Heelys got a big $1.2 million boost in its first-quarter sales compared with one year ago, reaching a level of $6.1 million for the period. They grew by $482,000 to $1.7 million in the U.S. They were up by $686,000 to $5.1 million elsewhere, mainly because of higher sales in Japan and extra revenues of $433,000 from Heelys' sales of Blazer Pro and District scooters and accessories in Europe. The consolidated gross margin declined to 44.3 percent from 49.3 percent a year ago because of changes in the mix of products and customers, and discounts granted to foreign customers. Structural changes in Europe contributed to worsening the company's operating loss by $655,000 to $1.7 million. The bottom line showed a net loss of $1.6 million for the quarter compared with $1.2 million. Looking ahead, the company expects to cut costs in Europe and to add more revenues from Eastern Europe, Central and South America, and Southeast Asia, where it is negotiating with potential distributors. 

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