Circon announces cost-saving program.

SANTA BARBARA, Calif.--(BUSINESS WIRE)--May 14, 1996--Richard A. Auhll, chairman and president, Tuesday announced that Circon (NASDAQ/NMS:CCON) would be closing Cabot Medical's smaller facility in Langhorne, Pa., and taking other consolidating actions by the end of the third quarter 1996.

As a result of this consolidation and related tax benefits, Circon is targeting after-tax benefits of $800,000 in 1996, $1.8 million in 1997 and each subsequent year, compared with not taking these actions.

The targeted one-time operating cost, associated with closing the facility, is $1.8 million in 1996, but will yield $2.6 million in operating cost savings in 1997 and each subsequent year, compared with not consolidating.

This consolidation is targeted to produce an $800,000 benefit in the second quarter, a $200,000 cost in the third quarter and a benefit of $200,000 in the fourth quarter, for a full-year 1996, after-tax benefit of $800,000. In the years 1997 and beyond, the after-tax benefit is targeted for $450,000 per quarter, or $1.8 million per year.

The major costs associated with closing the facility and relocating the production activities are targeted to occur in the second quarter and total $1.8 million for 1996. By the fourth quarter, operating savings of $300,000 are targeted. In the years 1997 and beyond, this consolidation is targeted to produce operational savings of $650,000 per quarter, or $2.6 million per year.

The products currently produced in Langhorne represent approximately 4 percent of Circon's total sales and will be transferred to Circon's manufacturing facilities in Racine, Wis.; Stamford, Conn.; Norwalk, Ohio; Santa Barbara; and Windsor, Ontario, Canada.

The marketing, engineering and administrative functions, currently housed in Langhorne, will be transferred to other Circon facilities as well. The Langhorne plant closure will result in 105 people being relocated or replaced at other Circon facilities. The net personnel reduction will be a total of 51 employees.

Auhll stated: ``Although a difficult decision, closing the Langhorne facility was a necessary step in achieving the synergistic benefits and cost savings contemplated by the merger of Circon and Cabot.

``By eliminating duplicative manufacturing efforts and consolidating marketing, engineering and administrative functions into their respective organizations in other facilities, we gain economies of scale, increased operational efficiencies and lower overall costs.

``The consolidation also marks further progress toward our goal of integrating the two organizations and complements the benefits of the merger achieved to date.'' -0-

                             Circon Corp.
              Targeted Net Savings Due to Consolidation
                   Compared With Not Consolidating
                            (in millions)

                                     1996 Savings
                            Quarter                    Full Year
                    2Q         3Q        4Q              1996

Operating
 savings (loss)   $(1.9)     $(0.2)    $ 0.3            $(1.8)
After-tax
 benefits (costs) $ 0.8      $(0.2)    $ 0.2            $ 0.8

                                     1997 Savings
                                  Quarter                  Full Year
                    1Q         2Q        3Q        4Q        1997

Operating
 savings (loss)   $ 0.65     $ 0.65    $ 0.65    $ 0.65     $ 2.6
After-tax
 benefits (costs) $ 0.45     $ 0.45    $ 0.45    $ 0.45     $ 1.8

CONTACT: Circon Corp., Santa Barbara

R. Bruce Thompson, 805/685-5100