Cybex International, Inc. (NASDAQ: CYBI), a leading manufacturer of premium exercise equipment, today reported results for its first quarter ended March 26, 2011. Net sales for the first quarter of 2011 increased by 19% to $31.0 million compared to $26.1 million for the corresponding 2010 period. The Company reported a net profit for the first quarter of 2011 of $0.4 million, or $0.02 per diluted share, compared to a net loss for the first quarter of 2010 of $0.8 million or $0.04 per diluted share. The 2011 results include a $356,000 charge related to the Barnhard product liability matter, discussed below.
John Aglialoro, CYBEX Chairman and CEO stated, "I am pleased with the Q1 operating results. We continue to make investments in marketing and new product development which I believe will build on our success. We are now producing two new treadmill models in addition to our Big Iron line which is new for 2011. The Bravo Functional Training Line will be available in Q3 and represents a new source of revenue. Consistently introducing new and better products plus effectively telling our story through multiple means are key elements in our business development strategy."
As expected, CYBEX also announced that a judgment has been entered with respect to the December 2010 jury verdict in the product liability litigation, Barnhard v. Cybex International, Inc. As previously reported, CYBEX recorded as of December 31, 2010 a $62,696,000 litigation reserve as a current liability pertaining to the Barnhard jury verdict and a corresponding litigation related receivable for $15,904,000, representing the amount recoverable from the co-defendant in the matter and the estimated amount recoverable under the Company's insurance policies. The entry of the judgment has resulted in a first quarter 2011 addition of $380,000 to the litigation reserve and $24,000 to the related receivable. Interest at the annual rate of 9% will accrue from the judgment date.
The Company believes that it was not at fault for the accident that is the basis of the Barnhard suit and accordingly that this case was wrongly decided as to liability, and further that the amount of damages awarded by the jury was grossly overstated. The Company will continue to pursue all avenues to attain a reversal or substantial reduction of this judgment. An appeal of post trial orders in the case has been filed with the Appellate Division, Fourth Judicial Department, of the Supreme Court of the State of New York, and the Company will promptly file an additional appeal of the judgment. The posting of a bond in the full amount of the judgment, which is customarily a requirement for a stay of enforcement of a judgment during the appellate process, is beyond our ability to secure. The Company 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.
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