Heelys, Inc. reported net sales for the third quarter ended Sept. 30 were $10.8 million compared to net sales of $23.8 million in the corresponding period a year ago.
Sequential Quarterly Comparisons
Net sales for the third quarter of 2009 were $10.8 million compared to net sales of $12.4 million in the second quarter of 2009. Gross profit was $3.2 million, or 29.6%, compared to $3.6 million, or 28.9%, for the second quarter of this year. Selling, general and administrative expenses, excluding litigation settlements and related costs, were $3.6 million compared to $4.0 million in the second quarter of 2009. Litigation settlements and related costs were $0.3 million for the third quarter of 2009 compared to $3.1 million during the second quarter of 2009. 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. During the second quarter of 2009, the company reached proposed settlements with regards to these lawsuits.
Tom Hansen, chief executive officer of the Company, commented, “Like our retail partners, our business continues to be adversely impacted by the tough economy and the holiday season remains a major question mark. However, we have made significant reductions in inventory and continue to scrub every aspect of our business to find more operating efficiencies and reduce costs in every possible way. And we are working diligently to rebuild the brand and increase visibility as well as implementing several new product development initiatives.”
Balance Sheet
As of September 30, 2009, the company had cash and cash equivalents of $68.4 million compared with $93.2 million as of September 30, 2008 and $68.4 million as of December 31, 2008. Inventory as of September 30, 2009 decreased to $9.8 million versus $18.4 million as of September 30, 2008 and $12.1 million as of December 31, 2008.
HEELYS, INC. AND SUBSIDIARIES | |||||||||||||||||
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| September 30, |
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| 2008 | 2009 | 2008 | 2009 | ||||||||||||||
| Net sales | $ | 23,825 | $ | 10,751 | $ | 55,143 | $ | 32,402 | |||||||||
| Cost of sales | 15,880 | 7,572 | 40,179 | 22,787 | |||||||||||||
| Gross profit | 7,945 | 3,179 | 14,964 | 9,615 | |||||||||||||
| Selling, general and administrative expenses | 6,552 | 3,617 | 17,696 | 12,119 | |||||||||||||
| Litigation settlements and related costs | 271 | 258 | 584 | 4,087 | |||||||||||||
| Income (loss) from operations | 1,122 | (696 | ) | (3,316 | ) | (6,591 | ) | ||||||||||
| Other (income) expense, net | (57 | ) | (239 | ) | (2,455 | ) | (724 | ) | |||||||||
| Income (loss) before income taxes | 1,179 | (457 | ) | (861 | ) | (5,867 | ) | ||||||||||
| Income tax expense (benefit) | 424 | 645 | (175 | ) | (1,865 | ) | |||||||||||
| Net income (loss) | $ | 755 | $ | (1,102 | ) | $ | (686 | ) | $ | (4,002 | ) | ||||||
| Net income (loss) per share: | |||||||||||||||||
| Basic | $ | 0.03 | $ | (0.04 | ) | $ | (0.03 | ) | $ | (0.15 | ) | ||||||
| Diluted | $ | 0.03 | $ | (0.04 | ) | $ | (0.03 | ) | $ | ||||||||
