HEAD NV and HTM Sport GmbH Announce the Unaudited Results of Head NV for the Three and Nine Months ended 30th September 2010.

November 11th, 2010

Amsterdam – 11th November 2010 – Head N.V. (VSX: HEAD; U.S. OTC: HEDYY.PK), a leading global manufacturer and marketer of sports equipment, and HTM Sport GmbH, a subsidiary of Head NV, announced the following results today.

Summary Unaudited Financial Information
see attached pdf file


For the nine months ended September 30, 2010 total net revenues increased by €11.7 million, or 5.7%, to €218.4m from €206.7m in the comparable 2009 period. This increase was mainly due to improved volumes in the winter sports business, compounded by the strengthening of the US dollar against the Euro, offset in part by lower volumes in racquets.

Winter sports sales for the first nine months grew 13.4% due to increased volumes in all of our winter sports products except snowboards and protection wear and a favourable product mix of ski as well as the strengthening of the US dollar against the Euro.

Racquet sales for the first nine months grew 2.7% due to higher sales volumes of balls, a favourable product mix in racquets and the strengthening of the US dollar against the Euro partially offset by lower sales volumes in tennis racquets and an unfavourable product mix for balls.

Diving saw a slight improvement in sales of 2.6% in the nine months to September 30, 2010 compared to the same period in 2009 due to sales of our newly introduced swimwear partially offset by lower revenues of diving equipment.

For the nine months ended 30th September 2010, licensing revenues decreased by 15.5% due to fewer licenses – the company took its previously licensed sportswear business in-house and will start delivering apparel in 2011.

The gross margin for the nine months to 30th September 2010 was positively impacted by both the increase in sales for the period and improved manufacturing costs, but offset by higher raw material costs. The margin improved by 1.8 percentage points for the nine months period compared to the prior year and in absolute terms was up €8.7m.

The operating profit for the nine months improved by €4.8m compared to the prior year as a result of the improved gross margin (€8.7m), the positive impact of the non-cash ESOP plan (€4.1m) and no repeat of the restructuring in the prior year (€2.1m), offset by higher Selling and Marketing (€1.6m), higher General and Admin (€0.2m) and lower Other Operating Income (€8.4m) – which for 2009 was mainly from the gain on the sale of a trademarks.

The net loss for the nine months ended 30th September 2010 was €0.9m compared to a profit of €24.4m in 2009. The main driver of the decline was an inclusion of the gain on the exchange of the senior notes which amounted to €28.9m (net of tax) in the 2009 results. The 2010 net loss was positively impacted by the improved operating profit and a reduction in interest of €1.9m due to the successful bond exchange in 2009.

Operating cashflow for the first nine months of 2010 was €11.1m, a decrease of €2.0m compared to the same period in 2009. In the third quarter 2009 there was significant cash inflow as a result of considerable efforts to manage working capital and whilst the company continues to focus on efficiently managing working capital, the same gains are not achievable in the current year due to the low starting position at the beginning of the year.

The continued positive cash flow development of the business has resulted in a €22m improvement to net debt compared to the balance at the end of September 2009.

Outlook for 2010 - the winter sport order book suggest sales will be ahead of 2009 in this division, but conditions in the racquets sports market are becoming very challenging and we believe that overall sales may exceed last year’s. There is sustained pressure on margins with increasing raw material costs and mix effects which will have deteriorating effect on overall margins. The company is initiating continued cost cutting and restructuring programmes to mitigate the impact.

About Head

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, helmets and protection wear), 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;

Skiers: Bode Miller, Didier Cuche, Aksel Lund Svindal, Ted Ligety, Werner Heel, Kjetil Jansrud, Patrick Staudacher, Hans Grugger, Hermann Maier, Franz Klammer, Jon Olsson, Lindsey Vonn, Maria Riesch, Anja Parson, Elisabeth Gorgl, Sarka Zahrobska

Tennis players: Novak Djokovic, Andy Murray, Robin Soderling, Marin Cilic, Svetlana Kuznetsova, Victoria Azarenka

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: headinvestors@aol.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 months ended 30th September 2010.

Forward-Looking Statements
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 their control, competitive pressures and trends in the sporting goods industry, our ability to implement their 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 their 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.

Equity
Head N.V.
Rokin 55
NL 1012 KK Amsterdam
ISIN: NL0000238301
Stock Market: Vienna Stock Exchange

Bonds
HTM Sport GmbH
Tyroliaplatz 1
A 2320 Schwechat
ISIN 8.5% Senior Notes: XS0184717956 / XS0184719143
ISIN 10.0% Senior Secured Notes: XS0447202218 / XS0447202309
Official Market: Luxembourg

Head_NV_Q3_2010_Press_Release.pdf (31.3 kb)