Sport-Haley, Inc. announced results of operations for the first quarter of its 2006 fiscal year, in which the company reported a net loss of $426,000, or 23 cents per share, as compared with a net loss of $1,276,000, or 52 cents per share, in the comparable quarter of the previous fiscal year.

For the quarter ended September 30, 2005, net sales decreased by 28%, or $1.6 million, to $4.0 million from $5.6 million in the same period in the prior fiscal year. Gross profit decreased by 26%, or $465,000, to $1,305,000 from $1,770,000, while other operating costs decreased approximately 41%, or $1,261,000, from $3,057,000 in the comparable prior year period to $1,796,000. Loss from operations reflected an improvement of $796,000, or 62%, from a loss from operations in the prior fiscal year's first quarter of $1,287,000 to loss from operations in the first quarter of fiscal 2005 of $491,000.

Commenting on the results of operations, Donald W. Jewell, interim CEO, stated, “Our results for the first quarter are in line with our expectations. Our sales are historically the weakest in our first quarter, and, accordingly, we did not expect to generate an operating profit for the quarterly period. The decrease in our sales this quarter, when compared with the same quarter last year, primarily relates to our previous discontinuance of our SPORT HALEY men's fashion apparel collections, which accounted for slightly over $1,000,000 of our net sales for the September 2004 fiscal quarter. We've worked diligently in the last twelve months to ensure the long-term financial health of the company, and we believe that we have taken the necessary steps to return the company to profitability in this fiscal year, including the joint venture we recently formed to introduce Top-Flite branded apparel.”

“We've maintained on track with our objectives to reduce operating costs,” continued Mr. Jewell. “Our inventory position has remained in line with our expectations, and our reduced operating costs are indicative of the significant reductions that we implemented in the last year. While our plans include focusing our efforts to find more ways to continue to decrease our operating costs, we believe that the success we achieved during our first quarter certainly indicates that the changes we have implemented to date have improved our overall operations.”

Three Months Ended
                                                    September 30,
                                              2005                 2004
Statements of Income Data:                 ----------           ----------

Net sales                                  $4,011,000           $5,570,000

Gross profit                                1,305,000            1,770,000

Other operating costs                       1,796,000            3,057,000

Loss from operations                         (491,000)          (1,287,000)

Net loss                                     (426,000)          (1,276,000)

Basic earnings (loss) per common share         ($0.16)              ($0.52)