Amsterdam – 25th February 2010 – Head N.V. (VSX: HEAD; U.S. OTC: HEDYY.PK), a leading global manufacturer and marketer of sports equipment, announced the following results today.
Summary Unaudited Preliminary Financial Information
(see attached pdf file)
As anticipated for the full year 2009, our sales are slightly lower than last year’s. The tough economic conditions have continued to impact our results – particularly in diving where we saw a decline of 12% for the year due to this industry’s link to travel and the relatively high price points of the products. We do not expect to see a quick recovery in this market.
Winter Sports for the full year decreased by 3.9% - this was driven by a decline in volumes in all our core product categories; Skis 9%, Boots 6%, and Bindings 5% due to the tough trading conditions, especially in North America, offset by some improvement in mix, positive exchange rate movements and some growth in non-core products.
Racquet sports experienced a sales growth of 3.9% for the year. The volumes of racquets declined by over 9% whilst ball volumes increased by nearly 3%. The improvement in the average selling price of both racquets and balls due to positive exchange rate movements and an enhanced mix resulted in the overall growth in sales for the division.
The impact of our recent restructuring programmes have positively influenced the operating profit in 2009 which, on an adjusted level, increased by €11.1m to €12.0m. The adjustments include the now largely completed restructuring programs, the 2009 costs consist of transferring tennis ball production to China and the reorganisation of ski production. Further adjustments have been made for the share-based compensation plans and the one-off sale of trademarks in Korea.
In addition, to our manufacturing restructuring projects, the company has also restructured part of its borrowings during 2009. Through a private exchange offer, €85.7m of existing Senior Notes were exchanged for €43.7m Senior Secured Notes plus 22,491,278 ordinary shares in the company. The new Senior Secured Notes are secured by pledges or charges over certain inventory, trade receivables and in some circumstances cash of the company. The transaction, which reduces the company’s net debt and interest payments also resulted in a gross gain of €40.3m reduced by €11.0m deferred tax expense resulting from the utilization of tax losses carried forward which is included in net income for the year.
As a condition of the exchange offer, the company secured a working capital facility of €10m for 2009. The facility was provided by a company ultimately controlled by Mr. Johan Eliasch and in consideration for the undertaking Head Sports Holdings and its shareholders received 28,343,298 shares. Of these shares 25,892,075 were newly issued shares and 2,451,223 were transferred from treasury shares. At the 31st December 2009, the company had 88,204,030 issued shares up from 39,820,677 at 31st December 2008. The shares issued as part of the bond exchange are not yet listed, but the company is working towards listing these shares during the first half of 2010. Once these shares are listed they will be fungible with our existing listed shares.
Operating cash flow for the year improved by over €34m due to the successful implementation of working capital reduction plans, our improved net income and lower interest payments. Capital expenditure was also lower due to its cyclical nature and while we anticipate that this will increase over the next years we expect our average capital expenditure to be lower than it has historically been.
It is too early in the year to predict the company’s performance in 2010, but the cost base has been brought in line with the current sales levels and the infrastructure is in place to allow the company to grow should the markets start to recover.
The 2009 Annual Report will be released on or around the 20 April 2010 and the Head NV AGM will be held on the 27 May 2010.
HEAD NV is a leading global manufacturer and marketer of premium sports equipment.
HEAD NV’s ordinary shares are listed on the Vienna Stock Exchange (“HEAD”).
Our business is organized into four divisions: Winter Sports, Racquet Sports, Diving and Licensing. We sell products under the HEAD (tennis, squash and racquetball racquets, tennis balls, tennis footwear, badminton products, alpine skis, ski bindings and ski boots, snowboards, bindings and boots), Penn (tennis and racquetball balls), Tyrolia (ski bindings), and Mares/Dacor (diving equipment) brands.
We hold leading positions in all of our product markets and our products are endorsed by some of the world’s top athletes including Andre Agassi, Hermann Maier, Bode Miller, Lindsey Vonn, Amelie Mauresmo, Svetlana Kuznetsova, Novak Djokovic, Andrew Murray, Ivan Ljubicic, Didier Cuche, Marco Büchel, Patrick Staudacher, Maria Riesch and Sarka Zahbrovska.
For more information, please visit our website: http://www.head.com
Analysts, investors, media and others seeking financial and general information, please contact:
Clare Vincent, Investor Relations
Tel: +44 207 499 7800
Fax: +44 207 491 7725
E mail: email@example.com
Gunter Hagspiel, Chief Financial Officer
Tel: +43 5574 608
Fax +43 5574 608 130
This press release should be read in conjunction with the company’s report for the three and none months ended 30 September 2009.
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases, including references to assumptions, as they relate to Head N.V., its management or third parties, identify forward-looking statements. Forward-looking statements include statements regarding Head N.V.’s business strategy, financial condition, results of operations, and market data, as well as any other statements that are not historical facts. These statements reflect beliefs of Head N.V.’s management as well as assumptions made by its management and information currently available to Head N.V. Although Head N.V. believes that these beliefs and assumptions are reasonable, the statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors include, but are not limited to, the following: the impact of the current global economic turmoil, weather and other factors beyond our control, competitive pressures and trends in the sporting goods industry, our ability to implement our business strategy, our liquidity and capital expenditures, our ability to obtain financing, our ability to realize the cost savings expected from the cost reduction program, our ability to compete, including internationally, our ability to introduce new and innovative products, legal proceedings and regulatory matters, our ability to fund our future capital needs, and general economic conditions. These factors, risks and uncertainties expressly qualify all subsequent oral and written forward-looking statements attributable to Head N.V. or persons acting on its behalf.
NL 1012 KK Amsterdam
Stock Market: Official Market of the Vienna Stock Exchange
HTM Sport GmbH
A 2320 Schwechat
ISIN: XS0184717956 / XS0184719143
Stock Market: Luxembourg Stock Exchange