Head N.V. expects net revenues at constant currency to be as much as 10% below year-ago levels. The Amsterdam-based company said it is “still experiencing difficult trading conditions, particularly in diving and to some extent in winter sports.”


Although the launch of the YOUTEK Radical Series tennis racquet line helped drive racquet sales in the quarter, it now expects 2009 revenues will decline.


“Such a decline, combined with the large cash costs of our interest expense, our capital expenditures and our having begun 2009 with less cash than at the same period in 2008 and being subject to seasonal capital requirement peaks due to the seasonal nature of our business, will result in us having to manage our working capital more aggressively particularly during the third and fourth quarters of this year,” Head said in a statement. “To the extent such actions are insufficient to fund our working capital requirements, we could be required to generate additional cash or secure additional credit facilities. However, the exchange offer for the 8.5% senior notes due 2014 issued by our subsidiary, HTM Sport- und Freizeitgeräte AG, is expected to reduce our cash interest expense.”


Head said it expects that it will also have a seasonal shortfall in available cash in the third and fourth quarters of 2009, the statement said. Even following the consummation of the exchange offer for the 8.5% senior notes, Head said it will require an additional working capital facility of up to €10.0 million ($14.3 million) for the remainder of 2009.
Head said if it is unable to obtain this working capital facility or other financing it may be forced to:


reduce or delay business activities, capital expenditures and research and development;
sell assets;
aggressively manage working capital;
raise equity capital; or
restructure or refinance all or a portion of debt on or before maturity.
“We may not be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all,” Head said. “In addition, the terms of our existing and future indebtedness may limit our ability to pursue any of these alternatives.”