The paper was cut out in circles.

[sitifan]

The paper was cut out in circles. (Hanlin English, Vol. 5, page 176)
Does the above sentence mean "several circles were produced from being cut out from the paper"?

 

[Tarheel]

That would be my best guess. (Context would make it more clear.)

 

[tedmc]

several circles were produced from being cut out from the paper

I'd say "several circles were cut out from the (piece of) paper.