HEAD NV Announces Results for the Three Months ended 30 September 2006

November 9th, 2006

HEAD NV Announces Results for the Three Months ended 30 September 2006
Amsterdam – November 9th 2006 – Head N.V. (NYSE: HED; VSX: HEAD), a leading global manufacturer and marketer of sports equipment, announced the following results today.

For the three months ended 30 September 2006 compared to the three months ended 30 September 2005:


Net revenues were up 11.1% to €111.9 million Operating profit, before restructuring costs, improved by €4.2 million to a profit of €15.4 million.The profit for the period was €9.6 million compared to a profit of €5.8 million in Q3 2005.
For the nine months ended 30 September 2006 compared to the nine months ended 30 September 2005:

Net revenues were up 5.5% to €243.5 million Operating profit, before restructuring costs and gain on sale of property, increased by €3.8 million to a profit of €8.2 million.The loss for the period was €0.1 million compared to €2.0 million profit for the 9 month period 2005.
Johan Eliasch, Chairman and CEO, commented:

“The nine month results are encouraging, with net revenues showing growth of nearly 6%, and a positive development in gross margin.

The performance of the Winter Sports division has exceeded our expectations, with 18% sales growth and strong bookings.

The Racquet Sport and Diving division results are in line with expectations; sales in both divisions are anticipated to match prior year. The Diving division will also show improved profitability.

Based on these developments, we continue to be positive in our outlook & anticipate an improvement on last year’s operating result”

Winter Sports

Winter Sports revenues for the three months ended September 30, 2006 increased by €11.6 million, or 19.7%, to €70.4 million from €58.8 million in the comparable 2005 period. For the nine months ended September 30, 2006, Winter Sports revenues increased by €15.3 million, or 18.0%, to €100.2 million from €84.9 million in the comparable 2005 period. This increase was due to higher sales volumes in all of our categories and almost all of our markets as a consequence of good snow conditions in the winter season 2005/2006 and relatively low inventory at retail level which resulted in good bookings inflow. In addition, our efforts to improve logistics lead to better product availability and earlier shipments in the three and nine months ended September 30, 2006 compared to 2005.

Racquet Sports

Racquet Sports revenues for the three months ended September 30, 2006 decreased by €1.7 million, or 4.8%, to €33.4 million from €35.1 million in the comparable 2005 period. This was mainly due to lower sales prices for tennis racquets due to the introduction of our Flexpoint racquets in the second quarter of 2005, which positively influenced our sales in the third quarter of 2005. For the nine months ended September 30, 2006, Racquet Sports revenues increased by €1.8 million, or 1.8%, to €106.3 million from €104.4 million in the comparable 2005 period. This increase was mainly due to the weakening of the euro against the U.S. dollar in the reporting period.

Diving

Diving revenues for the three months ended September 30, 2006 increased by €2.1 million, or 26.9%, to €10.1 million from €8.0 million in the comparable 2005 period. For the nine months ended September 30, 2006, Diving revenues decreased by €2.1 million, or 5.3%, to €38.0 million from €40.1 million in the comparable 2005 period. This decrease was mainly due to a special product launch in the first quarter of 2005 (Limited Edition) which was not repeated in 2006.

Licensing

Licensing revenues for the three months ended September 30, 2006 decreased by €0.4 million, or 24.3%, to €1.2 million from €1.6 million in the comparable 2005 period. For the nine months ended September 30, 2006, licensing revenues decreased by €1.3 million, or 17.6%, to €5.9 million from €7.2 million in the comparable 2005 period due to termination of a footwear license agreement which will be replaced by our own distribution and a termination of an apparel license agreement in the UK which will be replaced next year.

Profitability

Sales deductions for the three months ended September 30, 2006 increased by €0.5 million, or 18.7%, to €3.2 million from €2.7 million in the comparable 2005 period. For the nine months ended September 30, 2006, sales deductions increased by €1.1 million, or 18.5%, to €6.9 million from €5.8 million in the comparable 2005 period due to increased sales in winter sports and racquet sports

Gross Profit for the three months ended September 30, 2006 increased by €7.3 million to €45.4 million from €38.2 million in the comparable 2005 period. Gross margin increased to 40.6% in 2006 from 37.9% in the comparable 2005 period. For the nine months ended September 30, 2006 gross profit increased by €7.1 million to €98.2 million from €91.1 million in the comparable 2005 period. Gross margin increased to 40.3% in 2006 from 39.5% in the comparable 2005 period. The positive development in gross margin for both the three- and nine-month periods was mainly due to our winter sports and diving business and reflected improved production efficiency.

Selling and Marketing Expenses for the three months ended September 30, 2006, increased by €3.2 million, or 16.5%, to €22.8 million from €19.6 million in the comparable 2005 period. For the nine months ended September 30, 2006, selling and marketing expenses increased by €3.4 million, or 5.4%, to €67.4 million from €64.0 million in the comparable 2005 period. This increase was mainly due to the higher advertising and departmental selling expenditures as well as the weakening of the euro against the U.S. dollar.The increased selling and marketing expenses were partly offset by a lower provision for bad debt.

General and Administrative Expenses for the three months ended September 30, 2006, increased by €0.2 million, or 3.1%, to €7.6 million from €7.4 million in the comparable 2005 period. For the nine months ended September 30, 2006, general and administrative expenses increased by €0.7 million, or 3.2%, to €23.1 million from €22.4 million in the comparable 2005 period. This increase was due to higher non-cash compensation expenses of €0.6 million, resulting from the new Head Executive Stock Option Plan 2005 implemented in the third quarter 2005 as well as the weakening of the euro against the U.S. dollar.

As a result of the foregoing factors, for the three months ended September 30, 2006, the Company reported an operating profit of €15.4 million compared to an operation profit of €9.6 million in the comparable 2005 period. For the nine months ended September 30, 2006 the operating profit increased by €2.0 million to €8.2 million from €6.2 million in the comparable 2005 period. Operating profit for the nine months ended September 30, 2006, excluding the impact in 2005 of the sale of property and restructuring costs, increased by €3.8 million compared to the comparable 2005 period.

For the three months ended September 30, 2006, interest expense decreased by €0.01 million, or 0.3%, to €3.1 million from €3.1 million in the comparable 2005 period. For the nine months ended September 30, 2006, interest expense decreased by €0.4 million, or 4.3%, to €9.2 million from €9.7 million in the comparable 2005 period. This decrease was due to the repurchase of a portion of our 8.5% senior notes in 2005.

For the three months ended September 30, 2006, interest income increased by €0.2 million, or 101.6%, to €0.5 million from €0.2 million in the comparable 2005 period. For the nine months ended September 30, 2006, interest income decreased by €0.4 million, or 24.1%, to €1.3 million from €1.7 million in the comparable 2005 period. This decrease was due to the gain of €0.9 million on the repurchase of a portion of our 8.5% senior notes in 2005.

For the three months ended September 30, 2006, the Company had other non-operating income, net of €0.2 million compared to €0.3 million in the comparable 2005 period. For the nine months ended September 30, 2006 the other non-operating income, net decreased by €1.7 million mainly due to foreign currency gains in the comparable 2005 period.

For the three months ended September 30, 2006, the Company recorded income tax expense of €3.2 million, an increase of €2.0 million compared to the income tax expense of €1.2 million in the comparable 2005 period. For the nine months ended September 30, 2006, the Company recorded an income tax expense of €0.5 million, an increase of €2.4 million compared to the income tax benefit of €1.9 million in the comparable 2005 period. This increase was due to the increase in pre-tax gains in jurisdictions where tax loss carry forwards are used and the gain on sale of our property in 2005 which was tax-free.

As a result of the foregoing factors, for the three months ended September 30, 2006, the Company had a profit of €9.6 million, an increase of €3.8 million compared to the profit of €5.8 million in the comparable 2005 period. For the nine months ended September 30, 2006, the Company reported a loss of €0.1 million, compared to a profit of €2.0 million in the comparable 2005 period.

About Head

Head NV is a leading global manufacturer and marketer of premium sports equipment.

Head NV’s ordinary shares are listed on the New York Stock Exchange (“HED”) and 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, badminton and racquetball racquets, tennis balls, alpine skis 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, Marat Safin, Swetlana Kusnezowa, Bode Miller, Johann Grugger, Marco Büchel and Maria Riesch.

For more information, please visit our website: http://www.head.com

Analysts, investors, media and others seeking financial and general information, please contact:

Vicki Booth, Investor Relations
Tel: +44 207 499 7800
Fax: +44 207 491 7725
E mail: headinvestors@aol.com

Ralf Bernhart, Chief Financial Officer
Tel: +43 1 70 179 354
Fax +43 1 707 8940

This press release should be read in conjunction with the company’s report for the 9 months ended 30 September 2006.

This press release and the statements of Mr. Johan Eliasch quoted herein contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainties. Although Head believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included and quoted herein, the inclusion of such information should not be regarded as a representation by Head or any other person that the objectives and plans of Head will be achieved.