserscope determined this action in late 1998, as part
of a redirection in emphasis towards higher volume product lines.


                                      F-9
<PAGE>   17

3. SALE OF NWL LASER-TECHNOLOGIE

On February 18, 2000, the Company signed an agreement with Wavelight Laser
Technologie AG (`Wavelight") to sell its interest in NWL Laser Technologie GmbH
("NWL"). The sale, which was approved by Wavelight's shareholders on March 31,
2000, had an effective date of January 1, 2000. As part of the transaction, NWL
will continue to distribute Laserscope's products in all countries covered by
NWL's then current distribution channels. The details of the transaction are as
follows (in thousands):

<TABLE>
<CAPTION>
<S>                                           <C>
        Assets and liabilities sold:
            Cash                              $      296
            Accounts receivable                    2,477
            Inventory                              2,514
            Other current assets                     329
            Property, plant & equipment              857
            Licenses & intangible assets           2,707
            Accounts payable & accruals           (1,255)
            Income taxes payable                    (323)
            Short-term bank loans                 (3,040)
            Long-term bank loans                    (863)
            Minority interest & other                (37)
                                              ----------
                                                   3,662
        Proceeds:
            Received May 2000                      3,429
            In escrow until 2001                     400
        Total                                      3,829
                                              ----------
        Net Gain                              $      167
                                              ==========
</TABLE>

We will defer recognition of the gain until the funds held in escrow are paid
us.


                                      F-10
<PAGE>   18

4.  SEGMENT INFORMATION

Laserscope's revenue base is derived from the sales of interrelated products and
services on a world-wide basis. Although discrete components that earn revenues
and incur expenses exist, significant expenses such as research and development
and corporate administration are not incurred by nor allocated to these
operating units but rather are employed by the entire enterprise. Additionally,
the chief operating decision maker evaluates resource allocation not on a
product or geographic basis, but rather on an enterprise wide basis. Therefore,
the Company has concluded that it contains only one reportable segment, which is
the medical systems business.

Revenues from sales to external customers by similar products and services and
by major geographic area for the years ended December 31 were:

<TABLE>
<CAPTION>
        (in thousands)                           2000            1999            1998
        --------------------------------      ----------      ----------      ----------
<S>                                           <C>             <C>             <C>
        By similar products and services
        Laser equipment                       $   18,472      $   23,263      $   28,809
        Disposables & instrumentation             11,222          11,580          12,139
        Service                                    5,705           6,147           6,574
        AMS equipment(1)                               -               -           5,206
                                              ----------      ----------      ----------
             Total                            $   35,399      $   40,990      $   52,728
        By major geographic area(2)
                                                                              ----------
        United States                         $   22,007      $   22,551      $   30,662
        Germany(3), (4)                            1,300           7,089           9,298
        Rest of Europe(4)                          8,456           8,268           8,384
        Asia Pacific(4)                            2,871           2,635           3,657
        Rest of world(4)                             765             447             727
                                              ----------      ----------      ----------
             Total                            $   35,399      $   40,990      $   52,728
                                              ==========      ==========      ==========
</TABLE>

(1)  Laserscope sold certain assets and liabilities related to the AMS
     product line in November 1998.

(2)  Based on the location of the external customer.

(3)  The Company acquired a 52% interest in NWL in June 1997 and further
     increased its interest to 80% in January 1999. Effective January 2000,
     the Company divested itself from NWL.

(4)  Individual countries within each of these geographic regions represent less
     than 10% of total revenues.

Location of long lived assets by major geographic area at December 31 were:

<TABLE>
<CAPTION>
        (in thousands)            2000            1999            1998
        --------------      ----------      ----------      ----------
<S>                         <C>             <C>             <C>
        United States       $    2,462      $    5,645      $    6,167
        Germany                      -             884           1,418
        All others                 136             145             168
                            ----------      ----------      ----------
             Total          $    2,598      $    6,674      $    7,753
                            ==========      ==========      ==========
</TABLE>

                                      F-11
<PAGE>   19



<TABLE>
<CAPTION>
5.  ACCOUNTS RECEIVABLE

Accounts receivable at December 31 consisted of:

(in thousands)                                                             2000             1999
-----------------------------------------------------------------      ----------       ----------
<S>                                                                    <C>              <C>
Trade accounts receivable                                              $   10,349       $   10,251
Less:  allowance for doubtful accounts                                       (800)            (751)
                                                                       ----------       ----------
                                                                       $    9,549       $    9,500
                                                                       ==========       ==========
</TABLE>

<TABLE>
<CAPTION>
6.  INVENTORIES

Inventories at December 31 consisted of:

(in thousands)                                                             2000             1999
-----------------------------------------------------------------      ----------       ----------
<S>                                                                    <C>              <C>
Sub-assemblies and purchased parts                                     $    6,295       $    7,013
Finished goods                                                              1,984            3,039
                                                                       ----------       ----------
                                                                       $    8,279       $   10,052
                                                                       ==========       ==========
</TABLE>

Inventory at December 31, 1999 includes $2.5 million of inventory related to NWL
which was sold to Wavelight in January 2000

<TABLE>
<CAPTION>
7.  PROPERTY AND EQUIPMENT

Property and equipment at December 31 consisted of:

(in thousands)                                                             2000             1999
-----------------------------------------------------------------      ----------       ----------
<S>                                                                    <C>              <C>
Machinery and equipment                                                $    3,961       $    4,059
Land and building                                                              --              825
Office equipment and furniture                                              9,804            9,679
Leasehold improvements                                                        805            3,513
                                                                       ----------       ----------

                                                                           14,570           18,076
Less accumulated depreciation and amortization                            (12,626)         (14,127)
                                                                       ----------       ----------

                                                                       $    1,944       $    3,949
                                                                       ==========       ==========
</TABLE>



                                      F-12
<PAGE>   20

8.  DEVELOPED TECHNOLOGY AND OTHER INTANGIBLES

Developed technology and other intangibles resulting from the acquisition of
Heraeus Surgical, Inc. and NWL Laser-Technologie GmbH at December 31, 1999
consisted of (in thousands):

<TABLE>
Heraeus Surgical, Inc.:
<S>                                                 <C>
Developed technology                                $    3,229
Work force                                                 400
                                                         3,629
Less:
     Asset impairment                                   (1,937)
     Accumulated amortization                           (1,226)
     AMS sale                                             (443)
                                                    ----------
Net Heraeus Surgical, Inc.                                  23
                                                    ----------
NWL Laser-Technologie GmbH:

Developed technology                                     1,845
Distribution                                             1,183
Work force                                                 658
                                                    ----------
                                                         3,686
                                                    ----------
Less:
     Accumulated amortization                           (1,111)
                                                    ----------
Net NWL Laser-Technologie  GmbH                          2,575

Net developed technology and other intangibles      $    2,598
                                                    ==========
</TABLE>

There were no intangibles remaining after the sale of NWL as of January 1, 2000,
and the Company had no intangible assets as of December 31, 2000.

9. CREDIT LINES

The Company has in place an asset based line of credit which provides up to $6.0
million and expires September 2001. Credit is extended based on the Company's
eligible accounts receivable and inventory. At December 31, 2000, the Company
had approximately $2.1 million in borrowing base available against the $0.7
million outstanding and the $1.1 million in letter of credit reserve
requirements. The assets of the company secure the credit line, and the line
bears an interest rate equivalent to the bank's prime rate plus 2.25% per annum
(11.75% in December 2000). Borrowings against the line of credit are paid down
as the Company collects on accounts receivable. Provisions of the bank loan
agreement prohibit the payment of dividends on non-preferred stock, or the
redemption, retirement, repurchase or other acquisition of Company stock. The
agreement further requires the Company to maintain a minimum tangible net worth.
As of December 31, 2000, the Company was in compliance with all covenants.


                                      F-13
<PAGE>   21

10.  LEASE OBLIGATIONS

The Company leases certain equipment under lease agreements that have been
accounted for as capital leases. Leased equipment and accumulated amortization
related to assets under capital leases at December 31 were as follows:

<TABLE>
<CAPTION>
(in thousands)                                                          2000               1999
--------------                                                        -------            --------
<S>                                                                   <C>                <C>
Leased equipment                                                      $ 1,485            $  1,491
Accumulated amortization                                                  873                 620
</TABLE>

There were $20,000 in additions to leased equipment in 2000, $77,000 in 1999 and
$891,000 in 1998.

Amortization of equipment under capital leases is included in depreciation
expense.

The Company leases certain facilities and equipment under non-cancelable
operating leases. Rent expense under these leases amounted to approximately
$1,130,000, $1,558,000 and $1,805,000 in each of the three years ended December
31, 2000, 1999 and 1998 respectively.

Future minimum lease payments under capital and operating leases were as follows
at December 31, 2000:

<TABLE>
<CAPTION>
                                                      Capital          Operating
 (in thousands)                                        Leases           Leases
----------------------------------------------      ------------      ------------
<S>                                                 <C>               <C>
2001                                                $        333      $      1,643
2002                                                         238             1,676
2003                                                          76             1,714
2004                                                           -             1,716
2005 and beyond                                                -             1,409
                                                    ------------      ------------
                                                             647      $      8,158
                                                                      ============
Less amount representing interest                             75
                                                    ------------
Present value of future minimum lease payments      $        572
                                                    ============
Less current portion                                         295
                                                    ------------
                                                    $        277
                                                    ============
</TABLE>



                                      F-14
<PAGE>   22


11.  LONG-TERM DEBT

In February of 2000, the Company sold $3 million of 8.00% convertible debentures
in a private placement. The debentures mature in February 2007 and pay interest
monthly. Starting in February 2002, 1% per month of the outstanding principal
will be repaid. The debentures are convertible at the option of the holder at
any time prior to the close of business on the maturity date, unless previously
repurchased, into 2.4 million shares of common stock at a conversion price of
$1.25, subject to adjustment in certain circumstances. In addition, the Company
issued warrants to purchase 240,000 shares of the Company's common stock at
$1.50 per share. The warrants expire in 2005. The value of the warrants is being
amortized as interest expense in our statement of operations. The debenture
agreement contains covenants with regard various financial ratios, and as of
December 31, 2000 the Company is in compliance with all covenants.

Long term debt at December 31 consisted of:

<TABLE>
<CAPTION>
(in thousands)                                              2000              1999
-------------------------------------------------      ------------      ------------
<S>                                                    <C>               <C>
Mortgages secured by the NWL building with
   principal and 8.1% interest payable in monthly
   installments through March 2005                                -      $        346
Unsecured Bavarian Development Agency loans
   to NWL with principal and 5.2% interest due
   September through December 2003                                -               516
Convertible Debentures with 8% interest payable
   Monthly through February 2007                              3,000                 -
                                                       ------------      ------------
                                                       $      3,000      $        862
                                                       ============      ============
</TABLE>


For each of the five years and beyond, long-term obligations are:

<TABLE>
<CAPTION>
                                                              Long-term debt
(in thousands)                                               (Principal only)
--------------                                               ----------------
<S>                                                          <C>
2002                                                                  314
2003                                                                  305
2004                                                                  270
2005                                                                  240
2006 and beyond                                                     1,871
                                                                ---------
                                                                 $  3,000
                                                                =========
</TABLE>


                                      F-15
<PAGE>   23


12.  SHAREHOLDERS' EQUITY


The Company has 25,000,000 shares of no par value common stock authorized. In
addition, the Company has authorized 5,000,000 shares of undesignated preferred
stock with rights, preferences and privileges to be determined by the Company's
Board of Directors.

Private Placement of Common Stock

On January 14, 2000, the Company completed the final closing of a private
placement of common stock. In the transaction the Company received approximately
$1.8 million, net of expenses, of which approximately $1.0 million was received
in 1999 in exchange for 2.5 million shares of common stock, including placement
agent commission shares. In addition, the Company issued warrants to purchase
218,875 shares of the Company's common stock at $1.25 per share. The warrants
expire in January 2005.

1994 and 1984 Stock Option Plans

During 1994 and 1984, the Company adopted stock option plans under which the
Board of Directors may grant incentive stock options to purchase shares of
common stock to employees of the Company at a price not less than the fair value
of the shares as of the date of grant. The Board of Directors may also grant
non-statutory stock options to employees and consultants, including directors
who serve as employees or consultants, at not less than 85% of the fair market
value of the shares as of the date of grant. Options issued pursuant to the 1984
plan vest and become exercisable over periods of up to five years and expire
five to ten years after the date of grant. Options issued pursuant to the 1994
plan vest and become exercisable over periods of up to four years and expire
five years after the date of grant.

The 1984 Stock Option Plan expired by its terms with respect to any future
option grants effective in August 1994. At December 31, 2000, the 1984 Stock
Option Plan had options to purchase 142,832 shares of common stock outstanding,
all of which were exercisable.

The Company has reserved 3,050,000 shares of common stock of which there were
504,535 shares available for issuance pursuant to its 1994 stock option plan as
of December 31, 2000.

In 1998, the Company allowed employees to cancel outstanding options with
exercise prices greater than $2.00 per share that had been granted under the
1994 plan and replace them with new grants for a like number with the same
exercisability restrictions at the fair market value of the common stock at the
date of grant. None of these options had previously been repriced. Employees
elected to cancel and receive new grants to purchase an aggregate of 1,266,400
shares at an exercise price of $1.28. These options are included in the
cancellations and grants in 1998 in the table that summarizes plan activity for
the years ended December 31, 2000, 1999 and 1998.


                                      F-16
<PAGE>   24


1999 Retention Stock Option Plan

During 1999, the Company adopted a stock option plan under which the Board of
Directors may grant non-statutory options to purchase shares of common stock to
non-officer employees of the Company at a price not less than the fair value of
the shares as of the date of grant. Options issued pursuant to the 1999 plan
vest and become exercisable over periods of up to four years and expire five
years after the date of grant.

The Company has reserved 698,000 shares of common stock of which there were
196,000 shares available for issuance pursuant to its 1999 Retention Stock
Option Plan as of December 31, 2000.

Directors' Stock Option Plans

The Company has reserved 720,000 shares of its common stock for issuance
pursuant to its 1999 and 1995 Directors' Stock Option Plans in aggregate. Under
these plans, non-employee directors of the Company have been granted options to
purchase up to 105,000 shares (45,000 shares pursuant to the 1995 plan and
60,000 shares pursuant to the 1999 plan) of the Company's common stock
exercisable at the fair market value of such shares on the respective grant
dates. Options issued pursuant to these plans vest and become exercisable over
three years from the respective original date of issuance with respect to each
optionee who remains a director and expire five to ten years after the date of
grant. Upon the adoption of the 1999 Directors' Stock Option Plan, the 1995
Directors' Stock Option Plan expired with respect to future grants. There were
180,000 shares available in aggregate for issuance pursuant to the 1999
Directors' Stock Option Plans at December 31, 2000.


                                      F-17
<PAGE>   25

The following table summarizes activity in the Company's stock option plans
during the years ended December 31, 2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                   Options        Weighted Average
                                 Outstanding       Exercise Price
                                ------------       ------------
<S>                             <C>               <C>
Balance, December 31, 1997         2,428,397       $       4.08

Granted                            1,872,927       $       1.41
Exercised                            (53,960)      $       2.22
Canceled                          (1,632,047)      $       4.37
                                ------------       ------------

Balance, December 31, 1998         2,615,317       $       2.03

Granted                            1,508,553       $       1.36
Exercised                            (28,685)      $       1.26
Canceled                            (651,207)      $       2.23
                                ------------       ------------

Balance, December 31, 1999         3,443,978       $       1.70

Granted                              692,066       $       2.18
Exercised                           (568,507)      $       1.50
Canceled                            (747,931)      $       2.14
                                ------------       ------------
Balance, December 31, 2000         2,819,606       $       1.74
</TABLE>



The following table displays a summary of relevant ranges of exercise prices for
options outstanding and options exercisable for the Company's stock option plans
at December 31, 2000:

<TABLE>
<CAPTION>
                                   Options Outstanding                                 Options Exercisable
-----------------------------------------------------------------------------------------------------------------
                                                Weighted
                                                 Average         Weighted                            Weighted
Range of                        Number          Remaining         Average            Number           Average
Exercise Prices              Outstanding     Contractual Life  Exercise Price     Exercisable      Exercise Price
---------------              -----------     ----------------  --------------     -----------      --------------
<S>                          <C>             <C>               <C>                <C>              <C>
$0.69 - $1.25                    775,748              3.74      $       1.15           349,120      $       1.13
$1.28                            619,929              1.64      $       1.28           487,161      $       1.28
$1.31 - $1.50                    551,132              5.07      $       1.49           200,403      $       1.49
$1.59 - $2.00                    501,049              4.54      $       1.90           222,995      $       1.98
$2.31 - $5.88                    371,748              3.10      $       3.93           207,439      $       4.71
----------------------      ------------      ------------      ------------      ------------      ------------
$0.69 - $5.88                  2,819,606              3.60      $       1.74         1,467,118      $       1.86
======================      ============      ============      ============      ============      ============
</TABLE>


                                      F-18
<PAGE>   26


1989 and 1999 Employee Stock Purchase Plans

During 1989 and 1999, the Company adopted Employee Stock Purchase Plans under
which qualified employees can purchase up to a specified maximum amount of the
Company's common stock through payroll deduction at 85% of its fair market
value. In July 1999, the Company's 1989 Employee Stock Purchase Plan expired by
its term and at its expiration date, approximately 650,000 shares had been
purchased under this plan. Laserscope has reserved 350,000 shares of common
stock, for issuance pursuant to its 1999 Employee Stock Purchase Plan. Under
this plan, as of December 31, 2000, approximately 204,000 shares had been
purchased under this plan.

SFAS 123 Disclosure

The Company uses the intrinsic value method in accounting for its employee stock
options because, as discussed below, the alternative fair value method requires
use of option valuation models that were not developed for use in valuing
employee stock options. Under he intrinsic value method and because the exercise
price of the Company's stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recognized.

Pro forma information regarding net income and net income per share as if the
Company accounted for its employee stock options granted subsequent to December
15, 1994 under the fair value method was estimated at the date of grant using a
Black-Scholes multiple option pricing model with the following weighted average
assumptions:

<TABLE>
<CAPTION>
                                                     2000             1999             1998
                                                 ----------       ----------       ----------
<S>                                              <C>              <C>              <C>
Risk free interest rate                                6.07%            5.47%            4.74%
Dividend yield                                            -                -                -
Weighted average expected volatility factor            1.12             1.15             1.08
Expected life (in years)                               3.50             3.57             3.70
</TABLE>


Pro forma reporting compensation cost with respect to the Company's 1989 and
1999 Employee Stock Purchase Plan is estimated using the fair value of the
employees' purchase rights under the Black-Scholes model with the following
assumptions:

<TABLE>
<CAPTION>
                                                     2000             1999             1998
                                                 ----------       ----------       ----------
<S>                                              <C>              <C>              <C>
Risk free interest rate                                6.09%            4.79%            5.16%
Dividend yield                                            -                -                -
Weighted average expected volatility factor            1.49             1.31             0.70
Expected life (in years)                               0.50             0.50             0.50
</TABLE>

The weighted average fair values of those purchase rights granted in 2000, 1999
and 1998 were $0.68, $0.62 and $0.63, respectively.


                                      F-19
<PAGE>   27


The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options, which have no vesting restrictions and are fully
transferable. In addition, option models require the input of highly subjective
assumptions including the expected stock price volatility. Because the Company's
employee stock options have characteristics significantly different from those
of traded options, and because changes in the subjective assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options.

Had compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under those
plans, the Company's net loss and net loss per share would have been increased
to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
(in thousands, except per share data)               2000             1999             1998
                                                ----------       ----------       ----------
<S>                                             <C>              <C>              <C>
Pro forma net loss                              $   (1.265)      $   (9,236)      $  (11,150)
Pro forma basic and diluted loss per share      $    (0.08)      $    (0.73)      $    (0.90)
</TABLE>


1991 Shareholder Rights Plan

In November 1991, the Company adopted a shareholder rights plan and distributed
a dividend of one right to purchase one share of common stock (a "Right") for
each outstanding share of common stock of the Company. The Rights become
exercisable in certain limited circumstances involving a potential business
combination transaction of the Company and are initially exercisable at a price
of $34 per share. Following certain other events after the Rights have become
exercisable, each Right entitles its holder to purchase for $34 an amount of
common stock of the Company, or in certain circumstances, securities of the
acquirer, having a then current market value of twice the exercise price of the
Right. The Rights are redeemable at the Company's option at $0.01 per Right
before they become exercisable. Until a Right is exercised, the holder of a
Right, as such, has no rights as a shareholder of the Company. The Rights expire
on November 20, 2001.

13.  EMPLOYEE SAVINGS AND INVESTMENT PLAN

In October 1989, the Company adopted a 401(k) savings and investment plan, which
covers all employees. The Company's contributions to the plan have been 50%
matching of employee contributions up to 5% of each employee's base compensation
and were approximately $173,000, $213,000, and $260,000 in the years ended
December 31, 2000, 1999, and 1998, respectively.


                                      F-20
<PAGE>   28



14. INCOME TAXES

Significant components of the provision for income taxes were as follows (in
thousands):

<TABLE>
<CAPTION>
                                   2000            1999            1998
                                ----------      ----------      ----------
<S>                             <C>              <C>                <C>
Current federal taxes             $      -         $     -            $  -
Current state taxes                      -               -               -
Current foreign taxes                    -              13             184
                                ----------      ----------      ----------
Provision for income taxes        $      -      $       13      $      184
                                ==========      ==========      ==========
</TABLE>

Pretax loss from foreign operations was $665,000 in 2000, $501,000 in 1999 and
income of $395,000 in 1998.

Income taxes differ from the amount computed by applying the statutory federal
income tax rate of 35% to income (loss) before taxes. The reasons for the
differences and the tax effect of each are as follows (in thousands):

<TABLE>
<CAPTION>
                                                    2000             1999             1998
                                                ----------       ----------       ----------
<S>                                             <C>              <C>              <C>
Computed expected tax                           $       65       $   (2,683)      $   (3,306)
Operating loss with no carryback benefit               162            2,745            3,489
Benefit of net operating loss carryforward            (227)            (117)             (68)
Foreign taxes in excess of U.S. rate                     -               13               64
Other                                                    -               55                5
                                                ----------       ----------       ----------
Provision for income taxes                         $     -       $       13       $      184
                                                ==========       ==========       ==========
</TABLE>


                                      F-21
<PAGE>   29



The components of the deferred tax asset consisted of the following at December
31, 2000 and 1999(in thousands):

<TABLE>
<CAPTION>
                                                      2000             1999
                                                  ----------       ----------
<S>                                               <C>              <C>
Deferred tax assets:
     Net operating loss carryforwards             $    8,744       $    8,319
     General business credit carryforwards             1,708            1,701
     Inventory reserves and adjustments                1,344            2,191
     Other accruals and reserves not
       currently deductible for tax purposes           2,324            1,734
     Acquired intangibles                                  -              704
     Capitalized Research and Development                882              737
     Other                                             2,156            1,074
                                                  ----------       ----------
     Total deferred tax assets                        17,158           15,723
     Valuation for deferred tax assets               (17,158)         (15,723)
                                                  ----------       ----------
     Deferred tax asset                                    -                -
Deferred tax liabilities
                                                  ----------       ----------
Net deferred tax assets                           $        -       $        -
                                                  ==========       ==========
</TABLE>

Because of the Company's lack of earnings history, the net deferred tax assets
have been fully offset by a valuation allowance. The valuation allowance
increased by $1,435,000 in 2000 and by $2,173,000 in 1999. Approximately
$1,384,000 of the valuation allowance is attributed to stock option deductions,
the benefit of which will be credited to paid-in-capital when realized.

For federal tax purposes, the Company has net operating loss and tax credit
carryforwards of approximately $24,500,000 and $900,000, respectively, which
expire in the years 2001 through 2020. The Company has net operating loss
and research and development credit carryforwards of approximately $3,700,000
and $1,100,000, respectively, for state tax reporting purposes. The state net
operating loss carryforwards will expire in the years 2001 through 2006.

Utilization of the Company's net operating loss and tax credit carryforwards may
be subject to substantial annual limitation due to the ownership change
limitations provided by the Internal Revenue Code and similar state provisions.
Such an annual limitation could result in the expiration of the net operating
loss carryforwards and tax credits before utilization.


                                      F-22
<PAGE>   30


15. FINANCIAL INSTRUMENTS WITH MARKET RISK AND CONCENTRATIONS OF CREDIT RISK

The Company's trade receivables are made up of amounts due from its health care
industry customers, primarily in the United States, Europe and the Pacific Rim.
The Company's credit evaluation and collection practices and the relative lack
of concentration as well as geographical dispersion of customer accounts
comprising its accounts receivable substantially alleviate any concentration of
credit risk. Bad debt expense has been insignificant.

The Company also has an Investment Policy approved by its Board of Directors
related to its short-term cash investment practices. That policy limits the
amount of credit exposure to any one financial institution and restricts
investments to certain types of financial instruments based on specified credit
criteria.

16. CONTINGENCIES

The Company is at times a party to legal proceedings arising in the ordinary
course of its business. Currently, there are no actions which relate to product
liability or employee issues. While it is not feasible to predict or determine
the outcome of the actions which have been brought against it, the Company
believes that the ultimate resolution of these claims will not ultimately have a
material adverse effect on its financial position or results of operations.



                                      F-23
<PAGE>   31



                                   SCHEDULE II



                                   LASERSCOPE

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                  Balance at                                            Balance at
                                                  Beginning                                                End
         Descriptions                             of Period         Additions         Deductions        of Period
         ------------                            ------------       ---------         ----------        -----------
<S>                                              <C>               <C>               <C>               <C>
Allowance for doubtful accounts receivable:

   Year ended December 31, 1998                  $        800      $        161      $        436      $        525
                                                 ============      ============      ============      ============

   Year ended December 31, 1999                  $        525      $        226            $   --      $        751
                                                 ============      ============      ============      ============

   Year ended December 31, 2000                  $        751      $         49            $   --      $        800
                                                 ============      ============      ============      ============
</TABLE>



                                      S-1
<PAGE>   32

                                   SIGNATURES


        Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this Form 10-K/A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Jose, State of
California, on May 8, 2001.




                                   Laserscope, Inc.

                                   By:   /s/  Dennis LaLumandiere
                                         -------------------------------------
                                         Dennis LaLumandiere
                                         Chief Financial Officer