##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---

FORM 10-Q



---

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended June 30, 2007.
|- | -------------------------------------------------------------------------------------------------------------------------------------

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from
 to .
|- | -----------------------------------------------------------------------------------------------------------------------------

Commission file number 0-4538



---

Cybex International, Inc.

(Exact
name of registrant as specified in its charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|New York                                                       |  | 11-1731581                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                        |  |           
|--------------------------------------- |  | ----------
|10 Trotter Drive, Medway, Massachusetts |  | 02053     
|(Address of principal executive office) |  | (Zip Code)

(508) 533-4300

Registrants telephone number, including area code



---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by checkmark whether the registrant is a
shell company (as defined in Rule 12b2 of the Exchange Act).    Yes ̈No  x

On August 3, 2007, the Registrant had outstanding 17,339,816
shares of Common Stock, par value $0.10 per share, which is the Registrants only class of Common Stock.



---



---

##### Table of Contents

CYBEX INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX



|           |  |                       |  |                                                                                                  |  |     
|---------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------ |  | ----
|           |  |                       |  |                                                                                                  |  | Page
|PART I.    |  | FINANCIAL INFORMATION |  |                                                                                                 
|           |  |                       | 
|           |  | Item 1.               |  | Financial Statements (unaudited)                                                                 |  |     
|           |  |                       | 
|           |  |                       |  | Consolidated Statements of OperationsThree and six months ended June 30, 2007 and July 1, 2006 |  | 3   
|           |  |                       | 
|           |  |                       |  | Consolidated Balance Sheets  June 30, 2007 and December 31, 2006                               |  | 4   
|           |  |                       | 
|           |  |                       |  | Consolidated Statements of Cash Flows Six months ended June 30, 2007 and July 1, 2006          |  | 5   
|           |  |                       | 
|           |  |                       |  | Notes to Condensed Consolidated Financial Statements                                             |  | 6   
|           |  |                       | 
|           |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations            |  | 17  
|           |  |                       | 
|           |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risk                                       |  | 22  
|           |  |                       | 
|           |  | Item 4.               |  | Controls and Procedures                                                                          |  | 22  
|           |  |                      
|PART II.   |  | OTHER INFORMATION     |  |                                                                                                 
|           |  |                       | 
|           |  | Item 1.               |  | Legal Proceedings                                                                                |  | 23  
|           |  |                       | 
|           |  | Item 1A.              |  | Risk Factors                                                                                     |  | 23  
|           |  |                       | 
|           |  | Item 2.               |  | Unregistered Sales of Equity Securities and Use of Proceeds                                      |  | 23  
|           |  |                       | 
|           |  | Item 3.               |  | Defaults Upon Senior Securities                                                                  |  | 23  
|           |  |                       | 
|           |  | Item 4.               |  | Submission of Matters to a Vote of Security Holders                                              |  | 23  
|           |  |                       | 
|           |  | Item 5.               |  | Other Information                                                                                |  | 24  
|           |  |                       | 
|           |  | Item 6.               |  | Exhibits                                                                                         |  | 24  
|           |  |                      
|Signatures |  |                       |  | 25                                                                                              



2



---

##### Table of Contents

CYBEX INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)



|                                             |  |                    |        |   |                  |   |         |               |  |              |        |  |   |         |  
|-------------------------------------------- |  | ------------------ | ------ | - | ---------------- | - | ------- | ------------- |  | ------------ | ------ |  | - | ------- | -
|                                             |  | Three Months Ended |        |   | Six Months Ended |  
|                                             |  | June 30, 2007      |        |   | July 1, 2006     |   |         | June 30, 2007 |  | July 1, 2006 |       
|Net sales                                    |  | $                  | 34,740 |   |                  | $ | 29,951  |               |  | $            | 69,416 |  | $ | 58,863  |  
|Cost of sales                                |  |                    | 22,535 |   |                  |   | 19,089  |               |  |              | 44,317 |  |   | 37,450  |  
|                                             |  |                    |        |   |                  |   |         |               |  |              |        |  |   |         |  
|Gross profit                                 |  |                    | 12,205 |   |                  |   | 10,862  |               |  |              | 25,099 |  |   | 21,413  |  
|                                             |  |                    |        |  
|Selling, general and administrative expenses |  |                    | 10,380 |   |                  |   | 8,659   |               |  |              | 21,176 |  |   | 17,921  |  
|                                             |  |                    |        |   |                  |   |         |               |  |              |        |  |   |         |  
|Operating income                             |  |                    | 1,825  |   |                  |   | 2,203   |               |  |              | 3,923  |  |   | 3,492   |  
|                                             |  |                    |        |  
|Interest expense (income), net               |  |                    | (48    | ) |                  |   | 454     |               |  |              | 162    |  |   | 1,013   |  
|                                             |  |                    |        |   |                  |   |         |               |  |              |        |  |   |         |  
|Income before income taxes                   |  |                    | 1,873  |   |                  |   | 1,749   |               |  |              | 3,761  |  |   | 2,479   |  
|Income tax expense (benefit)                 |  |                    | 778    |   |                  |   | (14,359 | )             |  |              | 1,562  |  |   | (14,296 | )
|                                             |  |                    |        |   |                  |   |         |               |  |              |        |  |   |         |  
|Net income                                   |  | $                  | 1,095  |   |                  | $ | 16,108  |               |  | $            | 2,199  |  | $ | 16,775  |  
|                                             |  |                    |        |   |                  |   |         |               |  |              |        |  |   |         |  
|Basic net income per share                   |  | $                  | 0.06   |   |                  | $ | 1.00    |               |  | $            | 0.13   |  | $ | 1.08    |  
|                                             |  |                    |        |   |                  |   |         |               |  |              |        |  |   |         |  
|Diluted net income per share                 |  | $                  | 0.06   |   |                  | $ | 0.96    |               |  | $            | 0.12   |  | $ | 1.03    |  
|                                             |  |                    |        |   |                  |   |         |               |  |              |        |  |   |         |  

See notes to consolidated financial statements.



3



---

##### Table of Contents

CYBEX INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)



|                                                                                        |  |              |         |   |                  |   |         |  
|--------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                                                                                        |  | June 30,2007 |         |   | December 31,2006 |  
|ASSETS                                                                                  |  |              |         |   |                  |   |         |  
|Current Assets:                                                                         |  |              |         |   |                  |   |         |  
|Cash and cash equivalents                                                               |  | $            | 1,384   |   |                  | $ | 1,419   |  
|Accounts receivable, net of allowance of $913 and $797                                  |  |              | 18,851  |   |                  |   | 20,296  |  
|Inventories                                                                             |  |              | 12,022  |   |                  |   | 9,620   |  
|Prepaid expenses and other                                                              |  |              | 2,855   |   |                  |   | 4,176   |  
|Deferred tax asset                                                                      |  |              | 3,509   |   |                  |   | 3,509   |  
|                                                                                        |  |              |         |   |                  |   |         |  
|Total current assets                                                                    |  |              | 38,621  |   |                  |   | 39,020  |  
|Property, plant and equipment, net                                                      |  |              | 34,400  |   |                  |   | 13,055  |  
|Goodwill                                                                                |  |              | 11,247  |   |                  |   | 11,247  |  
|Deferred tax asset                                                                      |  |              | 7,380   |   |                  |   | 8,773   |  
|Other assets                                                                            |  |              | 667     |   |                  |   | 1,282   |  
|                                                                                        |  |              |         |   |                  |   |         |  
|                                                                                        |  | $            | 92,315  |   |                  | $ | 73,377  |  
|                                                                                        |  |              |         |   |                  |   |         |  
|                                                                                        |  |             
|LIABILITIES AND STOCKHOLDERS EQUITY                                                    |  |              |         |   |                  |   |         |  
|Current Liabilities:                                                                    |  |              |         |   |                  |   |         |  
|Current portion of long-term debt                                                       |  | $            | 11,609  |   |                  | $ | 3,762   |  
|Current portion of capital leases                                                       |  |              | 133     |   |                  |   | 248     |  
|Accounts payable                                                                        |  |              | 5,676   |   |                  |   | 5,570   |  
|Accrued expenses                                                                        |  |              | 10,946  |   |                  |   | 15,379  |  
|                                                                                        |  |              |         |   |                  |   |         |  
|Total current liabilities                                                               |  |              | 28,364  |   |                  |   | 24,959  |  
|Long-term debt                                                                          |  |              | 12,480  |   |                  |   |        |  
|Capital leases, excluding current portion                                               |  |              | 53      |   |                  |   | 82      |  
|Other liabilities                                                                       |  |              | 3,504   |   |                  |   | 2,669   |  
|                                                                                        |  |              |         |   |                  |   |         |  
|Total liabilities                                                                       |  |              | 44,401  |   |                  |   | 27,710  |  
|                                                                                        |  |              |         |   |                  |   |         |  
|Contingencies (Notes 3 and 9)                                                           |  |              |         |   |                  |   |         |  
|Stockholders Equity:                                                                   |  |              |         |   |                  |   |         |  
|Common stock, $.10 par value, 30,000 shares authorized, 17,548 and 17,411 shares issued |  |              | 1,755   |   |                  |   | 1,741   |  
|Additional paid-in capital                                                              |  |              | 67,858  |   |                  |   | 67,503  |  
|Treasury stock, at cost (209 shares)                                                    |  |              | (2,251  | ) |                  |   | (2,251  | )
|Accumulated deficit                                                                     |  |              | (18,277 | ) |                  |   | (20,476 | )
|Accumulated other comprehensive loss                                                    |  |              | (1,171  | ) |                  |   | (850    | )
|                                                                                        |  |              |         |   |                  |   |         |  
|Total stockholders equity                                                              |  |              | 47,914  |   |                  |   | 45,667  |  
|                                                                                        |  |              |         |   |                  |   |         |  
|                                                                                        |  | $            | 92,315  |   |                  | $ | 73,377  |  
|                                                                                        |  |              |         |   |                  |   |         |  

See notes to consolidated financial statements.



4



---

##### Table of Contents

CYBEX INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



|                                                                                  |  |                  |         |   |              |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------ | - | ------- | -
|                                                                                  |  | Six Months Ended |        
|                                                                                  |  | June 30,2007     |         |   | July 1, 2006 |  
|OPERATING ACTIVITIES:                                                             |  |                  |         |   |              |   |         |  
|Net income                                                                        |  | $                | 2,199   |   |              | $ | 16,775  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                  |         |   |              |   |         |  
|Depreciation and amortization                                                     |  |                  | 1,579   |   |              |   | 1,633   |  
|Amortization of deferred financing costs                                          |  |                  | 136     |   |              |   | 269     |  
|Deferred income taxes                                                             |  |                  | 1,393   |   |              |   | (14,421 | )
|Stock-based compensation                                                          |  |                  | 87      |   |              |   | 62      |  
|Provision for doubtful accounts                                                   |  |                  | 208     |   |              |   | 158     |  
|Change in fair value of interest rate swap                                        |  |                  | (289    | ) |              |   |        |  
|Change in fair value of foreign currency contract                                 |  |                  | 14      |   |              |   | 202     |  
|Changes in operating assets and liabilities:                                      |  |                  |         |   |              |   |         |  
|Accounts receivable                                                               |  |                  | 1,263   |   |              |   | 3,302   |  
|Inventories                                                                       |  |                  | (2,377  | ) |              |   | 456     |  
|Prepaid expenses and other                                                        |  |                  | 1,752   |   |              |   | (1,206  | )
|Accounts payable, accrued liabilities and other liabilities                       |  |                  | (3,355  | ) |              |   | (2,163  | )
|                                                                                  |  |                  |         |   |              |   |         |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                         |  |                  | 2,610   |   |              |   | 5,067   |  
|                                                                                  |  |                  |         |   |              |   |         |  
|INVESTING ACTIVITIES:                                                             |  |                  |         |   |              |   |         |  
|Purchases of property, plant and equipment                                        |  |                  | (22,990 | ) |              |   | (1,194  | )
|                                                                                  |  |                  |         |   |              |   |         |  
|NET CASH USED IN INVESTING ACTIVITIES                                             |  |                  | (22,990 | ) |              |   | (1,194  | )
|                                                                                  |  |                  |         |   |              |   |         |  
|FINANCING ACTIVITIES:                                                             |  |                  |         |   |              |   |         |  
|Repayments of term loans                                                          |  |                  |        |   |              |   | (12,320 | )
|Borrowings under term loans                                                       |  |                  | 13,000  |   |              |   |        |  
|Repayments under revolving loan                                                   |  |                  | (71,062 | ) |              |   | (60,433 | )
|Borrowings under revolving loan                                                   |  |                  | 78,389  |   |              |   | 59,094  |  
|Proceeds from issuance of common stock, net of costs                              |  |                  |        |   |              |   | 9,617   |  
|Proceeds from exercise of stock options                                           |  |                  | 162     |   |              |   | 140     |  
|Principal payments on capital leases                                              |  |                  | (144    | ) |              |   | (252    | )
|                                                                                  |  |                  |         |   |              |   |         |  
|NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                               |  |                  | 20,345  |   |              |   | (4,154  | )
|                                                                                  |  |                  |         |   |              |   |         |  
|DECREASE IN CASH AND CASH EQUIVALENTS                                             |  |                  | (35     | ) |              |   | (281    | )
|                                                                                  |  |                 
|CASH AND CASH EQUIVALENTS, beginning of period                                    |  |                  | 1,419   |   |              |   | 807     |  
|                                                                                  |  |                  |         |   |              |   |         |  
|CASH AND CASH EQUIVALENTS, end of period                                          |  | $                | 1,384   |   |              | $ | 526     |  
|                                                                                  |  |                  |         |   |              |   |         |  
|SUPPLEMENTAL CASH FLOW DISCLOSURE                                                 |  |                  |         |   |              |   |         |  
|Cash paid for interest                                                            |  | $                | 292     |   |              | $ | 736     |  
|Cash paid for income taxes                                                        |  |                  | 54      |   |              |   | 222     |  
|Common stock issued to directors earned in previous period                        |  |                  | 47      |   |              |   | 52      |  
|(Note 4)                                                                          |  |                  |         |   |              |   |         |  

See notes to consolidated financial statements.



5



---

##### Table of Contents

CYBEX INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1  BASIS OF
PRESENTATION

Cybex International, Inc. (the Company or Cybex), a New York corporation, is a manufacturer of exercise equipment
and develops, manufactures and markets strength and cardiovascular fitness equipment products for the commercial and, to a lesser extent, consumer markets. Currently most of the Companys products are sold under the brand name
Cybex. The Company operates in one business segment.

The accompanying condensed consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted
accounting principles. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30,
2007 are not necessarily indicative of the results that may be expected for the entire year.

It is recommended that these consolidated financial
statements be read in conjunction with the consolidated financial statements and other information included in the Companys reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended
December 31, 2006, its Current Reports on Form 8-K, this Report on Form 10-Q and its proxy statement dated April 10, 2007.

NOTE 2 
CONSOLIDATION OF RISK AND GEOGRAPHIC SEGMENT DATA

Sales to one customer represented 15.1% and 15.9% of consolidated net sales for the three and six
months ended June 30, 2007 and 16.2% and 16.6% of consolidated net sales for the three and six months ended July 1, 2006, respectively. Accounts receivable from this customer was $2,337,000 and $1,691,000 at June 30, 2007 and
December 31, 2006, respectively.

Sales outside of North America represented 28% and 27% of consolidated net sales for the three and six months ended
June 30, 2007 and 28% and 29% of consolidated net sales for the three and six months ended July 1, 2006, respectively. No single foreign country accounts for greater than 10% of consolidated net sales.

NOTE 3  ACCOUNTING FOR GUARANTEES

The Company arranges
equipment leases and other financings for its customers. While most of these financings are without recourse, in certain cases the Company may offer a guarantee or other recourse provisions. In such situations, the Company ensures that the
transaction between the independent leasing company and the end user customer represents a sales-type lease. The Company monitors the payment status of the lessee under these arrangements and provides a reserve under Statement of Financial
Accounting Standards (SFAS) No. 5, Accounting for Contingencies, in situations when collection of the lease payments is not probable. At June 30, 2007, the maximum contingent liability under all recourse and guarantee
provisions was $4,148,000. A reserve for estimated losses under recourse provisions of $616,000 and $585,000 has been recorded based on historical and industry experience and is included in accrued expenses at June 30, 2007 and
December 31, 2006, respectively.

FASB Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others, requires that the guarantor recognize, at the inception of certain guarantees, a liability for the fair value of the obligation undertaken in issuing such guarantees. The
initial recognition and measurement provisions of this



6



---

##### Table of Contents

interpretation was applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The Company has recorded a net liability
of $58,000 and $70,000 at June 30, 2007 and December 31, 2006, respectively, in accordance with FIN 45 for the estimated fair value of the Companys guarantees issued after January 1, 2003. The fair value of the guarantees was
determined based on the estimated cost for a customer to obtain a letter of credit from a bank or similar institution. This liability is reduced on a straight-line basis over the term of each respective guarantee. In most cases, if the Company is
required to fulfill its obligations under the guarantee, then it has the right to repossess the equipment from the customer. It is not practicable to estimate the approximate amount of proceeds that would be generated from the sale of these assets
in such situations.

Additionally, FIN 45 requires disclosure about the Companys obligations under other guarantees that it has issued, including
warranties. The Company provides a warranty on its products for up to three years for labor and up to ten years for structural frames. Warranty periods for parts range from one to ten years depending on the part and type of equipment. The accrued
warranty obligation is provided at the time of product sale based on management estimates which are developed from historical information and certain assumptions about future events, which are subject to change. The following table sets forth the
change in the liability for product warranties during the six months ended June 30, 2007:



|                                       |  |   |            |  
|-------------------------------------- |  | - | ---------- | -
|Balance as of January 1, 2007          |  | $ | 3,197,000  |  
|Payments made under product warranties |  |   | (2,012,000 | )
|Accrual for product warranties issued  |  |   | 2,250,000  |  
|                                       |  |   |            |  
|Balance as of June 30, 2007            |  | $ | 3,435,000  |  
|                                       |  |   |            |  

NOTE 4  STOCK-BASED COMPENSATION

On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), Share-Based Payment (SFAS No. 123R). SFAS No. 123R supersedes SFAS No. 123, Accounting for Stock-Based
Compensation, and Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and its related interpretations. SFAS No. 123R requires recognition in the financial statements of the cost of
employee services received in exchange for an award of equity instruments, with such cost recognized over the period that the employee is required to perform services in exchange for the award. SFAS No. 123R also requires measurement of the
cost of employee services received in exchange for an award based on the grant date fair value of the award. The Company adopted SFAS No. 123R using the modified prospective method. Under this method, the Company is required to record
compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that were outstanding at the date of adoption.

For the three months ended June 30, 2007, the Company recorded stock-based compensation expense of $46,000 consisting of expenses related to stock options ($21,000) and stock to be issued to directors ($25,000).
For the six months ended June 30, 2007, the Company recorded stock-based compensation expense of $87,000, consisting of expenses related to stock options ($42,000) and stock to be issued to directors ($45,000). For the three months ended
July 1, 2006, the Company recorded stock-based compensation expense of $33,000, consisting of expenses related to stock options ($19,000) and stock to be issued to directors ($14,000). For the six months ended July 1, 2006, the Company
recorded stock-based compensation expense of $62,000, consisting of expenses related to stock options ($35,000) and stock to be issued to directors ($27,000). These stock-based compensation charges decreased net income by $27,000 and $19,000 for the
three month periods ended June 30, 2007 and July 1, 2006, respectively, and had no effect on basic and diluted net income per share for these periods.



7



---

##### Table of Contents

These stock-based compensation charges decreased net income by $51,000 and $36,000 for the six month periods ended
June 30, 2007 and July 1, 2006, respectively. Cash received from the exercise of incentive stock options for the six month periods ended June 30, 2007 and July 1, 2006 totaled $162,000 and $140,000, respectively.

Cybexs 2005 Omnibus Incentive Plan (the Omnibus Plan) is designed to provide incentives that will attract and retain individuals key to the
success of the Company through direct or indirect ownership of the Companys common stock. The Omnibus Plan provides for the granting of stock options, stock appreciation rights, stock awards, performance awards and bonus stock purchase awards.
The Company has reserved 1,000,000 shares of common stock for issuance pursuant to the Omnibus Plan. A registration statement has been filed for the Omnibus Plan and the Company anticipates providing newly-issued shares of registered common stock
upon the exercise of options and upon stock grants under the Omnibus Plan. The Omnibus Plan was amended at the 2007 Annual Meeting to provide for one-time stock awards to newly elected nonemployee directors and that stock options or stock
appreciation rights granted under the Omnibus Plan will automatically vest upon the death of the holder.

The terms and conditions of each award are
determined by a committee of the Board of Directors of the Company. Under the Omnibus Plan, the committee may grant either qualified or nonqualified stock options with a term not to exceed ten years from the grant date and at an exercise price per
share that the committee may determine (which in the case of incentive stock options may not be less than the fair market value of a share of the Companys common stock on the date of grant).

A summary of the status of the Companys stock option plans as of June 30, 2007 is presented below:



|                                          |  |                  |   |  |                               |      |                                  |      |                 |   |          
|----------------------------------------- |  | ---------------- | - |  | ----------------------------- | ---- | -------------------------------- | ---- | --------------- | - | ---------
|                                          |  | Number of Shares |   |  | WeightedAverage ExercisePrice |      | RemainingContractualTerm (years) |      | Intrinsic Value
|Outstanding at January 1, 2007            |  | 695,000          |   |  | $                             | 2.09 |                                  |      |                 |   |          
|Exercised                                 |  | (110,625         | ) |  |                               | 1.46 |                                  |      |                 |   |          
|Forfeited                                 |  | (1,250           | ) |  |                               | 1.22 |                                  |      |                 |   |          
|                                          |  |                  |   |  |                               |      |                                  |      |                 |   |          
|Outstanding at June 30, 2007              |  | 583,125          |   |  | $                             | 2.21 |                                  | 5.28 |                 | $ | 2,779,000
|                                          |  |                  |   |  |                               |      |                                  |      |                 |   |          
|Options exercisable at June 30, 2007      |  | 466,000          |   |  | $                             | 2.06 |                                  | 4.79 |                 | $ | 2,295,000
|                                          |  |                  |   |  |                               |      |                                  |      |                 |   |          
|Options expected to vest at June 30, 2007 |  | 578,844          |   |  | $                             | 2.19 |                                  | 5.26 |                 | $ | 2,772,000
|                                          |  |                  |   |  |                               |      |                                  |      |                 |   |          

The intrinsic value of options exercised in the three months ended June 30, 2007 and July 1, 2006 was
$442,000 and $142,000 respectively. The intrinsic value of options exercised in the six months ended June 30, 2007 and July 1, 2006 was $527,000 and $261,000, respectively.

As of June 30, 2007, there was $161,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 3.0
years.

The options generally vest over a three to five year period (with some subject to cliff vesting). At June 30, 2007, there are 970,000 shares
available for future issuance pursuant to the Omnibus Plan.

The Companys 2002 Stock Retainer Plan for Nonemployee Directors (2002 Plan)
provides that each nonemployee director will receive 50% of his annual retainer in shares of common stock of the Company. Up to 150,000 shares of common stock may be issued under the 2002 Plan. The issuance of shares as partial payment of annual
retainers results in expense based on the fair market value of such shares. At June 30, 2007, there are 34,431 shares available for future issuance pursuant to the 2002 Plan. The Company recorded



8



---

##### Table of Contents

stock-based compensation expense of $25,000 and $45,000 for the three months and six months ended June 30, 2007, respectively, for common stock to be
issued in 2008 to the directors for services rendered in 2007, which is included in accrued expenses at June 30, 2007. During the quarter ended March 31, 2007, the Company issued 7,511 shares of common stock to the directors, which had a
fair value of $47,000, related to directors fees earned in 2006, which were included in accrued expenses at December 31, 2006. The Company recorded stock-based compensation expense of $14,000 and $27,000 for three months and six months
ended July 1, 2006, respectively for common stock issued in 2007 to the directors for services rendered in 2006, which was included in accrued expenses at July 1, 2006. During the quarter ended April 1, 2006, the Company issued 14,344
shares of common stock to the directors, which had a fair value of $52,000, related to directors fees earned in 2005, which were included in accrued expenses at December 31, 2005.

NOTE 5  INVENTORIES

Inventories consist of the following:



|                |  |               |            |                  |   |          
|--------------- |  | ------------- | ---------- | ---------------- | - | ---------
|                |  | June 30, 2007 |            | December 31,2006
|Raw materials   |  | $             | 5,997,000  |                  | $ | 5,232,000
|Work in process |  |               | 2,176,000  |                  |   | 2,208,000
|Finished goods  |  |               | 3,849,000  |                  |   | 2,180,000
|                |  |               |            |                  |   |          
|                |  | $             | 12,022,000 |                  | $ | 9,620,000
|                |  |               |            |                  |   |          

NOTE 6  LONG-TERM DEBT AND DERIVATIVES

Long-term debt consists of the following:



|                          |  |               |             |   |                   |   |            |  
|------------------------- |  | ------------- | ----------- | - | ----------------- | - | ---------- | -
|                          |  | June 30, 2007 |             |   | December 31, 2006 |  
|CIT working capital loan  |  | $             | 11,089,000  |   |                   | $ | 3,762,000  |  
|Citizens real estate loan |  |               | 13,000,000  |   |                   |   |           |  
|                          |  |               |             |   |                   |   |            |  
|                          |  |               | 24,089,000  |   |                   |   | 3,762,000  |  
|Less  current portion    |  |               | (11,609,000 | ) |                   |   | (3,762,000 | )
|                          |  |               |             |   |                   |   |            |  
|                          |  | $             | 12,480,000  |   |                   | $ |           |  
|                          |  |               |             |   |                   |   |            |  

In July 2004, the Company entered into a credit agreement with GMAC Commercial Finance, LLC (GMAC)
(the GMAC Credit Agreement). The GMAC Credit Agreement originally provided for a $13,000,000 term loan. On June 30, 2006, the outstanding loans under the GMAC Credit Agreement, as amended, were repaid in full from the proceeds of
the Companys common stock public offering (see Note 7). In December 2006, the Company entered into an amendment and restatement of the GMAC Credit Agreement (as restated, GMAC Amended Credit Agreement), which provided for a
$7,000,000 credit line to finance the purchase of machinery and equipment. No advances were made under this credit line and the GMAC Amended Credit Agreement was terminated in July 2007. In connection with the termination of the GMAC Amended Credit
Agreement, the Company wrote-off $136,000 of unamortized deferred financing costs that were capitalized at the outset of this agreement.

In July 2004, the
Company also entered into an amendment of a financing agreement with The CIT Group/Business Credit, Inc. (CIT) (as amended, the CIT Amended Financing Agreement). The CIT Amended Financing Agreement provided for a term loan
with an original balance of $4,000,000 and working capital revolving loans of up to the lesser of $14,000,000 or an amount determined by reference to a borrowing base. In May 2006, the CIT term loan, which had been increased to $6,250,000, was
repaid in full from the proceeds from the Companys common stock public offering (see Note 7). In June 2006, the CIT Amended Financing Agreement was further amended to, among other things, extend the working capital revolving loan availability
through June 30, 2009. The CIT loans are secured by substantially all assets of the Company other than real estate, fixtures and equipment. The CIT loans



9



---

##### Table of Contents

include both a subjective acceleration clause and a lockbox arrangement which requires all lockbox receipts be used to repay the working capital loans.
Although the working capital loans do not mature until 2009 (as reflected in the table below), the working capital loans under the CIT Amended Financing Agreement are classified as current in the accompanying consolidated balance sheet as required
by Emerging Issues Task Force Issue No. 95-22, Balance Sheet Classification of Borrowings Outstanding Under Revolving Credit Agreements that Include both a Subjective Acceleration Clause and a Lockbox Arrangement (EITF
No. 95-22).

On June 28, 2007, a $13,000,000 mortgage loan was advanced to the Company pursuant to the loan agreement dated as of
October 17, 2006 (the Citizens Loan Agreement) with Citizens Bank of Massachusetts (Citizens). The proceeds of this loan were used to finance a portion of the acquisition of an approximate 340,000 square foot
manufacturing, office and warehouse facility located in Owatonna, Minnesota, and the loan is secured by this real estate.

In July 2007, the Company
entered into a Loan Agreement (the Wachovia Loan Agreement) with Wachovia Bank, NA (Wachovia), providing a $7,000,000 credit line that is available through February 29, 2008 to finance the acquisition of machinery and
equipment. Loans advanced pursuant to this line are secured by the equipment financed pursuant to the line.

At June 30, 2007, there were $11,089,000
in working capital loans and a $13,000,000 real estate loan outstanding. Availability under the revolving loan fluctuates daily. At June 30, 2007, there was $2,866,000 unused availability under the working capital revolving loan.

The CIT working capital revolving loan bears interest at rates ranging between LIBOR plus 1.75% to 2.50% or the prime rate less .25% to plus .50% based on a performance
grid (8% at June 30, 2007) (prior to June 30, 2006, LIBOR plus 2.50% to 3.25% or the prime rate less .25% to plus .50% based on a performance grid). The Citizens real estate loan bears interest at a floating rate equal to LIBOR plus
1.2% per annum. The advances under the Wachovia equipment line will bear interest at LIBOR plus 1.2% to 1.45% based on a performance grid. The GMAC term loans bore interest at LIBOR plus 4% or the prime rate plus 1%. The prime rate was 8.25%
and LIBOR was 5.4% at June 30, 2007.

The average outstanding working capital loan balance for the six months ended June 30, 2007 and
July 1, 2006 was $4,768,000 and $45,000, respectively, and the weighted average interest rate was 8.04% and 7.73%, respectively. Interest expense on the working capital loan was $146,000 and $14,000 for the three months ended June 30, 2007
and July 1, 2006, respectively, and $223,000 and $37,000 for the six months ended June 30, 2007 and July 1, 2006, respectively. Interest expense on the CIT term loans was $0 and $75,000 for the three months ended June 30, 2007
and July 1, 2006, respectively, and $0 and $210,000 for the six months ended June 30, 2007 and July 1, 2006, respectively. Interest expense on the GMAC term loans was $0 and $191,000, for the three months ended June 30, 2007 and
July 1, 2006, respectively, and $0 and $307,000 for the six months ended June 30, 2007 and July 1, 2006, respectively.

The CIT Amended
Financing Agreement, the Citizens Loan Agreement and the Wachovia Loan Agreement require the Company to maintain certain financial covenants, such as maintaining a minimum fixed charge ratio, a leverage ratio and a limitation on annual capital
expenditures. The Company was in compliance with these covenants as of June 30, 2007. The CIT Amended Financing Agreement also restricts the ability of the Company to pay cash dividends. The Companys credit agreements contain cross
default provisions to each other.



10



---

##### Table of Contents

At June 30, 2007 long-term debt maturities are as follows:



|                                       |  |   |             |  
|-------------------------------------- |  | - | ----------- | -
|Remainder of 2007                      |  | $ | 260,000     |  
|2008                                   |  |   | 520,000     |  
|2009                                   |  |   | 11,609,000  |  
|2010                                   |  |   | 520,000     |  
|2011                                   |  |   | 520,000     |  
|Thereafter                             |  |   | 10,660,000  |  
|                                       |  |   |             |  
|                                       |  |   | 24,089,000  |  
|Less current portion of long-term debt |  |   | (11,609,000 | )
|                                       |  |   |             |  
|                                       |  | $ | 12,480,000  |  
|                                       |  |   |             |  

In August 2005, the Company sold its prior manufacturing, warehouse and office facility located in Owatonna,
Minnesota for $3,600,000, of which $3,067,000 was used to prepay a portion of the GMAC term loan, $123,000 was used to pay a prepayment fee in connection therewith and $400,000 was used to prepay a portion of the CIT term loan. Simultaneously with
the sale of the Owatonna facility, the Company and the purchaser entered into a lease of the Owatonna facility with an initial term of five years at a rental rate of $40,000 per month, plus operating costs. The lease contains renewal options as well
as options to terminate the lease if the Company elects to relocate, and the lease will be terminated in connection with the move to the Companys new Owatonna facility. Due to the option to repurchase the facility originally contained in the
lease, the transaction was treated for financial accounting purposes as a financing transaction and payments made of $200,000 through December 2005 were recorded as interest expense. On December 23, 2005, the lease was amended to eliminate the
Companys option to repurchase the building in exchange for certain services to be provided by the landlord. Accordingly, the transaction has been accounted for as a sale/leaseback subsequent to December 23, 2005 resulting in a deferred
gain of $811,000 at December 31, 2005, which is being amortized over 21 months. At June 30, 2007 and July 1, 2006, $164,000 and $0, respectively, of the deferred gain was included in accrued expenses and $0 and $219,000, respectively,
was included in other long-term liabilities.

A $2,888,025 letter of credit was issued under the CIT Amended Financing Agreement in connection with the
Companys appeal of the judgment in the litigation, Colassi v. Cybex International, Inc. (see Note 9). This letter of credit was returned and cancelled after payment of the judgment in April 2007. Letters of credit outstanding under the
CIT Amended Financing Agreement reduce availability under the revolving loan facility.

On September 8, 2004, the Company entered into two interest
rate caps with a financial intermediary to lock in one-month LIBOR at a maximum of 3% for the two-year period ended September 8, 2006 related to the Companys GMAC term debt facility and CIT working capital revolving loan credit facility.
The cost of the interest rate caps was $97,000. On May 31, 2006, the Company terminated its agreement with the financial intermediary and received proceeds of $79,000. The interest rate caps were accounted for as cash flow hedges and the cost
of the interest rate caps was being amortized on a straight-line basis over two years, which approximated the period during which the individual caplets related to each forecasted interest payment were to expire. Changes in the fair value of the
interest rate caps were recorded within accumulated other comprehensive loss. For the three and six months ended July 1, 2006, the change in the fair value of the interest rate caps was a decrease of $89,000 and $103,000, respectively.

On February 28, 2005, the Company entered into a series of 13 forward contracts with the final contract completed March 31, 2006, whereby Cybex
paid a bank 140,212 British Sterling and the bank paid the Company $265,000 each month. In February 2006, the Company entered into a series of 12 monthly forward contracts that began on April 1, 2006, whereby the Company pays a bank 150,000
British Sterling and the bank pays the Company $265,000 each month. The purpose of these transactions is to hedge the foreign currency exposure on sales made in the UK in British Sterling. The Companys UK sales are denominated in British
Sterling while its purchases of inventory from the Company are paid in U.S. dollars. The above transactions are not considered eligible for hedge accounting based on guidance in SFAS No. 133, as amended. The change in fair value of the hedge
resulted in a loss of $42,000 and $149,000 for the three months ended June 30, 2007 and July 1, 2006, respectively, and a loss of $14,000 and $202,000 for the six months ended June 30, 2007 and July 1, 2006, respectively.



11



---

##### Table of Contents

On June 29, 2006, the Company entered into an interest rate swap agreement with Citizens which was initiated on
June 29, 2007 to hedge the LIBOR-based Citizens real estate loan. The notional amount of the swap amortizes based on the same amortization schedule as the Citizens Loan Agreement and the hedged item (one-month LIBOR) is the same as the basis
for the interest rate on the loan. The swap effectively converts the rate from a floating rate based on LIBOR to a 6.95% fixed rate throughout the duration of the loan. The swap and interest payments on the debt will settle monthly. The real estate
loan and the swap both mature on July 2, 2014. There was no initial cost of the interest rate swap. Prior to June 27, 2007, the change in the fair value of the interest rate swap was included as a component of interest expense. During the
third quarter of 2006, the Company recorded $506,000 of expense related to the change in fair value associated with this interest rate swap. The change in fair value of the hedge resulted in income of $336,000 and $289,000 for the three and six
months ended June 30, 2007. Effective June 27, 2007, the Company determined the interest rate swap qualifies as a derivative hedging instrument, and, accordingly changes in the fair value of this swap after such date will be recorded as a
component of accumulated other comprehensive income. For the period June 27, 2007 through June 30, 2007, the change in the fair value of the interest rate swap was an increase in the liability of $11,000. The fair value of the interest
rate swap is included in other liabilities at June 30, 2007.

NOTE 7  STOCKHOLDERS EQUITY

Preferred Stock:

The Companys Board has the ability to issue, without
approval by the common shareholders, up to 500,000 shares of $1 par value preferred stock having rights and preferences as the Board may determine in its sole discretion.

Common Stock:

On May 22, 2006, the Company consummated a public offering of 3,500,000 shares of common stock at $5.50
per share. Of the total shares offered, 1,750,000 shares were issued by the Company and 1,750,000 shares were sold by the selling stockholders. The Company also granted the underwriters of the offering an option to purchase up to an additional
525,000 shares of common stock on the same terms equally split between the Company and the selling stockholders. In June 2006, the underwriters exercised a portion of their over-allotment option and purchased an additional 407,900 shares of common
stock at the offering price of $5.50 per share. Of the over-allotment shares, 203,950 shares were issued and sold by the Company and 203,950 were sold by a selling stockholder. The net proceeds to the Company in this offering, after commissions and
offering expenses, were approximately $9,609,000. The Company did not receive any proceeds from the shares of common stock sold by the selling shareholders.

At June 30, 2007, there are 1,756,115 shares of common stock reserved for future issuance pursuant to the exercise or issuance of stock options and warrants.

Warrants:

At June 30, 2007, warrants to purchase 189,640 and 13,350 shares of common stock at $.10 per share were
outstanding and expire on July 16, 2008 and August 4, 2009, respectively.

Comprehensive Income:

Comprehensive income is the change in equity of a business enterprise from transactions and other events and circumstances from non-owner sources. Excluding net income,
the components of comprehensive income are from foreign currency translation adjustments and changes in the fair value of hedging instruments.



12



---

##### Table of Contents

The following summarizes the components of comprehensive income:



|                                         |  |                    |           |   |                  |   |            |               |  |   |              |   |  |   |            |  
|---------------------------------------- |  | ------------------ | --------- | - | ---------------- | - | ---------- | ------------- |  | - | ------------ | - |  | - | ---------- | -
|                                         |  | Three Months Ended |           |   | Six Months Ended |  
|                                         |  | June 30, 2007      |           |   | July 1, 2006     |   |            | June 30, 2007 |  |   | July 1, 2006 |  
|Net income                               |  | $                  | 1,095,000 |   |                  | $ | 16,108,000 |               |  | $ | 2,199,000    |   |  | $ | 16,775,000 |  
|Other comprehensive income (loss):       |  |                    |           |   |                  |   |            |               |  |   |              |   |  |   |            |  
|Foreign currency translation adjustment  |  |                    | (133,000  | ) |                  |   | (210,000   | )             |  |   | (310,000     | ) |  |   | (279,000   | )
|Change in fair value of hedge            |  |                    | (11,000   | ) |                  |   | (10,000    | )             |  |   | (11,000      | ) |  |   | (24,000    | )
|Reclassification for settlement of hedge |  |                    |          |   |                  |   | (79,000    | )             |  |   |             |   |  |   | (79,000    | )
|                                         |  |                    |           |   |                  |   |            |               |  |   |              |   |  |   |            |  
|Comprehensive income                     |  | $                  | 951,000   |   |                  | $ | 15,809,000 |               |  | $ | 1,878,000    |   |  | $ | 16,393,000 |  
|                                         |  |                    |           |   |                  |   |            |               |  |   |              |   |  |   |            |  

The following summarizes the components of accumulated other comprehensive loss at June 30, 2007 and
December 31, 2006:



|                                  |  |               |            |   |                  |   |          |  
|--------------------------------- |  | ------------- | ---------- | - | ---------------- | - | -------- | -
|                                  |  | June 30, 2007 |            |   | December 31,2006 |  
|Cumulative translation adjustment |  | $             | (1,160,000 | ) |                  | $ | (850,000 | )
|Fair value of hedge               |  |               | (11,000    | ) |                  |   |         |  
|                                  |  |               |            |   |                  |   |          |  
|Total                             |  | $             | (1,171,000 | ) |                  | $ | (850,000 | )
|                                  |  |               |            |   |                  |   |          |  

NOTE 8  NET INCOME PER SHARE

The table below sets forth the reconciliation of the basic and diluted net income per share computations:



|                                                      |  |                    |  |                  |  |               |  |             
|----------------------------------------------------- |  | ------------------ |  | ---------------- |  | ------------- |  | ------------
|                                                      |  | Three Months Ended |  | Six Months Ended
|                                                      |  | June 30, 2007      |  | July 1, 2006     |  | June 30, 2007 |  | July 1, 2006
|Shares used in computing basic net income per share   |  | 17,309,000         |  | 16,041,000       |  | 17,288,000    |  | 15,599,000  
|Dilutive effect of options and warrants               |  | 602,000            |  | 657,000          |  | 614,000       |  | 665,000     
|                                                      |  |                    |  |                  |  |               |  |             
|Shares used in computing diluted net income per share |  | 17,911,000         |  | 16,698,000       |  | 17,902,000    |  | 16,264,000  
|                                                      |  |                    |  |                  |  |               |  |             

For the three and six months ended June 30, 2007, options to purchase 30,000 shares of common stock at
exercise prices of $7.37 per share were outstanding but were not included in the calculation of diluted net income per share as the result would be anti-dilutive.



13



---

##### Table of Contents

NOTE 9  CONTINGENCIES

Kirila et al v. Cybex International, Inc., et al

This action was commenced in the Court of Common Pleas of Mercer County,
Pennsylvania in May 1997 against the Company, the Companys wholly-owned subsidiary, Trotter, and certain officers, directors and affiliates of the Company. The plaintiffs include companies that sold to Trotter a strength equipment company in
1993, a principal of the corporate plaintiffs who was employed by Trotter following the acquisition, and a company that leased to Trotter a plant located in Sharpsville, Pennsylvania. The complaint made numerous allegations, including wrongful
closure of the Sharpsville facility, wrongful termination of the individual plaintiffs employment and nonpayment of compensation, fraud and breach of the asset purchase agreement. A jury verdict was rendered in this litigation in February
2002. While the jury found in favor of the Company with respect to the majority of the plaintiffs claims, it also found that the Company owed certain incentive compensation payments and rent, plus interest. In December 2002, plaintiff Kirila
Realty and the Company agreed to enter judgment in favor of Kirila Realty for $48,750 on the claims related to lease issues. Such amount represented the approximate $38,000 jury verdict together with an agreed amount of interest due and was paid by
the Company in 2002. In March 2004, a $2,452,783 judgment was entered with respect to the incentive compensation portion of the jury verdict. Cybex filed an appeal of this judgment. In January 2006, the Superior Court of Pennsylvania affirmed the
judgment, and both Cybex and the plaintiffs filed a Petition for Allowance of Appeal with the Pennsylvania Supreme Court. On June 7, 2006, the Pennsylvania Supreme Court denied the respective Petitions for Allowance of Appeal of the Company and
the plaintiffs. The Company determined not to further pursue its appeals, and in November 2006, it satisfied a portion of the judgment, which, with interest and costs, amounted to approximately $2,800,000. The plaintiffs asserted that additional
attorneys fees were payable by the Company and the Court, on December 29, 2006, ordered that $523,000 be added to the judgment representing additional fees and costs. The amended judgment was paid in January 2007, and the matter is now
concluded.

Colassi v. Cybex International, Inc.

This action was filed in the United States District Court for the District of Massachusetts. The plaintiff alleged that certain of the Companys treadmill products infringed a patent allegedly owned by the plaintiff. The plaintiff
sought injunctive relief and monetary damages. The Company filed an answer to the complaint denying the material allegations of the complaint and asserting counterclaims. A jury verdict was rendered in this litigation in August 2005. The jury
determined that the deck system of certain of the Companys treadmill products infringes plaintiffs patent and awarded damages which with interest equaled approximately $2,800,000 at March 31, 2007. A six-month stay of a permanent
injunction against sale of these treadmill products was entered in September 2005, and the Company has implemented a redesign of its deck system. The Company filed an appeal of the judgment entered by the trial court on the jury verdict, which
required that Cybex post a letter of credit for $2,888,025 (see Note 6). The Court of Appeals in February 2007, denied the Companys appeal, and the Company moved for a rehearing. In November 2006 the plaintiff filed with the trial court a
motion to enter a substitute judgment in an attempt to substitute plaintiffs reissued patent for the patent that was at issue at trial. In December 2006 the trial court denied this motion and in January 2007 the plaintiff appealed this
decision. In April 2007, the Court of Appeals ruled that it would not accept a rehearing of the Companys appeal. The Company paid to the plaintiff in April 2007 approximately $3,000,000 (representing the judgment, accrued interest, and
royalties for the period prior to the Companys deck redesign), the plaintiff voluntarily dismissed its appeal, and this matter is now concluded.

Free Motion Fitness v. Cybex International, Inc.

In December 2001, Free Motion Fitness (f.k.a. Ground Zero Design Corporation) filed
in the United States District Court for the District of Utah an action for patent infringement against the Company alleging that the Companys FT360 Functional Trainer infringed the plaintiffs patent. The Company filed an answer denying
the material allegations of the complaint and including claims which management believes could invalidate the Free Motion Fitness patent; the Company also filed a counterclaim against



14



---

##### Table of Contents

Free Motion Fitness seeking damages. In September 2003, this case was combined with a separate matter also in the United States District Court, District of
Utah in which Free Motion Fitness had sued the Nautilus Group for infringement of the same patent at issue in the Cybex case. In May 2004, the Court ruled in favor of the Companys motion for summary judgment, dismissing all of the claims of
the plaintiff against the Company and Nautilus and also dismissing the Companys counterclaims against the plaintiff. The plaintiff appealed the grant of summary judgment and in September 2005, the Court of Appeals for the Federal Circuit
reversed the lower court ruling, with the result that this case was returned to the trial court level. In January 2007, the parties entered into a settlement agreement pursuant to which, among other things, Cybex received a license of certain Free
Motion patents and paid an upfront license fee and the litigation was dismissed with prejudice.

Other Litigation and Contingencies

The Company is involved in certain other legal actions, contingencies and claims arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material adverse effect on the Companys financial position, results of operations or cash flows. Legal fees related to those matters are charged to expense as incurred.

NOTE 10  INCOME TAXES

In 2002, the Company
established a full valuation allowance against its net deferred tax assets. As of July 1, 2006, management reevaluated the need for this valuation allowance in accordance with SFAS No. 109, Accounting for Income Taxes, due to
the existence of various factors. Based on this reevaluation, the Company reduced the valuation allowance by $15,361,000 in 2006 (including $14,421,000 effective July 1, 2006). For the three months and six months ended June 30, 2007, an
income tax provision of approximately 41% of income before taxes was recorded, totaling $778,000 and $1,562,000, respectively.

At December 31, 2006,
U.S. federal net operating loss carryforwards of $23,477,000 were available to offset future taxable income and, as of such date, the Company had foreign net operating loss carryforwards of $2,568,000, which have an unlimited life, federal
alternative minimum tax credit carryforwards of $540,000, which do not expire, and a federal research and development tax credit carryforward of $129,000, which expires in 2008. The U.S. federal operating loss carryforwards begin to expire in 2012.

Approximately $28,000,000 of income before income taxes is needed to fully realize the Companys recorded net deferred tax asset and $45,000,000 of
future taxable income is needed to fully realize the Companys deferred tax assets. The difference between this figure and the net operating loss carryforwards and credits is primarily book versus tax differences of various expenses.

The net deferred tax asset balance of $10,889,000 at June 30, 2007 represents the amount that management believes is more-likely-than-not to be
realized, and the remaining valuation allowance at June 30, 2007 is $6,599,000. Management will continue to assess the need for the remaining valuation allowance in future periods.

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109
(FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements and prescribes a threshold of more-likely-than-not for recognition of tax benefits of uncertain tax
positions taken or expected to be taken in a tax return. FIN 48 also provides related guidance on measurement, derecognition, classification, interest and penalties, and disclosure. The Company adopted the provisions of FIN 48 on January 1,
2007.



15



---

##### Table of Contents

The Company files income tax returns in the U.S. federal jurisdiction, the United Kingdom and various state
jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, United Kingdom and state income tax examinations by tax authorities for years before 2002.

Upon the adoption of FIN 48, the Company commenced a review of all open tax years in all jurisdictions. The Company does not believe it has included any uncertain tax positions in its federal income tax
return, United Kingdom return or any of the state tax returns it is currently filing. The Company has made an evaluation of the potential impact of additional state taxes being assessed by jurisdictions in which the Company does not currently
consider itself liable. Based on this analysis the Company does not anticipate that such additional taxes, if any, would result in a material change to its financial position.

Consistent with its current policy, the Company will include any interest and penalties related to uncertain tax positions as a component of selling, general and administrative expense.



16



---

##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

CAUTIONARY STATEMENT FOR FORWARD LOOKING INFORMATION

Statements included in this Managements Discussion and
Analysis of Financial Condition and Results of Operations 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 below.
These include, but are not limited to, competitive factors, technological and product developments, market demand, economic conditions, the resolution of litigation involving us and our ability to comply with the terms of our credit facilities.
Further information on these and other factors which could affect our financial results can be found in our reports filed with the Securities and Exchange Commission, including the Annual Report on Form 10-K, including Part I thereof, our Current
Reports on Form 8-K, this Form 10-Q and the proxy statement dated April 10, 2007.

OVERVIEW

We are a New York corporation that develops, manufactures and markets high performance, professional quality exercise equipment products for the commercial market and, to
a lesser extent, the premium segment of the consumer market.

RESULTS OF OPERATIONS

NET SALES

Our net sales increased $4,789,000, or 16%, to $34,740,000 for the second quarter of 2007 from $29,951,000
for the second quarter of 2006. For the six months ended June 30, 2007, net sales increased $10,553,000, or 18%, to $69,416,000 from $58,863,000 compared to the same period in 2006. For the second quarter of 2007, sales of cardiovascular
products increased $2,451,000, or 15%, to $18,599,000 and sales of strength products increased $2,455,000, or 23%, to $13,309,000 compared to the same period in 2006. For the six months ended June 30, 2007, sales of cardiovascular products
increased $5,115,000, or 16%, to $36,423,000 and sales of strength products increased $5,494,000, or 26%, to $26,865,000 compared to the same period in 2006. The sales increase of cardiovascular products for the second quarter and the six month
period was predominantly driven by sales of the 445T treadmill, Cordless Arc Trainer, Cordless Total Body Arc, 425A Arc Trainer and the Home Arc Trainer, each of which is a new product first introduced in the third and fourth quarters of 2006. The
sales increase of strength products for the quarter and the six month period was primarily due to sales of VR3, the new strength line introduced at the end of 2005, and VR1, the new strength line introduced in May 2007. Freight, parts and other
revenue decreased $117,000, or 4%, to $2,832,000 in the second quarter of 2007 and decreased $56,000, or 1%, to $6,128,000 for the six months ended June 30, 2007.

GROSS MARGIN

Gross margin for the second quarter of 2007 decreased by 1.2% to 35.1% from 36.3% for the same period
in 2006. The decrease was caused primarily by product mix (.8%), increased warranty (.3%) and facility relocation related costs (.2%), partially offset by pricing increases (.1%).

Gross margin for the six months ended June 30, 2007 decreased by .2% to 36.2% from 36.4% for the same period in 2006. The decrease was caused primarily by sales mix (.9%) and increased warranty costs (.2%),
partially offset by price increases (.9%).

The price of steel, a major component of our products, fluctuates from time to time. The negative impact from
changes in steel prices in the second quarter and six months of 2007 and 2006 was minimal. We are uncertain of the likely impact of steel prices on margins for the balance of 2007.



17



---

##### Table of Contents

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses increased $1,721,000, or 20%, to $10,380,000 in the second quarter of 2007 compared to $8,659,000 in the second quarter of 2006, predominantly due to an increase in
domestic and international selling expenses ($1,320,000) and an increase in product development costs ($352,000). For the six months ended June 30, 2007, selling, general and administrative expenses increased by $3,255,000, or 18%, to
$21,176,000 compared to $17,921,000 for the comparable period in 2006, predominantly due to an increase in domestic and international selling expenses ($2,029,000), and an increase in product development costs ($1,008,000). The balance of the
increase in these expenses is primarily comprised of smaller amounts including higher general salary levels. The increase in product development costs for the three and six months ended June 30, 2007 includes $224,000 and $733,000 of expenses
related to a product development agreement. Selling, general and administrative expenses represented 30% and 31% of sales for the three and six months ended June 30, 2007 and 29% and 30% of sales for the three and six months ended July 1,
2006, respectively.

NET INTEREST EXPENSE

Net interest
expense decreased by $502,000 in the second quarter of 2007 compared to the corresponding period of 2006. For the six months ended June 30, 2007, net interest expense decreased by $851,000. The decreases in 2007 were primarily due to lower
outstanding debt balances and $289,000 of income recognized in 2007 related to the Citizens interest rate swap. We expect that the net interest expense will increase during the balance of 2007 compared to the corresponding 2006 period as we have
incurred additional debt to finance the purchase of our new Owatonna manufacturing facility and related capital expenditures.

INCOME TAXES

We recorded income tax expense of $778,000 and $1,562,000 for the three and six months ended June 30, 2007, respectively. In 2002, we established
a valuation allowance against all of our deferred tax assets. As of July 1, 2006, we reevaluated the need for this valuation allowance in accordance with SFAS No. 109, Accounting for Income Taxes, due to the existence of
various factors. Based on this reevaluation, we reduced the valuation allowance by $15,361,000 in 2006 (including $14,421,000 effective July 1, 2006 or $0.86 and $0.89 per diluted share for the three and six months ended July 1, 2006).
During the period from the establishment of the valuation allowance in 2002, to the July 1, 2006 reduction of the valuation allowance, our income tax provision was limited to state taxes and federal alternative minimum taxes. For the three and
six months ended June 30, 2007, an income tax provision of approximately 41% of income before taxes was recorded totaling $778,000 and $1,562,000, respectively. The difference between the 2007 and 2006 effective tax rates would equate to
additional tax expense of $663,000, or $0.04 per diluted share and $904,000, or $0.05 per diluted share for the three and six months ended July 1, 2006, respectively. Actual cash outlays for taxes will, however, continue to be reduced by the
available operating loss carryforwards, consistent with prior periods.

As of December 31, 2006, U.S. federal operating loss carryforwards of
approximately $23,477,000 were available to us to offset future taxable income and, as of such date, we had foreign net operating loss carryforwards of $2,568,000, federal alternative minimum tax credit carryforwards of $540,000 and federal research
and development tax credit carryforwards of $129,000. The net deferred tax asset balance of $10,889,000 at June 30, 2007 represents the amount that we believe is more-likely-than-not to be realized, and the remaining valuation allowance at
June 30, 2007 is $6,599,000. We will continue to assess the need for the remaining valuation allowance in future periods.

The Company adopted the
provisions of FIN 48 on January 1, 2007. The impact of FIN 48 on the Companys financial position is discussed in Note 10 to the condensed consolidated financial statements.



18



---

##### Table of Contents

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2007, we had working capital of $10,257,000 compared to $14,061,000 of working capital at December 31, 2006. The change in working capital is primarily due to the increase in the current
portion of debt related to the acquisition of our new approximate 340,000 square foot, manufacturing, office and warehouse facility located in Owatonna, Minnesota (the Owatonna facility).

For the six months ended June 30, 2007, we generated $2,610,000 of cash from operating activities compared to $5,067,000 for the six months ended July 1, 2006.
The decrease in cash provided by operating activities is primarily due to an increase in inventory. The increase in inventory reflects the inclusion of $770,000 of inventory for the new Home Arc line which utilizes outsourced manufacturing and
$994,000 buildup of inventory due to increased volumes as well as the anticipation of our Owatonna facility relocation and the annual shutdown of our manufacturing facilities during the beginning of July.

Cash used in investing activities of $22,990,000 during the six months ended June 30, 2007 consisted of $15,217,000 for the purchase of our new Owatonna
manufacturing facility, purchases and deposits on manufacturing tooling and equipment of $6,533,000, primarily related to our new Owatonna facility, $782,000 of renovations to our Medway manufacturing facility and computer hardware and software of
$458,000 including costs associated with an upgrade to our ERP system. Cash used in investing activities of $1,194,000 during the six months ended July 1, 2006 relates primarily to purchases and deposits on equipment and tooling for the
manufacture of new products and improvements to our computer network.

For the six months ended June 30, 2007, cash provided by financing activities
of $20,345,000 consisted primarily of the $13,000,000 real estate loan which financed in part the acquisition of the Owatonna facility, and net working capital loan borrowings of $7,327,000. For the six months ended July 1, 2006, cash used in
financing activities of $4,154,000 consisted of term and net working capital loan payments of $13,659,000, partially offset by the proceeds of our public offering of common stock of $9,617,000.

We have credit facilities with The CIT Group/Business Credit, Inc. (CIT), Citizens Bank of Massachusetts (Citizens), and Wachovia Bank, NA
(Wachovia). Our credit facility with GMAC Commercial Finance, LLC (GMAC) was terminated in July 2007. Our CIT Amended Financing Agreement provides for working capital loans of up to the lesser of $14,000,000, or an amount
determined by reference to a borrowing base. Our Citizens Loan Agreement provides for a $13,000,000 real estate loan which was advanced June 28, 2007 to finance the acquisition of the Owatonna facility. We entered into the Wachovia Loan
Agreement in July 2007, providing a $7,000,000 credit line that is available through February 29, 2008 to finance the acquisition of machinery and equipment. The CIT loans are secured by substantially all of our assets except real estate,
fixtures and equipment and mature on June 30, 2009. The Citizens real estate loan is secured by a mortgage on the Owatonna facility and matures on July 2, 2014. The Wachovia loans are secured by any equipment that is financed through the
line, and mature on March 1, 2013.

At June 30, 2007, there were $11,089,000 in working capital loans and a $13,000,000 real estate loan.
Availability under the revolving loan fluctuates daily. At June 30, 2007, there was $2,866,000 in unused availability under the working capital revolving loan facility.

In 2006, we posted a letter of credit of $2,888,025 in connection with our appeal of the judgment in Colassi v. Cybex International, Inc. In April 2007, we paid to the plaintiff in this action approximately
$3,000,000 (representing the judgment, accrued interest and royalties for the period prior to our deck redesign) and the letter of credit was returned and canceled. This litigation is now concluded.

We rely upon cash flows from our operations and borrowings under our credit facilities to fund our working capital and capital expenditure requirements. A decline in
sales or margins or a failure to remain in compliance with the terms of our credit facilities could result in having insufficient funds for such purposes. We believe that our cash flows and the availability under our credit facilities are sufficient
to fund our general working capital and capital expenditure needs for at least the next 12 months.



19



---

##### Table of Contents

CONTRACTUAL OBLIGATIONS

The following is an aggregated summary of the Companys obligations and commitments to make future payments under agreements as of June 30, 2007:



|                              |  |       |            |                   |   |                    |  |                   |            |                  |   |           |  |   |           
|----------------------------- |  | ----- | ---------- | ----------------- | - | ------------------ |  | ----------------- | ---------- | ---------------- | - | --------- |  | - | ----------
|                              |  | TOTAL |            | Less ThanOne Year |   | One to Three Years |  | Four to FiveYears |            | After Five Years
|Contractual obligations:      |  |       |            |                   |   |                    |  |                   |            |                  |   |           |  |   |           
|Debt                          |  | $     | 24,089,000 |                   | $ | 260,000            |  | $                 | 12,129,000 |                  | $ | 1,040,000 |  | $ | 10,660,000
|Royalty agreement             |  |       | 1,980,000  |                   |   | 390,000            |  |                   | 720,000    |                  |   | 720,000   |  |   | 150,000   
|Capital lease obligations (a) |  |       | 198,000    |                   |   | 143,000            |  |                   | 55,000     |                  |   |          |  |   |          
|Operating lease commitments   |  |       | 1,024,000  |                   |   | 594,000            |  |                   | 413,000    |                  |   | 17,000    |  |   |          
|Purchase obligations          |  |       | 20,140,000 |                   |   | 17,649,000         |  |                   | 2,491,000  |                  |   |          |  |   |          
|                              |  |       |            |                   |   |                    |  |                   |            |                  |   |           |  |   |           
|TOTAL                         |  | $     | 47,431,000 |                   | $ | 19,036,000         |  | $                 | 15,808,000 |                  | $ | 1,777,000 |  | $ | 10,810,000
|                              |  |       |            |                   |   |                    |  |                   |            |                  |   |           |  |   |           

---

|(a) | Includes future interest obligation
|--- | -----------------------------------

OFF-BALANCE SHEET ARRANGEMENTS

We have a lease financing program whereby we arrange equipment leases and other financing for certain commercial customers for selected products. These
leases are accounted for as sales-type leases and are generally for terms of three to five years, at which time title transfers to the lessee. While most of these financings are without recourse, in certain cases we may offer a guaranty or other
recourse provisions. At June 30, 2007, the maximum contingent liability under all recourse provisions was approximately $4,148,000. A reserve for estimated losses under recourse provisions of $616,000 has been recorded based upon historical and
industry experience, and is included in accrued liabilities at June 30, 2007.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis,
management evaluates its estimates and judgments, including those related to the allowance for doubtful accounts, realizability of inventory, reserves for warranty obligations, reserves for legal matters and product liability, recoverability of
goodwill and valuation of deferred tax assets. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, which could materially impact the
Companys results of operations and financial position. These critical accounting policies and estimates have been discussed with the Companys audit committee.

Allowance for doubtful accounts. Management performs ongoing credit evaluations of customers and adjusts credit limits based upon payment history and the customers current credit worthiness, as determined
by a review of their current credit information. Management continuously monitors collections and payments from customers and maintains a provision for estimated credit losses based upon historical experience and any specific customer collection
issues that have been identified. If the financial condition of a specific customer or the Companys general customer base were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.



20



---

##### Table of Contents

Realizability of inventory. The Company values inventory at the lower of cost or market. Management regularly
reviews inventory quantities on-hand and records a provision for excess and obsolete inventory based primarily on estimated forecasts of product demand and historical usage, after considering the impact of new products. If actual market conditions
and product demand are less favorable than projected, additional inventory write-downs may be required.

Warranty reserve. All products are
warranted for up to three years for labor and up to ten years for structural frames. Warranty periods for parts range from one to ten years depending on the part and the type of equipment. A warranty liability is recorded at the time of product sale
based on estimates that are developed from historical information and certain assumptions about future events. Future warranty obligations are affected by product failure rates, usage and service costs incurred in addressing warranty claims. These
factors are impacted by the level of new product introductions and the mix of equipment sold to the commercial and consumer markets. If actual warranty costs differ from managements estimates, adjustments to the warranty liability would be
required.

Legal matters. The Company has recorded a reserve related to certain legal matters for which it is probable that a loss has been incurred
and the range of such loss can be determined. With respect to other matters, management has concluded that a loss is only possible or remote and, therefore, no loss is recorded. As additional information becomes available, the Company will continue
to assess whether losses from legal matters are probable, possible, or remote, the adequacy of accruals for probable loss contingencies.

Product liability reserve.Due to the nature of its products, the Company is involved in certain pending product liability claims and lawsuits. The Company maintains product liability insurance coverage subject to deductibles.
Reserves for self-insured retention, including claims incurred but not yet reported, are included in accrued liabilities in the accompanying condensed consolidated balance sheets, based on managements review of outstanding claims and claims
history and consultation with its third-party claims administrators. If actual results vary from managements estimates, adjustments to the reserve would be required.

Recoverability of goodwill. In assessing the recoverability of goodwill, management is required to make assumptions regarding estimated future cash flows and other factors to determine whether the fair value of
the business supports the carrying value of goodwill and net operating assets. This analysis includes assumptions and estimates about future sales, costs, working capital, capital expenditures, and cost of capital. If these assumptions and estimates
change in the future, the Company may be required to record an impairment charge related to goodwill.

Valuation of deferred tax assets. In
2002, we established a full valuation allowance against our net deferred tax asset. Effective July 1, 2006, we reevaluated the need for this valuation allowance in accordance with SFAS No. 109, Accounting for Income Taxes, due
to the existence of various factors. Based on this reevaluation, we reduced the valuation allowance by $15,361,000 in 2006 (including $14,421,000 effective July 1, 2006). The net deferred tax asset balance of $10,889,000 at June 30, 2007
represents the amount that we believe is more-likely-than-not to be realized and the remaining valuation allowance at June 30, 2007 is $6,599,000. We will continue to assess the need for the remaining valuation allowance in future periods.Approximately $28,000,000 of income before income taxes is needed to fully realize the Companys recorded net deferred tax asset and $45,000,000 of future taxable income is needed to fully realize the Companys deferred tax assets. If
the estimates and related assumptions relating to the likely utilization of the deferred tax asset change in the future, the valuation allowance may change accordingly.



21



---

##### Table of Contents

|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

There
have been no material changes in market risks from the disclosure within the Companys Report on Form 10-K for the year ended December 31, 2006.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

The Company carried out an evaluation,
under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Companys controls and procedures pursuant to Rule 13a-15 under the Securities
Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company (including its consolidated subsidiaries) in its periodic filings with the Securities and Exchange Commission is recorded, processed, summarized and reported within the
time periods specified in the Commissions rules and forms. There has been no change in the Companys internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely
to materially affect, the Companys internal control over financial reporting.



22



---

##### Table of Contents

PART II. OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

Colassi v. Cybex International,
Inc.

See Part 1 Item 3 of the Companys Report on Form 10-K for the year ended December 31, 2006 and Part II
Item 1 of the Companys Report on 10-Q for the quarter ended March 31, 2007 for a description of these proceedings.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

There are no material changes to the risk
factors previously disclosed in Item 1A, Part I of the Companys Report on Form 10-K for the year ended December 31, 2006.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

None



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

The
Annual Meeting of the Shareholders of the Company was held on May 9, 2007. At the meeting, action was taken on the following matters:

1. James H. Carll, John McCarthy, Harvey Morgan and Arthur W. Hicks, Jr. were elected as directors of the Company. The terms of office of John Aglialoro, Joan Carter, Jerry Lee and Milton Leontiades continued after the meeting.

2. Amendment No. 1 to the 2005 Omnibus Incentive Plan (the Amendment) was approved. The Amendment provides (i) for a one-time
stock award to newly elected nonemployee directors and (ii) that stock options or stock appreciation rights granted under the 2005 Omnibus Incentive Plan vest upon the death of the holder.

The number of shares cast for, against or withheld, as well as the number of abstentions and broker non-votes, on each matter considered at the meeting,
were as follows:



|                                                |  |                 |  |                     |  |                |  |                              
|----------------------------------------------- |  | --------------- |  | ------------------- |  | -------------- |  | -----------------------------
|                                                |  | SharesVoted For |  | Shares VotedAgainst |  | SharesWithheld |  | Abstention/ Broker Non- Votes
|1. Election of Directors                        |  |                 |  |                     |  |                |  |                              
|James H. Carll                                  |  | 13,566,812      |  |                    |  | 3,311,630      |  |                             
|Harvey Morgan                                   |  | 16,768,514      |  |                    |  | 109,928        |  |                             
|Arthur W. Hicks, Jr.                            |  | 13,592,108      |  |                    |  | 3,286,334      |  |                             
|John McCarthy                                   |  | 16,804,710      |  |                    |  | 73,732         |  |                             
|                                                |  |                 |  |                    
|2. Amendment of the 2005 Omnibus Incentive Plan |  | 13,204,473      |  | 472,569             |  |               |  | 3,201,400                    



23



---

##### Table of Contents

|ITEM 5. | OTHER INFORMATION
|------- | -----------------

On July 31, 2007, the Company
entered into a Loan Agreement dated July 30, 2007 (the Wachovia Loan Agreement) with Wachovia Bank, NA (Wachovia), providing a $7,000,000 credit line that is available through February 29, 2008 to finance the
acquisition of machinery and equipment. Advances under the Wachovia equipment line bear interest at LIBOR plus 1.2% to 1.45% based on a performance grid, are secured by the equipment financed pursuant to the line and mature on March 1, 2013.
There are no material relationships between the Company or its affiliates and Wachovia, other than in respect of the transactions contemplated by the Loan Agreement and other standard banking arrangements.

On July 25, 2007, the Company and Commerce Street Investments LLC, successor in interest to GMAC Commercial Finance LLC, mutually agreed to terminate
the Third Amended and Restated Credit Agreement (the GMAC Credit Agreement) between the parties. The GMAC Credit Agreement had provided the Company a $7 million credit line availability to finance the acquisition of equipment which had
never been utilized.



|ITEM 6. | EXHIBITS
|------- | --------



| | (a) | Exhibit 10.1  Amendment No. 1 to the Cybex International, Inc. 2005 Omnibus Incentive Plan, incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K
dated May 9, 2007 (the May 9, 2007 Form 8-K)*
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Exhibit 10.2  Form of Restricted Stock Award Agreement
for Newly-Elected Non- Employee Director, incorporated by reference to Exhibit 99.2 to the May 9, 2007 Form 8-K*

Exhibit 10.3 
Loan Agreement, dated July 30, 2007, with Wachovia Bank, NA

Exhibit 10.4  Form of Promissory Note to be issued under the Loan
Agreement with Wachovia Bank, NA

Exhibit 31.1  Certification of Chief Executive Officer.

Exhibit 31.2  Certification of Chief Operating Officer and Chief Financial Officer.

Exhibit 32.1  Statement of Chief Executive Officer.

Exhibit 32.2  Statement of Chief Operating Officer and Chief Financial Officer.

---

|* | Executive compensation plans and arrangements
|- | ---------------------------------------------



24



---

##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.



| |  |  |  |                          
| |  |  |  | -------------------------
| |  | 
| |  |  |  | Cybex International, Inc.



|               |  |     |  |                                     
|-------------- |  | --- |  | ------------------------------------
|               |  |    
|               |  | By: |  | /s/ John Aglialoro                  
|August 3, 2007 |  |     |  | John Aglialoro                      
|               |  |     |  | Chairman and Chief Executive Officer



|               |  |     |  |                                                    
|-------------- |  | --- |  | ---------------------------------------------------
|               |  |    
|               |  | By: |  | /s/ Arthur W. Hicks, Jr.                           
|August 3, 2007 |  |     |  | Arthur W. Hicks, Jr.                               
|               |  |     |  | Chief Operating Officer and Chief Financial Officer



25