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Heelys, Inc. Reports Second Quarter 2012 Financial Results

Balance Sheet

Combined cash and investments remained consistent at $58.2 million as of June 30, 2012, and $58.4 million as of December 31, 2011. The decrease in accounts receivables was primarily a result of decreased sales, as well as timing; the decrease in accounts payable and accrued liabilities was primarily due to payment of inventory purchase related liabilities that were outstanding as of December 31, 2011. Cash flows from changes in operating assets/liabilities are subject to seasonality.

Management Comments

Tom Hansen, chief executive officer of the Company, commented, "Retail sales were slow across most segments and geographies in April and May and our products were no exception. We continue to pursue multiple initiatives to address these tough conditions.

New products: our new athletic/running, lifestyle and sport/skate outsole designs arrived in the United States in late June and are just now hitting retailers' shelves.

Cost control and reduction: we have completed the closure of our international headquarters office in Brussels, Belgium which should reduce our overhead beginning in 2013.

Drive trial: focus on the younger end of our customer segment through additional distribution of our entry level priced Sidewalk Sports brand in both the United States and Europe.

Third party brands: continue to build our third party distribution business by adding new brands that complement our current portfolio

Add distribution: aggressively pursue new distribution partners in parts of the world that represent opportunities."

Conference Call

The Company will host a conference call and webcast on Thursday, August 9, 2012 to discuss the results of its second quarter ended June 30, 2012. The teleconference will begin at 11:00 a.m. Eastern Time. To participate in the teleconference, investors should dial (877) 342-9747 a few minutes before the start of the call. International callers may dial (678) 304-6848. The broadcast will also be available at An audio replay of the webcast will be archived on Heelys' investor website for 1 year.

About Heelys, Inc.

Heelys, Inc. designs, markets and distributes innovative, action sports-inspired products primarily under the HEELYS(R) brand targeted to the youth market. The Company's primary product, HEELYS-wheeled footwear, is patented dual purpose footwear that incorporates a stealth, removable wheel in the heel. HEELYS-wheeled footwear allows the user to seamlessly transition from walking or running to rolling by shifting weight to the heel. Users can transform HEELYS-wheeled footwear into street footwear by removing the wheel. HEELYS-wheeled footwear provides users with a unique combination of fun and style that differentiates it from other footwear and wheeled sports products.

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