Sport-Haley Reports Fiscal Q2 Profit on 13% Sales Rise

Sport-Haley, Inc. reported net sales for the fiscal quarter ended December 31, 2002 were approximately $4,041,000, an increase of $472,000, or 13%, from net sales of approximately $3,569,000 for the same quarter in the prior fiscal year. Net sales for the six months ended December 31, 2002, were approximately $7,822,000, an increase of $278,000, or 4%, from net sales of approximately $7,544,000 million for the same six-month period in the previous fiscal year.

Management attributes the increases in net sales for the fiscal quarter and six months ended December 31, 2002, to the successful introduction of Ben Hogan(R) apparel collections into upscale golf markets. Net sales of Ben Hogan(R) apparel were approximately $1,446,000 and $0 for the six months ended December 31, 2002 and 2001, respectively.

“HALEY(R) brand sales appear to have stabilized and are beginning to contribute again in a positive way,” stated Kevin M. Tomlinson, Chief Executive Officer. “Nevertheless, the real story at this point is the successful first-year launch of Ben Hogan(R) apparel. We are very pleased with the excellent market response to Ben Hogan(R) apparel, and our customers have praised the strong sell-through of Ben Hogan(R) collections at the pro-shop level. The Ben Hogan(R) brand made a significant contribution to the Company’s financial performance for the quarter and six months just ended, and we anticipate even better contributions from the Ben Hogan(R) brand in the future.”

“The golf apparel market remains soft at this point, but the market is certainly better than a year ago,” continued Mr. Tomlinson. “While the just- completed quarter is historically the lowest revenue quarter in the golf apparel industry, we managed to increase revenues by approximately 13%, as compared with the same quarter last year. As we now move into the Company’s higher revenue quarters, we anticipate that the combination of our HALEY(R) and Ben Hogan(R) brands will exhibit our renewed competitive strength within golf apparel markets. Our management team and staff have worked diligently together to strategically steer the Company back toward profitability, and we look forward to achieving positive results in the remaining two quarters of this fiscal year.”

As a percentage of net sales, gross profit was approximately 39% and 39% for the fiscal quarter and six months ended December 31, 2002, respectively, as compared with approximately 40% and 35% 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 December 31, 2002 was approximately $10,000, an increase of $91,000, or 112%, as compared with the loss of approximately ($81,000) for the same quarter in the prior fiscal year. Both basic and diluted earnings per share for the fiscal quarter ended December 31, 2002, were $0.00 per share compared to ($0.03) per share for the same quarter in the prior fiscal year. For the fiscal quarters, diluted average weighted shares outstanding were approximately 2,709,000 and 2,973,000, respectively.

Net income (loss) for the six months ended December 31, 2002 was approximately ($163,000), an improvement of $61,000, or approximately 27%, as compared with the loss of approximately ($224,000) for the same six-month period in the prior fiscal year. Both basic and diluted earnings (loss) per share for the six months ended December 31, 2002, were ($0.06) per share compared to ($0.07) per share for the same six-month period in the prior fiscal year. For the six-month periods, diluted average weighted shares outstanding were approximately 2,699,000 and 3,123,000, respectively.

                              SPORT-HALEY, INC.
                 Consolidated Unaudited Financial Information
                    (In thousands, except per share data)

                              Three Months Ended             Six Months Ended
                                  December 31,                 December 31,
                               2002         2001            2002         2001
    Statements of Income Data:

     Net sales               $4,041       $3,569           $7,822     $7,544
     Gross profit             1,558        1,411            3,036      2,656
     Loss from operations       (60)        (244)            (372)      (516)
     Other income, net           62          116              105        218
     Net income (loss)           10          (81)           (163)       (224)