In an encore episode, Steve D'Agostino talks with Arthur Hicks Jr., president and CEO of Cybex International, which is based in Medway. This interview aired originally on April 15, 2012.
“American businesses face an onslaught of obstacles,” Art Hicks wrote in a March 14, 2012 Fortune magazine article titled Restoring Sanity To the U.S. Tort System. “With Japan set to lower its corporate tax rate next month,” he continued, “the United States will have the highest corporate tax rate in the developed world – at 39.2 percent. Even worse, U.S. businesses confront a byzantine regulatory environment that adds hundreds of millions of dollars in compliance costs.”
Cybex produces premium commercial fitness equipment designed for exercisers from first-time users to professional athletes. The publicly traded company has two manufacturing facilities in U.S., a total of 550 employees and about $100 million in annual revenue.
Cybex recently settled a lawsuit with a New York State woman whose use of one of the company’s machines left her paralyzed. There was no dispute that the plaintiff had misused the machine and that the machine has operated without problem for more than 20 years. Yet the jury awarded her damages of $66 million. It was, at the time, the highest personal-injury reward amount in the history of Western New York, and 10 times the average for cases of this type.
Eventually, Cybex settled out of court, agreeing to pay to the plaintiff, net of insurance, about $1.5 million, of which about $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.