Plaintiffs v Heelys Inc.

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Heelys To Pay $5.25 Million To Settle IPO Suit

Case ID: 5535

Amount At Issue: $5,250,000.00

Category: Miscellaneous

Last Update: 08/19/2009

Country:

Heelys Inc., the maker of wheeled shoes for kids, posted a wider net loss for the second quarter and said it reached a proposed settlement of a class action lawsuit over its initial public offering.

The Carrollton-based company's net loss totaled $1.6 million, or 6 cents per share, compared with a loss of $394,000, or 1 cent per share, a year earlier. Revenue fell 32 percent to $12.4 million.

Heelys shares closed at $2.01, down 9 cents, but gained 4 cents in after-market trading.

Pending court approval, the proposed $7.5 million settlement includes all owners of Heelys common stock as of July 16, according to court documents.

The proposed settlement stems from lawsuits filed in 2007 and 2008 alleging that Heelys and certain officers and directors made or allowed "false and misleading statements" about the company's risk factors, business model and business prospects in its IPO registration in 2006, according to documents filed with the Securities and Exchange Commission. A settlement hearing is scheduled for Nov. 17 in U.S. District Court in Dallas.

Heelys had accrued about $3.6 million as of June 30 toward the settlement but said insurance would cover most of the settlement and related legal costs. The company took a second-quarter charge of $3.1 million for litigation.

Coughlin Stoia Geller Rudman & Robbins LLP
58 South Service Road, Suite 200
Melville, NY 11747
Telephone: (631) 367-7100 or (877) 992-2555
Facsimile: (631) 367-1173

or

Barroway Topaz Kessler Meltzer & Check, LLP
280 King of Prussia Road
Radnor, PA 19087
Telephone: (610) 667.7706
Facsimile: (610) 667.7056

If you bought Heelys Inc. securities and would like to obtain information about the Heelys Inc. lawsuit, then you are invited to call Kahn Swick Foti, LLC toll free at (866) 467-1400 to speak with an attorney or visit www.ksfcounsel.com.

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