Head N.V. expects 2003 sales and profits to be flat or lower than the results reported in 2002-results impacted a great deal by currency exchange rates & rules.

Net sales for 2002 declined 1.1% to $387.5 million. HED company saw a net loss of $2.6 million compared to net income of $9.4 million in 2001. Net income, prior to tax and excluding foreign exchange gains and losses, decreased 3.0% to $7.4 million.

The negative net income for the year is a result of the large foreign exchange loss generated in the year as the Euro strengthened against the U.S. dollar. The negative impact on profits by the exchange rates also had a net positive effect on the sales numbers.

Winter Sport sales grew 6.8% for the year, but the main reason for the increase was the strengthening of the Euro against the U.S dollar. Excluding the effect of changes in exchange rates, revenues in Winter Sports would have increased just 1.4% for the year.

Snowboard product fueled much of the increase, with sales jumping 32% for the year and a staggering 86% in Q4. Ski sales grew 6% and boot revenues increased 7.8%. Gross margins shrank 560 bps due to product mix and exchange rates.

Racquet sales declined by 6.8% in 2002, due mostly to the move of footwear to a licensed product. Sales of Penn balls were flat to last year and racquet sales were down by 4.0%. Excluding the effect of changes in exchange rates, sales for the full-year declined by 7.8%.

Racquet sales accounted for 50% of total segment and balls contributed 35% of revenues. North America provided 49% of segment sales.

Diving product revenues decreased by 4.2%. Excluding the effect of changes in exchange rates, sales for the full-year declined by 7.0%.

Licensing revenues grew by 4.8% in the year, impacted by the inclusion of footwear and the conversion of bags to a non-licensed category in the U.K.

Total worldwide licensed sales of Head products exceeded $130 million. Apparel sales accounted for over 70% of licensed sales.