Head NV reported that total net revenues increased 6.9 percent to €62.5 million ($80 mm)from €58.5 million ($84 mm) in the comparable 2011 period. This increase was mainly due to higher revenues in the Racquet Sports division.

 
For the six months ended June 30, total net revenues increased 12.1 percent to €132.6 million from €118.3 million in the comparable 2011 period. This increase was mainly due to higher revenues in the Racquet Sports division and the Diving division, but also all other divisions reported revenue increases.

Winter Sports revenues for the quarter remained almost unchanged at €9.3 million ($11.9 mm) versus €9.2 million ($13.3 mm) in Q2 2011. Higher volumes in skis were offset by an unfavorable product mix for skis and bindings.  Regarding the first six months ended June 30, Winter Sports revenues increased 2.6 percent from €22.2 million to €22.8 million. This increase was mainly due to higher volumes in all categories, except snowboard, partly offset by an unfavorable product mix in all categories.

Racquet Sports revenues for the second quarter increased 9.9 percent to €37.0 million (47.6 mm). This increase was mainly due to an advantageous development of exchange rates and a favorable product mix for racquets and balls. For the first half Racquet Sports revenues increased 15.7 percent from €68.5 million to €79.3 million. This substantial increase was due to higher volumes and a favorable product mix for racquets and balls, supported by positive exchange rate movements.

Diving revenues for the quarter increased 2.5 percent to €15.7 million ($20.1 mm) mainly due to advantageous exchange rate movements.  Diving revenues for the six month period increased 6.7 percent to €28.4 million. This increase was mainly due to higher sales in North America and Asia and to a favorable development of exchange rates.

Sportswear revenues for the second quarter amounted to €1.3 million ($1.6 mm) and therefore almost unchanged compared to €1.2 million ($1.7 mm) in 2011.  Revenues for the six months ended June 30 increased 42.4 percent from €2.3 million to €3.3 million. This increase was mainly due to higher sales for Summer Sportswear.

Licensing revenues for the three months ended June 30 amounted to €1.0 million ($1.3 mm) versus €1.1 million ($1.5 mm) in Q2 2011.  Regarding the first six months ended June 30, 2012, revenues slightly increased 12.8 percent from €2.3 million to €2.6 million.

Gross margin decreased to 36.7 percent in 2012 from 39.0 percent in 2011 mainly due to higher cost of sales for the tennis ball business and to further investment in the Sportswear division.  For the six months ended June 30, 2012 gross margin decreased from 41.0 percent to 39.9 percent. This decrease was mainly due to higher cost of sales for the Winter Sports and tennis ball business and again to higher costs for the Sportswear division and patents and royalties.

Selling and marketing expense increased 12.2 percent from €19.8 million to €22.2 million mainly due to higher advertising costs in the Winter Sports division. For the six months ended June 30, 2012 selling and marketing expense increased 8.6 percent to €48.1 million from €44.3 million in the comparable 2011 period. This was again mainly due to higher advertising costs in the Winter Sports and Racquet Sports division and to a lower release of bad debt provision.

General and administrative expense slightly increased 3.1 percent from €6.7 million to €6.9 million. For the six months ended June 30, 2012 general and administrative expense increased by €0.4 million, or 3.1 percent, from €13.5 million to €13.9 million mainly due to higher warehouse and business unit administration costs.

Head recorded share-based compensation expense for Stock Option Plans of €0.2 million compared to share-based compensation income of €0.02 million in the comparable 2011 period.  For the six months ended June 30, 2012 Head recorded share-based compensation expense for Stock Option Plans of €0.4 million compared to share-based compensation income of €0.1 million in the comparable 2011 period. The expense in 2012 is due to the increase of the share price at June 30, 2012 compared to the share price at December 31, 2011, which impacted the cash-settled Stock Option Plans.

Other operating expense, net amounted to €0.3 million compared to other operating income, net of €0.5 million in the comparable 2011 period. This swing of €0.7 million was mainly due to foreign exchange gains in 2011 and foreign exchange losses in 2012. For the six months ended June 30, 2012 other operating income, net amounted to €0.1 million compared to other operating income, net of €0.6 million in the comparable 2011 period. This change is again mainly due to foreign exchange rate fluctuations.

As a result of the foregoing factors, operating loss for the three months ended June 30, 2012 increased by €3.4 million from €3.2 million to €6.6 million.  For the six months ended June 30, 2012 operating loss increased by €700,000 to €9.4 million from €8.7 million in the comparable 2011 period.

Interest and other finance expense decreased significantly 47.2 percent from €2.8 million to €1.5 million. This decrease was mainly due to lower interest expense for long-term debt and the decreased amortization of the non-cash disagio costs caused by the buy back and redemption of the Senior Secured Notes in 2011. For the six months ended June 30, 2012 interest and other finance expense decreased substantially by €6.1 million, or 67.1 percent, from €9.2 million to €3.0 million. This decrease was again mainly due to lower interest expense for long-term debt and the decreased amortization of the non-cash disagio costs caused by the buy back and redemption of the Senior Secured Notes in 2011.

Interest and investment income remained almost unchanged compared to 2011 with €0.2 million. For the six months ended June 30, 2012 interest and investment income slightly increased by €0.1 million to €0.5 million.

Other non-operating expense, net increased by €0.9 million to €2.0 million from €1.1 million mainly due to higher foreign exchange losses. For the six months ended June 30, 2012 other non-operating expense, net amounted to €0.6 million compared to other non-operating income, net of €0.6 million in the comparable 2011 period. This change was caused by foreign exchange gains in 2011 and losses in 2012.
 
Income tax benefit increased by €0.3 million from €1.7 million to €2.0 million. For the six months ended June 30, 2012 income tax benefit decreased by €1.5 million to €2.4 million from €3.9 million mainly due to higher current income tax expense and lower deferred income tax benefits on tax losses carried forward as a result of higher pre-tax numbers.
 
The net loss was €7.9 million in the second quarter compared to €5.3 million in the comparable 2011 period. For the six months ended June 30, 2012 we had a net loss of €10.1 million compared to €13.0 million in the comparable 2011 period.