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Heelys, Inc. Reports Second Quarter 2012 Financial Results

Stocks in this article: HLYS

Forward Looking Statements

Certain statements in this press release and oral statements made from time to time by representatives of Heelys are "forward-looking statements" for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995, including in particular, statements regarding our guidance, outlook for future events, financial performance, customer demand, growth and profitability. In some cases, you can identify forward-looking statements by terminology such as "subject to," "believes," "anticipates," "plans," "expects," "intends," "estimates," "may," "will," "should," "can," the negatives thereof, variations thereon, similar expressions, or discussions of strategy. All forward-looking statements are based upon management's current expectations and various assumptions, but they are inherently uncertain, and Heelys may not realize its expectations and the underlying assumptions may not prove correct. Heelys' actual results and the timing of events could differ materially from those described in or implied by the forward-looking statements as a result of risks and uncertainties, including, without limitation, the fact that substantially all of Heelys' net sales are generated by one product, Heelys' intellectual property may not restrict competing products that infringe on its patents from being sold, continued changes in fashion trends and consumer preferences and general economic conditions, Heelys' dependence on its relationships with retail customers and independent distributors with whom Heelys does not have long term contracts, Heelys outsources all of its manufacturing to, and relies on, a limited number of independent manufacturers, Heelys' distribution model and recent moves in select markets to takeover distribution of its products directly to customers contains inherent risks, Heelys is subject to the risks of conducting business internationally, foreign exchange rate fluctuations could harm its results of operations, Heelys has expanded its product offering to mass merchants which may affect its brand image and reputation, Heelys may not be able to successfully introduce new product categories and additional factors which are detailed in Heelys' filings with the Securities and Exchange Commission, including the Risk Factors contained in Heelys' Annual Report on Form 10-K, as modified and supplemented in other filings from time to time. Investors, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and Heelys undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

HEELYS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(amounts in thousands, except per share data)
         
         
  Three Months Ended June 30,  Six Months Ended June 30, 
  2012 2011 2012 2011
         
Net sales  $ 5,754  $ 8,342  $ 13,025  $ 14,445
Cost of sales  3,538  4,432  7,585  7,526
Gross profit  2,216  3,910  5,440  6,919
         
Selling, general and administrative expenses 3,707 4,978 8,143 9,090
Restructuring charges 222  --  768  -- 
Loss from operations  (1,713)  (1,068)  (3,471)  (2,171)
         
Other (income) expense, net  9  (137)  (77)  (175)
Loss before income taxes  (1,722)  (931)  (3,394)  (1,996)
         
Income tax (benefit) expense  (70)  42  (161)  160
         
Net loss  $ (1,652)  $ (973)  $ (3,233)  $ (2,156)
         
Net loss per share:        
Basic and Diluted  $ (0.06)  $ (0.04)  $ (0.12)  $ (0.08)
         
Weighted-average shares:        
Basic and Diluted  27,571  27,571  27,571  27,571
         
HEELYS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands)
     
  June 30,  December 31,
Assets 2012 2011
     
Current Assets:    
Cash and cash equivalents  $ 18,995  $ 17,925
Investments  39,235  40,469
Accounts receivable, net of allowances  4,115  7,077
Inventories  8,290  8,836
Prepaid expenses and other current assets  959  1,193
Income taxes receivable  211  133
Deferred income taxes  15  14
Total current assets 71,820 75,647
     
Property and Equipment, net of accumulated depreciation  426  570
Patents and Trademarks, net of accumulated amortization  329  320
Intangible Assets, net of accumulated amortization  227  380
Goodwill  1,488  1,532
Deferred Income Taxes  450  364
     
Total Assets  $ 74,740  $ 78,813
     
Liabilities and Stockholders' Equity    
     
Current Liabilities:    
Accounts payable  $ 886  $ 2,277
Accrued liabilities  3,608  2,974
Deferred income taxes  104  104
Total current liabilities 4,598 5,355
     
Long Term Liabilities:    
Income taxes payable  670  660
Deferred income taxes  2  40
Other long term liabilities  224  247
     
Total Liabilities  5,494  6,302
     
Stockholders' Equity:    
Common stock  28  28
Additional paid-in capital  66,303  66,126
Retained earnings  3,708  6,941
Accumulated other comprehensive loss  (793)  (584)
Total stockholders' equity 69,246 72,511
     
Total Liabilities and Stockholders' Equity  $ 74,740  $ 78,813
     
CONTACT: Heelys, Inc.
         Craig Storey, 214-390-1831
         Chief Financial Officer

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