UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 13 , 2009
HEELYS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-33182 |
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75-2880496 |
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(State or other
jurisdiction of incorporation
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(Commission File No.) |
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(IRS Employer Identification No.) |
3200 Belmeade Drive, Suite 100, Carrollton, Texas 75006
(Address of principal executive offices and zip code)
(214) 390-1831
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02 |
Results of Operations and Financial Condition |
On August 13, 2009, Heelys, Inc. (the “Company”) issued a press release announcing information regarding its consolidated financial results for the second quarter ended June 30, 2009. The consolidated financial results are with respect to the Company and its consolidated subsidiaries. A copy of the press release issued in connection with the announcement is attached as Exhibit 99.1 and is incorporated herein by reference.
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Item 7.01 |
Regulated FD Disclosure |
On August 13, 2009, the Company issued a press release announcing that it has reached proposed settlements filed in connection with the Company’s initial public offering. A copy of the Company’s press release is being furnished as Exhibit 99.1 and is incorporated hereby by reference.
The information contained in this report and the exhibits hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of Section 18, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
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Item 9.01 |
Financial Statements and Exhibits. |
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(d) |
Exhibits. |
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99.1 |
Press Release of Heelys, Inc. dated August 13, 2009. |
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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.
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Heelys, Inc. |
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Date: August 13, 2009 |
By: |
/s/ Lisa K. Peterson |
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Lisa K. Peterson |
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Chief Financial Officer |
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EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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Press Release of Heelys, Inc. dated August 13, 2009. |
4
Exhibit 99.1
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Company Contact: |
Lisa Peterson / Chief Financial Officer |
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(214) 390-1831 |
DALLAS, August 13, 2009 (BUSINESS WIRE) — Heelys, Inc. (NASDAQ: HLYS) today reported the following financial results for the second quarter ended June 30, 2009.
Year-over-Year Quarterly Comparisons
Net sales for the second quarter of 2009 were $12.4 million compared to net sales of $18.2 million in the corresponding period a year ago. Gross profit was $3.6 million, or 28.9%, compared to gross profit of $4.2 million, or 23.0%, in the second quarter of 2008. Selling, general and administrative expenses were $4.0 million compared to $5.1 million in the second quarter of last year. Litigation settlements and related costs were $3.1 million for the second quarter of 2009 compared to $0.2 million for the same quarter of 2008. These costs are related to the lawsuits filed in the latter part of 2007 and early part of 2008 in connection with the Company’s initial public offering. The Company has reached proposed settlements with regards to these lawsuits and has accrued approximately $3.6 million as of June 30, 2009, as discussed more fully below. The Company reported a net loss of $1.6 million, or ($0.06) per fully diluted share versus a net loss of $0.4 million, or ($0.01) per fully diluted share in the second quarter of 2008.
Sequential Quarterly Comparisons
Net sales for the second quarter of 2009 were $12.4 million compared to net sales of $9.2 million in the first quarter of 2009. Gross profit was $3.6 million, or 28.9%, compared to $2.9 million, or 30.8%, for the first quarter of this year. Selling, general and administrative expenses were $4.0 million compared to $4.5 million in the first quarter of 2009. Litigation settlements and related costs were $3.1 million for the second quarter of 2009 compared to $0.7 million during the first quarter of 2009. The Company reported a net loss of $1.6 million, or ($0.06) per fully diluted share versus a net loss of $1.3 million, or ($0.05) per fully diluted share in the first quarter of this year.
Tom Hansen, chief executive officer of the Company, commented “We continue to evaluate every aspect of our business to make sure that we’re operating as efficiently as possible. While things on a macro level seem to be stabilizing, we believe that we must be more precise than ever in our inventory management and hyper aware of our retail partners’ needs going forward.”
Balance Sheet
As of June 30, 2009, the Company had cash and cash equivalents of $67.1 million compared with $96.8 million as of June 30, 2008 and $68.4 million as of December 31, 2008. Inventory as of June 30, 2009 decreased to $10.6 million versus $19.2 million as of June 30, 2008 and $12.1 million as of December 31, 2008.
Proposed Litigation Settlements
The Company has reached proposed settlements of lawsuits filed in the latter part of 2007 and early part of 2008 in connection with the Company’s initial public offering. Pursuant to the proposed settlements, if approved by the court, the Company’s insurance policies will fund the majority of the settlement amounts and related legal defense costs. As stated above, the Company has accrued approximately $3.6 million with respect to these settlements as of June 30, 2009.
Conference Call Information
The Company has decided to discontinue earnings calls at this time.
About Heelys, Inc.
Heelys, Inc. designs, markets and distributes innovative, action sports-inspired products 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.
Forward Looking Statements
Certain statements in this press release and oral statements made from time to time by representatives of the Company 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 the Company may not realize its expectations and the underlying assumptions may not prove correct. The Company’s 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 the Company’s net sales are generated by one product, continued changes in fashion trends and consumer preferences and general economic conditions, the Company’s intellectual property may not restrict competing products that infringe on its patents from being sold, the Company’s dependence on independent manufacturers, the Company may not be able to successfully introduce new product categories, the outcome of lawsuits filed against the Company, which could have a material adverse effect on us, and additional factors which are detailed in the Company’s filings with the Securities and Exchange Commission, including the Risk Factors contained in the Company’s Annual Report on Form 10-K. 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 the Company 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 for per share data)
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Three-month period ended |
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Six-month period ended |
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June 30, |
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June 30, |
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June 30, |
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June 30, |
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2008 |
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2009 |
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2008 |
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2009 |
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Net sales |
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$ |
18,211 |
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$ |
12,402 |
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$ |
31,318 |
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$ |
21,651 |
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Cost of sales |
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14,016 |
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8,817 |
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24,299 |
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15,215 |
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Gross profit |
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4,195 |
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3,585 |
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7,019 |
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6,436 |
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Selling, general and administrative expenses |
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5,128 |
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3,970 |
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11,144 |
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8,502 |
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Litigation settlements and related costs |
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248 |
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3,051 |
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313 |
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3,829 |
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Loss from operations |
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(1,181 |
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(3,436 |
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(4,438 |
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(5,895 |
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Other (income) expense, net |
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(830 |
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(590 |
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(2,398 |
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(485 |
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Loss before income taxes |
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(351 |
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(2,846 |
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(2,040 |
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(5,410 |
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Income tax expense (benefit) |
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43 |
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(1,256 |
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(599 |
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(2,510 |
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Net loss |
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$ |
(394 |
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$ |
(1,590 |
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$ |
(1,441 |
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$ |
(2,900 |
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Net loss per share: |
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Basic |
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$ |
(0.01 |
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$ |
(0.06 |
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$ |
(0.05 |
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$ |
(0.11 |
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Diluted |
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$ |
(0.01 |
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$ |
(0.06 |
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$ |
(0.05 |
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$ |
(0.11 |
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Weighted-average shares: |
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Basic |
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27,193 |
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27,571 |
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27,134 |
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27,571 |
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Diluted |
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27,193 |
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27,571 |
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27,134 |
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27,571 |
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HEELYS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands)
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December 31, |
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June 30, |
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2008 |
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2009 |
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Assets |
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Current Assets: |
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Cash and cash equivalents |
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$ |
68,446 |
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$ |
67,101 |
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Accounts receivable, net of allowances |
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6,594 |
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6,599 |
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Inventories |
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12,104 |
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10,595 |
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Prepaid and other current assets |
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831 |
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1,484 |
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Income taxes receivable |
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268 |
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121 |
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Deferred income tax asset |
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3,572 |
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6,375 |
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Total current assets |
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91,815 |
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92,275 |
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Property and Equipment, net of accumulated depreciation |
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1,007 |
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1,181 |
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Patents and Trademarks, net of accumulated amortization |
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310 |
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316 |
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Intangible Assets, net of accumulated amortization |
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1,412 |
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1,230 |
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Goodwill |
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1,668 |
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1,663 |
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Deferred Income Tax Asset |
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284 |
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111 |
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Total Assets |
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$ |
96,496 |
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$ |
96,776 |
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Liabilities and Stockholders’ Equity |
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Current Liabilities: |
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Accounts payable |
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$ |
1,910 |
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$ |
3,029 |
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Accrued expenses |
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5,091 |
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7,139 |
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Income taxes payable |
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1,347 |
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1,408 |
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Total current liabilities |
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8,348 |
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11,576 |
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Long Term Liabilities: |
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Income taxes payable |
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442 |
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431 |
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Deferred income tax liability |
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— |
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59 |
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Other long term liabilities |
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1,331 |
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967 |
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Total Liabilities |
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10,121 |
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13,033 |
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Stockholders’ Equity: |
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Common stock |
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28 |
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28 |
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Additional paid-in capital |
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64,809 |
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65,020 |
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Retained earnings |
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21,657 |
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18,757 |
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Accumulated other comprehensive loss |
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(119 |
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(62 |
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Total stockholders’ equity |
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86,375 |
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83,743 |
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Total Liabilities and Stockholders’ Equity |
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$ |
96,496 |
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$ |
96,776 |
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