##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

|    |  |                                                                                        
|--- |  | ---------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2001

OR

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ___________

Commission file number: 0-18553

Ashworth, Inc.

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 84-1052000
(I.R.S. Employee
Identification No.)

2765 LOKER AVENUE WEST
CARLSBAD, CA 92008
(Address of Principal Executive Offices)

(760) 438-6610
(Telephone No. Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 [   ]

Indicate the number of shares outstanding of each of the registrants classes
of common stock, as of the latest practicable date.

|                             |  |                            
|---------------------------- |  | ---------------------------
|Title                        |  | Outstanding at June 4, 2001
|                            
|                            
|                            
|                            
|$.001 par value Common Stock |  | 13,129,469                 





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TABLE OF CONTENTS



|                          |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|                          |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                          |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME         
|                          |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                          |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                          | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                          | Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II OTHER INFORMATION
|                          | Item 1 LEGAL PROCEEDINGS                                                                     
|                          | Item 2 CHANGES IN SECURITIES AND USE OF PROCEEDS                                             
|                          | Item 3 DEFAULTS UPON SENIOR SECURITIES                                                       
|                          | Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   
|                          | Item 5 OTHER INFORMATION                                                                     
|                          | Item 6 EXHIBITS AND REPORTS ON FORM 8-K                                                      
|SIGNATURES               



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##### Table of Contents



INDEX

|         |  |                                                                                       |  |      |    | 
|-------- |  | ------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                       |  | PAGE
|         |  |                                                                                       |  |     
|Part I.  |  | Financial Information                                                                
|        
|        
|        
|        
|Item 1.  |  | Financial Statements                                                                 
|        
|        
|        
|        
|         |  | Condensed Consolidated Balance Sheets                                                 |  |      | 1  | 
|        
|        
|        
|        
|         |  | Condensed Consolidated Statements of Income                                           |  |      | 2  | 
|        
|        
|        
|        
|         |  | Condensed Consolidated Statements of Cash Flows                                       |  |      | 3  | 
|        
|        
|        
|        
|         |  | Notes to Condensed Consolidated Financial Statements                                  |  |      | 4  | 
|        
|        
|        
|        
|Item 2.  |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations |  |      | 8  | 
|        
|        
|        
|        
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  |      | 11 | 
|        
|        
|        
|        
|Part II. |  | Other Information                                                                     |  |      | 12 | 
|        
|        
|        
|        
|Item 1.  |  | Legal Proceedings                                                                     |  |      | 12 | 
|        
|        
|        
|        
|Item 2.  |  | Changes in Securities and Use of Proceeds                                             |  |      | 13 | 
|        
|        
|        
|        
|Item 3.  |  | Defaults Upon Senior Securities                                                       |  |      | 13 | 
|        
|        
|        
|        
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  |      | 13 | 
|        
|        
|        
|        
|Item 5.  |  | Other Information                                                                     |  |      | 13 | 
|        
|        
|        
|        
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                      |  |      | 13 | 
|        
|        
|        
|        
|         |  | Signatures                                                                            |  |      | 16 | 





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##### Table of Contents






ASHWORTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                       |                                                |                            |                                            |             |             |             |             |             |            |            | 
|-------------------------------------- | ---------------------------------------------- | -------------------------- | ------------------------------------------ | ----------- | ----------- | ----------- | ----------- | ----------- | ---------- | ---------- | 
|                                       |                                                |                            |                                            |             | April 30,   |             | October 31,
|                                       |                                                |                            |                                            |             | 2001        |             | 2000       
|                                       |                                                |                            |                                            |             |             |             |            
|                                       |                                                |                            |                                            |             | (UNAUDITED)
|ASSETS                                
|                                      
|                                      
|                                      
|                                      
|Current assets:                       
|                                      
|                                      
|                                      
|                                      
|                                       | Cash and cash equivalents                      |                            | $                                          | 1,657,000   |             |             | $           | 1,231,000   |           
|                                      
|                                      
|                                      
|                                      
|                                       | Accounts receivable-trade, net                 |                            |                                            | 48,664,000  |             |             |             | 25,578,000  |           
|                                      
|                                      
|                                      
|                                      
|                                       | Accounts receivable  other                    |                            |                                            | 2,378,000   |             |             |             | 2,221,000   |           
|                                      
|                                      
|                                      
|                                      
|                                       | Inventories                                    |                            |                                            | 35,873,000  |             |             |             | 37,526,000  |           
|                                      
|                                      
|                                      
|                                      
|                                       | Income tax refund receivable                   |                            |                                            |            |             |             |             | 582,000     |           
|                                      
|                                      
|                                      
|                                      
|                                       | Other current assets                           |                            |                                            | 3,357,000   |             |             |             | 1,891,000   |           
|                                      
|                                      
|                                      
|                                      
|                                       | Deferred income tax asset                      |                            |                                            | 1,614,000   |             |             |             | 1,614,000   |           
|                                       |                                                |                            |                                            |             |             |             |             |            
|                                       |                                                | Total current assets       |                                            |             | 93,543,000  |             |             |             | 70,643,000 |           
|                                       |                                                |                            |                                            |             |             |             |             |            
|Property, plant and equipment, at cost |                                                |                            | 35,156,000                                 |             |             |             | 30,452,000  |            
|                                      
|                                      
|                                      
|                                      
|                                       | Less accumulated depreciation and amortization |                            |                                            | (16,459,000 | )           |             |             | (15,604,000 | )         
|                                       |                                                |                            |                                            |             |             |             |             |            
|                                       |                                                |                            | 18,697,000                                 |             |             |             | 14,848,000  |            
|                                       |                                                |                            |                                            |             |             |             |             |            
|Other assets                           |                                                |                            | 1,643,000                                  |             |             |             | 1,880,000   |            
|                                       |                                                |                            |                                            |             |             |             |             |            
|                                       |                                                |                            | Total assets                               |             | $           | 113,883,000 |             |             | $          | 87,371,000 | 
|                                       |                                                |                            |                                            |             |             |             |             |            
|LIABILITIES AND STOCKHOLDERS EQUITY  
|                                      
|                                      
|                                      
|                                      
|Current liabilities:                  
|                                      
|                                      
|                                      
|                                      
|                                       | Note payable                                   |                            | $                                          | 19,775,000  |             |             | $           | 1,490,000   |           
|                                      
|                                      
|                                      
|                                      
|                                       | Current portion of long-term debt              |                            |                                            | 727,000     |             |             |             | 692,000     |           
|                                      
|                                      
|                                      
|                                      
|                                       | Accounts payable-trade                         |                            |                                            | 4,066,000   |             |             |             | 4,477,000   |           
|                                      
|                                      
|                                      
|                                      
|                                       | Income taxes payable                           |                            |                                            | 3,006,000   |             |             |             |            |           
|                                      
|                                      
|                                      
|                                      
|                                       | Accrued liabilities                            |                            |                                            | 5,402,000   |             |             |             | 3,988,000   |           
|                                       |                                                |                            |                                            |             |             |             |             |            
|                                       |                                                | Total current liabilities  |                                            |             | 32,976,000  |             |             |             | 10,647,000 |           
|                                       |                                                |                            |                                            |             |             |             |             |            
|Long-term debt, net of current portion |                                                |                            | 3,242,000                                  |             |             |             | 3,293,000   |            
|                                      
|                                      
|                                      
|                                      
|Deferred income tax liability          |                                                |                            | 742,000                                    |             |             |             | 742,000     |            
|                                      
|                                      
|                                      
|                                      
|Other long term liabilities            |                                                |                            | 608,000                                    |             |             |             | 715,000     |            
|                                      
|                                      
|                                      
|                                      
|Stockholders equity:                 
|                                      
|                                      
|                                      
|                                      
|                                       | Common stock                                   |                            |                                            | 13,000      |             |             |             | 13,000      |           
|                                      
|                                      
|                                      
|                                      
|                                       | Capital in excess of par value                 |                            |                                            | 37,803,000  |             |             |             | 37,698,000  |           
|                                      
|                                      
|                                      
|                                      
|                                       | Retained earnings                              |                            |                                            | 39,633,000  |             |             |             | 35,241,000  |           
|                                      
|                                      
|                                      
|                                      
|                                       | Accumulated other comprehensive loss           |                            |                                            | (1,134,000  | )           |             |             | (978,000    | )         
|                                       |                                                |                            |                                            |             |             |             |             |            
|                                       |                                                | Total stockholders equity |                                            |             | 76,315,000  |             |             |             | 71,974,000 |           
|                                       |                                                |                            |                                            |             |             |             |             |            
|                                       |                                                |                            | Total liabilities and stockholders equity |             | $           | 113,883,000 |             |             | $          | 87,371,000 | 
|                                       |                                                |                            |                                            |             |             |             |             |            

1



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ASHWORTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

|                                             |                                                |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |            |  
|-------------------------------------------- | ---------------------------------------------- | - | ---------------------------- | ---------- | -------------------------- | - | ---------- | ---------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                                             |                                                |   | Three months ended April 30, |            | Six months ended April 30,
|                                             |                                                |   |                              |            |                           
|                                             |                                                |   | 2001                         |            | 2000                       |   | 2001       |            | 2000
|                                             |                                                |   |                              |            |                            |   |            |            |     
|Net revenues                                 |                                                | $ | 46,908,000                   |            |                            | $ | 41,272,000 |            |      | $ | 74,614,000 |            |   | $ | 63,771,000 |           
|                                            
|                                            
|                                            
|                                            
|Cost of goods sold                           |                                                |   | 27,655,000                   |            |                            |   | 24,381,000 |            |      |   | 45,415,000 |            |   |   | 38,850,000 |           
|                                             |                                                |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Gross profit                                   |   |                              | 19,253,000 |                            |   |            | 16,891,000 |      |   |            | 29,199,000 |   |   |            | 24,921,000 |  
|                                            
|                                            
|                                            
|                                            
|Selling, general and
administrative expenses |                                                |   | 12,047,000                   |            |                            |   | 10,641,000 |            |      |   | 21,117,000 |            |   |   | 18,073,000 |           
|                                             |                                                |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Income from operations                         |   |                              | 7,206,000  |                            |   |            | 6,250,000  |      |   |            | 8,082,000  |   |   |            | 6,848,000  |  
|                                            
|                                            
|                                            
|                                            
|Other income (expense):                     
|                                            
|                                            
|                                            
|                                            
|                                             | Interest income                                |   |                              | 6,000      |                            |   |            | 7,000      |      |   |            | 8,000      |   |   |            | 40,000     |  
|                                            
|                                            
|                                            
|                                            
|                                             | Interest expense                               |   |                              | (449,000   | )                          |   |            | (229,000   | )    |   |            | (780,000   | ) |   |            | (315,000   | )
|                                            
|                                            
|                                            
|                                            
|                                             | Other
income (expense)                         |   |                              | (78,000    | )                          |   |            | (335,000   | )    |   |            | 10,000     |   |   |            | (429,000   | )
|                                             |                                                |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Total other expense                            |   |                              | (521,000   | )                          |   |            | (557,000   | )    |   |            | (762,000   | ) |   |            | (704,000   | )
|                                            
|                                            
|                                            
|                                            
|                                             | Income before provision for
income tax expense |   |                              | 6,685,000  |                            |   |            | 5,693,000  |      |   |            | 7,320,000  |   |   |            | 6,144,000  |  
|Provision for income tax expense             |                                                |   | 2,674,000                    |            |                            |   | 2,249,000  |            |      |   | 2,928,000  |            |   |   | 2,427,000  |           
|                                             |                                                |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Net income                                     |   | $                            | 4,011,000  |                            |   | $          | 3,444,000  |      |   | $          | 4,392,000  |   |   | $          | 3,717,000  |  
|                                             |                                                |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|Net income per share                        
|                                            
|                                            
|                                            
|                                            
|Basic:                                      
|                                            
|                                            
|                                            
|                                            
|                                             | Weighted average shares
outstanding            |   |                              | 13,149,000 |                            |   |            | 13,467,000 |      |   |            | 13,133,000 |   |   |            | 13,576,000 |  
|                                            
|                                            
|                                            
|                                            
|                                             | Net income per share                           |   | $                            | 0.31       |                            |   | $          | 0.26       |      |   | $          | 0.33       |   |   | $          | 0.27       |  
|                                            
|                                            
|                                            
|                                            
|Diluted:                                    
|                                            
|                                            
|                                            
|                                            
|                                             | Weighted average shares
outstanding            |   |                              | 13,584,000 |                            |   |            | 13,498,000 |      |   |            | 13,510,000 |   |   |            | 13,598,000 |  
|                                            
|                                            
|                                            
|                                            
|                                             | Net income per share                           |   | $                            | 0.30       |                            |   | $          | 0.26       |      |   | $          | 0.33       |   |   | $          | 0.27       |  

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ASHWORTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                     |                                                        |   |                            |             |      |   |             |             |  
|---------------------------------------------------- | ------------------------------------------------------ | - | -------------------------- | ----------- | ---- | - | ----------- | ----------- | -
|                                                     |                                                        |   | Six months ended April 30,
|                                                     |                                                        |   |                           
|                                                     |                                                        |   | 2001                       |             | 2000
|                                                     |                                                        |   |                            |             |     
|Cash flows from operating activities:               
|                                                    
|                                                    
|                                                    
|                                                    
|Net cash used in operating activities                |                                                        |   | ($12,654,000               | )           |      |   | ($8,828,000 | )          
|                                                    
|                                                    
|                                                    
|                                                    
|Cash flows from investing activities:               
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchases of property and equipment                    |   |                            | (5,146,000  | )    |   |             | (1,746,000  | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from sale of property and equipment           |   |                            | 8,000       |      |   |             |            |  
|                                                     |                                                        |   |                            |             |      |   |             |            
|Net cash used in investing activities                |                                                        |   | (5,138,000                 | )           |      |   | (1,746,000  | )          
|                                                    
|                                                    
|                                                    
|                                                    
|Cash flows from financing activities:               
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Principal payments on capital
lease obligations        |   |                            | (5,000      | )    |   |             | (22,000     | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Borrowings on line of credit                           |   |                            | 32,275,000  |      |   |             | 17,723,000  |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Payments on line of credit                             |   |                            | (13,990,000 | )    |   |             | (11,868,000 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from long-term borrowing                      |   |                            | 3,000,000   |      |   |             | 1,441,000   |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Principal payments on notes payable
and long-term debt |   |                            | (3,011,000  | )    |   |             | (345,000    | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Payments for repurchase of common stock                |   |                            | (217,000    | )    |   |             | (1,569,000  | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from issuance of common stock                 |   |                            | 322,000     |      |   |             |            |  
|                                                     |                                                        |   |                            |             |      |   |             |            
|Net cash provided by financing activities            |                                                        |   | 18,374,000                 |             |      |   | 5,360,000   |            
|                                                    
|                                                    
|                                                    
|                                                    
|Effect of exchange rate changes on cash              |                                                        |   | (156,000                   | )           |      |   | (362,000    | )          
|                                                     |                                                        |   |                            |             |      |   |             |            
|Net increase (decrease) in cash and cash equivalents |                                                        |   | 426,000                    |             |      |   | (5,576,000  | )          
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents, beginning of period       |                                                        |   | 1,231,000                  |             |      |   | 6,507,000   |            
|                                                     |                                                        |   |                            |             |      |   |             |            
|Cash and cash equivalents, end of period             |                                                        | $ | 1,657,000                  |             |      | $ | 931,000     |            
|                                                     |                                                        |   |                            |             |      |   |             |            

3



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##### Table of Contents






ASHWORTH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2001

NOTE 1  Basis of Presentation.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the opinion of management, the accompanying condensed consolidated
balance sheets and related interim condensed consolidated statements
of income and cash flows include all adjustments (consisting only of
normal recurring items) necessary for their fair presentation. The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenues, and expenses and the disclosure of contingent
assets and liabilities. Actual results could differ from those
estimates. Interim results are not necessarily indicative of results
to be expected for the full year.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Certain information in footnote disclosure normally included in
financial statements has been condensed or omitted in accordance with
the rules and regulations of the Securities and Exchange Commission.
The information included in this Form 10-Q should be read in
conjunction with Managements Discussion and Analysis of Financial
Condition and Results of Operations, and consolidated financial
statements and notes thereto included in the annual report on Form
10-K for the year ended October 31, 2000 filed with the Securities and
Exchange Commission.

NOTE 2  Inventories.



| |                                                                               
| | ------------------------------------------------------------------------------
| | Inventories consisted of the following at April 30, 2001 and October
31, 2000:

|                       |  |           |            |             |  |   |            | 
|---------------------- |  | --------- | ---------- | ----------- |  | - | ---------- | 
|                       |  | April 30, |            | October 31,
|                       |  | 2001      |            | 2000       
|                       |  |           |            |            
|Raw materials          |  | $         | 583,000    |             |  | $ | 811,000    | 
|                      
|                      
|                      
|                      
|Finished goods         |  |           | 35,290,000 |             |  |   | 36,715,000 | 
|                       |  |           |            |             |  |   |            | 
|Total inventories, net |  | $         | 35,873,000 |             |  | $ | 37,526,000 | 
|                       |  |           |            |             |  |   |            | 

4



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##### Table of Contents



NOTE 3  Net Income Per Share Information.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Basic net income per share has been computed based upon the weighted
average number of common shares outstanding during the period.
Diluted net income per share has been computed based upon the weighted
average number of common shares outstanding plus the dilutive effects
of common shares potentially issuable from the exercise of stock
options. Common stock options are excluded from the computation of
net income per share if their effect is anti-dilutive. The following
table sets forth the computation of basic and diluted net income per
share based upon the requirements of SFAS No. 128:

|                                                                                                      |  |                              |            |                            |  |      |            |      |  |   |            |  |  |   |            | 
|----------------------------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | -------------------------- |  | ---- | ---------- | ---- |  | - | ---------- |  |  | - | ---------- | 
|                                                                                                      |  | Three months ended April 30, |            | Six months ended April 30,
|                                                                                                      |  |                              |            |                           
|                                                                                                      |  | 2001                         |            | 2000                       |  | 2001 |            | 2000
|                                                                                                      |  |                              |            |                            |  |      |            |     
|Numerator:                                                                                           
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Net income
numerator for basic and diluted
income per share  income
available to common stockholders |  | $                            | 4,011,000  |                            |  | $    | 3,444,000  |      |  | $ | 4,392,000  |  |  | $ | 3,717,000  | 
|                                                                                                      |  |                              |            |                            |  |      |            |      |  |   |            |  |  |   |            | 
|Denominator:                                                                                         
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Denominator for basic income
per share  weighted average shares                                      |  |                              | 13,149,000 |                            |  |      | 13,467,000 |      |  |   | 13,133,000 |  |  |   | 13,576,000 | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Effect
of dilutive securities:stock options                                                           |  |                              | 435,000    |                            |  |      | 31,000     |      |  |   | 377,000    |  |  |   | 22,000     | 
|                                                                                                      |  |                              |            |                            |  |      |            |      |  |   |            |  |  |   |            | 
|Denominator for diluted income
per share  adjusted weighted
average
shares and assumed conversions   |  |                              | 13,584,000 |                            |  |      | 13,498,000 |      |  |   | 13,510,000 |  |  |   | 13,598,000 | 
|                                                                                                      |  |                              |            |                            |  |      |            |      |  |   |            |  |  |   |            | 
|Basic net income per share                                                                            |  | $                            | 0.31       |                            |  | $    | 0.26       |      |  | $ | 0.33       |  |  | $ | 0.27       | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Diluted net income per share                                                                          |  | $                            | 0.30       |                            |  | $    | 0.26       |      |  | $ | 0.33       |  |  | $ | 0.27       | 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the quarters ended April 30, 2001 and 2000, the diluted weighted
average shares outstanding computation excludes 1,134,000 and
2,551,000 options whose impact would have an anti-dilutive effect,
respectively. For the six months ended April 30, 2001 and 2000, the
diluted weighted average shares outstanding computation excludes
1,139,000 and 2,555,000 options whose impact would have an
anti-dilutive effect, respectively.

5



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##### Table of Contents



NOTE 4  Comprehensive Income.



| |                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company includes the cumulative foreign currency translation
adjustment as a component of the comprehensive income in addition to
net income for the period. For the quarters ended April 30, 2001 and
2000, total comprehensive income was $3,744,000 and $3,161,000,
respectively. For the six-month periods ended April 30, 2001 and
2000, total comprehensive income was $4,236,000 and $3,355,000,
respectively.

NOTE 5  Legal Proceedings.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On January 22, 1999, Milberg Weiss Bershad Hynes & Lerach LLP filed a
class action in the United States District Court for the Southern
District of California (U.S. District Court) on behalf of purchasers
of the Companys common stock during the period between September 4,
1997 and July 15, 1998 alleging violations of the Securities Exchange
Act of 1934 by the Company and certain of its officers and directors.
The complaint alleged that, during the class period, Company
executives made positive statements about the Companys business
including statements concerning product demand, offshore production
and inventories. The complaint further alleged that the defendants
knew these statements to be false and concealed adverse conditions and
trends in the Companys business during the class period. The
complaint sought to recover unspecified damages on behalf of all
purchasers of the Companys common stock during the period September
4, 1997 to July 15, 1998. The Company was served a copy of the
complaint on January 26, 1999. Subsequently, two other suits were
served upon the Company making similar allegations. The three actions
have been consolidated by order of the United States District Court
and lead counsel for the plaintiffs has been appointed. Per order of
the Court, Plaintiffs filed their Amended and Consolidated Complaint
on December 17, 1999. On February 18, 2000, the Company filed a
motion to dismiss. On May 22, 2000, the Court heard the motion to
dismiss and took it under submission. On July 18, 2000, the U.S.
District Court granted the motion to dismiss the Amended and
Consolidated Complaint as to all defendants. The Court granted
plaintiffs sixty days to amend the complaint if they chose to do so.
On September 18, 2000, plaintiffs served their Second Consolidated
Amended Complaint (Second Amended Complaint) making allegations and
seeking remedies similar to those in the prior complaint. On November
6, 2000, the Company filed its motion to dismiss the Second Amended
Complaint. The motion to dismiss was heard before the U.S. District
Court in February 2001. The matter is currently under submission. No
discovery has taken place in this matter to date.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In October 2000, former Ashworth sales representatives Regional Sales,
Inc. and Susan Stanley filed a complaint in San Diego Superior Court.
They filed a first amended complaint on November 29, 2000. By their
amended complaint, the plaintiffs allege, among other things, that the
Company failed to pay commissions and/or provide discounts on various
sales, failed to honor an agreement for plaintiffs to develop a
corporate sales division, and will not provide credit for the return
of certain goods. Plaintiffs seek an accounting and an unspecified
amount of compensatory and punitive damages. On January 19, 2001, the
Company filed an answer to the first amended complaint denying the
claims and asserting a number of defenses. On the same date, the
Company filed a cross-complaint against plaintiffs for failure to pay
for goods. Discovery in this case has commenced. A trial is set for
August 2001.

6



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##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company is party to other claims and litigation proceedings
arising in the normal course of business. Although the legal
responsibility and financial impact with respect to such other claims
and litigation cannot currently be ascertained, the Company does not
believe that these other matters will result in payment by the Company
of monetary damages, net of any applicable insurance proceeds, that,
in the aggregate, would be material in relation to the consolidated
financial position or results of operations of the Company.

NOTE 6  Segment Information



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company defines its operating segments as components of an
enterprise for which separate financial information is available and
regularly reviewed by the Companys senior management. The Company
has the following two reportable segments: Domestic and International.
Management evaluates segment performance based primarily on revenue
and income from operations. Interest income and expense is evaluated
on a consolidated basis and is not allocated to the Companys business
segments. Segment information is summarized (for the dates or periods
presented) below:

|                        |               |       |   |            |            |          |   |            |            |          |   |            |            |  |   |            |            | 
|----------------------- | ------------- | ----- | - | ---------- | ---------- | -------- | - | ---------- | ---------- | -------- | - | ---------- | ---------- |  | - | ---------- | ---------- | 
|                        |               |       |   | Three      |            | Three    |   | Six        |            | Six     
|                        |               |       |   | Months     |            | Months   |   | Months     |            | Months  
|                        |               |       |   | Ended      |            | Ended    |   | Ended      |            | Ended   
|                        |               |       |   | 04/30/01   |            | 04/30/00 |   | 04/30/01   |            | 04/30/00
|                        |               |       |   |            |            |          |   |            |            |         
|Net Revenue:           
|                       
|                       
|                       
|                       
|                        | Domestic      |       | $ | 40,278,000 |            |          | $ | 33,893,000 |            |          | $ | 64,406,000 |            |  | $ | 53,626,000 |           
|                       
|                       
|                       
|                       
|                        | International |       |   | 6,630,000  |            |          |   | 7,379,000  |            |          |   | 10,208,000 |            |  |   | 10,145,000 |           
|                        |               |       |   |            |            |          |   |            |            |          |   |            |            |  |   |           
|                       
|                       
|                       
|                       
|                        |               | Total |   | $          | 46,908,000 |          |   | $          | 41,272,000 |          |   | $          | 74,614,000 |  |   | $          | 63,771,000 | 
|                        |               |       |   |            |            |          |   |            |            |          |   |            |            |  |   |           
|Income From Operations:
|                       
|                       
|                       
|                       
|                        | Domestic      |       | $ | 6,541,000  |            |          | $ | 4,921,000  |            |          | $ | 7,718,000  |            |  | $ | 6,043,000  |           
|                       
|                       
|                       
|                       
|                        | International |       |   | 665,000    |            |          |   | 1,329,000  |            |          |   | 364,000    |            |  |   | 805,000    |           
|                        |               |       |   |            |            |          |   |            |            |          |   |            |            |  |   |           
|                       
|                       
|                       
|                       
|                        |               | Total |   | $          | 7,206,000  |          |   | $          | 6,250,000  |          |   | $          | 8,082,000  |  |   | $          | 6,848,000  | 
|                        |               |       |   |            |            |          |   |            |            |          |   |            |            |  |   |           

|              |               |  |           |             |             |  |   |            | 
|------------- | ------------- |  | --------- | ----------- | ----------- |  | - | ---------- | 
|              |               |  | April 30, |             | October 31,
|              |               |  | 2001      |             | 2000       
|              |               |  |           |             |            
|Total Assets:
|             
|             
|             
|             
|              | Domestic      |  | $         | 100,326,000 |             |  | $ | 74,847,000 | 
|             
|             
|             
|             
|              | International |  |           | 13,557,000  |             |  |   | 12,524,000 | 
|              |               |  |           |             |             |  |   |            | 
|              | Total         |  | $         | 113,883,000 |             |  | $ | 87,371,000 | 
|              |               |  |           |             |             |  |   |            | 

7



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##### Table of Contents






|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|Item 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Results of Operations

Second Quarter 2001 compared to Second Quarter 2000

Consolidated net revenue for the second quarter of fiscal 2001 increased 13.7%
to $46,908,000 from $41,272,000 for the same period in 2000. Net revenue for
the domestic segment increased 18.8% to $40,278,000 from $33,893,000 in the
second quarter of 2000, primarily due to higher revenue from the Companys
corporate and golf related distribution channels. Net revenue for the
international segment decreased 10.2% to $6,630,000 from $7,379,000 for the
same period of the prior year. The decrease was primarily due to lower
revenues in Europe which decreased 21.9%, as well as lower revenues from the
Companys Canadian division, which decreased 20.1%. These decreases were
primarily due to the outbreak of foot-and-mouth disease in Europe as well as
colder and wetter than normal weather.

Consolidated gross margin for the quarter increased to 41.0% as compared to
40.9% a year earlier. This was primarily due to improved sourcing as well as
improved inventory management and sales mix.

Consolidated selling, general, and administrative (SG&A) expenses increased
13.2% to $12,047,000. As a percentage of net revenue, SG&A expenses decreased
to 25.7% of net revenue for the second quarter of fiscal 2001 compared to 25.8%
in the second quarter of fiscal 2000 reflecting increased revenue and a
continuing focus on cost efficiencies. The Company installed an additional 120
golfman shop fixtured locations during the second quarter, bringing the total
number to 1,120 at April 30, 2001.

Net other expenses decreased to $521,000 for the second quarter of fiscal 2001
from $557,000 in the second quarter of fiscal 2000, due primarily to a lower
currency transaction loss by Ashworth UK Ltd. in its transactions with
Ashworth, Inc. and its European customers partially offset by higher interest
expense on the increased borrowing on the Companys line of credit.

The effective income tax rate for the second quarter of fiscal 2001 was 40.0%
of pre-tax income compared with 39.5% in the second quarter of fiscal 2000.

Six months ended April 30, 2001 compared to six months ended April 30, 2000

Consolidated net revenue for the first half of fiscal 2001 increased 17.0% to
$74,614,000 from $63,771,000 for the same period in fiscal 2000. Net revenue
for the domestic segment increased 20.1% to $64,406,000 from $53,626,000 in the
first half of fiscal 2000, primarily due to higher sales in the Companys golf
related and corporate business. Net revenue for the international segment
increased 0.6% to $10,208,000 from $10,145,000 for the same period of the prior
year. The increase was primarily due to the improvement in sales to Australia
and the Pacific Rim offset by lower sales in Canada and South Africa.

Consolidated gross margin for the six months remained at 39.1%, the same as the
first half of fiscal 2000.

Consolidated SG&A expenses increased 16.8% to $21,117,000. As a percentage of
revenue, SG&A expenses remained at 28.3% of net revenue for the first six
months of fiscal 2001, the same as the first six months of fiscal 2000. The
Company installed a total of 220 golfman shop fixtured locations during the
first half of fiscal year 2001, bringing the total number to 1,120 at April 30,
2001.

8



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##### Table of Contents



Net other expenses increased to $762,000 from $704,000 in the first half of
fiscal 2001, due primarily to a higher currency transaction loss by Ashworth UK
Ltd. in its transactions with Ashworth, Inc. and its European customers as well
as higher interest expense on the increased borrowing on the Companys line of
credit.

The effective income tax rate in the first half of fiscal 2001 was 40.0% of
pre-tax income as compared to 39.5% in the first half of fiscal 2000.

Capital Resources and Liquidity

The Companys primary sources of liquidity are expected to be its working
capital line of credit with its bank and other financial alternatives such as
leasing. The Company requires cash for expansion of its domestic and
international sales, capital expenditures and for general working capital
purposes. The Company has a $25,000,000 working capital line of credit with
Bank of America. The Company negotiated an amendment to the line of credit
agreement effective January 31, 2001. The amendment provides for a seasonal
increase in the line of credit to $35,000,000 for the periods from March 1,
2001 to June 1, 2001 and again from March 1, 2002 to May 1, 2002. At April 30,
2001, the Company had $19,775,000 outstanding against the line of credit as
compared to $5,855,000 outstanding at April 30, 2000. The increase in
borrowings was due to higher working capital requirements as well as increased
capital expenditures. The Company believes that it was in compliance with all
the covenants in its line of credit agreement with the bank as of April 30,
2001.

Trade receivables-net were $48,664,000 at April 30, 2001, an increase of
$23,086,000 from the balance at October 31, 2000. Because the Companys
business is seasonal, the receivables balance may more meaningfully be compared
to the balance of $37,464,000 at April 30, 2000, rather than the year-end
balance. The comparison to the second quarter of fiscal 2000 shows an increase
of 29.9% in net trade receivables. This increase is primarily due to many of
our green grass customers delaying their seasonal re-openings due to adverse
weather conditions resulting in later shipping dates during the quarter, as
well as the increase in wholesale net revenue.

Inventories decreased to $35,873,000 at April 30, 2001 from $37,526,000 at
October 31, 2000, a decrease of 4.4%. Compared to the inventories of
$34,344,000 at April 30, 2000, inventories have increased by 4.5%, which level
of inventories management believes is outpaced by current sales trends and
estimated future demand for its products.

During the first six months of fiscal 2001, the Company incurred capital
expenditures of $5,146,000 primarily for leasehold improvements and furniture
and fixtures for the new corporate office facilities, warehouse automation and
computer equipment. The Company consolidated its corporate offices into one
new facility from three buildings, one of which was leased through February 28,
2001.

Based upon current levels of operations, the Company expects that sufficient
cash flow will be generated from operations so that, combined with other
financing alternatives available, including cash on hand, borrowings under the
bank credit facility, and leasing alternatives, the Company will be able to
meet all of its debt service, capital expenditure, and working capital
requirements for at least the next twelve months.

During the first six months of fiscal 2001, share capital and capital in excess
of par value increased by $105,000. An increase of $322,000 due to the
issuance of 56,000 shares on exercise of options was offset by a decrease of
$217,000 as a result of the Company repurchasing 35,000 shares of its common
stock at an average price of $6.18 per share.

9



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##### Table of Contents



Derivatives

From time to time, the Company enters into short-term foreign exchange
contracts with its bank to hedge against the impact of currency fluctuations
between the U.S. dollar and the British pound. The contracts provide that, on
specified dates, the Company will sell the bank a specified number of British
pounds in exchange for a specified number of U.S. dollars. Additionally, the
Companys subsidiary in England enters into similar contracts with its bank to
hedge against currency fluctuations between the British pound and other
European currencies. Realized gains and losses on these contracts are
recognized in the same period as the hedged transactions. These contracts have
maturity dates that do not normally exceed 12 months. As of April 30, 2001, the
Company was not a party to any outstanding foreign exchange contracts.

New Accounting Standards

Effective November 1, 2000, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments
and Hedging Activities, which establishes accounting and reporting standards
for derivative instruments and hedging activities. SFAS No. 133 requires that
an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
Accounting for changes in the fair value of a derivative depends on the
intended use and resulting designation of the derivative. For derivatives
designated as hedges, changes in the fair value are either offset against the
change in fair value of the assets or liabilities through earnings or
recognized in other comprehensive income in the balance sheet until the hedged
item is recognized into earnings. For the six months ended April 30, 2001, the
Company did not engage in any hedging activities and was not a party to any
derivative instruments.

Cautionary Statements and Risk Factors

This report on Form 10-Q contains certain forward-looking statements, including
without limitation those regarding the Companys plans and expectations for
revenue growth, product lines, designs and seasonal collections, marketing
programs, foreign sourcing, cost controls, inventory levels and availability of
working capital. These forward looking statements may contain the words
believe, anticipate, expect, estimate, project, will be, will
continue, will likely result, or other similar words and phrases. Forward
looking statements and the Companys plans and expectations are subject to a
number of risks and uncertainties that could cause actual results to differ
materially from those anticipated, and the Companys business in general is
subject to certain risks that could affect the value of the Companys stock.
These risks include, but are not limited to, the following:



| |  | Demand for the Companys products may decrease significantly if the
economy weakens or if the popularity of golf decreases.                                                                                                                                                                                                                                                                                                   
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Like other apparel manufacturers, the Company must correctly
anticipate and help direct fashion trends within its industry. The
Companys results of operations could suffer if it fails to develop
fashions and styles that are well received in any season.                                                                                                                                                                 
| 
| |  | The market for golf apparel and sportswear is extremely competitive.
While the Company is currently a leader in the core green grass
market, it has several strong competitors that are better capitalized
and have stronger distribution systems. Outside the green grass
market, the Companys market share is not significant. Price
competition or industry consolidation could weaken the Companys
competitive position.

10



---



##### Table of Contents





| |  | Certain of the Companys competitors may be better positioned to
capitalize on the opportunities provided by e-commerce (i.e., revenues
and marketing over the Internet). This could weaken the Companys
competitive position.                                                                                                                                                                                                                                                                                                                                                                                                        
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | The Company relies on domestic and foreign contractors to manufacture
various products. If these contractors deliver goods late or fail to
meet the Companys quality standards, the Company could lose sales.                                                                                                                                                                                                                                                                                                                                                                                                                         
| 
| |  | There can be no assurance that the Companys future revenues will not
decline due to various factors, including potential consolidation of
the Companys core green grass market, which could result in
discounting, as well as possible general declines in economic
conditions from the levels recently experienced.                                                                                                                                                                                                                                                                                                                 
| 
| |  | Fluctuations in foreign currency exchange rates could affect the
Companys ability to sell its products in foreign markets and the
value in U.S. dollars of revenues made in foreign currencies.                                                                                                                                                                                                                                                                                                                                                                                                                                       
| 
| |  | The Company maintains high levels of inventory to support its Basics
program. Additional products, greater sales volume, and customer
trends toward increased at-once ordering may require increased
inventory. Disposal of excess prior season inventory is an ongoing
part of the Companys business, and writedowns of inventories may
materially impair the Companys financial performance in any period.
Particular inventories may be subject to multiple writedowns if the
Companys initial reserve estimates for inventory obsolescence or lack
of throughput prove to be too low. These risks increase as inventory
grows.




Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys long-term debt consists of notes payable with a total balance of
$3,969,000 at April 30, 2001. The debt bears interest at fixed rates ranging
from 7.3% to 11.0%, which approximates fair value based on current rates
offered for debt with similar risks and maturities. The Company also has
$19,775,000 outstanding on its revolving line of credit with interest charged
at the banks reference (prime) rate minus one-half of one percentage point.
The Company believes that an immediate 10% change in interest rates would not
have a material effect on the Companys financial results of operations.

The Companys ability to sell its products in foreign markets and the value of
the U.S. dollars of sales made in foreign currencies can be significantly
influenced by foreign currency fluctuations. A decrease in the value of
foreign currencies relative to the U.S. dollar could result in downward price
pressure for the Companys products or losses from currency exchange rates.
From time to time, the Company enters into short-term foreign exchange
contracts with its bank to hedge against the impact of currency fluctuations
between the U.S. dollar and the British pound. The contracts provide that, on
specified dates, the Company would sell the bank a specified number of British
pounds in exchange for a specified number of U.S. dollars. Additionally, the
Companys subsidiary in England enters into similar contracts with its bank to
hedge against currency fluctuations between the British pound and other
European currencies. Realized gains and losses on these contracts are
recognized in the same period as the hedged transaction. These contracts have
maturity dates that do not normally exceed 12 months. The Company will continue
to assess the benefits and risks of strategies to manage the risks presented by
currency exchange rate fluctuations. There is no assurance that any strategy
will be successful in avoiding losses due to exchange rate fluctuations, or
that the failure to manage currency risks effectively would not have a material
adverse effect on the Companys results of operations. As of April 30, 2001,
the Company had no outstanding foreign currency forward exchange contracts.

11



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##### Table of Contents






PART II

OTHER INFORMATION




Item 1 LEGAL PROCEEDINGS

On January 22, 1999, Milberg Weiss Bershad Hynes & Lerach LLP filed a class
action in the United States District Court for the Southern District of
California (U.S. District Court) on behalf of purchasers of the Companys
common stock during the period between September 4, 1997 and July 15, 1998
alleging violations of the Securities Exchange Act of 1934 by the Company and
certain of its officers and directors. The complaint alleged that, during the
class period, Company executives made positive statements about the Companys
business including statements concerning product demand, offshore production
and inventories. The complaint further alleged that the defendants knew these
statements to be false and concealed adverse conditions and trends in the
Companys business during the class period. The complaint sought to recover
unspecified damages on behalf of all purchasers of the Companys common stock
during the period September 4, 1997 to July 15, 1998. The Company was served a
copy of the complaint on January 26, 1999. Subsequently, two other suits were
served on the Company making similar allegations. The three actions have been
consolidated by order of the United States District Court and lead counsel for
the plaintiffs has been appointed. Per order of the Court, Plaintiffs filed
their Amended and Consolidated Complaint on December 17, 1999. On February 18,
2000, the Company filed a motion to dismiss. On May 22, 2000, the Court heard
the motion to dismiss and took it under submission. On July 18, 2000, the U.S.
District Court granted the motion to dismiss the Amended and Consolidated
Complaint as to all defendants. The Court granted plaintiffs sixty days to
amend the complaint if they chose to do so. On September 18, 2000, plaintiffs
served their Second Consolidated Amended Complaint (Second Amended Complaint)
making allegations and seeking remedies similar to those in the prior
complaint. On November 6, 2000, the Company filed its motion to dismiss the
Second Amended Complaint. The motion to dismiss was heard before the U.S.
District Court in February 2001. The matter is currently under submission. No
discovery has taken place in this matter to date.

In October 2000, former Ashworth sales representatives Regional Sales, Inc. and
Susan Stanley filed a complaint in San Diego Superior Court. They filed a
first amended complaint on November 29, 2000. By their amended complaint, the
plaintiffs allege, among other things, that the Company failed to pay
commissions and/or provide discounts on various sales, failed to honor an
agreement for plaintiffs to develop a corporate sales division, and will not
provide credit for the return of certain goods. Plaintiffs seek an accounting
and an unspecified amount of compensatory and punitive damages. On January 19,
2001, the Company filed an answer to the first amended complaint denying the
claims and asserting a number of defenses. On the same date, the Company filed
a cross-complaint against plaintiffs for failure to pay for goods. Discovery
in this case has commenced. A trial is set for August 2001.

The Company is party to other claims and litigation proceedings arising in the
normal course of business. Although the legal responsibility and financial
impact with respect to such other claims and litigation cannot currently be
ascertained, the Company does not believe that these other matters will result
in payment by the Company of monetary damages, net of any applicable insurance
proceeds, that, in the aggregate, would be material in relation to the
consolidated financial position or results of operations of the Company.

12



---



##### Table of Contents






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  NONE




Item 5           OTHER INFORMATION  NONE




Item 6           EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3(a)    |  | Certificate of Incorporation as filed March 19, 1987 with the Secretary
of State of Delaware, Amendment to Certificate of Incorporation as filed
August 3, 1987 and Amendment to Certificate of Incorporation as filed
April 26, 1991 (filed as Exhibit 3(a) to Registrants Registration
Statement dated February 21, 1992 (File No. 33-45078) and incorporated
herein by reference) and Amendment to Certificate of Incorporation as
filed April 6, 1995 (filed as Exhibit 3(a) to the Registrants Form 10-K
for year ended October 31, 1994 (File No. 0-18553) and incorporated herein
by reference).
|       
|       
|       
|       
|3(b)    |  | Amended and Restated Bylaws of the Registrant (filed as Exhibit 3.1 to
Registrants Current Report on Form 8-K filed on February 23, 2000 (File
No. 0-18553) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                      
|       
|       
|       
|       
|4(a)    |  | Specimen certificate for Common Stock, par value $.001, of the Registrant
(filed as Exhibit 4(a) to Registrants Registration Statement dated
November 4, 1987 (File No. 33-16714-D) and incorporated herein by
reference).                                                                                                                                                                                                                                                                                                                                                                              
|       
|       
|       
|       
|4(b)(1) |  | Specimen certificate for Options granted under the Amended and Restated
Nonqualified Stock Option Plan dated March 12, 1992 (filed as Exhibit 4(b)
to Registrants Form 10-K for the year ended October 31, 1993 (File No.
0-18553) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|4(b)(2) |  | Specimen certificate for Options granted under the Founders Stock
Option Plan dated November 6, 1992 (filed as Exhibit 4(b)(2) to
Registrants Form 10-K for the year ended October 31, 1993 (File No.
0-18553) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                   
|       
|       
|       
|       
|4(c)    |  | Specimen certificate for Options granted under the Incentive Stock Option
Plan dated June 15, 1993 (filed as Exhibit 4(c) to Registrants Form 10-K
for the year ended October 31, 1993 (File No. 0-18553) and incorporated
herein by reference).                                                                                                                                                                                                                                                                                                                                                        
|       
|       
|       
|       
|4(d)    |  | Rights Agreement dated as of October 6, 1998 as amended on February 22,
2000 by and between Ashworth, Inc. and American Securities Transfer &
Trust, Inc. (filed as Exhibit 4.1 to Registrants Form 8-K filed on March
14, 2000 (File No. 0-18553) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10(a)*  |  | Personal Services Agreement and Acknowledgement of Termination of
Executive Employment effective December 31, 1998 by and between Ashworth,
Inc. and Gerald W. Montiel (filed as Exhibit 10(b) to Registrants Form
10-K for the year ended October 31, 1998 (File No. 0-18553) and
incorporated herein by reference).                                                                                                                                                                                                                                                                                   

13



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##### Table of Contents



|          |  |                                                                                                                                                                                                                                                                                                                                                                        
|--------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10(b)*    |  | Amendment to Personal Services Agreement effective January 1, 1999 by
and between Ashworth, Inc. and Gerald W. Montiel (filed as Exhibit 10(c)
to Registrants Form 10-K for the year ended October 31, 1998 (File No.
0-18553) and incorporated herein by reference).                                                                                                 
|         
|         
|         
|         
|10(c)*    |  | Promotion Agreement effective June 1, 1998 by and among Ashworth, Inc.,
James W. Nantz, III and Nantz Communications, Inc. (filed as Exhibit 10(d)
to Registrants Form 10-K for the year ended October 31, 1998 (File No.
0-18553) and incorporated herein by reference).                                                                                             
|         
|         
|         
|         
|10(d)*    |  | First Amended and Restated Executive Employment Agreement effective
February 22, 1999 by and between Ashworth, Inc. and Randall L. Herrel, Sr.
(filed as Exhibit 10(a) to Registrants Form 10-Q for the quarter ended
April 30, 1999 (File No. 0-18553) and incorporated herein by reference).                                                                        
|         
|         
|         
|         
|10(e)*    |  | Personal Services Agreement and Acknowledgement of Termination of
Executive Employment effective May 31, 1999 by and between Ashworth, Inc.
and A. John Newman (filed as Exhibit 10(b) to Registrants Form 10-Q for
the quarter ended April 30, 1999 (File No. 0-18553) and incorporated
herein by reference).                                                        
|         
|         
|         
|         
|10(f)*    |  | Employment Agreement effective December 15, 2000 by and between
Ashworth, Inc. and Terence W. Tsang. (filed as Exhibit 10(f) to
Registrants Form 10-Q for the quarter ended January 31, 2001 (File No.
0-18553) and incorporated herein by reference).                                                                                                                
|         
|         
|         
|         
|10(g)*    |  | Offer and Acceptance of Executive Employment effective June 1, 1999 by
and between Ashworth, Inc. and Suzi Chauvel (filed as Exhibit 10(a) to
Registrants Form 10-Q for the quarter ended July 31, 1999 (File No.
0-18553) and incorporated herein by reference).                                                                                                     
|         
|         
|         
|         
|10(h)*    |  | Founders Stock Option Plan dated November 6, 1992 (filed as Exhibit
10(g) to Registrants Form 10-K for the year ended October 31, 1993 (File
No. 0-18553) and incorporated herein by reference).                                                                                                                                                                      
|         
|         
|         
|         
|10(i)*    |  | Amended and Restated Nonqualified Stock Option Plan dated November 1,
1996 (filed as Exhibit 10(i) to Registrants Form 10-K for the year ended
October 31, 2000 (File No. 0-18553) and incorporated herein by reference).                                                                                                                                             
|         
|         
|         
|         
|10(j)*    |  | Amended and Restated Incentive Stock Option Plan dated November 1, 1996
(filed as Exhibit 10(j) to Registrants Form 10-K for the year ended
October 31, 2000 (File No. 0-18553) and incorporated herein by reference).                                                                                                                                                
|         
|         
|         
|         
|10(k)*    |  | Amended and Restated 2000 Equity Incentive Plan dated December 14, 1999
adopted by the stockholders on March 24, 2000 (filed as Exhibit 4.1 to
Registrants Form S-8 filed on December 12, 2000 (File No. 333-51730) and
incorporated herein by reference).                                                                                                            
|         
|         
|         
|         
|10(l)(1)* |  | Business Loan Agreement dated June 1, 2000, between Ashworth, Inc.,
Ashworth Store I, Inc., Ashworth Store II, Inc., Ashworth International,
Inc., Ashworth U.K. Ltd. and Bank of America, N. A. expiring May 1, 2002.
(filed as Exhibit 10(m) to Registrants Form 10-Q for the quarter ended
April 30, 2000 (File No. 0-18553) and incorporated herein by reference).
|         
|         
|         
|         
|10(l)(2)* |  | Amendment to the Business Loan Agreement dated June 1, 2000,
effective January 31, 2001, between Ashworth, Inc., Ashworth Store I,
Inc., Ashworth Store II, Inc., Ashworth                                                                                                                                                                                             

14



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##### Table of Contents



|       |  |                                                                                                                                                                                                                                                                                                           
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  | International, Inc., Ashworth U.K.
Ltd. and Bank of America, N. A. expiring May 1, 2002. (filed as Exhibit
10(l)(2) to Registrants Form 10-Q for the quarter ended January 31, 2001
(File No. 0-18553) and incorporated herein by reference).                                                            
|      
|      
|      
|      
|10(m)* |  | Change in Control Agreement dated November 1, 2000 by and between
Ashworth, Inc. and Randall L. Herrel, Sr. (filed as Exhibit 10(m) to
Registrants Form 10-K for the year ended October 31, 2000 (File No.
0-18553) and incorporated herein by reference).                                               
|      
|      
|      
|      
|10(n)* |  | Change in Control Agreement dated November 1, 2000 by and between
Ashworth, Inc. and Terence W. Tsang (filed as Exhibit 10(n) to
Registrants Form 10-K for the year ended October 31, 2000 (File No.
0-18553) and incorporated herein by reference).                                                     
|      
|      
|      
|      
|10(o)* |  | Promotion Agreement effective November 1, 1999 by and between Ashworth,
Inc. and Fred Couples (filed as Exhibit 10(o) to Registrants Form 10-K
for the year ended October 31, 2000 (File No. 0-18553) and incorporated
herein by reference).                                                             
|      
|      
|      
|      
|10(p)* |  | Amended and Restated Offer and Acceptance of Executive Employment
effective February 1, 2000 by and between Ashworth, Inc. and Nicoletta
Larucci-Miele. (filed as Exhibit 10(p) to Registrants Form 10-Q for the
quarter ended January 31, 2001 (File No. 0-18553) and incorporated herein
by reference).
|      
|      
|      
|      
|10(q)* |  | Offer and Acceptance of Executive Employment effective November 29, 1999
by and between Ashworth, Inc. and Anthony Wilkinson. (filed as Exhibit
10(q) to Registrants Form 10-Q for the quarter ended January 31, 2001
(File No. 0-18553) and incorporated herein by reference).                          
|      
|(b)    |  | Reports on Form 8-K.  NONE.                                                                                                                                                                                                                                                                              



|* |  | Compensation plan, contract or agreement required to be filed as an
Exhibit pursuant to applicable rules of the Securities and Exchange
Commission.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                    |  |                                                                                         
|------------------- |  | ----------------------------------------------------------------------------------------
|                    |  | ASHWORTH, INC                                                                           
|                   
|                   
|                   
|                   
|                    |  | (Registrant)                                                                            
|                   
|                   
|                   
|                   
|                   
|                   
|Date: June 14, 2001 |  | By: /s/ Randall L. Herrel, Sr.                                                          
|                    |  |                                                                                         
|                    |  | Randall L. Herrel, Sr.                                                                  
|                   
|                   
|                   
|                   
|                    |  | Chairman, President and
Chief Executive Officer                                         
|                   
|                   
|                   
|                   
|                   
|                   
|Date: June 14, 2001 |  | By: /s/ Terence W. Tsang                                                                
|                    |  |                                                                                         
|                    |  | Terence W. Tsang                                                                        
|                   
|                   
|                   
|                   
|                    |  | Executive Vice President,
Chief Operating Officer,
Chief Financial Officer and
Treasurer

16