An annular cutter is a specialized bit for drilling through metal. Like a hole saw for wood, an annular cutter only cuts the outside edge of a hole. It produces accurate burr-free holes to close tolerances without pre-drilling or step drilling. It can drill a much larger hole and requires less force and time than a standard twist drill bit. As it turns, the cutter produces chips from the outside cutting edges and after cutting the hole a ‘slug’ (round chunk of metal from the center of the cutter) falls out.