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, 2001
/ / 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 MARCH 7, 2001
COMMON STOCK, NO PAR VALUE 3,441,985
Transitional Small Business Disclosure Format (check one): Yes / / No /X/
TABLE OF CONTENTS
PAGE
PART 1 - CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 3
CONSOLIDATED STATEMENTS OF INCOME 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
PART II - OTHER INFORMATION 16
SIGNATURES 17
SPORT-HALEY, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARES OF STOCK)
MARCH 31, JUNE 30,
2001 2000
----------- --------
(UNAUDITED) (NOTE 2)
ASSETS
Current assets:
Cash and cash equivalents $ 6,178 $ 6,676
Marketable securities 1,473 1,967
Accounts receivable, net of allowances of
$149 and $130, respectively 5,334 4,795
Inventories 10,430 9,659
Other current assets 1,770 1,292
Deferred taxes 134 230
------- -------
Total current assets 25,319 24,619
Property and equipment, net 1,865 2,364
Deferred taxes 9 --
Other assets 115 176
------- -------
Total Assets $27,308 $27,159
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 647 $ 848
Accrued commissions and other expenses 704 500
------- -------
Total current liabilities 1,351 1,348
------- -------
Long-term liabilities:
Deferred taxes -- 19
------- -------
Total long-term liabilities -- 19
------- -------
Total liabilities 1,351 1,367
------- -------
Shareholders' 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; 3,441,985 and 3,460,385 shares
issued and outstanding, respectively 13,049 13,108
Additional paid-in capital 1,417 1,402
Retained earnings 11,491 11,282
------- -------
Total shareholders' equity 25,957 25,792
------- -------
Total Liabilities and Shareholders' Equity $27,308 $27,159
======= =======
See accompanying notes to consolidated financial statements.
3
SPORT-HALEY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2001 2000 2001 2000
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Net sales $ 5,908 $ 7,837 $ 16,734 $ 17,799
Cost of goods sold 3,547 5,263 10,826 11,724
-------- -------- -------- --------
Gross profit 2,361 2,574 5,908 6,075
Selling, general and
administrative expense 2,135 2,391 6,001 5,724
-------- -------- -------- --------
Income (loss) from operations 226 183 (93) 351
Other income, net 57 185 429 508
-------- -------- -------- --------
Income before provision
for income taxes 283 368 336 859
Provision for income taxes (104) (140) (127) (331)
-------- -------- -------- --------
Net income $ 179 $ 228 $ 209 $ 528
======== ======== ======== ========
Basic and diluted earnings
per common share $ 0.05 $ 0.06 $ 0.06 $ 0.14
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
4
SPORT-HALEY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS ENDED
MARCH 31,
2001 2000
------- -------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 209 $ 528
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 579 470
Deferred taxes and other 72 (35)
Allowance for doubtful accounts 36 236
Allowance for sales returns -- (28)
Stock option compensation 15 110
Cash provided (used) due to changes in assets and liabilities:
Accounts receivable (574) (1,022)
Inventory (771) 2,545
Other assets (456) 811
Accounts payable (201) (330)
Accrued commissions and other expenses 204 (60)
------- -------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (887) 3,225
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of investments 2,000 --
Sale of fixed assets -- 54
Purchase of common stock of subsidiary
from minority shareholders -- (24)
Purchase of fixed assets (79) (300)
Purchases of held to maturity investments (1,473) --
------- -------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 448 (270)
------- -------
See accompanying notes to consolidated financial statements.
5
SPORT-HALEY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS ENDED
MARCH 31,
2001 2000
------- -------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock $ -- $ 32
Principal payments on revolving line of credit -- (600)
Repurchase of common stock (59) (2,485)
------- -------
NET CASH USED BY FINANCING ACTIVITIES (59) (3,053)
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (498) (98)
CASH AND CASH EQUIVALENTS, BEGINNING 6,676 8,581
------- -------
CASH AND CASH EQUIVALENTS, ENDING $ 6,178 $ 8,483
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ 248 $ --
======= =======
Interest $ -- $ 27
======= =======
See accompanying notes to consolidated financial statements.
6
SPORT-HALEY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The consolidated 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. These financial statements should be read in
conjunction with the Company's annual audited consolidated financial
statements dated June 30, 2000, included in the Company's annual report on
Form 10-K as filed with the Securities and Exchange Commission. The results
for interim periods are not necessarily indicative of results that may be
expected for any other interim period or for the full 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 periods presented.
The consolidated financial statements include the accounts of Sport-Haley,
Inc., and its subsidiary, B&L Sportswear, Inc. (collectively referred to as
the Company). All significant inter-company accounts and transactions have
been eliminated.
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
During the fiscal quarter ended March 31, 2001, the Company determined that
certain amounts previously accrued for income taxes required adjustment.
The adjustments were required due to differences between final and amended
income tax return amounts versus previously estimated amounts for fiscal
years ended June 30, 2000, 1999 and 1998. The adjustments primarily
resulted in increases of approximately $600,000 in income taxes receivable,
$225,000 in additional paid-in capital and $325,000 in retained earnings
in the consolidated balance sheet at June 30, 2000. The adjustment to
retained earnings related to periods prior to July 1, 1997.
In addition, in the current period, the Company recorded changes in
estimates of deferred income tax assets and liabilities that were
previously estimated in fiscal years 2000, 1999 and 1998. These changes
in estimates had no material effect on net income for the fiscal quarter
or nine-month period ended March 31, 2001.
Certain reclassifications have been made to the consolidated statements of
income for the three months and nine months ended March 31, 2000 to conform
to the presentation for the three months and nine months ended March 31,
2001. A significant portion of this change in presentation was due to
reclassifying certain design costs from cost of goods sold to selling,
general and administrative expenses.
7
SPORT-HALEY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 COMMITMENTS
On May 16, 2001, the Company entered into a licensing agreement with
Spalding Sports Worldwide whereby the Company will manufacture and market
men's premium golf apparel under the Ben Hogan(R) brand name. The agreement
covers a five-year initial period plus a five-year renewal period.
According to the agreement, the Ben Hogan(R) Apparel Collection, featuring
tops, bottoms, windwear and outerwear, is expected to debut at the January
2002 PGA Merchandise Show in Orlando, Florida.
NOTE 4 REPURCHASE OF COMMON STOCK
The Company's Board of Directors previously authorized the repurchase of up
to 1,820,000 shares of the Company's issued and outstanding common stock.
The shares may be repurchased from time to time in open market transactions
at prevailing market prices or in privately negotiated transactions. The
Company has no commitment or obligation to repurchase all or any portion of
the shares authorized for repurchase. All shares repurchased by the Company
are canceled and returned to the status of authorized but unissued common
stock.
Through March 31, 2001, the Company repurchased a total of 1,515,400 shares
of its common stock at a cumulative cost of approximately $10.3 million.
NOTE 5 COMMON STOCK OPTIONS
As of March 31, 2001, the maximum number of shares of common stock
available for award grants (including incentive stock options) was 123,665.
At March 31, 2001, there were outstanding options to purchase 494,881
shares of the Company's common stock at prices ranging from $2.50 to
$10.63, with expiration dates between March 15, 2002, and January 5, 2010.
8
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 earnings per common share. The following table provides a
reconciliation of the numerator and denominator of basic and diluted
earnings per common share:
Three Months Ended March 31, 2001
---------------------------------------------
Net Weighted
Income Average Shares Per Share
--------- -------------- ---------
EARNINGS PER COMMON SHARE
Basic earnings per share $ 179,000 3,443,794 $ 0.05
Effect of dilutive securities
options -- 11,502 --
--------- --------- --------
Diluted earnings per share $ 179,000 3,455,296 $ 0.05
========= ========= ========
Nine Months Ended March 31, 2001
---------------------------------------------
Net Weighted
Income Average Shares Per Share
--------- -------------- ---------
EARNINGS PER COMMON SHARE
Basic earnings per share $ 209,000 3,454,935 $ 0.06
Effect of dilutive securities
options -- 31,835 --
--------- --------- --------
Diluted earnings per share $ 209,000 3,486,770 $ 0.06
========= ========= ========
9
SPORT-HALEY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2000
---------------------------------------------
Net Weighted
Income Average Shares Per Share
--------- -------------- ---------
EARNINGS PER COMMON SHARE
Basic earnings per share $ 228,000 3,605,272 $ 0.06
Effect of dilutive securities
options and warrants -- 52,995 --
--------- --------- --------
Diluted earnings per share $ 228,000 3,658,267 $ 0.06
========= ========= ========
Nine Months Ended March 31, 2000
---------------------------------------------
Net Weighted
Income Average Shares Per Share
--------- -------------- ---------
EARNINGS PER COMMON SHARE
Basic earnings per share $ 528,000 3,755,352 $ 0.14
Effect of dilutive securities
options and warrants -- 20,763 --
--------- --------- --------
Diluted earnings per share $ 528,000 3,776,115 $ 0.14
========= ========= ========
10
SPORT-HALEY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Report on Form 10-Q contains certain forward-looking statements. When used
in this report, the words "may," "will," "expect," "anticipate," "continue,"
"estimate," "project," "intend," "believe" and similar expressions are intended
to identify forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
regarding events, conditions and financial trends including, without limitation,
business conditions and growth in the fashion golf apparel market and the
general economy, competitive factors, and price pressures in the high-end
golf-apparel market; inventory risks due to shifts in market and/or price
erosion of purchased apparel, raw fabric and trim; cost controls; changes in
product mix; and other risks or uncertainties detailed in other Securities and
Exchange Commission filings made by Sport-Haley. Such statements are based on
management's current expectations and are subject to risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, the actual plan of operations,
business strategy, operating results and financial position of Sport-Haley could
differ materially from those expressed in, or implied by, such forward-looking
statements.
FINANCIAL CONDITION
The Company intends to rely on cash generated from operations and available cash
on hand to finance its working capital requirements for at least the next 12
months. To the extent such amounts are insufficient to finance the Company's
working capital requirements, the Company may also make periodic borrowings
under its revolving line of credit. Working capital at March 31, 2001 was
approximately $24.0 million and was approximately $23.3 million at June 30,
2000. Working capital increased primarily because of an increase in net accounts
receivable March 31, 2001.
Since June 30, 2000, inventories increased by approximately $771,000 to $10.4
million from $9.6 million. The increase in inventories was due to finished goods
purchases from foreign suppliers and management's efforts to maximize fill rates
for the Spring 2001 selling season's customer orders. During the fiscal quarter
ended March 31, 2001, the Company maintained the exceptionally high fill rates
for pending Spring 2001 customer orders that had been achieved in the previous
fiscal quarter. The increase in inventories also represents a continual changing
trend in the Company's business relating to purchases of finished goods
inventories. Prior to June 30, 2000, the Company manufactured and purchased
finished goods inventories primarily by utilizing domestic suppliers. Since June
30, 2000, the Company has begun to purchase a significantly larger percentage of
finished goods from foreign suppliers. Purchasing finished goods from foreign
suppliers resulted in increased finished goods inventories because,
historically, the Company has received a substantial portion of an entire
selling season's finished goods inventory for a particular item or items all in
one shipment from a foreign supplier. The Company's increased reliance on
foreign suppliers also increases the risk that the Company's revenues might be
adversely affected if a foreign shipment were late or lost. The Company
maintains insurance for risk of loss relating to goods shipped from its domestic
and foreign suppliers. However, the Company's increased reliance on its foreign
suppliers increases the risk that the Company would be left with inadequate or
unsatisfactory recourse should the goods received from the foreign suppliers be
nonconforming.
11
SPORT-HALEY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cash and cash equivalents plus marketable securities decreased since June 30,
2000 by approximately $992,000. The decrease is primarily attributable to the
increase in inventories described above of approximately $771,000 over the same
six-month period. Net accounts receivable increased by approximately $539,000 to
$5.3 million from $4.8 million at June 30, 2000. The increase in accounts
receivable is typical for the third fiscal quarter. A disproportionately higher
amount of sales are recorded in the month of March each year, as compared with
the months of January and February in that fiscal quarter. Because of the
combination of these and other factors, during the nine months ended March 31,
2001, operating activities used cash of approximately $887,000.
Other current assets plus current deferred taxes increased by approximately
$382,000 since June 30, 2000 to $1.9 million from $1.5 million. The increase was
due primarily to deposits paid to foreign suppliers during the three months
ended March 31, 2001 for pending finished goods inventory purchases.
For the nine months ended March 31, 2001, the Company spent approximately
$79,000 for the purchase of property and equipment, and approximately $579,000
in depreciation and amortization was charged to current operations. During the
same nine-month period, investing activities provided cash of approximately
$448,000 primarily due to the combination of the redemption and purchase of
held-to-maturity investments.
Other long-term assets plus long-term deferred taxes have decreased by
approximately $52,000 since June 30, 2000 to $124,000 from $176,000. The
decrease was due primarily to changes in deferred taxes.
Accounts payable and accrued expenses remained approximately the same since June
30, 2000.
Total shareholders' equity increased by approximately $165,000 for the
nine-month period. The increase was attributable to net income for the same
period combined with stock repurchases and the required amortization of stock
option expense. Book value per share increased by approximately $0.09 per share
at March 31, 2001 to $7.54, as compared with $7.45 per share at June 30, 2000.
RECENT DEVELOPMENTS
As previously reported, in conjunction with the audit of the Company's financial
statements for the fiscal year ended June 30, 2000, the Company determined that
its financial statements for the fiscal years ended June 30, 1999 and 1998
required restatement, due to accounting errors. The effects of significant
financial statement adjustments related to the restatements for the fiscal years
ended June 30, 1999 and 1998 are set forth in the Company's Form 10-K for the
fiscal year ended June 30, 2000, which was filed with the Securities and
Exchange Commission on November 3, 2000. In addition, the Company filed amended
quarterly reports on Form 10-Q for the quarterly periods of fiscal years 2000
and 1999 in order to correct material quarterly information for the prior
interim reporting periods of fiscal years 2000, 1999 and 1998.
12
SPORT-HALEY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The restatements described above may lead to litigation against the Company.
There is no litigation currently pending or threatened against the Company
concerning the restatements. However, if such litigation is initiated, it could
have a material adverse impact on the Company's income from continuing
operations.
To-date, the Company has incurred approximately $400,000 in expenses related to
the restatements of its fiscal year 1999 and 1998 financial statements and the
correction of material quarterly information for fiscal years 2000, 1999 and
1998. The Company has continued to evaluate whether such expenses will be
recoverable in a future reporting period.
The Securities and Exchange Commission (the "SEC") is currently investigating
the Company to determine whether the Company or any of its officers, directors
or employees violated any of the federal securities laws pursuant to a formal
order of investigation. The Company previously provided documents requested by
the Commission and voluntarily provided testimony. The Commission has not
brought an action against the Company, but it may do so in the future. In such
an event, the Commission may seek injunctive or other relief from the Company.
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 fiscal quarter and nine months ended March 31, 2001, were
approximately $5.9 million and $16.7 million, respectively, decreases of
approximately $1.9 million or 25%, and $1.1 million or 6%, from net sales of
approximately $7.8 million and $17.8 million for the same periods in the prior
fiscal year. The decrease in net sales was attributable to both a general
slowing of the economy and unusually inclement weather conditions in major
geographic markets. Each of those circumstances contributed to late season
cancellations of customer orders for spring merchandise and a decrease in the
number of golf shops that placed orders for "basic" goods at the opening of the
spring season.
The Company's gross profit, as a percentage of net sales, was approximately 40%
and 35% for the quarter and nine months ended March 31, 2001, respectively, and
33% and 34% for the same periods in the prior fiscal year. The increase in gross
profit is due to a combination of factors, including: (i) the relatively lower
cost of inventory due to greater reliance on foreign suppliers during the
quarter and nine months ended March 31, 2001; and, (ii) differences between the
quarters and nine-month periods in the compositions of apparel sold in the
disposals of excess prior seasons' inventories at reduced sales prices.
Management has continued to actively search for additional foreign suppliers and
has attempted to expand sales markets for excess prior seasons' inventories.
13
SPORT-HALEY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Selling, general and administrative expenses for the fiscal quarter ended March
31, 2001 decreased by approximately $256,000, or 11%, to $2.1 million from $2.4
million for the same quarter in the prior fiscal year. For the nine-month period
ended March 31, 2001, selling, general and administrative expenses increased by
approximately $277,000, or 5%, to $6.0 million from $5.7 million for the same
period in the prior fiscal year. The increase for the nine-month period was
primarily due to additional accounting, legal and other expenses of
approximately $400,000 incurred relating to the restating of the Company's
financial statements for fiscal years 1999 and 1998 and the correcting of
material quarterly information for the quarters of fiscal years 2000, 1999 and
1998. While the Company is currently evaluating whether any or all of those
additional expenses are recoverable, there is no assurance that any or all of
the additional $400,000 in expenses that have been incurred will be recovered.
As a percentage of sales, selling, general and administrative expenses were 36%
and 36% for the quarter and nine months ended March 31, 2001, respectively, as
compared with 31% and 32% for the same periods in the prior fiscal year. The
additional accounting, legal and other expenses relating to the restated
financial statements and corrected quarterly information as a percentage of
sales were approximately 1% and 2% for the quarter and nine months ended March
31, 2001, respectively.
Income before provision for income taxes decreased by approximately $85,000, or
23%, to approximately $283,000 for the fiscal quarter ended March 31, 2001, from
$368,000 for the same quarter in the prior fiscal year. Income before provision
for income taxes decreased by approximately $523,000, or 61%, to approximately
$336,000 for the nine months ended March 31, 2001, from $859,000 for the same
period in the prior fiscal year.
The Company's effective tax rates for the nine months ended March 31, 2001 and
2000 were 38% and 39%, respectively. The effective tax rate in any fiscal period
can vary significantly from the effective tax rate in another period due to
differences between the recording of certain transactions for financial versus
tax purposes. Certain deductions recognized for tax purposes may not be expensed
for financial statement purposes, and certain expenses recorded for financial
statement purposes may not be deductible for tax purposes.
Net income for the fiscal quarter and nine months ended March 31, 2001 decreased
by approximately $49,000, or 21%, and $319,000, or 60%, when compared to the
same periods in the prior fiscal year. The decreases were primarily the result
of the higher percentage of sales with respect to selling, general and
administrative expenses combined with the other factors discussed above.
Both the basic and diluted earnings per share were $0.05 and $0.06 for the
fiscal quarter and nine months ended March 31, 2001, respectively. This compares
to basic and diluted earnings per share of $0.06 and $0.14 for the same periods
in prior fiscal year. Had the Company not incurred the additional accounting,
legal and other expenses relating to the restating of the Company's financial
statements for fiscal years 1999 and 1998 and the correcting of material
quarterly financial information for the quarters of fiscal years 2000, 1999 and
1998, both the basic and diluted pre-tax earnings per share would have been
$0.11 and $0.21 for the fiscal quarter and nine months ended March 31, 2001,
respectively, as compared with both the basic and diluted pre-tax earnings per
share of $0.10 and $0.23 for the fiscal quarter and nine months ended March 31,
2000, respectively.
14
SPORT-HALEY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR 2000 COMPUTER CONVERSION
The Company was cognizant of the Year 2000 issues associated with programming
code in computer systems. The Company utilizes an integrated computer system to
manage all business transactions, historical data and record keeping, including
sourcing, warehousing, embroidering and shipping. In preparation for the Year
2000, the Company installed a Year 2000 compliant upgrade to the software for
this system and tested all other systems. As of May 21, 2001, the Company had
not experienced, nor does it expect to experience any disruptions related to
Year 2000 issues in the operation of its systems. To the best knowledge of the
Company, none of the material suppliers, vendors and financial institutions with
which the Company has a business relationship experienced any failures or
disruptions in their computer systems caused by the Year 2000 issues.
15
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 TO MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 5 OTHER INFORMATION - NONE
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS - NONE
(B) REPORTS ON FORM 8-K - NONE
16
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 21, 2001 /s/ Robert G. Tomlinson
---------------------------
Robert G. Tomlinson
Chief Executive Officer
Date: May 21, 2001 /s/ Patrick W. Hurley
---------------------------
Patrick W. Hurley
Chief Financial Officer
17