AMSTERDAM, Netherlands, May 11, 2006 (PRIMEZONE) -- 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 31 March 2006 compared to the three months ended 31 March 2005:
-- Net revenues were up 8.2% to EUR 68.1 million
-- Operating result improved by EUR 2.9 million to a loss of EUR 4.2
million.
-- The net loss was EUR 5.7 million, a EUR 1.4 million improvement on
2005.
Johan Eliasch, Chairman and CEO, commented:
"The first quarter has provided a solid start to 2006, with a positive development in revenues and gross profit margin.
"Revenue increases are a result of increased sales in both the Winter and Racquet Sport divisions, partially offset by declines in Diving revenue.
"Despite completing the majority of our restructuring & cost saving initiatives during 2005, we continue to look for ways to improve efficiency; this is essential in order to remain competitive in today's market.
"The operating environment during 2006 remains challenging; however, given our strong start to the year, our outlook is an improvement on last year's result."
Winter Sports
Winter Sports revenues for the three months ended March 31, 2006 increased by EUR 4.3 million, or 26.9%, to EUR 20.2 million from EUR 15.9 million in the comparable 2005 period. This increase was due to higher sales volumes of skis, bindings, ski boots and snowboard equipment as a consequence of good snow conditions in the winter season 2005/2006.
Racquet Sports
Racquet Sports revenues for the three months ended March 31, 2006 increased by EUR 4.3 million, or 13.5%, to EUR 36.2 million from EUR 31.9 million in the comparable 2005 period. This increase was mainly due to higher sales volumes in tennis racquets and balls partly offset by decreased sales volumes of our bags. In addition, the weakening of the euro against the U.S. dollar in the reporting period contributed to the positive development.
Diving
Diving revenues for the three months ended March 31, 2006 decreased by EUR 3.4 million, or 23.5%, to EUR 11.0 million from EUR 14.4 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 March 31, 2006 increased by EUR 0.2 million, or 9.0%, to EUR 2.5 million from EUR 2.3 million in the comparable 2005 period due to increased income from existing agreements.
Profitability
Gross Profit for the three months ended March 31, 2006 increased by EUR 3.8 million to EUR 27.0 million from EUR 23.2 million in the comparable 2005 period. Gross margin increased to 39.7% in 2006 from 36.9% in the comparable 2005 period due to improved operating performance and product mix.
Selling and Marketing Expense for the three months ended March 31, 2006 increased by EUR 0.2 million, or 0.7%, to EUR 23.4 million from EUR 23.3 million in the comparable 2005 period. This increase was due to higher shipment costs and commissions as a consequence of increased sales and also to the weakening of the euro against the U.S. dollar.
General and Administrative Expenses for the three months ended March 31, 2006, increased by EUR 0.7 million, or 10.1%, to EUR 7.8 million from EUR 7.1 million in the comparable 2005 period. This increase was due to higher non-cash compensation expenses of EUR 0.3 million, resulting from the new Head Executive Stock Option Plan 2005 implemented in the third quarter 2005 as well as due to the weakening of the euro against the U.S. dollar.
As a result of the foregoing factors, operating loss for the three months ended March 31, 2006 decreased by EUR 2.9 million to EUR 4.2 million from EUR 7.1million in the comparable 2005 period.
For the three months ended March 31, 2006, interest expense decreased by EUR 0.3 million, or 8.3%, to EUR 3.1 million from EUR 3.4 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 March 31, 2006, interest income increased by EUR 0.2 million, or 67.7%, to EUR 0.4 million from EUR 0.2 million in the comparable 2005 period. This increase was due to higher interest bearing cash on hand.
For the three months ended March 31, 2006, we had a foreign currency loss of EUR 0.02 million compared to a gain of EUR 0.7 million in the comparable 2005 period.
For the three months ended March 31, 2006, other income, net remained insubstantial as in the comparable 2005 period.
For the three months ended March 31, 2006, income tax benefit was EUR 1.3 million, a decrease of EUR 1.2 million compared to income tax benefit of EUR 2.4 million in the comparable 2005 period due to the decrease in pre-tax loss.
As a result of the foregoing factors, for the three months ended March 31, 2006, we had a net loss of EUR 5.7 million, compared to a net loss of EUR 7.1 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 and racquetball racquets, 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 Kuznetsova, Bode Miller, Johann Grugger, Marco Buchel and Maria Riesch.
For more information, please visit our website: www.head.com
This press release should be read in conjunction with the company's report for the year ended 31 March 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.
The full press release including tables can be downloaded from the following link: http://hugin.info/133711/R/1050436/173775.pdf