Head N.V. reported that net revenues were down 1.0% to

€92.2 million ($132 mm) for the three months ended September 30 from

€93.1 million ($140 mm) in the year-ago period.  The decrease was said to be due to decreased sales volumes in Winter Sports partially offset by a better product mix, higher sales volumes in Racquet Sports and the strengthening of the U.S. dollar against the euro.


The net profit for the period, including the gain on exchange of senior notes, net of tax (

€31.2 million) was

€41.5 million ($59 mm) compared to a

€1.2 million ($2 mm) in net profit in Q3 2008.


Winter Sports
Winter Sports revenues for the third quarter decreased 7.3% to

€50.4 million ($72 mm) from

€54.3 million ($82 mm) in the comparable 2008 period. This decrease was due to lower sales volumes partially offset by favorable product mix and the strengthening of the U.S. dollar against the euro compared to the comparable 2008 period.


Racquet Sports
Racquet Sports revenues for the third quarter increased 9.3% to

€33.4 million ($48 mm) from

€30.5 million ($46 mm) in the comparable 2008 period. This increase was due to higher sales volumes of tennis racquets and footwear and favorable product mix resulting from the launch of our new tennis racquets as well as the strengthening of the U.S. dollar against the euro.


Diving
Diving revenues for the third quarter increased 1.3% to

€10.1 million ($14 mm) from

€10.0 million ($15 mm) in the comparable 2008 period due to the strengthening of the U.S. dollar against the euro compared to the comparable 2008 period.


Licensing
Licensing revenues for the third quarter remained stable at

€1.2 million ($2 mm) compared to the comparable 2008 period.


Gross Profit
Gross margin increased 270 basis points to 40.0% of net sales in 2009 from 37.3% in the comparable 2008 period.


Operating Expenses
Third quarter selling and marketing expense decreased by €0.3 million, or 1.2%, to

€21.9 million from

€22.1 million in the comparable 2008 period.


General and administrative expense decreased by €0.8 million, or 11.2%, to

€6.3 million from

€7.1 million in the comparable 2008 period.


Johan Eliasch, Chairman and CEO, commented:


We continue to be affected by the current uncertain economic conditions. We believe all our markets have declined in the last twelve months. As expected, our diving division continues to be the most affected due to its link to travel and the relatively high price points of the products. Overall the sales in this division have fallen by 12% for the first nine months of the year compared to the first nine months of 2008. Although in the third quarter sales were broadly flat compared to prior year reversing the quarter on quarter decline we do not expect to see any significant recovery in the market in 2009.


The key selling season is now under way for our winter sports business and for the first nine months of the year volumes were down as anticipated in all key product groups due to cautious global preseason ordering brought about by the difficult economic conditions. In weak markets, for the nine months ski volumes were down by 20%, bindings 11% and boots 13%. Overall winter sports sales have declined by only 8.9% reflecting the improved product mix in 2009 and favourable exchange rate movements.


For the nine months our racquets division had mixed results � overall sales were up over 7% in what we believe has been a declining market, but volumes of our racquets fell by 8%. The improvement in sales was a result of the launch of a new series of products under the YouTek concept in conjunction with a brand repositioning which resulted in an improved product mix. Tennis ball volumes grew slightly in both the US and Europe and this, combined with the positive exchange impact on US balls, resulted in overall revenue growth.


Our gross margin for the period has seen an improvement from 38.2% to 40.3% which has helped improve our overall profitability. The improvement has come from lower manufacturing costs and an enhanced product mix in both our racquet and winter sports divisions.


For the full year 2009, we are still anticipating our sales to be lower than those achieved in 2008. We are not anticipating a quick recovery for the sporting goods market, and forecasting remains difficult during these challenging market conditions. We believe 2010 will be a difficult year, and we will seek to preserve cash as much as possible.


As previously announced, the company has been focusing on reducing its debt and interest burden and in August this year announced the successful conclusion of an exchange of

€85.7 million of unsecured senior notes plus

€3.6 million of accrued interest for

€43.7 million of new secured notes and 22.5 million shares. In addition, a

€10.0 million short term working capital facility agreement was entered into to overcome the anticipated shortfall in cash in the third and fourth quarters of this year. In connection with this working capital facility, an additional 28.3 million shares were awarded.