Circon announces preliminary 1994 results.

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Jan. 26, 1995--Richard A. Auhll, chairman and president, Thursday announced that Circon's 1994 operating income was up 130 percent to $5.6 million, and net income and EPS both increased 69 percent to $3.8 million and 47 cents respectively.

Sales for 1994 reached a record high $88.9 million and there was an improving trend in quarterly sales with each quarter being progressively better than the preceding quarter.

Operating expenses were carefully controlled throughout 1994 and were down 1.6 percent to $40.7 million. Selling, general and administrative expenses dropped $0.5 million to $32.8 million even though sales increased.

1994 R&D expenditures were $7.9 million and remained at the desired level of 9 percent of sales. Development efforts during 1994 were concentrated on expanding the products offered to the company's primary markets of urology, gynecology and laparoscopy.

1994 income before taxes increased 95 percent to $5.9 million. Income taxes totalled $2.1 million, up 173 percent over 1993 due to higher tax rates, reduced tax credits, and less tax exempt income.

Fourth quarter 1994 sales were a record high $23.7 million, up 7 percent over fourth quarter 1993. Gross profit for the quarter of $12.2 million was also a new Circon high. Operating income of $1.7 million, net income of $1.0 million and EPS of 12 cents were all up substantially over respective fourth quarter 1993 results when a $2.6 million restructuring charge was recorded.

Circon is in solid financial condition with $20.8 million in cash, a current ratio of four to one, and zero debt.

Sales of one of Circon's exciting new products, the VaporTrode electrode will begin within 30 days. The VaporTrode electrode can be used to perform a variety of surgical procedures in the urinary tract including the transurethral resection of the prostate (TURP).

Studies demonstrate that the VaporTrode electrode dramatically reduces bleeding, shortens hospital stay by 80 percent and lowers the overall cost of surgery and hospitalization by approximately 60 percent or $5,000. Urologists find the VaporTrode electrode easy to use and much less expensive than laser systems.

The VaporTrode electrode can only be used with Circon Resectoscopes and the company may be able to penetrate competitive accounts. VaporTrode electrode sales to existing customers could replace sales of certain existing products such as the lower cost traditional cutting loops and higher cost laser fibers.

The single use VaporTrode electrode will sell for approximately $135. About 300,000 urological procedures could potentially be performed annually with the VaporTrode electrode.

Circon Corp. develops, manufactures, and markets advanced endoscope and video systems for minimally invasive surgical applications. Circon is the largest U.S. producer of medical endoscope and video systems.

                         Circon Corp.
               Comparative summary of income
         Unaudited, in millions, except per share data

                      Fourth quarter               Full year
                   1994       1993(a)           1994        1993(a)

Sales              $23.7      $22.2             $88.9      $87.3
Gross profit        12.1        8.9              46.3       43.7
Operating expenses  10.4        9.8              40.7       41.3
Operating income     1.7       (1.1)              5.6        2.4
Income before
  taxes              1.6       (1.1)              5.9        3.0
Net taxes            0.6       (0.5)              2.1        0.7
Net income         $ 1.0      $(0.6)            $ 3.8      $ 2.3
Shares outstanding 8,252      8,146             8,147      8,158
Earnings per share $0.12     $(0.07)            $0.47      $0.28

(a)1993 includes $2.6 million pretax restructuring charge.

                    Condensed balance sheet
                     Unaudited, in millions

                             Dec. 31, 1994        Dec. 31, 1993
Cash & equivalents           $20.8                $22.3
Total current assets         $58.9                $58.4
All other assets, net         35.3                 29.2
Total assets                 $94.2                $87.6
Total current liabilities    $12.2                $ 8.5
Total debt                       0                    0
All other liabilities, net     4.0                  4.5
Shareholders' equity         $78.0                $74.6
Total liabilities and
  shareholders' equity       $94.2                $87.6

CONTACT: Circon Corp., Santa Barbara

R. Bruce Thompson, 805/967-0404