<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
_____ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
COMMISSION FILE NO. 1-12888
SPORT-HALEY, INC.
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1111669
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 E. 48TH AVENUE, DENVER, COLORADO 80216
(Address of principal executive offices)
(303) 320-8800
(Issuer's telephone number including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days: Yes __X__ No _____
State the number of shares outstanding in each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MAY 10, 1999
COMMON STOCK, NO PAR VALUE 4,297,552
Transitional Small Business Disclosure Format (check one): Yes _____
No __X__
<PAGE>
INDEX
PAGE
---------
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 3
CONSOLIDATED STATEMENTS OF INCOME & 4
COMPREHENSIVE INCOME
CONSOLIDATED STATEMENTS OF CASH FLOWS 5-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7-12
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OPERATIONS 13-15
PART II - OTHER INFORMATION 16-17
SIGNATURES 18
<PAGE>
SPORT-HALEY, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1999 1998
----------- ----------
(UNAUDITED) (NOTE)
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,735 $ 6,502
Short-term investments and
marketable securities 13 13
Accounts receivable, net of allowances of
$79,000 and $155,000, respectively 7,570 6,554
Inventories 15,545 17,893
Other current assets 1,490 1,403
----------- ----------
30,353 32,365
----------- ----------
Property and equipment 4,484 4,193
Property held under capital leases - 7
Less, accumulated depreciation (1,565) (1,455)
----------- ----------
2,919 2,745
----------- ----------
Other assets:
Other assets 156 126
----------- ----------
$ 33,428 $ 35,236
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 355 $ 1,862
Note payable 600 500
Accrued expenses 961 1,345
----------- ----------
1,916 3,707
Long-term liabilities:
Other - 4
----------- ----------
1,916 3,711
----------- ----------
Minority interest (89) 60
----------- ----------
Stockholders' equity:
Preferred stock, no par value; 1,500,000
shares authorized; none issued and
outstanding
Common stock, no par value;
15,000,000 shares authorized; 4,362,552
and 4,512,962 shares issued and
outstanding, respectively 16,852 18,416
Additional paid in capital 794 598
Retained earnings 13,955 12,451
Accumulated other comprehensive income - -
----------- ----------
31,601 31,465
----------- ----------
Total Liabilities and Stockholders' Equity $ 33,428 $ 35,236
----------- ----------
----------- ----------
</TABLE>
Note: Taken from the audited balance sheet at that date.
3
<PAGE>
SPORT-HALEY, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------------- ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales $ 8,000 $ 8,610 $ 21,135 $ 21,911
Cost of goods sold 5,614 4,996 13,935 13,313
----------- ----------- ----------- -----------
Gross profit 2,386 3,614 7,200 8,598
Selling, general and
administrative expense 1,863 1,986 5,375 5,355
----------- ----------- ----------- -----------
Income from operations 523 1,628 1,825 3,243
Other income (expense):
Other income - net 106 122 337 474
----------- ----------- ----------- -----------
Income before income taxes and
minority interest 629 1,750 2,162 3,717
Minority interest 53 - 151 -
Provision for income taxes (277) (344) (809) (716)
----------- ----------- ----------- -----------
Net income 405 1,406 1,504 3,001
----------- ----------- ----------- -----------
Other comprehensive income:
Unrealized holding losses on
available for sale securities - (47) - (99)
----------- ----------- ----------- -----------
Comprehensive income $ 405 $ 1,359 $ 1,504 $ 2,902
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Basic earnings per common share $ .09 $ 0.30 $ .34 $ 0.63
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted earnings per common share $ .09 $ 0.30 $ .34 $ 0.63
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
4
<PAGE>
SPORT-HALEY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
1999 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,504 $ 2,902
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 431 395
Amortization of goodwill 7 -
Deferred taxes, net (21) (15)
Allowance for doubtful accounts 105 48
Stock option compensation 196 230
Cash provided (used) due to changes in assets and liabilities:
Short-term investments to maturity - (755)
Accounts receivable (1,045) (1,097)
Inventory 2,348 (6,058)
Other current assets (138) (1,151)
Accounts payable (1,507) 595
Accrued commissions and other expenses (66) 338
Accrued income taxes (318) 319
Other liabilities (4) 20
Minority interest (149) -
----------- -----------
Net cash provided by operating activities 1,343 (4,229)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advance on note payable 100 -
Principal payments on capital lease obligation - (1)
Net proceeds from issuance of common stock 205 525
Repurchase of common stock (1,769) (2,711)
----------- -----------
Net cash provided by financing activities $ (1,464) $ (2,187)
----------- -----------
</TABLE>
5
<PAGE>
SPORT-HALEY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
1999 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets $ (684) $ (586)
Disposal of assets 38 192
----------- -----------
Net cash used by investing activities (646) (394)
----------- -----------
Net increase (decrease) in cash (767) (6,810)
CASH AND CASH EQUIVALENTS, BEGINNING 6,502 10,273
----------- -----------
CASH AND CASH EQUIVALENTS, ENDING $ 5,735 $ 3,463
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ 694 $ 466
----------- -----------
----------- -----------
Interest $ 32 $ 16
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
</TABLE>
At March 31, 1998, the Company has unrealized holding losses on marketable
securities of approximately $196,000 of which $98,700 has been charged off in
the Company's statement of income at March 31, 1998.
6
<PAGE>
SPORT-HALEY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 CONDENSED FINANCIAL STATEMENTS
The financial statements included herein have been prepared by
Sport-Haley, Inc. (the "Company") without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted as
allowed by such rules and regulations. The Company believes that
the disclosures are adequate to make the information presented
not misleading. It is suggested that these financial statements
be read in conjunction with the Company's annual consolidated
financial statements dated June 30, 1998. While management
believes the procedures followed in preparing these financial
statements are reasonable, the accuracy of the amounts are, in
some respects, dependent upon the facts that will exist, and
procedures that will be accomplished by the Company later in the
year.
The management of the Company believes that the accompanying
unaudited condensed consolidated financial statements prepared in
conformity with generally accepted accounting principles, which
require the use of management estimates, contain all adjustments
(including normal recurring adjustments) necessary to present
fairly the operations and cash flows for the period presented.
NOTE 2 INVENTORIES
Inventories at March 31, 1999 consist of the following:
<TABLE>
<S> <C>
Raw materials $ 6,544,300
Finished goods 9,001,000
---------------
$ 15,545,300
---------------
---------------
</TABLE>
NOTE 3 INCOME TAXES
The components of the deferred tax asset and net deferred tax
liability recognized in the accompanying balance sheet as of
March 31, 1999, are as follows:
<TABLE>
<CAPTION>
Current Long-Term
------------ ------------
<S> <C> <C>
Deferred tax (liability) $ - $ -
Deferred tax asset 106,800 29,200
------------ ------------
$ 106,800 $ 29,200
------------ ------------
------------ ------------
</TABLE>
7
<PAGE>
SPORT-HALEY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 INCOME TAXES (Continued)
The types of temporary differences between the tax bases of
assets and liabilities and the financial reporting amounts that
give rise to a significant portion of the deferred tax liability
and their appropriate tax effects at March 31, 1999, are as
follows:
<TABLE>
<CAPTION>
Tax Effect
Difference Current Long-Term
---------- --------- ---------
<S> <C> <C> <C>
Loss on stock $ 221,000 $ 86,200 $ -
Allowance for
doubtful accounts 52,700 20,600 -
Stock option
compensation 591,400 - 230,600
Accumulated
depreciation 516,000 - (201,400)
--------- ---------
$ 106,800 $ 29,200
--------- ---------
--------- ---------
</TABLE>
The components of income tax expenses are as follows:
<TABLE>
<CAPTION>
<S> <C>
Current:
Federal $ 717,200
State 113,600
---------
830,800
---------
Deferred:
Federal (18,500)
State (2,900)
---------
(21,400)
---------
$ 809,400
---------
---------
</TABLE>
NOTE 4 REPURCHASE OF COMMON STOCK
The repurchase of the Company's common stock is based upon the
Board of Director's belief that the Company's common stock is
underpriced given its book value, earnings and prospects for
future operations. Repurchases may be made periodically in the
open market, block purchases or in private negotiated
transactions, depending on market conditions and other factors.
The Company has no commitment or obligation to purchase all or
any portion of the shares. All shares purchased by the Company
will be cancelled and returned to the status of authorized but
unissued common stock.
8
<PAGE>
SPORT-HALEY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 REPURCHASE OF COMMON STOCK , (Continued)
During December 1994, the Company's Board of Directors authorized
the repurchase of up to 150,000 shares of the Company's issued
and outstanding common stock. Through March 31, 1999, the
Company's Board of Directors have authorized further increases in
the total number of shares of common stock that the Company may
repurchase from 150,000 shares to a total of 850,000 shares.
Through March 31, 1999, Company had repurchased a total of
582,000 shares of its common stock at a cost of approximately
$6.5 million.
Subsequent to March 31, 1999, the Company's Board of Directors
authorized an additional increase of 200,000 shares the Company
can repurchase under its repurchase program. From April 1, 1999
through May 10, 1999, the Company repurchased an additional
65,000 shares of its common stock at a cost of approximately
$332,000.
NOTE 5 COMMON STOCK OPTIONS
At March 31, 1999, the Company had outstanding options to
purchase 437,826 shares of common stock at prices ranging from
$2.50 to $12.06, with expiration dates between March 15, 2002 and
January 4, 2009. During the three months ended March 31, 1999,
option holders exercised and purchased 1,940 shares of the
Company's common stock. The Company realized gross proceeds of
approximately $15,000.
During October 1998, the Compensation Committee of the Board of
Directors authorized the re-pricing of certain stock options,
previously granted under the Company's stock option plan, that
were deemed to be "out of the money" based upon the prevailing
quoted market prices of the Company's common stock.
Included in the Company's nine month net income is a charge of
approximately $196,000, which is a result of applying the Statement of
Financial Accounting Standards No. 123, ACCOUNTING FOR STOCK BASED
COMPENSATION.
9
<PAGE>
SPORT-HALEY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 EARNINGS PER SHARE
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 128, EARNINGS PER SHARE, (SFAS No. 128)
effective with the year ended June 30, 1998. SFAS No. 128 requires
the presentation of basic and diluted net income per common share.
The following table provides a reconciliation of the numerator and
denominator of basic and diluted net income per common share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
------------------------------------
Net
Income Shares Per Share
--------- ---------- -----------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE
Income available
to common shareholders $ 405,000 4,401,152 $ 0.09
-----------
-----------
Effect of Dilutive Securities
Options, net of
future tax benefit - -
--------- ---------
DILUTED EARNINGS PER SHARE $ 405,000 4,401,152 $ 0.09
--------- --------- -----------
--------- --------- -----------
NINE MONTHS ENDED MARCH 31, 1999
------------------------------------
Net
Income Shares Per Share
--------- --------- -----------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE
Income available
to common shareholders $ 1,504,000 4,443,072 $ 0.34
-----------
-----------
Effect of Dilutive Securities
Options, net of future
tax benefit - -
----------- ---------
DILUTED EARNINGS PER SHARE $ 1,504,000 4,443,072 $ 0.34
----------- --------- -----------
----------- --------- -----------
</TABLE>
10
<PAGE>
SPORT-HALEY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 EARNINGS PER SHARE (Continued)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
------------------------------------
Net
Income Shares Per Share
--------- --------- -----------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE
Income available
to common shareholders $ 1,359,000 4,499,406 $ 0.30
-----------
-----------
Effect of Dilutive Securities
Warrants 28,120
Options, net of
future tax benefit 5,628
------------ ---------
DILUTED EARNINGS PER SHARE
$ 1,359,000 4,533,154 $ 0.30
----------- --------- -----------
----------- --------- -----------
NINE MONTHS ENDED MARCH 31, 1998
------------------------------------
Net
Income Shares Per Share
--------- --------- -----------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE
Income available
to common shareholders $ 2,902,000 4,587,482 $ 0.63
-----------
-----------
Effect of Dilutive Securities
Warrants 28,120
Options, net
of future tax benefit 5,628
----------- ---------
DILUTED EARNINGS PER SHARE $ 2,902,000 4,587,482 $ 0.63
----------- --------- -----------
----------- --------- -----------
</TABLE>
11
<PAGE>
SPORT-HALEY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company's financial position at March 31, 1999 compared to the same
period in the prior fiscal year shows a marginal improvement due mainly to
ongoing profitability. Working capital at March 31, 1999 was approximately
$28.4 million compared to $26.7 million in March 31, 1998.
Cash and cash equivalents have decreased since June 30, 1998 by approximately
$767,000. During the nine months ended March 31, 1999, the Company provided
cash from operating activities of approximately $1.3 million. The Company,
during the same nine month period, expended approximately $1.8 million to
acquire 182,000 shares of its common stock. The Company considered that its
current working capital position was sufficient to allow the purchase of
these shares without a negative effect on working capital. Additionally, the
reduction of outstanding shares is a benefit to the stockholders. The book
value at March 31, 1999 per share increased by approximately $.27 per share
since June 30, 1998. Additionally, the Company expended approximately
$646,000 on fixed assets.
The changes in accounts receivable and inventories have a direct relationship
to each other. Since June 30, 1998, inventories decreased by approximately
$2.3 million from approximately $17.9 million. During the same period,
receivables increased by approximately $1.0 million from approximately $6.6
million.
Other current assets increased by approximately $87,000 since June 30, 1998
to approximately $1.5 million. Most of the change was in prepaid expenses.
As mentioned above, the Company expended approximately $767,000 on fixed
assets. Most of the funds were used to acquire furniture, fixtures and
computer software enhancements. During the nine month period ended March 31,
1999, approximately $431,000 in depreciation and amortization was charged to
current operations.
During the nine months ended March 31, 1999, the Company used approximately
$1.5 million in funds to reduce the June 30, 1998 accounts payable balance of
approximately $1.9 million.
The Company's subsidiary during the nine months ended March 31, 1999,
borrowed an additional $100,000 which was used for operations and working
capital.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Accrued expenses declined by approximately $384,000 since June 30, 1998
primarily due to the accruals related to year-end that had been paid.
Stockholders' equity changed by an increase in net income of $1.5 million and
a net decrease in common stock of $1.6 million. Additionally, paid in
capital increased by $196,000 since June 30, 1998 due to the accounting for
stock based compensation under the Statement of Financial Accounting
Standards No. 123.
RESULTS OF OPERATIONS
The Company's business is seasonal in nature, and therefore the results for
any one or more quarters are not necessarily indicative of the annual results
or continuing trends.
Net sales for the third quarter ended March 31, 1999, were approximately $8.0
million, a decrease of approximately $610,000, or 7% from net sales of $8.9
million for the same quarter in the prior fiscal year. Net sales for the
nine months ended March 31, 1999 were $21.1 million. This is a decrease of
approximately $776,000 or 3.5%, over the same nine month period of fiscal
1998.
The reduction in net sales for both the three and nine month periods is
attributable to slower sales to golf professional shops, many of which had
larger inventories remaining from their prior year operations then in past
years. The Company has successfully disposed of a portion of its excess
inventories, and the associated sale prices resulted in a reduction in gross
profit margin of approximately 4%.
The Company's gross profit margin declined approximately $1.2 million and
$1.4 million for the three months and the nine months ended March 31, 1999.
Gross profit margin as a percentage of sales was 30% and 42% for the three
month period ended March 31, 1999 and 1998, respectively. The gross profit
margin as a percentage of sales declined to 34% from 39% for the nine month
periods.
Selling, general and administrative expenses decreased by approximately
$123,000 or 6% for the third quarter ended March 31, 1999, from $2.0 million
for the same quarter in the prior fiscal year. For the nine months ended
March 31, 1999, selling, general and administrative expenses increased by
$20,000 from $5.4 million in the same nine month period in the prior fiscal
year. As a percentage of sales, the quarters remained at 23% and the nine
months increased to 25% from 24%. The decrease in actual costs for this
quarter is the result of management's continued efforts to control selling
and operating expenses.
Other income (expense) increased by approximately $31,000 for the three
months and decreased by $38,000 for the nine months ended March 31, 1999, as
compared to the same periods in the prior fiscal year. During both the three
month and nine month periods ended March 31, 1999, the Company earned less
income from investments due to lower cash balances available for investing.
During the prior fiscal year, the Company incurred costs of approximately
$99,000 associated with the write down of an investment security classified
as "available for sale." The Company has not incurred similar costs during
the current fiscal year period.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Income before provision for income taxes and minority interest decreased by
approximately $1.1 million or 63% for the third fiscal quarter ended March
31, 1999, from $1.7 million for the same quarter in the prior fiscal year.
Income before provisions for income taxes and minority interest decreased by
approximately $1.5 million or 40% for the nine months ended March 31, 1999,
from $3.6 million in the same period in the prior fiscal year.
The subsidiary in which the Company has a 52% ownership has incurred losses
for both the three month and nine month periods ended March 31, 1999. The
minority interest in the loss was approximately $53,000 and $151,000,
respectively.
The Company's effective tax rates for the quarters ended March 31, 1999 and
March 31, 1998 were approximately 36% and 20%, respectively. The effective
tax rate for the nine month periods ended March 31, 1999 and March 31, 1998
were approximately 30% and 20%, respectively. The increase in the effective
rate for the fiscal 1999 periods are due to a decrease in certain stock
option tax deductions, net of FASB 123-Accounting for Stock Based
Compensation book deductions, that were available in the prior year.
For the three month and the nine month periods ended March 31, 1999, net
income decreased by approximately $954,000 or 70% and $1,390,000 or 48%,
respectively, when compared to the same three and nine month periods in the
prior fiscal year. The decrease in both three month and nine month periods
are the result of reduced sales, lower gross margins and higher tax rates.
Both the basic and diluted earnings per share were $.09, respectively, for
the third quarter ended March 31, 1999. This compares to basic and diluted
earnings per share of $.30 for the same quarter in fiscal 1998. The nine
month period basic and diluted earnings per share at March 31, 1999 were both
$.34, respectively. This compares to basic and diluted earnings per share of
$.63 per share, for the same nine month period in fiscal 1998.
YEAR 2000 ISSUE
The Company is cognizant of the issues associated with the programming code
in existing computer systems as the year 2000 approaches. The "Year 2000"
problem is pervasive and complex, as virtually every computer operation will
be affected in some way. Many currently installed computer systems and
software products are coded to accept only two-digit entries in the date
field. These date code fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. Systems not able to
recognize the date correctly could generate erroneous data or fail.
Accordingly, by the end of 1999, computer systems and/or software used by the
Company will need to be tested and upgraded, if necessary, to comply with
such Year 2000 requirements. The Company's computer operations currently run
on an IBM RS6000 computer. The Company's software is based upon an
established, fully integrated, relational database system designed for
manufacturing companies and adapted for the apparel industry. The software
programs running on the Company's computer are being modified to accommodate
the Year 2000.
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The costs associated with the Company's Year 2000 initiative are charged to
expense as incurred and the Company estimates that these costs should not
exceed $50,000. The Company does not maintain a project tracking system that
tracks the cost and time that its own internal employees spend on the Y2K
project.
Presently, the Company has received written notification from several of its
vendors that they believe their systems are Year 2000 compliant. The Company
continues to address this issue to ensure the availability and integrity of
its financial systems and the reliability of its operational systems and is
presently evaluating and upgrading its software and hardware, so that its
computer systems will function properly with respect to Year 2000 and beyond.
The Company continues discussions with other significant suppliers and
financial institutions with whom the Company has a relationship, to ensure
those parties have appropriate plans to remediate Year 2000 issues
particularly where their systems interface with the Company's systems or
otherwise impact its operations.
If the vendors of the Company's most important goods and services, or the
suppliers of the Company's necessary energy, telecommunications and
transportation needs, fail to provide the Company with the materials and
services which are necessary to produce, distribute and sell its products,
the electrical power and other utilities to sustain its operations, or
reliable means of obtaining supplies and transporting products to its
customers, such failure could have a material adverse effect on the results
of operations, liquidity and financial condition of the Company. The Company
is in the process of developing a contingency plan to address these and other
issues.
If some or all of the Company's remediated or replaced internal computer
systems fail the testing phase, or if any software applications or embedded
microprocessors critical to the Company's operations are overlooked in the
assessment and implementation phases, there could be a material adverse
effect on the Company's results of operations, liquidity and financial
condition of a magnitude which the Company has not yet fully analyzed.
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements that are subject to certain
risks and uncertainties which could cause actual results or facts to differ
materially from such statements for a variety of reasons, including, but not
limited to: industry conditions, changes in product supply, pricing, and
customer demand, competition, other vagaries in the computer and electronic
components markets, and changes in relationships with key suppliers.
Shareholders and other readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date on which
they are made. The Company undertakes no obligation to update publicly or
revise any forward-looking statements.
15
<PAGE>
SPORT-HALEY, INC.
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS - NONE
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS- NONE
ITEM 3 DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders was held February 16, 1999.
(b) The following persons were elected directors for a one year term or
until their successor shall have been duly elected and qualified.
<TABLE>
<CAPTION>
Votes for Votes withheld
<S> <C> <C>
Robert G. Tomlinson 3,484,794 14,987
Robert W. Haley 3,484,794 14,987
Mark J. Stevenson 3,484,884 14,987
Ronald J. Norick 3,484,884 14,987
James H. Everest 3,484,884 14,987
</TABLE>
(c) To ratify the appointment of Levine, Hughes & Mithuen, Inc. as
auditors of the Company.
<TABLE>
<S> <C>
For 3,488,444
Against 7,070
Abstain 4,267
</TABLE>
ITEM 5 OTHER INFORMATION - NONE
16
<PAGE>
SPORT-HALEY, INC.
PART II
OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
27 FINANCIAL DATA SCHEDULE
(B) REPORTS ON FORM 8-K -
A Form 8-K, dated September 27, 1999 was filed on January 9,
1999 reporting that the Registrant was authorized by its Board of
Directors to increase the number of shares it could repurchase
under the Registrant's stock repurchase plan by an additional
400,000 shares, thus bringing the total authorized share for
repurchase to 850,000.
17
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPORT-HALEY, INC.
(Registrant)
Date: May 12, 1999 /s/ Robert G. Tomlinson
------------ -----------------------
Robert G. Tomlinson
Chief Executive Officer
Date: May 12, 1999 /s/ Steve S. Auger
------------ -----------------------
Steve S. Auger
Chief Accounting Officer
18
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0
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