NORWALK, Conn., Aug. 5 /PRNewswire/ -- United States Surgical Corporation (NYSE:USS) announced today that it has commenced a new cash tender offer for all of the outstanding common shares of Circon Corporation (Nasdaq:CCON) at $16.50 per share. ``We believe that U.S. Surgical's offer is a highly attractive opportunity for Circon shareholders,with a price/earnings ratio of more than 235 times trailing 12 months' earnings,' said Leon C. Hirsch, chairman of USS. ``We would still prefer to meet with Circon's management and negotiate amerger on a friendly basis, but they have turned down every request for a meeting. ``The sales and operating synergies between USS and Circon are significant. Circon is the largestproducer of laparoscopic scopes, video systems and endoscopic suction irrigation devices in theUnited States. These products represent an ideal complement to USS' $500 million minimallyinvasive product lines. Circon will also provide a major platform for U.S. Surgical to expand itspresence in the areas of urology and gynecology. In addition, Circon is the largest producer ofureteral stents in the United States and number one in gynecological sterilization products. Mr. Hirsch added, ``Since USSU original tender offer of August 2, 1996, Circon's financialperformance has continuously deteriorated. Circon's latest results clearly demonstrate that Circonmanagement continues to fail to create tangible operational improvements. Operating income for thesix month period ended June 30 was down 22% compared to the comparable six months in 1996,while the operating margin for the same period dropped to 4% from 6%. Additionally, secondquarter operating income fell more than 25% from first quarter, earnings per share dropped 50%and the operating margin was down to 4% from 5%. ``While Circon's management has touted the fact that their second quarter sales were the highestsince the merger with Cabot Medical in August 1995, they failed to mention that second quarterrevenues are still lower than the third quarter of 1995 and on an operating basis the quarter justended is one of the worst in the last eight quarters.' USS' tender offer is conditioned on, among other things, the acquisition of at least 67% of Circon'sshares on a fully diluted basis, the inapplicability of Circon's ``poison pill' rights plan and Section203 of the Delaware General Corporation Law to the offer and USSU proposed merger. The offerand withdrawal rights will expire at 6:00 p.m., New York City time, September 25, 1997.Following the completion of the tender offer, U.S. Surgical intends to consummate a merger inwhich all remaining shareholders will also receive $16.50 per share. USS currently owns 14.8% of outstanding Circon shares, the approximate maximum number ofshares USS can purchase without triggering Circon's ``poison pill.' USS acquired 1,000,100 shareson the open market prior to commencing an $18 per share cash tender offer on August 2, 1996.After amending the original offer twice, USS acquired an additional 973,174 shares in a $14.50 pershare cash tender offer that was completed on July 14, 1997. Circon shareholders have demonstrated overwhelming support for USSU original and amendedtender offers. In December 1996, 7,726,701 shares were tendered, which with the 1,000,100shares already owned by USS, represented 79% of Circon's common stock not owned by Circon'smanagement and board, based on their September 1996 10-Q and June 1996 proxy statement. InJuly, the amended offer of $14.50 per share was oversubscribed 400%, with 4,508,000 sharestendered. United States Surgical Corporation is a diversified surgical products company specializing inminimally invasive technologies that improve patient care and lower health care costs. Some of the statements contained in this document are forward-looking and are based onmanagement's current expectations. Actual results may differ materially from such expectations dueto factors discussed in the ``Financial Condition' section of USS' Form 10-K as filed with theSecurities and Exchange Commission. Certain Additional Information: United States Surgical Corporation will be soliciting proxies inopposition to the Board of Directors of Circon Corporation to elect two directors and approve ashareholder proposal at Circon's 1997 Annual Meeting of Shareholders. The following persons maybe deemed participants in such solicitation of proxies: United States Surgical Corporation, USSAcquisition Corp., Thomas R. Bremer, Leon C. Hirsch, Pamela Komenda, Marianne Scipione,Scott Spitzer, Charles M. Elson and Victor H. Krulak. United States Surgical Corporation is the beneficial owner of 1,959,348 shares of Circon commonstock, USS Acquisition Corp. is the beneficial owner of 973,174 shares, Mr. Elson is the beneficialowner of 6,963 shares and Mr. Krulak is the beneficial owner of 6,963 shares of Circon commonstock. Mr. Krulak and Mr. Elson received such shares of common stock from United StatesSurgical Corporation in connection with their agreement to stand for election as a director ofCircon. In addition, United States Surgical Corporation has agreed to indemnify Mr. Elson and Mr.Krulak to the extent permitted by applicable law, from and against any and all expenses, liabilities orlosses of any kind arising out of any threatened or filed claim, action, suit, or proceeding assertedagainst or incurred by either Mr. Elson or Mr. Krulak in his capacity as a nominee for election as adirector of Circon. Following their election to the Circon Board, if Circon does not provide Mr.Elson and Mr. Krulak with the same indemnification agreements provided to the current directors ofCircon, United States Surgical Corporation has agreed to enter into agreements providing the samelevel of indemnification. United States Surgical Corporation has also agreed to reimburse each of Mr. Elson and Mr. Krulakfor his reasonable out-of-pocket expenses, including reasonable fees and expenses of counsel. Although Salomon Brothers Inc. (``Salomon Brothers'), which is acting as dealer manager inconnection with the proposed acquisition of Circon, does not admit that it or any of its directors,officers, employees or affiliates is a ``participant', as defined in Schedule 14A promulgated by theSecurities and Exchange Commission under the Securities Act of 1934, as amended, or that suchSchedule 14A requires the disclosure of certain information concerning them, the followingemployees of Salomon Brothers may assist United States Surgical Corporation in such a solicitation:Wilder Fulford (managing director), John Fowler (managing director), Adam Berger (vicepresident) and Richard Upton (associate).
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