Sport-Haley Narrows Fiscal Q3 Loss on 26% Sales Gain

Sport-Haley, Inc. reported net sales for the fiscal quarter ended March 31, 2003 were approximately $5,504,000, an increase of $1,140,000, or 26%, from net sales of approximately $4,364,000 for the same quarter in the prior fiscal year. Net sales for the nine months ended March 31, 2003, were approximately $13,326,000, an increase of $1,418,000, or 12%, from net sales of approximately $11,908,000 million for the same nine-month period in the previous fiscal year.

Management attributes the increases in net sales for the fiscal quarter and six months ended March 31, 2003, to the continued marketing success of its Ben Hogan(R) apparel collections. Net sales of Ben Hogan(R) apparel were approximately $2,754,000 and $319,000 for the nine months ended March 31, 2003 and 2002, respectively.

“The strong acceptance of Ben Hogan(R) apparel by both our professional golf shop distributor base and the end consumers is certainly gratifying to management,” stated Kevin M. Tomlinson, Chief Executive Officer. “While we anticipate that HALEY(R) brand sales for the Fall 2003 selling season will be relatively flat compared with the same season last year, we are encouraged by the advance bookings for the Ben Hogan(R) collections for Fall 2003, based upon bookings as of today compared with the same for this date last year. Management expects the Ben Hogan(R) collections to continue to contribute significantly to the Company’s operating performance over the next few calendar quarters.”

“Nevertheless, the overall state of the golf industry and the apparel sector in particular remains challenging at best,” continued Mr. Tomlinson. “Economic and geopolitical conditions, the war in Iraq and poor spring weather in major geographic territories continued to hamper the financial performance of most companies in the golf industry. Rounds of golf played are down for the third year in a row and consumer spending in the travel and leisure sectors remains flat. Still, we have maintained a strong balance sheet with no debt, and we maintain an optimistic outlook for the future performance of the Company. We will continue to manage the controllable challenges of adapting our Company to operate successfully in these difficult conditions, and management expects to quickly react when faced with the uncontrollable factors now affecting the golf industry and so many others. We will continue to closely monitor current economic conditions and adjust our inventory position and operating costs accordingly.”

As a percentage of net sales, gross profit was approximately 42% and 40% for the quarter and nine months ended March 31, 2003, respectively, as compared with approximately 32% and 34% for the same periods in the prior fiscal year.

Management believes that the current gross profit percentages are reflective of its successful efforts to source finished goods inventories at competitive prices from foreign suppliers and to minimize prior seasons inventories that must be sold at reduced prices.

Net income (loss) for the fiscal quarter ended March 31, 2003 was approximately ($79,000), an improvement of $241,000, or 75%, as compared with net income (loss) of approximately ($320,000) for the same quarter in the prior fiscal year. Both basic and diluted earnings per share for the fiscal quarter ended March 31, 2003, were ($0.03) per share compared to ($0.11) per share for the same quarter in the prior fiscal year. For the fiscal quarters, diluted average weighted shares outstanding were approximately 2,615,000 and 2,769,000, respectively.

Net income (loss) for the nine months ended March 31, 2003 was approximately ($242,000), an improvement of $302,000, or approximately 56%, as compared with net income (loss) of approximately ($544,000) for the same nine-month period in the prior fiscal year. Both basic and diluted earnings (loss) per share for the nine months ended March 31, 2003, were ($0.09) per share compared to ($0.18) per share for the same nine-month period in the prior fiscal year. For the nine-month periods, diluted average weighted shares outstanding were approximately 2,671,000 and 3,007,000, respectively.

Consolidated Unaudited Financial Information (In thousands, except per share data)

                                  Three Months Ended      Nine Months Ended

                                       March 31,              March 31,

                                    2003       2002       2003        2002

    Statements of Income Data:

    Net sales                     $5,504      $4,364    $13,326     $11,908
    Gross profit                   2,289       1,410      5,325       4,066
    Loss from operations            (116)       (676)      (488)     (1,192)
    Other income, net                 (4)         78        101         296
    Net income (loss)                (79)       (320)      (242)       (544)