A pending appeal on a $66 million product liability lawsuit and a possible delisting from the NASDAQ Stock Market did not put a damper on net sales for Cybex International Inc., the publicly traded equipment manufacturer based in Medway, MA.
Last month, Cybex reported net sales of $33.5 million for third quarter 2011, a 15 percent increase compared to $29.2 million for the same period last year, according to financials released by the company. This quarter makes the fourth consecutive quarter of double-digit sales increases for Cybex.
However, Cybex reported a third quarter 2011 net loss of $0.3 million compared to a net loss of $15,000 for the corresponding period in 2010. Even though the net loss was higher for the quarter, the net loss for the first nine months of this year was lower this year than last—$0.5 million compared to $1.1 million for the same period in 2010.
Part of the net loss was due to litigation charges of $1.4 million and $3 million for third quarter 2011 and the nine months ended Sept. 24, 2011, respectively. Those charges stem from the Barnhard v. Cybex International Inc. product liability judgment delivered in December 2010 in which Cybex was held 75 percent responsible for an accident involving a piece of Cybex equipment. Cybex has appealed the judgment. A five-judge appellate court was scheduled to hear the company’s position in the Barnhard case on Oct. 26 in Rochester, NY. John Aglialoro, Cybex CEO, said in a call with analysts last month that he expects to receive a verdict before the end of the year. He said the court would decide whether to send the case back to the lower courts, approve the judgment amount or do something in between.
Cybex also will make its case before NASDAQ this month. In April, Cybex received a letter from the exchange that it was noncompliant with a rule requiring listed companies to have minimum stockholders’ equity of $10 million. Due to an accounting charge related to the Barnhard case, Cybex was unable to comply in the required 180 days, the company says. Cybex was scheduled to appear before a NASDAQ hearing panel on Nov. 10 to offer a plan on how it will comply with the rule. The panel can grant Cybex a period of up to 180 more calendar days from the date of the determination letter, which would be April 1, 2012, to regain compliance with the listing rule. If Cybex’s appeal in the Barnhard case is successful, Cybex says it will be able to regain full compliance with the listing rule.
This appearance before a NASDAQ hearing panel may not be Cybex’s last. The company has until Dec. 13 to regain compliance with a NASDAQ requirement that the minimum bid price for a company traded on the market be at least $1 per share or risk being delisted. Cybex’s stock has traded under that price for most of the year.