ATS Liquidating Trust
Frequently Asked Questions

When will the first cash distribution to former ATS stockholders occur?
The first cash distribution occurred on May 30, 2003.

When will the subsequent distributions to former ATS stockholders occur?
Subsequent distributions depend on the timing of asset sales, the proceeds of any such asset sales, the amount and timing of the receipt of royalties, milestone payments and any other cash that becomes available to the Trust. We cannot predict when a second distribution will occur. However, subsequent distributions are expected to be made at least annually until there is a final liquidating distribution.

How much cash will be distributed at subsequent distributions to former ATS stockholders?
The exact amounts depend on the timing of asset sales, receipt of royalties and milestone payments, the actual amounts realized and the resolution of outstanding claims. Therefore we cannot make any forecasts of future distributions, if any. At this time, please refer to Exhibit E of the Disclosure Statement for projections of future distributions and the assumptions integral to those projections. From time to time the liquidating trustee may also provide an update to such assumptions on this website.

How much cash will I receive as a former ATS stockholder?
Cash distributions will be on a per share basis. We plan to announce future distribution amounts shortly in advance of the actual distribution date.

Why was the May 31, 2003 distribution different from the ten cents per share projected in the Disclosure Statement?
The initial distribution projection was based on assumptions as detailed in the Disclosure Statement and in Exhibit E.

That number was merely a projection based upon a series of assumptions. The Disclosure Schedule specifically indicated that the actual numbers would differ from these projections. A number of factors have and will continue to influence those assumptions and projections and the amount of any distributions.

For example, the projection in the Disclosure Schedule assumed that all the assets would be sold by the initial distribution. That did not occur as projected. The Cardiovascular and Segenix assets have not sold to date and the second sale to Smith & Nephew, confirmed by the Court on May 28, 2003, did not close in time for those proceeds to be included in the initial distribution.

In addition, many factors that may include the state of the financial markets and the uncertainty created by the war in Iraq have caused unanticipated delays and dampened interest in the assets. It is unclear whether those factors will change or whether the remaining assets can be sold for their projected prices, if at all, or whether the assumed and projected royalties and milestones from existing, pending and future deals will be realized.

I heard that there is a minimum cash distribution amount to former ATS stockholders and that I might not receive a distribution. How does that work?
According to the Plan approved by the Court, the Liquidating Trust will not be required to make a current distribution to former shareholders where the amount of that individual distribution is less than $200, unless the distribution is a final distribution of the Liquidating Trust. If their distribution is less than $200, an account will be set up in their name and they will be paid at a subsequent distribution when their account is in excess of $200. Additionally, no distribution to former ATS stockholders will be made if the total distribution in the aggregate will be less than $250,000.

Nevertheless, the Trustee has discretion to make distributions of less than $200 to individual former ATS stockholders, or to make a total distribution that is in the aggregate less than $250,000. For the initial distribution, the Trustee used this discretion to make an initial distribution to all shareholders.

What must I do to receive the cash distributions?
Nothing. The Trust will distribute cash to shareholders of record as of the close of business on March 31, 2003. However you may update your address as described below.

How long will the ATS Liquidating Trust last?
The Trust will terminate in five years, unless the Trustee, or a party in interest, timely files a motion with the bankruptcy court requesting an extension of the term of the Trust and the bankruptcy court grants the request. Although projections in Exhibit E of the Disclosure Statement show distributions through the end of 2005, this is not a firm date to indicate either a minimum or a maximum duration. The Trust may make a final distribution and terminate at an earlier date, or the Trust may be continued for a longer time as described above.

Can I sell my shares?
As a result of the Plan , the stock of the Company was cancelled and its former stockholders now hold non-trading interests in the ATS Liquidating Trust. According to the terms of the Plan, the interests in the ATS Liquidating Trust cannot be transferred, except by operation of law, and the Liquidating Trustee will only recognize as beneficiaries of the Trust those equity holders of record as of March 31, 2003, the effective date of the Plan. Any trading that may be occurring after the effective date of the Plan under the symbol “atisz.pk” or otherwise is unauthorized by the Plan and will not be recognized by the Trustee.

Will my shares be converted into shares of Smith & Nephew?
No.

Will my shares be converted into shares of any other company?
No

Will Advanced Tissue Sciences resume operations?
No

If former shares are held in street name by a brokerage firm, will the brokerage firm receive one lump sum check covering all the shares they hold or will the firm receive individual checks for each account?
The brokerage firm will receive one lump sum check covering all the former shares held by its clients. If you held your ATS shares in a brokerage account, you should contact your broker to be sure any distributions are forwarded to you.

Who should I notify if my address changes?
If you held your ATS shares in a brokerage account, you should contact your broker. If you held your shares directly through ATS, please write to the Trustee.

How do I contact the Trustee of the ATS Liquidating Trust?
Write to:
John T. Freeman
Trustee of the ATS Liquidating Trust
P.O. Box 180479
Coronado, CA 92178-0479.

Are cash distributions from the ATS Liquidating Trust taxable events?
You need to discuss the tax aspects of your holdings and any distributions with your tax advisor. The trustee cannot and will not provide advice on the personal tax treatment of any distributions.