Cybex Announces 2008 Results

MEDWAY, Mass.--([ BUSINESS WIRE ])--Cybex International, Inc. (NASDAQ: CYBI), a leading manufacturer of premium exercise equipment for the commercial and consumer markets, today reported results for its fourth quarter and year ended December 31, 2008.

Net sales for the fourth quarter of 2008 were $39.3 million compared to $44.5 million for the corresponding 2007 period. The Company reported a net loss for the fourth quarter of 2008 of $10.9 million, including an $11.3 million goodwill impairment charge, or $0.62 per diluted share, compared to net income of $3.0 million, or $0.17 per diluted share, for the corresponding 2007 period.

For the year ended December 31, 2008, net sales were $147.9 million compared to $146.5 million for 2007. The net loss for the year ended December 31, 2008 was $9.1 million, or $0.52 per diluted share, compared to net income of $9.8 million, or $0.55 per diluted share, for 2007.

The 2008 results include a fourth quarter non-cash non-deductible goodwill impairment charge of $11.3 million, or $0.64 per diluted share, triggered by declines in the Company's stock price in the period. The write-off is in accordance with the requirements of Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." Various factors, principally the reduction in the Company's market capitalization resulting from the decline in its stock price, resulted in a complete write-off of the carrying value of the goodwill. Without the goodwill impairment charge, net income would have been $373,000 or $0.02 per diluted share for the fourth quarter of 2008 and $2.2 million or $0.12 per diluted share for 2008 and operating income would have been $1.5 million for the fourth quarter of 2008 and $5.7 million for 2008.

During the third quarter of 2007, the Company reevaluated, in accordance with SFAS 109, the need for the remaining deferred tax valuation allowance originally established in 2002 and, based on this review, substantially reduced the reserve as of September 29, 2007. The reduction of the tax valuation allowance increased net income by $5.4 million, or $0.30 per diluted share, for the year ended December 31, 2007.

John Aglialoro, Chairman and CEO stated, "Q4 sales were down 12% compared to Q4 2007 and I expect Q1 2009 sales to be below Q1 2008. Fitness clubs appear to be cautious in making expansion investments and have reduced their capital expenditures. This is reflective, of course, of general economic conditions. Looking forward, while the Company is not certain how long these conditions will persist, we expect sales to rebound as the economy recovers. In the meantime, expenses are being closely monitored as they were throughout 2008, and some initiatives are being delayed until we are more confident of the sales horizon. Gross margin in the quarter continued to be negatively impacted by higher material costs compared to Q4 2007 although we have seen some decreases in commodity prices in Q1 2009."

The Company will hold a conference call today. If you cannot participate in the call but wish to listen to it, you may login at CYBEX's website at [ www.cybexintl.com ]. Under the category Company, click on Press, scroll to bottom and select Q4 Earnings Release Conference Call.

About CYBEX

Cybex International, Inc. is a leading manufacturer of premium exercise equipment for commercial and consumer use. The CYBEX product line includes a full range of both strength training and cardio training machines sold worldwide under the CYBEX brand. Products are designed and engineered using exercise science to reflect the natural movement of the human body. Accommodating users from the first-time exerciser to the professional athlete, CYBEX products are available for a wide range of facilities from commercial health clubs to home gyms. For more information on CYBEX and its product lines, please visit the Company's website at [ www.cybexintl.com ].

This news release may contain forward-looking statements.There are a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made above.These include, but are not limited to, competitive factors, technological and product developments, market demand, economic conditions, the resolution of litigation involving the Company, and the ability of the Company to comply with the terms of its credit facilities.Further information on these and other factors which could affect the Company's financial results can be found in the Company's previously filed Report on Form 10-K for the year ended December 31, 2007, its Reports on Form 10-Q, its Current Reports on Form 8-K, and its proxy statement dated April 4, 2008.

CYBEX INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)

	Three Months Ended						Year Ended
	December 31,			December 31,			December 31,			December 31,
	2008			2007			2008			2007

Net sales	$	39,260		$	44,486		$	147,929		$	146,503
Cost of sales		27,650			29,274			99,940			95,683
Gross profit		11,610			15,212			47,989			50,820
As a percentage of sales		29.6	%		34.2	%		32.4	%		34.7	%
Selling, general and administrative expenses		10,081			9,691			42,321			42,224
Goodwill impairment charge		11,247		-				11,247		-
Operating income (loss)		(9,718	)		5,521			(5,579	)		8,596
Interest expense, net		245			379			1,176			963
Income (loss) before income taxes		(9,963	)		5,142			(6,755	)		7,633
Income tax expense (benefit)		911			2,150			2,333			(2,121	)
Net income (loss)	$	(10,874	)	$	2,992		$	(9,088	)	$	9,754
Basic net income (loss) per share	$	(0.62	)	$	0.17		$	(0.52	)	$	0.56
Diluted net income (loss) per share	$	(0.62	)	$	0.17		$	(0.52	)	$	0.55
Shares used in computing basic net income (loss) per share		17,539			17,341			17,465			17,304
Shares used in computing diluted net income (loss) per share		17,539			17,745			17,465			17,781

CYBEX INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share data)
(unaudited)

	Three Months Ended			Year Ended
	December 31,			December 31,
	2008			2008

GAAP operating loss	$	(9,718	)	$	(5,579	)
Adjustments
Goodwill impairment charge		11,247			11,247
Non-GAAP operating income		1,529			5,668
Interest expense, net		245			1,176
Income before income taxes		1,284			4,492
Income tax expense		911			2,333
Non-GAAP net income	$	373		$	2,159
Basic and diluted net loss per share	$	(0.62	)	$	(0.52	)
Adjustments		0.64			0.64
Non-GAAP basic and diluted net income per share	$	0.02		$	0.12
Shares used in computing basic net income per share		17,539			17,465
Shares used in computing diluted net income per share		17,541			17,570

CYBEX INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)

	December 31,		December 31,
	2008		2007
ASSETS
Current assets:
Cash and cash equivalents	$	1,628	$	609
Accounts receivable, net		18,735		21,015
Inventories		13,465		13,803
Prepaid expenses and other		2,249		1,970
Deferred tax asset		4,685		4,325
Total current assets		40,762		41,722
Property and equipment, net		36,551		34,089
Deferred tax asset		8,698		10,718
Other assets		5,290		353
Goodwill	-			11,247
	$	91,301	$	98,129

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	1,882	$	2,628
Accounts payable		5,965		7,021
Accrued expenses		11,986		13,887
Total current liabilities		19,833		23,536
Long-term debt		16,606		16,322
Other liabilities		9,411		3,229
Total liabilities		45,850		43,087
Stockholders' equity		45,451		55,042
	$	91,301	$	98,129

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Cybex Announces 2008 Results