Release 3:00pm CDT
  Approved By:   Scott Youngstrom, CFO (763)
 
      951-8211
 
      Enpath Medical, Inc.
 
       
 
  Contacts:   Investors
 
      EVC Group (415) 896-6820
 
      Doug Sherk
 
      Jennifer Beugelmans
 
       
 
      Media
 
      EVC Group
 
      Steve DiMattia (646) 277-8706

May 2, 2007
Exhibit 10.4
Enpath Medical Reports Record First Quarter Revenues
Company Earns $.05 Per Share
Conference Call Previously Scheduled for Today is Cancelled
MINNEAPOLIS—Enpath Medical, Inc. (Nasdaq: NPTH), a leading developer and
manufacturer of proprietary products for blue-chip medical device companies
operating worldwide, today reported first quarter results.
Revenue increased 7% to $10.1 million, the Company’s first quarter over
$10 million, compared with $9.4 million for the same quarter in 2006. Introducer
and lead product line revenue increases were partially offset by a reduction in
catheter product line revenue.
Revenue from the introducer product line increased 16% to $6.6 million compared
with $5.7 million in the first quarter last year. Revenue from the stimulation
leads product line for the quarter increased to $3.1 million, up from the
$2.3 million in the first quarter of 2006 due primarily to increased leads and
contract manufacturing revenues when compared to the same period last year.
Revenue from the catheter product line decreased to $390,000 compared with
$1.4 million in the first quarter last year. First quarter 2006 catheter line
revenue was favorably influenced by two customers preparing to launch their
catheter based products.
Gross margins for the quarter were 36% compared with 39% in the first quarter of
2006 due primarily to costs associated with the duplicate facilities and the
expenses associated with moving to our new facility. Selling, general and
administrative expenses totaled $2.1 million, or 21% of revenue, during the
first quarter of 2007 as compared to $1.5 million, or 16% of revenue, recorded
for the first quarter of 2006. Recognition of additional rental expense on the
new facility, legal expenses associated with our patent infringement defense and
moving-related expenses impacted the Company’s overall quarterly SG&A results
when compared to the 2006 first quarter. Research and development expenditures
for the quarter totaled $900,000, or 9% of revenues, compared with $1.2 million
in the first quarter of 2006, or 13% of revenues.
Net income was $330,000 or $0.05 per fully diluted share in the first quarter of
2007 as compared to $650,000 or $0.11 per fully diluted share in the first
quarter of 2006.
Definitive Merger Agreement Signed on Monday, April 30, 2007
Enpath Medical, Inc. announced on Monday, April 30, 2007, that it has entered
into a definitive merger agreement under which Greatbatch, Inc. will acquire
Enpath for $14.38 per share in cash, or approximately $102 million, including
assumption of debt. Under the terms of the agreement,

 

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Greatbatch, Inc. will commence a tender offer for all of Enpath’s outstanding
shares no later than May 8, 2007. The proposed transaction is subject to
customary closing conditions and regulatory approvals and the tender of a
majority of Enpath’s outstanding shares, on a fully diluted basis. The
transaction has been unanimously approved by the Boards of Directors of both
companies and is expected to close in late June 2007.
Annual Shareholder Meeting Update
Enpath’s Annual Shareholder Meeting, scheduled for 3:45 PM on Thursday, May 3,
will proceed as scheduled but will not include an executive report on the
Company’s business.
Conference Call Previously Scheduled for Today has been Cancelled
About Enpath Medical
Enpath Medical, Inc., headquartered in Plymouth, Minnesota, is a leader in the
design, development, manufacture and marketing of percutaneous delivery systems
and stimulation leads technologies. Its proprietary products include venous
vessel introducers, articulating and fixed curve delivery catheters, epicardial
and endocardial stimulation leads, and other products for use in pacemaker,
defibrillator, catheter and infusion port procedures as well as neuromodulation
markets. Its products, which are primarily finished goods, are sold worldwide
through partnering relationships with other medical device companies.
Safe Harbor
This news release contains forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995. Certain important factors could cause
results to differ materially from those anticipated by some statements made
herein. All forward-looking statements involve risks and uncertainties. A number
of factors that could cause results to differ materially are discussed in our
Annual Report on Form 10-K for the year ended December 31, 2006, as well as in
our quarterly reports on Form 10-Q and Current Reports on Form 8-K. Among the
factors that could cause results to differ materially are the following:
Enpath’s dependence upon a limited number of key customers for its revenue;
Enpath’s ability to successfully protect its intellectual property against
misappropriation or claims of infringement by third parties; the ability of
Enpath’s customers to successfully develop and market therapies that utilize the
Company’s advanced delivery systems; Enpath’s ability to effectively manufacture
its products, specifically steerable catheters, in anticipated required
quantities; Enpath’s ability to develop or acquire new products to increase its
revenues; Enpath’s ability to attract and retain key personnel; introduction of
competitive products; government regulatory matters; economic conditions; and
Enpath’s ability to raise capital. In addition to those risks, there are risks
and uncertainties associated with the tender offer that will made by Greatbatch,
Inc. for Enpath’s common stock. Those risks include risks that the transaction
will not be consummated on the terms or timeline first announced on Monday,
April 30, 2007. Further information concerning those risks will be included in
the Company’s filings with the Securities and Exchange Commission in response to
the tender offer. All forward-looking statements of Enpath, whether written or
oral, and whether made by or on behalf of Enpath, are expressly qualified by
these cautionary statements. In addition, Enpath disclaims any obligation to
update forward-looking statements to reflect events or circumstances after the
date hereof.

 

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Enpath Medical, Inc.
Condensed Balance Sheets

                      Unaudited             03/31/07     12/31/06  
Assets
               
Cash and cash equivalents
  $ 904,457     $ 523,483  
Inventory, receivables and prepaids
    12,714,350       11,177,186  
Other current assets
    253,791       313,686  
Property, plant and equipment, net
    9,913,975       5,900,115  
Goodwill
    9,487,975       9,487,975  
Intangible assets with finite lives and other
    5,833,118       5,990,466  
 
           
Total Assets
  $ 39,107,666     $ 33,392,911  
 
           
Liabilities & Shareholders’ Equity
               
Bank line of credit
  $ —     $ —  
Current liabilities
    5,176,017       4,477,198  
Long-term liabilities
    4,823,708       727,058  
Shareholders’ equity
    29,107,941       28,188,655  
 
           
Total Liabilities & Shareholders’ Equity
  $ 39,107,666     $ 33,392,911  
 
           

Enpath Medical, Inc.
Statements of Operations (Unaudited)

                      Three Months Ended       March 31, 2007     March 31, 2006
 
Net sales
  $ 10,104,517     $ 9,422,689  
Cost of sales
    6,509,684       5,709,670  
 
           
Gross profit
    3,594,833       3,713,019  
 
           
 
               
Operating expenses:
               
Research and development
    949,799       1,203,088  
Selling, general and administrative
    2,148,767       1,459,409  
 
           
Total operating expenses
    3,098,566       2,662,497  
 
           
 
               
Operating income
    496,267       1,050,522  
 
               
Other income (expense):
               
Interest expense
    (43,191 )     (50,599 )
Interest income
    233       231  
Other
    (7,921 )     3,798  
 
           
Total other income (expense)
    (50,879 )     (46,570 )
 
           
 
               
Income before income taxes
    445,388       1,003,952  
Income tax expense
    115,356       351,383  
 
           
Net income
  $ 330,032     $ 652,569  
 
           
 
               
Net income per common share:
               
Basic
  $ 0.05     $ 0.11  
Diluted
  $ 0.05     $ 0.11  
 
           
 
               
Weighted average common and common equivalent shares outstanding:
               
Basic
    6,336,515       6,104,568  
Diluted
    6,444,378       6,209,405