Aug. 14--Heelys Inc., the maker of wheeled shoes for kids, on Thursday 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.

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.

Heelys officials did not return phone calls Thursday.

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 Thursday with the Securities and Exchange Commission. A settlement hearing is scheduled for Nov. 17 in U.S. District Court in Dallas.

Heelys said the company and certain officers and directors deny wrongdoing but decided to settle because continuing to fight the suits would be "protracted and expensive."

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