Cybex International, Inc., the manufacturer of exercise equipment, has reached a settlement in the product liability litigation, Barnhard v. Cybex International, Inc. Pursuant to the settlement, Cybex will pay to the plaintiff, net of insurance, approximately $19.5 million, of which approximately $18.5 million will be paid at the consummation of the settlement with the balance paid over seven years.
As part of the settlement, Cybex will be released of all further liability with respect to the litigation, which will be dismissed with prejudice. Cybex will satisfy its cash obligation through available cash, its existing line of credit and additional financing, which it is in the process of arranging with its principal bank.
The settlement is subject to standard closing conditions, including the execution of a definitive settlement agreement by Cybex, the plaintiff and the third party defendant. Cybex anticipates that all conditions will be satisfied and funds disbursed within the next 30 days.
In December 2010, a New York court ruled that Cybex must pay
a New York woman $66 million after she was injured by one of the company’s
weight machines in 2004. In November 2011, an appellate court reduced a product liability award against Cybex International by 31 percent to approximately $44 million.
Natalie Barnhard, 30,
sued the Medway-MA based manufacturer of exercise equipment after a Cybex-built
leg extension machine fell on top of her, crushing vertebrae in her back and
rendering her a quadriplegic. Barnhard, who was 24 at the time of the incident
and working as a physical therapist’s assistant at Amherst Orthopedic Physical
Therapy in Buffalo, said the machine fell on her when she put her hand on top
of it to brace herself while she stretched.
As previously reported, Cybex currently is subject to possible de-listing from the Nasdaq Stock Market due to its failure to comply with the Nasdaq requirements for a minimum stockholders’ equity of $10,000,000, a minimum bid price for its common stock of $1.00 per share and a minimum market value of publicly held shares of $5,000,000. Cybex is analyzing the impact the settlement will have on its financial statements. However, looking forward, Cybex is confident that, once the settlement is reflected in the Company’s financial statements, its stockholders’ equity will exceed the $10,000,000 minimum required by Nasdaq.
Cybex Chairman and CEO John Aglialoro states, “The positive financial impact of this settlement will be reflected in our Q4 results. As we move past this lawsuit, Cybex remains a healthy business and a leader in the fitness industry. We are confident of our future as we move forward with our Cybex team.”
Cybex anticipates announcing 2011 results on or around February 16, 2012.
