Heelys Names New Chairman of the Board

CARROLLTON, Texas--(BUSINESS WIRE)--The board of directors of Heelys, Inc. (NASDAQ: HLYS) has been expanded to eight directors and Gary L. Martin has been selected to join the board and serve as its non-executive Chairman. Mr. Martin, 61, is President and Chief Executive Officer of Capital Southwest Corporation (NASDAQ: CSWC), which is Heelys’ largest shareholder, holding 9,317,310 shares of common stock, equivalent to a 34.4% equity interest.

Mr. Martin, who has been associated with Capital Southwest or its subsidiaries since 1972, has served on its board since 1988 and was named President and CEO in July 2007. Previously, he was CEO of The Whitmore Manufacturing Company of Rockwall, Texas, a producer of industrial lubricants and a key portfolio company of Capital Southwest. He earned a BBA in finance and accounting from the University of Oklahoma, is a Certified Public Accountant and is a graduate of Harvard Business School’s Advanced Management Program. Mr. Martin is a director of Alamo Group, Inc. (NYSE: ALG) and Capital Southwest Corporation (Nasdaq: CSWC).

Mr. Martin stated, “The Heelys board of directors has established challenging goals for the growth of sales and earnings. To accomplish these goals, the company must market Heelys’ present products more effectively and introduce new products which appeal to Heelys present customers and a new universe of potential customers.” Mr. Martin added “We are committed to sustaining Heelys’ growth and producing results that will merit the confidence of our stockholders.”

Heelys, Inc. President and CEO Michael Staffaroni said, “We are delighted to have Gary join our board of directors as Chairman. We welcome his vast experience both as a successful business manager and director for other publicly traded companies. We indeed have both challenges and opportunities facing our dynamic business as we continue to grow and diversify our HEELYS brand into important strategic areas such as apparel, backpacks and our exciting new foray into ‘non-wheeled’ footwear through the introduction of our Gamer by Heelys collection that will be available in stores for holiday ’07. This ‘non-wheeled’ initiative along with our growing assortment of wheeled footwear styles and evolving technology gives HEELYS the unique opportunity to become a world class kids’ sports-lifestyle brand.”

Heelys’ former Chairman, Patrick F. Hamner, will remain on the board and will serve as Senior Vice President of the company.

Heelys, Inc. designs, markets and distributes innovative, action sports-inspired products under the HEELYS® 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 skating 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. For the year ended December 31, 2006, Heelys reported diluted earnings per share of $1.16 on net sales of approximately $188,208,000. For the six months ended June 30, 2007, the company reported diluted earnings per share of $0.75 on net sales of $123,738,000, as compared to diluted earnings per share of $0.24 on net sales of $44,596,000 in the prior year.

Capital Southwest Corporation, Dallas, Texas, established in 1961, is a venture capital and business development company with assets of more than $700 million. In 2000, it provided the capital necessary for Heelys to complete the development and marketing of its unique stealth skate-shoe.

Forward Looking Statements

Certain information in this press release may be deemed to constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks and uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performances or achievements anticipated in the forward looking statements. Certain of the risks and uncertainties and other factors include, without limitation, the fact that substantially all of the Company's net sales are generated by one product, the Company may not be able to successfully introduce new product categories, 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, continued changes in fashion trends and consumer preferences and general economic conditions, 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 filed with the Securities and Exchange Commission on March 15, 2007, available at www.sec.gov. 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.

Contacts

Heelys, Inc.
Michael W. Hessong, 214-390-1831
Chief Financial Officer
or
Gary L. Martin, 972-233-8242
Chairman
or
Investor Relations
Integrated Corporate Relations, Inc.
Joe Teklits/Brendon Frey, 203-682-8200