Cybex International, Inc. reported net sales for the fourth quarter 2005 were $36.0 million, compared to $29.9 million for the corresponding 2004 period, an increase of 20%. For the year ended December 31, 2005, net sales were $114.6 million, compared to net sales of $103.4 for 2004, an increase of 11%. Excluding a fourth quarter 2005 litigation-related charge, the company's fourth quarter 2005 pro forma net income was $2.9 million or 19 cents per fully diluted share, compared to net income of $1.6 million, or 10 cents per fully diluted share, for the corresponding 2004 period. Excluding third and fourth quarter 2005 litigation-related charges, the pro forma net income for the year ended December 31, 2005 was $4.7 million, or 30 cents per fully diluted share, compared to net income of $2.9 million, or 24 cents per fully diluted share, for the corresponding 2004 period. On a GAAP basis, the company reported net income for fourth quarter of $2.4 million, or 16 cents per fully diluted share and for the year ended December 31, 2005 of $61,000, or $0.00 per fully diluted share.
Actual GAAP results for the fourth quarter ended December 31, 2005 include an increase in the company's litigation reserve primarily related to the previously announced appellate decision in the Kirila matter, resulting in a pre-tax charge of $504,000. Actual GAAP results for the year ended December 31, 2005 also include increases in the company's litigation reserve related to a jury verdict and a reversal of summary judgment in two patent infringement cases during the third quarter which, together with the fourth quarter increase described above, resulted in pretax charges for the year totaling $4,605,000. While CYBEX will continue to vigorously appeal or defend each of these matters, the company believes it has sufficient liquidity to satisfy any final awards if these matters are ultimately determined adversely to the company.
John Aglialoro, Chairman and CEO, stated, “The results of our efforts over the last nine months culminated in our strong fourth quarter. We are pleased with our sales performance and the improvement in gross margins for the quarter. Most importantly, we introduced two new product categories, the LCX 425T light commercial treadmill and the virtual reality Trazer, which will open new markets for CYBEX. We also solidified our core strength business with the introduction of the exciting VR3 line. We are determined to continue our momentum in 2006 with an aggressive new product development schedule.”