Cybex International Inc. (Nasdaq: CYBI) continues to recover from the effects of a down economy and recent unfavorable judgment from a liability lawsuit as it reported higher revenue and swung to a profit for the first quarter.
The Medway, Mass.-based fitness equipment manufacturer said its latest quarterly sales, ended March 26, 2011, grew 19 percent to $31 million, compared to sales of $26.1 million during same period a year ago.
Cybex reported a first-quarter 2011 net profit of $400,000, or $0.02 per diluted share, compared to a net loss of $800,000, or a loss of $0.04 per diluted share during the first quarter 2010.
The first-quarter results include a $356,000 charge related to an unfavorable $65.9 million lawsuit verdict lodged against Cybex and a New York gym, for which the company is reserving funds in case its current appeal of the verdict fails.
In the previous quarter, ended Dec. 31, 2010, Cybex set aside a $46 million for the reserve and $12.7 million in related tax provisions.
As of Dec. 31, 2010, Cybex reported a total $62,696,000 in litigation reserves.
In December 2010, a New York jury ordered Cybex and Amherst Orthopedic Physical Therapy PC to pay $65.9 million in damages to plaintiff Natalie M. Barnhard, who sued the company after one of its exercise machines fell on her in 2004. Cybex contended Barnhard wasn’t using the machine for its intended purpose.
Cybex is responsible for 95 percent of the lawsuit, but said April 22 it expects to recover 20 percent plus interest, or $15,904,000, from its co-defendant in the case.
In the first-quarter earnings report, Cybex officials reiterated what they told SNEWS two weeks ago, that “the company will continue to pursue all avenues to attain a reversal or substantial reduction of this judgment.”
An appeal has been filed with the Appellate Division, Fourth Judicial Department, of the Supreme Court of the State of New York.
Cybex “is exploring ways of protecting itself during the pendency of its appeals, which will include immediately requesting the Appellate Division to grant a stay of enforcement of the judgment with a limited bonding requirement,” company officials said in their most recent statement.
-- Compiled by David Clucas