Cybex International saw a 15.7% jump in net sales for the second quarter to $34.7 million, driven by “strong sales” of both the strength and cardio products. Gross margins declined 110 basis points for the quarter to 35.1% of sales, while SG&A expenses grew 100 basis points to 29.9%, which had the expected effect on the bottom line. However, the net income decrease to $1.1 million, or 6 cents per diluted share, from last year's $16.1 million or 96 cents per diluted share, was more directly a result of a $14.4 million, or 86 cents per diluted share benefit due to a reduction in the company's tax valuation reserve during the year-ago quarter. In addition, the company's effective tax rate was 41.5% in Q2 compared to 3.5% in the corresponding 2006 period. The difference between the 2007 and 2006 effective tax rates would equate to additional tax expense of $663,000, or 4 cents per diluted share, for the 2006 period.
