Sport-Haley, Inc. and Explorer Gear USA, Inc., a California corporation have entered into a joint venture in order to manufacture and market Top-Flite branded apparel to Wal-Mart Stores, Inc. in the U.S. The joint venture is to be formed and operated as a separate Colorado limited liability company.
The LLC intends to use the Company's license with the Callaway Golf Company to contract for the manufacture of and market Top-Flite branded apparel in the United States. The LLC also intends to capitalize on Explorer Gear's contacts with Wal-Mart Stores, Inc. to sell Top-Flite branded apparel throughout the United States. Callaway has given Sport-Haley its consent to use the Top-Flite license in connection with the LLC, subject to certain conditions. The first significant deliveries of Top-Flite apparel in conjunction with this agreement are expected to be made in approximately January 2006.
Explorer Gear is affiliated by ownership with Explorer Headgear, Inc., a Canadian corporation located in Markham, Ontario (“Explorer Headgear”). Explorer Headgear is licensed by Callaway to manufacture and market Top-Flite(TM) apparel in Canada and Sport-Haley is so licensed in the United States and certain other countries. Explorer Headgear and Explorer Gear are affiliated with certain manufacturing plants in China, which are expected to manufacture the apparel for the LLC.
Donald W. Jewell, Interim Chief Executive Officer of Sport-Haley, commented on the formation of the LLC as follows: “We are excited about the introduction of Top-Flite branded apparel in the United States, which allows us to diversify our operations. The introduction of Top-Flite branded apparel allows us to penetrate a sector of the golf apparel market other than the green grass market in which we primarily operate with our Ben Hogan and SPORT HALEY brands. While this initial offering will only include a limited collection of men's wear, we're excited about the potential for Top-Flite branded apparel. We believe that growth of the Top-Flite label can help the Company achieve significant increases in sales over the course of the next few years.”
Gerard Lee, Chief Executive Officer of Explorer Gear, commented as follows: “We have had significant success for several years selling Top-Flite branded apparel to Wal-Mart in Canada. The brand certainly seems to resonate well with Wal-Mart's customers. We have forged a strong alliance with Wal-Mart Stores, Inc. in the United States, as well as its International Division, and we anticipate the United States program through the joint venture with Sport-Haley will achieve excellent results. We are particularly excited about the joint venture as it allows us to capitalize on Sport-Haley's well-developed and tested infrastructure and combine it with our experience in mass merchant retailing.”
