Sidebar Categories

Sweet, but I don’t know how to incorporate it into the existing code.. It says to do like this:

<?php wp_list_cats('exclude=1'); ?>

I’m need to incorporate it into this line:

<?php wp_list_categories('show_count=1&title_li=<h2>Categories</h2>'); ?>

Is that possible or will that throw things off and I have to find another place to implement it?