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[LETTERHEAD]
CIRCON ANNOUNCES CURRENT THREE MONTHS 1997 RESULTS
CIRCON CORPORATION, SANTA BARBARA, CALIFORNIA (NASDAQ-NMS:CCON)-September 15,
1997
Richard A. Auhll, Chairman and President today announced that in response to
shareholders requests for information prior to the shareholders meeting and
U.S. Surgical's allegations that the company's strategic plan is not working,
Circon is releasing current financial results for the three month period
ended August 1997 (June, July, and August) compared to the same period in
1996.
Circon is encouraged that the performance increases produced in the second
quarter 1997 have accelerated through August, particularly for U.S. sales,
and operating and net income.
Mr. Auhll noted that U.S. sales for the past three months are up 9.3%, and
total sales are up 6.3% over the same 1996 period. The sales increase was due
to new product introductions and productivity improvements of the U.S. sales
force.
Operating income for the 1997 period reached $3.5 million, up 64% compared to
1996, excluding one time charges related to closing Cabot's Langhorne
facility last year. This operating income improvement was due to the sales
increases and freezing of operating expenses over the past year.
Net income totalled $1.7 million, up 21%, and EPS was $0.12 per share, up
15% for the three months ended August 1997 compared to the same 1996 period.
If the one time 1996 facility closure charges and 1996 NOL tax benefits are
excluded, the resulting comparable 1997 net income was up 149% and earnings
per share rose 139%.
The current three month results have demonstrated the substantial progress
Circon has made in the past year, even under the stress of a hostile takeover
attempt by U.S. Surgical.
The current three months had a total sales increase of $2.4 million which
resulted in a gross profit increase of $1.3 million, an operating income
increase of $1.4 million and a net income increase of $1.0 million compared
to the same period last year, excluding the one time facility closure costs
and NOL tax benefits of 1996.
Circon's basic profit structure has improved with operating income rising
from 5.6% to 8.6% of sales, and net income rising from 1.7% to 4.1% of sales
for the respective 1996 and 1997 periods. Moreover, a major operating and
overhead expense reduction program was initiated in late August that includes
a one year 10% reduction in the salaries of top management and a 20%
reduction in the salary of the CEO, if the expense reduction objectives are
not achieved. The program is intended to bring further benefits for the
fourth quarter and all of 1998.
Page 1 of 2
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CIRCON ANNOUNCES CURRENT THREE MONTHS 1997 RESULTS Page 2 of 2
This document contains forward-looking statements regarding future
operating results and expected benefits of Circon's cost reduction program
which are subject to risk and uncertainty, including the risk that the third
quarter may not match the current period's performance. For a more detailed
discussion of these risks, please review the company's Form 10-Q filed with
the Securities and Exchange Commission for the second quarter of 1997.
Contact: R. Bruce Thompson
Executive Vice President
Chief Financial Officer
805-685-5100
COMPARATIVE SUMMARY OF INCOME
Unaudited, in Millions, Except per share data
<TABLE>
<CAPTION>
CURRENT THREE MONTHS YEAR TO DATE
JUNE, JULY, AUGUST EIGHT MONTHS
------------------------- ------------------
1996 1997 % 1996 1997
-------- -------- ---- -------- --------
<S> <C> <C> <C> <C> <C>
U.S Sales Force Sales $ 29.52 $ 32.26 9.3% $ 78.06 $ 79.29
Other Sales 8.92 8.59 (3.7%) 24.60 24.72
-------- -------- ---- -------- --------
Total Sales $ 38.44 $ 40.85 6.3% 102.66 104.01
Gross Profit 21.18 22.50 6.2% 56.80 57.16
Operating Expenses 19.04 18.99 (0.3%) 51.05 52.43
-------- -------- ---- -------- --------
Operating Income (w/o closure exp) 2.14 3.51 64% 5.75 4.74
-------- -------- ---- -------- --------
FACILITY CLOSURE EXPENSE 2.13 0 *** 2.13 0
Net Operating Income 0.01 3.51 *** 3.62 4.74
Income Before Taxes (1.01) 2.57 *** 0.98 2.47
Taxes (Benefits) (0.39) 0.90 *** 0.26 0.86
(NOL Benefits) (2.00) 0 *** (2.00) 0
-------- -------- ---- -------- --------
Net Taxes (2.39) 0.90 *** (1.74) 0.86
Net Income $ 1.38 $ 1.67 21% $ 2.72 $ 1.60
Net Income (w/o Closure Exp & Tax Ben) $ 0.67 $ 1.67 149% $ 2.30 $ 1.60
-------- -------- ---- -------- --------
-------- -------- ---- -------- --------
Shares Outstanding 13,037 13,650 4.7% 13,078 13,650
EPS $ 0.106 $ 0.122 15% $ 0.208 $ 0.117
EPS (w/o Exp & Tax Ben) $ 0.051 $ 0.122 139% $ 0.176 $ 0.117
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-------- -------- ---- -------- --------
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