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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, 2002

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 11, 2002
|                            
|$.001 par value Common Stock |  |                              | 13,286,787 | 





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|                          |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|                          |                                                                                               | 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               
|EXHIBIT 10(J)(2)         



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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 |                                                      |  | 7    |   
|                                                                                             
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |                                                      |  | 13   |   
|                                                                                             
|Part II. Other Information                                                                    |                                                      |  |      |   
|                                                                                             
|Item 1. Legal Proceedings                                                                     |                                                      |  | 13   |   
|                                                                                             
|Item 2. Changes in Securities and Use of Proceeds                                             |                                                      |  | 14   |   
|                                                                                             
|Item 3. Defaults Upon Senior Securities                                                       |                                                      |  | 14   |   
|                                                                                             
|Item 4. Submission of Matters to a Vote of Security Holders                                   |                                                      |  | 14   |   
|                                                                                             
|Item 5. Other Information                                                                     |                                                      |  | 14   |   
|                                                                                             
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                      |  | 14   |   
|                                                                                             
|                                                                                              | Signatures                                           |  |      | 17 | 

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ASHWORTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                         |                                                |                            |                                          |                                            |            |             |             |             |            |            |            | 
|---------------------------------------- | ---------------------------------------------- | -------------------------- | ---------------------------------------- | ------------------------------------------ | ---------- | ----------- | ----------- | ----------- | ---------- | ---------- | ---------- | 
|                                         |                                                |                            |                                          |                                            |            | April 30,   |             | October 31,
|                                         |                                                |                            |                                          |                                            |            | 2002        |             | 2001       
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|                                         |                                                |                            |                                          |                                            |            | (UNAUDITED) |             | (AUDITED)  
|ASSETS                                   |                                                |                            |                                          |                                            |            |             |             |            
|Current assets:                          |                                                |                            |                                          |                                            |            |             |             |            
|                                         | Cash and cash equivalents                      |                            | $                                        | 1,918,000                                  |            |             | $           | 1,055,000   |           
|                                         | Accounts receivable  trade, net               |                            |                                          | 44,787,000                                 |            |             |             | 26,817,000  |           
|                                         | Accounts receivable  other                    |                            |                                          | 1,585,000                                  |            |             |             | 2,199,000   |           
|                                         | Inventories, net                               |                            |                                          | 33,788,000                                 |            |             |             | 35,841,000  |           
|                                         | Income tax refund receivable                   |                            |                                          |                                           |            |             |             | 941,000     |           
|                                         | Other current assets                           |                            |                                          | 4,176,000                                  |            |             |             | 2,359,000   |           
|                                         | Deferred income tax asset                      |                            |                                          | 1,833,000                                  |            |             |             | 1,833,000   |           
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|                                         |                                                | Total current assets       |                                          |                                            | 88,087,000 |             |             |             | 71,045,000 |           
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|Property, plant and equipment, at cost   |                                                |                            | 37,418,000                               |                                            |            |             | 36,507,000  |            
|                                         | Less accumulated depreciation and amortization |                            |                                          | (19,384,000                                | )          |             |             | (17,862,000 | )         
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|                                         |                                                |                            | Total property, plant and equipment, net |                                            |            | 18,034,000  |             |             |            | 18,645,000 |           
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|Other assets                             |                                                |                            | 3,808,000                                |                                            |            |             | 3,966,000   |            
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|                                         |                                                |                            |                                          | Total assets                               |            | $           | 109,929,000 |             |            | $          | 93,656,000 | 
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|LIABILITIES AND STOCKHOLDERS EQUITY     |                                                |                            |                                          |                                            |            |             |             |            
|Current liabilities:                     |                                                |                            |                                          |                                            |            |             |             |            
|                                         | Note payable                                   |                            | $                                        | 13,205,000                                 |            |             | $           | 5,950,000   |           
|                                         | Current portion of long-term debt              |                            |                                          | 802,000                                    |            |             |             | 659,000     |           
|                                         | Accounts payable  trade                       |                            |                                          | 7,115,000                                  |            |             |             | 4,203,000   |           
|                                         | Income taxes payable                           |                            |                                          | 1,108,000                                  |            |             |             |            |           
|                                         | Accrued liabilities                            |                            |                                          | 5,056,000                                  |            |             |             | 3,306,000   |           
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|                                         |                                                | Total current liabilities  |                                          |                                            | 27,286,000 |             |             |             | 14,118,000 |           
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|Long  term debt, net of current portion |                                                |                            | 3,052,000                                |                                            |            |             | 3,166,000   |            
|Deferred income tax liability            |                                                |                            | 752,000                                  |                                            |            |             | 752,000     |            
|Other long term liabilities              |                                                |                            | 518,000                                  |                                            |            |             | 626,000     |            
|Stockholders equity:                    |                                                |                            |                                          |                                            |            |             |             |            
|                                         | Common stock                                   |                            |                                          | 13,000                                     |            |             |             | 13,000      |           
|                                         | Capital in excess of par value                 |                            |                                          | 38,696,000                                 |            |             |             | 37,959,000  |           
|                                         | Retained earnings                              |                            |                                          | 40,601,000                                 |            |             |             | 38,069,000  |           
|                                         | Accumulated other comprehensive loss           |                            |                                          | (989,000                                   | )          |             |             | (1,047,000  | )         
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|                                         |                                                | Total stockholders equity |                                          |                                            | 78,321,000 |             |             |             | 74,994,000 |           
|                                         |                                                |                            |                                          |                                            |            |             |             |            
|                                         |                                                |                            |                                          | Total liabilities and stockholders equity |            | $           | 109,929,000 |             |            | $          | 93,656,000 | 
|                                         |                                                |                            |                                          |                                            |            |             |             |            

See accompanying notes to condensed consolidated financial statements.

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

|                                             |                                                                     |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |            |  
|-------------------------------------------- | ------------------------------------------------------------------- | - | ---------------------------- | ---------- | -------------------------- | - | ---------- | ---------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                                             |                                                                     |   | Three months ended April 30, |            | Six months ended April 30,
|                                             |                                                                     |   |                              |            |                           
|                                             |                                                                     |   | 2002                         |            | 2001                       |   | 2002       |            | 2001
|                                             |                                                                     |   |                              |            |                            |   |            |            |     
|Net revenues                                 |                                                                     | $ | 42,871,000                   |            |                            | $ | 46,908,000 |            |      | $ | 62,682,000 |            |   | $ | 74,614,000 |           
|Cost of goods sold                           |                                                                     |   | 25,266,000                   |            |                            |   | 27,655,000 |            |      |   | 38,059,000 |            |   |   | 45,415,000 |           
|                                             |                                                                     |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Gross profit                                                        |   |                              | 17,605,000 |                            |   |            | 19,253,000 |      |   |            | 24,623,000 |   |   |            | 29,199,000 |  
|Selling, general and
administrative expenses |                                                                     |   | 11,547,000                   |            |                            |   | 12,047,000 |            |      |   | 20,044,000 |            |   |   | 21,117,000 |           
|                                             |                                                                     |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Income from operations                                              |   |                              | 6,058,000  |                            |   |            | 7,206,000  |      |   |            | 4,579,000  |   |   |            | 8,082,000  |  
|Other income (expense):                      |                                                                     |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Interest income                                                     |   |                              | 25,000     |                            |   |            | 6,000      |      |   |            | 32,000     |   |   |            | 8,000      |  
|                                             | Interest expense                                                    |   |                              | (245,000   | )                          |   |            | (449,000   | )    |   |            | (396,000   | ) |   |            | (780,000   | )
|                                             | Other income (expense)                                              |   |                              | (8,000     | )                          |   |            | (78,000    | )    |   |            | 5,000      |   |   |            | 10,000     |  
|                                             |                                                                     |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Total other expense                                                 |   |                              | (228,000   | )                          |   |            | (521,000   | )    |   |            | (359,000   | ) |   |            | (762,000   | )
|                                             | Income before provision for
income                      tax expense |   |                              | 5,830,000  |                            |   |            | 6,685,000  |      |   |            | 4,220,000  |   |   |            | 7,320,000  |  
|Provision for income tax expense             |                                                                     |   | 2,332,000                    |            |                            |   | 2,674,000  |            |      |   | 1,688,000  |            |   |   | 2,928,000  |           
|                                             |                                                                     |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Net income                                                          |   | $                            | 3,498,000  |                            |   | $          | 4,011,000  |      |   | $          | 2,532,000  |   |   | $          | 4,392,000  |  
|                                             |                                                                     |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|Net income per share                         |                                                                     |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|Basic:                                       |                                                                     |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Weighted average shares
outstanding                                 |   |                              | 13,222,000 |                            |   |            | 13,149,000 |      |   |            | 13,191,000 |   |   |            | 13,133,000 |  
|                                             | Net income per share                                                |   | $                            | 0.26       |                            |   | $          | 0.31       |      |   | $          | 0.19       |   |   | $          | 0.33       |  
|Diluted:                                     |                                                                     |   |                              |            |                            |   |            |            |      |   |            |            |   |   |            |           
|                                             | Weighted average shares
outstanding                                 |   |                              | 13,667,000 |                            |   |            | 13,584,000 |      |   |            | 13,491,000 |   |   |            | 13,510,000 |  
|                                             | Net income per share                                                |   | $                            | 0.26       |                            |   | $          | 0.30       |      |   | $          | 0.19       |   |   | $          | 0.33       |  

See accompanying notes to condensed consolidated financial statements.

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

|                                               |                                                        |   |                            |             |      |   |             |             |  
|---------------------------------------------- | ------------------------------------------------------ | - | -------------------------- | ----------- | ---- | - | ----------- | ----------- | -
|                                               |                                                        |   | Six months ended April 30,
|                                               |                                                        |   |                           
|                                               |                                                        |   | 2002                       |             | 2001
|                                               |                                                        |   |                            |             |     
|Cash flows from operating activities:          |                                                        |   |                            |             |      |   |             |            
|Net cash used in operating activities          |                                                        | $ | (5,984,000                 | )           |      | $ | (12,654,000 | )          
|Cash flows from investing activities:          |                                                        |   |                            |             |      |   |             |            
|                                               | Purchases of property and equipment                    |   |                            | (840,000    | )    |   |             | (5,146,000  | )
|                                               | Proceeds from sale of property and equipment           |   |                            |            |      |   |             | 8,000       |  
|                                               |                                                        |   |                            |             |      |   |             |            
|Net cash used in investing activities          |                                                        |   | (840,000                   | )           |      |   | (5,138,000  | )          
|Cash flows from financing activities:          |                                                        |   |                            |             |      |   |             |            
|                                               | Principal payments on capital
lease obligations        |   |                            | (54,000     | )    |   |             | (5,000      | )
|                                               | Borrowings on line of credit                           |   |                            | 21,100,000  |      |   |             | 32,275,000  |  
|                                               | Payments on line of credit                             |   |                            | (13,845,000 | )    |   |             | (13,990,000 | )
|                                               | Proceeds from long-term borrowing                      |   |                            |            |      |   |             | 3,000,000   |  
|                                               | Principal payments on notes payable
and long-term debt |   |                            | (309,000    | )    |   |             | (3,011,000  | )
|                                               | Payments for repurchase of common stock                |   |                            |            |      |   |             | (217,000    | )
|                                               | Proceeds from issuance of common stock                 |   |                            | 737,000     |      |   |             | 322,000     |  
|                                               |                                                        |   |                            |             |      |   |             |            
|Net cash provided by financing activities      |                                                        |   | 7,629,000                  |             |      |   | 18,374,000  |            
|Effect of exchange rate changes on cash        |                                                        |   | 58,000                     |             |      |   | (156,000    | )          
|                                               |                                                        |   |                            |             |      |   |             |            
|Net increase in cash and cash equivalents      |                                                        |   | 863,000                    |             |      |   | 426,000     |            
|Cash and cash equivalents, beginning of period |                                                        |   | 1,055,000                  |             |      |   | 1,231,000   |            
|                                               |                                                        |   |                            |             |      |   |             |            
|Cash and cash equivalents, end of period       |                                                        | $ | 1,918,000                  |             |      | $ | 1,657,000   |            
|                                               |                                                        |   |                            |             |      |   |             |            

See accompanying notes to condensed consolidated financial statements.

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ASHWORTH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2002

NOTE 1  Basis of Presentation.

In the opinion of management, the accompanying condensed consolidated
balance sheets and related interim condensed consolidated statements
of operations 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 accounting
principles generally accepted in the United States of America 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 disclosures normally included in
financial statements has been condensed or omitted in accordance with
the rules and regulations of the Securities and Exchange Commission
(SEC). 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, 2001, filed with the Securities
and Exchange Commission on January 28, 2002.

NOTE 2  Inventories.

Inventories consisted of the following at April 30, 2002 and October 31, 2001:

|                       |  |           |            |             |  |   |            | 
|---------------------- |  | --------- | ---------- | ----------- |  | - | ---------- | 
|                       |  | April 30, |            | October 31,
|                       |  | 2002      |            | 2001       
|                       |  |           |            |            
|Raw materials          |  | $         | 459,000    |             |  | $ | 449,000    | 
|Work in process        |  |           |           |             |  |   | 107,000    | 
|Finished goods         |  |           | 33,329,000 |             |  |   | 35,285,000 | 
|                       |  |           |            |             |  |   |            | 
|Total inventories, net |  | $         | 33,788,000 |             |  | $ | 35,841,000 | 
|                       |  |           |            |             |  |   |            | 

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 common
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:

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|                                                                                                      |               |   |                              |         |                            |   |            |         |      |   |            |         |  |   |            |         | 
|----------------------------------------------------------------------------------------------------- | ------------- | - | ---------------------------- | ------- | -------------------------- | - | ---------- | ------- | ---- | - | ---------- | ------- |  | - | ---------- | ------- | 
|                                                                                                      |               |   | Three months ended April 30, |         | Six months ended April 30,
|                                                                                                      |               |   |                              |         |                           
|                                                                                                      |               |   | 2002                         |         | 2001                       |   | 2002       |         | 2001
|                                                                                                      |               |   |                              |         |                            |   |            |         |     
|Numerator:                                                                                            |               |   |                              |         |                            |   |            |         |      |   |            |         |  |   |            |        
|Net income
numerator for basic and diluted
income per share  income
available to common stockholders |               | $ | 3,498,000                    |         |                            | $ | 4,011,000  |         |      | $ | 2,532,000  |         |  | $ | 4,392,000  |        
|                                                                                                      |               |   |                              |         |                            |   |            |         |      |   |            |         |  |   |            |        
|Denominator:                                                                                          |               |   |                              |         |                            |   |            |         |      |   |            |         |  |   |            |        
|Denominator for basic income
per share  weighted average
shares                                      |               |   | 13,222,000                   |         |                            |   | 13,149,000 |         |      |   | 13,191,000 |         |  |   | 13,133,000 |        
|Effect of dilutive securities:                                                                        |               |   |                              |         |                            |   |            |         |      |   |            |         |  |   |            |        
|                                                                                                      | stock options |   |                              | 445,000 |                            |   |            | 435,000 |      |   |            | 300,000 |  |   |            | 377,000 | 
|                                                                                                      |               |   |                              |         |                            |   |            |         |      |   |            |         |  |   |            |        
|Denominator for diluted income
per share  adjusted weighted
average shares and assumed
conversions   |               |   | 13,667,000                   |         |                            |   | 13,584,000 |         |      |   | 13,491,000 |         |  |   | 13,510,000 |        
|                                                                                                      |               |   |                              |         |                            |   |            |         |      |   |            |         |  |   |            |        
|Basic net income per share                                                                            |               | $ | 0.26                         |         |                            | $ | 0.31       |         |      | $ | 0.19       |         |  | $ | 0.33       |        
|Diluted net income per share                                                                          |               | $ | 0.26                         |         |                            | $ | 0.30       |         |      | $ | 0.19       |         |  | $ | 0.33       |        

For the quarters ended April 30, 2002 and 2001, the diluted weighted
average shares outstanding computation excludes 710,000 and 1,134,000
options whose impact would have an anti-dilutive effect, respectively.
For the six-month periods ended April 30, 2002 and 2001, the diluted
weighted average shares outstanding computation excludes 1,173,000 and
1,139,000 options whose impact would have an anti-dilutive effect,
respectively.

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, 2002 and
2001, total comprehensive income was $3,862,000 and $3,744,000,
respectively. For the six-month periods ended April 30, 2002 and
2001, total comprehensive income was $2,590,000 and $4,236,000,
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. The action was subsequently consolidated with
two similar suits and plaintiffs filed their Amended and Consolidated
Complaint on December 17, 1999. Upon the Companys motion, the U.S.
District Court dismissed the Complaint with leave to amend on July 18,
2000. On September 18, 2000, plaintiffs served their Second
Consolidated Amended Complaint (Second Amended Complaint). On
November 6, 2000, the Company filed its motion to dismiss the Second
Amended Complaint, which the U.S. District Court granted, in part, and
denied, in part. The remaining portions of the Second Amended
Complaint allege that, among other things, during the class period and
in violation of the Securities Exchange Act of 1934, the Companys
financial statements, as reported, did not conform to generally
accepted accounting principles with respect to revenues and

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inventory levels. It further alleges that certain Company executives
made false or misleading statements or omissions concerning product
demand and that two former executives engaged in insider trading. The
plaintiffs seek unspecified damages. The parties are currently in the
early stages of the discovery process.

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 revenues
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 months ended April 30, |            | Six months ended April 30,
|                        |               |       |   |                              |            |                           
|                        |               |       |   | 2002                         |            | 2001                       |   | 2002       |            | 2001
|                        |               |       |   |                              |            |                            |   |            |            |     
|Net Revenues:           |               |       |   |                              |            |                            |   |            |            |      |   |            |            |  |   |           
|                        | Domestic      |       | $ | 36,447,000                   |            |                            | $ | 40,278,000 |            |      | $ | 54,024,000 |            |  | $ | 64,406,000 |           
|                        | International |       |   | 6,424,000                    |            |                            |   | 6,630,000  |            |      |   | 8,658,000  |            |  |   | 10,208,000 |           
|                        |               | Total |   | $                            | 42,871,000 |                            |   | $          | 46,908,000 |      |   | $          | 62,682,000 |  |   | $          | 74,614,000 | 
|                        |               |       |   |                              |            |                            |   |            |            |      |   |            |            |  |   |           
|Income From Operations: |               |       |   |                              |            |                            |   |            |            |      |   |            |            |  |   |           
|                        | Domestic      |       | $ | 5,080,000                    |            |                            | $ | 6,541,000  |            |      | $ | 4,116,000  |            |  | $ | 7,718,000  |           
|                        | International |       |   | 978,000                      |            |                            |   | 665,000    |            |      |   | 463,000    |            |  |   | 364,000    |           
|                        |               | Total |   | $                            | 6,058,000  |                            |   | $          | 7,206,000  |      |   | $          | 4,579,000  |  |   | $          | 8,082,000  | 
|                        |               |       |   |                              |            |                            |   |            |            |      |   |            |            |  |   |           

|              |               |       |   |            |             |             |   |            |            | 
|------------- | ------------- | ----- | - | ---------- | ----------- | ----------- | - | ---------- | ---------- | 
|              |               |       |   | April 30,  |             | October 31,
|              |               |       |   | 2002       |             | 2001       
|              |               |       |   |            |             |            
|Total Assets: |               |       |   |            |             |             |   |           
|              | Domestic      |       | $ | 94,320,000 |             |             | $ | 79,878,000 |           
|              | International |       |   | 15,609,000 |             |             |   | 13,778,000 |           
|              |               | Total |   | $          | 109,929,000 |             |   | $          | 93,656,000 | 
|              |               |       |   |            |             |             |   |           

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

In response to the SECs Release Numbers 33-8040, Cautionary Advice Regarding
Disclosure About Critical Accounting Policies and 33-8056, Commission
Statement About Managements Discussion and Analysis of Financial Condition and
Results of Operations, the Company has identified the following critical
accounting policies that affect its more significant judgments and estimates
used in the preparation of its consolidated financial statements.

The Companys business is seasonal; therefore, the current balance sheet
balances at April 30, 2002 may more meaningfully be compared to the balances at
April 30, 2001 rather than to the balances at October 31, 2001.

Sales Returns and Other Allowances.Management must make estimates of
potential future product returns related to current period product revenues.
Management analyzes historical returns, current economic trends, changes in
customer demand, and sell-through of our products when evaluating the adequacy
of the sales returns and other allowances. Significant management judgments
and estimates must be made and used in connection with establishing the sales
returns and other allowances in any accounting period. Material differences
may result in the amount and timing of our revenues for any period if
management makes different judgments or utilizes different estimates. The
reserves for sales returns and other allowances amounted to $447,000 at April
30, 2002 compared to $716,000 at October 31, 2001 and $590,000 at April 30,
2001.

Allowance for Doubtful Accounts.Management must also make estimates of the
uncollectability of accounts receivable. The Company maintains an allowance
for doubtful accounts for estimated losses resulting from the inability of its
customers to make required payments, which results in bad debt expense.
Management determines the adequacy of this allowance by analyzing historical
bad debts, continually evaluating individual customer receivables considering
the customers financial condition and current economic conditions. At April
30, 2002, approximately $2,000,000 of over-90-day receivables was attributable
to a national retailer which is also obligated to the Company on an unsecured
promissory note with a principal balance of approximately $2,500,000. If the financial condition of this or our other significant customers
were to deteriorate, resulting in the impairment of their ability to make
payments, material additional allowances for doubtful accounts may be required.
Our trade accounts receivable balance was $44.8 million, net of allowances for
doubtful accounts of $1.4 million at April 30, 2002 as compared to the balance
of $26.8 million, net of allowances for doubtful accounts of $1.4 million at
October 31, 2001. At April 30, 2001, the trade accounts receivable balance was
$48.7 million, net of allowances for doubtful accounts of $1.1 million.

Inventory.The Company writes down its inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of inventory
and the estimated net realizable value based on assumptions about age of the
inventory, future demand and market conditions. This process provides for a
new basis for the inventory until it is sold. If actual market conditions are
less favorable than those projected by management, additional inventory
write-downs may be required. Our inventory balance was $33.8 million, net of
inventory write-downs of $845,000 at April 30, 2002 as compared to an inventory
balance of $35.8 million, net of inventory write-downs of $955,000 at October
31, 2001. At April 30, 2001, the inventory balance was $35.9 million, net of
inventory write-downs of $1.5 million.

Asset Purchase Credits.In November 2000, the Company entered into an
agreement with a third party whereby inventory was exchanged for future asset
purchase credits (APCs), which may be utilized by the Company to purchase
future goods and services over a four-year period. The original value of the

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inventory exchanged (at cost) was $1.4 million resulting in $1.4 million in
future APCs. The Company has entered into contracts with several third party
suppliers who have agreed to accept these APCs, in part, as payment for goods
and services. From time to time the Company may enter into additional
contracts with such third party suppliers to use the APCs. At April 30, 2002,
the Company had $1.1 million of the APCs remaining and management expects to
fully utilize them over the remaining life of the contract.

The Company operates in an industry that is highly competitive and must
accurately anticipate fashion trends and consumer demand for its products. The
following are important factors, among others, that could cause actual results
to differ materially from the projected results contained in certain
forward-looking statements in this report.



| |  |  | Continued weak global economic conditions could adversely impact
the Companys revenues and growth rate.                        
| | - |  | --------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The competitive environment in the golf apparel industry places
pressure on revenues, gross margins and market share.           
|
| |  |  | Erosion of the financial condition of customers could adversely
affect the Companys business and collectability of receivables.

For additional information, see Cautionary Statements and Risk Factors,
below.

At April 30, 2002 and 2001, the Company did not have any relationships with
unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes. In addition, the Company
does not engage in trading activities involving non-exchange traded contracts.
As such, the Company is not exposed to any financing, liquidity, market or
credit risk that could arise if the Company had engaged in such relationships.

Results of Operations

Second quarter 2002 compared to second quarter 2001

Consolidated net revenues for the second quarter of fiscal 2002 decreased 8.6%
to $42,871,000 from $46,908,000 for the same period in 2001. Net revenues for
the domestic segment decreased 9.5% to $36,447,000 from $40,278,000 in the
second quarter of 2001, primarily due to lower revenues from the Companys golf
related and retail distribution channels partially offset by the initial
shipments of Callaway Golf apparel. During the second quarter of fiscal year
2002 the Companys net revenues continued to be impacted by several external
factors including broad economic weakness adversely affecting the Companys
retail division and at-once orders from its green grass accounts, and weakness
in the Companys resort business resulting from the effects of 9/11. Net
revenues for the international segment decreased 3.1% to $6,424,000 from
$6,630,000 for the same period of the prior fiscal year. The decrease was
primarily due to lower revenues in the Pacific Rim countries resulting from
their soft economies as well as a stronger US dollar. This decrease was
partially offset by increased revenues in the Companys U.K. subsidiary and
Canadian divisions.

Consolidated gross margin for the quarter increased slightly to 41.1% as
compared to 41.0% a year earlier. This improvement was primarily due to
improved sourcing, improved inventory management as well as the Companys
ability to maintain price. The Company continues to benefit from operational
initiatives designed to improve its execution and profitability. These factors
enabled the Company to maintain gross

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margins despite the negative leverage resulting from fixed expenses being
spread over lower net revenues.

Consolidated selling, general, and administrative (SG&A) expenses decreased
4.2% to $11,547,000 for the second quarter of fiscal 2002 from $12,047,000 for
the same period in fiscal 2001. This decline was a result of cost savings from
operational initiatives implemented in the second half of fiscal 2001,
including a workforce reduction of approximately 14%. As a percentage of net
revenues, SG&A expenses increased to 26.9% of net revenues for the second
quarter of fiscal 2002 compared to 25.7% in the second quarter of fiscal 2001,
reflecting fixed expenses being spread over a lower net revenues base.

Total other expenses decreased to $228,000 for the second quarter of fiscal
2002 from $521,000 in the second quarter of fiscal 2001, due primarily to lower
interest expense on reduced borrowing on the Companys line of credit as well
as lower currency transaction losses incurred by the Companys Canadian
division.

The effective income tax rate for the second quarter of fiscal 2002 remained at
40.0% of pre-tax income.

Six months ended April 30, 2002 compared to six months ended April 30, 2001

Consolidated net revenues for the first half of fiscal 2002 decreased 16.0% to
$62,682,000 from $74,614,000 for the same period in fiscal 2001. Net revenues
for the domestic segment decreased 16.1% to $54,024,000 from $64,406,000 in the
first half of fiscal 2001, primarily due to lower revenues from the Companys
golf related and retail distribution channels partially offset by the initial
shipments of Callaway Golf apparel product line. Net revenues for the
international segment decreased 15.2% to $8,658,000 from $10,208,000 for the
same period of the prior fiscal year. The decrease was primarily due to the
lower revenues from the Pacific Rim countries and Europe partially offset by
increased revenues in Canada.

Consolidated gross margin for the first six months of fiscal 2002 increased
slightly to 39.3% as compared to 39.1% in the first half of fiscal 2001. The
improvement was primarily due to improved sourcing as well as improved
inventory management partially offset by the negative leverage caused by lower
revenues.

Consolidated SG&A expenses decreased 5.1% to $20,044,000 for the first half of
fiscal 2002 from $21,117,000 for the same period in fiscal 2001. As a
percentage of revenues, SG&A expenses increased to 32.0% of net revenues for
the first six months of fiscal 2002, as compared to 28.3% for the first six
months of fiscal 2001. This increase as a percentage of net revenues was
primarily due to the fixed expenses being spread over a lower net revenues base
as well as the additional expenses incurred in launching the Callaway Golf
apparel product line.

Total other expenses decreased to $359,000 from $762,000 in the first half of
fiscal 2002, due primarily to lower interest expense on reduced borrowing on
the Companys line of credit.

The effective income tax rate in the first half of fiscal 2002 remained at
40.0% of pre-tax income.

Capital Resources and Liquidity

The Companys primary sources of liquidity for the remainder of fiscal 2002 are
expected to be its cash flows from operations, the working capital line of
credit with its bank and other financial alternatives such as leasing. The
Company requires cash for capital expenditures and other requirements
associated with the expansion of its domestic and international production,
distribution and sales, as well as for general working capital purposes. In
May 2002, the Company extended its business loan agreement with its bank
through March 1, 2003. The loan agreement provides a revolving line of credit
of $25,000,000 with a

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seasonal increase in the line of credit to $35,000,000 through July 1, 2002 and
again for the period of February 1, 2003 through March 1, 2003. Interest is
charged at the banks reference (prime) rate, minus one-half of one percentage
point. The loan agreement also provides for optional interest rates based on
inter-bank offered rates (IBOR) for periods of at least 30 days in increments
of $500,000. The loan agreement is unsecured but contains various restrictive
covenants requiring, among other matters, the maintenance of certain financial
ratios. Management believes the Company was in compliance with all such
covenants as of April 30, 2002. The loan agreement permits the Company to
acquire, for value, shares of Ashworth stock in an aggregate amount not to
exceed $10,200,000 during the term of the agreement. The line of credit may
also be used to finance commercial letters of credit and standby letters of
credit. Commercial letters of credit outstanding under this loan agreement
totaled $10,309,000 at April 30, 2002 and $5,506,000 at October 31, 2001. The
Company had $13,205,000 outstanding against the line of credit at April 30,
2002, compared to $5,950,000 outstanding at October 31, 2001. The increases in
outstanding letters of credit and borrowings are primarily due to the
seasonality of the Companys business.

Net trade receivables were $44,787,000 at April 30, 2002, an increase of
$17,970,000 from the balance at October 31, 2001. Because the Companys
business is seasonal, the net receivables balance may more meaningfully be
compared to the balance of $48,664,000 at April 30, 2001, rather than the
year-end balance. The comparison to the second quarter of fiscal 2001 shows a
decrease of 8.0% in net trade receivables and is in line with the decline in
revenues.

Net inventories decreased 5.7% to $33,788,000 at April 30, 2002 from
$35,841,000 at October 31, 2001. Compared to net inventories of $35,873,000 at
April 30, 2001, net inventories at April 30, 2002 have decreased by 5.8%,
primarily as a result of improved inventory management systems. The Company
believes that its current inventory mix is appropriate to respond to market
demand.

During the first six months of fiscal 2002, the Company incurred capital
expenditures of $840,000 primarily for computer equipment, furniture and
fixtures and leasehold improvements. The Company anticipates spending
approximately $2,060,000 during the remainder of fiscal 2002, primarily on
upgrades of computer systems and equipment and outlet stores renovations.
Management currently intends to finance the purchase of the Companys capital
equipment from its own cash resources, but may use leases or equipment
financing agreements if deemed appropriate. In addition, the Company continues
to evaluate projects requiring additional capital expenditures in connection
with the planned expansion of its domestic and international production,
distribution and sales.

Common stock and capital in excess of par value increased by $737,000 in the
six months ended April 30, 2002, due to the issuance of shares on exercise of
options.

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, bank credit
facilities 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 12 months.

Derivatives

Although the Company and its subsidiaries did not do so during the first six
months of fiscal 2002, 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 and the
U.S. dollar and the Canadian dollar. The contracts provide that, on specified
dates, the Company will sell the bank a specified number of British pounds or
Canadian dollars in exchange for a specified number of U.S. dollars.
Additionally, from time to time the Companys U.K. subsidiary enters into
similar contracts with its bank

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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. At April 30, 2002,
neither the Company nor any of its subsidiaries was a party to any outstanding
foreign exchange contracts.

New Accounting Standards

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement Obligations, which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. The standard applies to legal
obligations associated with the retirement of long-lived assets that result
from the acquisition, construction, development and/or normal use of the asset.

SFAS No. 143 requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The fair value of the liability
is added to the carrying amount of the associated asset and this additional
carrying amount is depreciated over the life of the asset. The liability is
accreted at the end of each period through charges to operating expense. If
the obligation is settled for other than the carrying amount of the liability,
the Company will recognize a gain or loss on settlement.

The Company is required and plans to adopt the provisions of SFAS No. 143 for
the quarter ending January 31, 2003. To accomplish this, the Company must
identify all legal obligations for asset retirement obligations, if any, and
determine the fair value of these obligations on the date of adoption. The
determination of fair value is complex and will require the Company to gather
market information and develop cash flow models. Additionally, the Company
will be required to develop processes to track and monitor these obligations.
Management does not expect the adoption of SFAS No. 143 to have a material
impact on the Companys financial statements.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, which
supersedes both SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Ofand the accounting and
reporting provisions of Accounting Principles Board (APB) Opinion No. 30,
Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, for the disposal of a segment of a business (as
previously defined in that Opinion). SFAS No. 144 retains the fundamental
provisions in SFAS No. 121 for recognizing and measuring impairment losses on
long-lived assets held for use and long-lived assets to be disposed of by sale,
while also resolving significant implementation issues associated with SFAS No.
121. For example, SFAS No. 144 provides guidance on how a long-lived asset
that is used as part of a group should be evaluated for impairment, establishes
criteria for when a long-lived asset is held for sale, and prescribes the
accounting for a long-lived asset that will be disposed of other than by sale.
SFAS No. 144 retains the basic provisions of APB Opinion No. 30 on how to
present discontinued operations in the income statement but broadens that
presentation to include a component of an entity (rather than a segment of a
business). Unlike SFAS No. 121, an impairment assessment under SFAS No. 144
will never result in a write-down of goodwill. Rather, goodwill is evaluated
for impairment under SFAS No. 142, Goodwill and Other Intangible Assets.

The Company is required to adopt SFAS No. 144 no later than the fiscal year
beginning after December 15, 2001, and plans to adopt its provisions for the
quarter ending January 31, 2003. The provisions of the statement for assets
held for sale or other disposal generally are required to be applied
prospectively after the adoption date to newly initiated disposal activities.
Management does not expect

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the adoption of SFAS No. 144 for long-lived assets held for use to have a
material impact on the Companys financial statements because the impairment
assessment under SFAS No. 144 is largely unchanged from SFAS No. 121.

Cautionary Statements and Risk Factors

This report contains certain forward-looking statements, including without
limitation those regarding the Companys plans and expectations for revenue
growth, product lines, strategic alliances, 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 common 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 the Company fails to develop
fashions and styles that are well received in any season.                                                                                                                                                                                                                                      
| 
| |  | The Company is party to a multi-year licensing agreement to design,
source and sell Callaway Golf apparel primarily in the United States,
Europe, Canada and Australia. The Company must correctly anticipate the
fashion trends and demand for this product line. 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 as significant. Price competition or
industry consolidation 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.                                                                                                                                                                                                                                                                                              
| 
| |  | 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 received in foreign currencies.                                                                                                                                                                                                                                                                                                        
| 
| |  | If economic conditions do not improve, the Companys customers ability
to pay current obligations may be adversely impacted and the Company may
experience an increase in delinquent and uncollectable accounts.                                                                                                                                                                                                                                                                                           
| 
| |  | The Company maintains high levels of inventory to support its
AuthenticsTM 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

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| |  | 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 debt consists of notes payable which had a total balance of
$3,854,000 at April 30, 2002. The debt bears interest at variable and fixed
rates ranging from 5.9% to 11.0%, which approximates fair value based on
current rates offered for debt with similar risks and maturities. The Company
also had $13,205,000 outstanding at April 30, 2002 on its revolving line of
credit with interest charged at the banks reference (prime) rate minus
one-half of one percentage point. The loan agreement also provides for
optional interest rates based on IBOR for periods of at least 30 days in
increments of $500,000. A hypothetical 10% increase in interest rates during
the six months ended April 30, 2002 would have resulted in a $14,000 change in
net income.

The Companys ability to sell its products in foreign markets and the U.S.
dollar value of the 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.
Although the Company and its subsidiaries did not do so during the first six
months of fiscal 2002, 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 and the
U.S. dollar and the Canadian dollar. The contracts provide that, on specified
dates, the Company would sell the bank a specified number of British pounds or
Canadian dollars in exchange for a specified number of U.S. dollars.
Additionally, the Companys U.K. subsidiary 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. At
April 30, 2002, neither the Company nor any of its subsidiaries had any
outstanding foreign exchange contracts.




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.
The action was subsequently consolidated with two similar suits and plaintiffs
filed their Amended and Consolidated Complaint on December 17, 1999. Upon the
Companys motion, the U.S. District Court dismissed the Complaint with leave to
amend on July 18, 2000. On September 18, 2000, plaintiffs served their Second
Consolidated Amended Complaint (Second Amended Complaint). On November 6,
2000, the Company filed its motion to dismiss the Second Amended Complaint,
which the U.S. District Court granted, in part, and denied, in part. The
remaining portions of the Second Amended Complaint allege that, among other
things, during the class period and in violation of the Securities Exchange Act
of 1934, the Companys financial statements, as reported, did not conform to
generally accepted accounting principles with respect to revenues and inventory
levels. It further alleges that certain Company executives made false or
misleading statements or omissions concerning product demand and that two
former

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executives engaged in insider trading. The plaintiffs seek unspecified
damages. The parties are currently in the early stages of the discovery
process.

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.




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



|(1) |  | At the Companys Annual Meeting of Stockholders on March 19, 2002, the
following two directors were elected to three-year terms as Class III
directors on the Companys board of directors: Mr. Stephen Bartolin, Jr.
and Mr. H. Michael Hecht. The following directors continued in office
after the meeting but were not elected at the meeting: Stephen G.
Carpenter, Andre P. Gambucci, John M. Hanson, Jr., Randall L. Herrel, Sr.
and James W. Nantz, III.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The stockholder votes on the elections were as follows:                                                                                                                                                                                                                                                                                                                                                                                                         

|                           |  |  |            | 
|-------------------------- |  |  | ---------- | 
|Stephen Bartolin, Jr.      |  |  |            | 
|Number of votes FOR        |  |  | 10,403,291 | 
|Number of votes WITHHELD   |  |  | 51,530     | 
|Number of broker non-votes |  |  | 0          | 

|                           |  |  |            | 
|-------------------------- |  |  | ---------- | 
|H. Michael Hecht           |  |  |            | 
|Number of votes FOR        |  |  | 10,403,291 | 
|Number of votes WITHHELD   |  |  | 51,530     | 
|Number of broker non-votes |  |  | 0          | 




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 the Company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 Companys Form 10-K for
the fiscal year ended October 31, 1994 (File No. 0-18553) and incorporated
herein by reference).
|    
|3(b) |  | Amended and Restated Bylaws of the Company (filed as Exhibit 3.1 to the
Companys Current Report on Form 8-K on February 23, 2000 (File No.
0-18553) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                       

14



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|4(a)    |  | Specimen certificate for Common Stock, par value $.001 per share, of the
Company (filed as Exhibit 4(a) to the Company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 the Companys Form 10-K for the fiscal 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 the
Companys Form 10-K for the fiscal 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 the Companys Form 10-K
for the fiscal year ended October 31, 1993 (File No. 0-18553) and
incorporated herein by reference).                                                                     
|       
|4(d)    |  | Rights Agreement dated as of October 6, 1998 and amended on February 22,
2000 by and between Ashworth, Inc. and American Securities Transfer &
Trust, Inc. (filed as Exhibit 4.1 to the Company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 the Companys Form
10-K for the fiscal year ended October 31, 1998 (File No. 0-18553) and
incorporated herein by reference).
|       
|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 the Companys Form 10-K for the fiscal year ended October 31, 1998
(File No. 0-18553) and incorporated herein by reference).                                                
|       
|10(c)   |  | Promotion Agreement effective November 1, 2001 by and among Ashworth,
Inc., James W. Nantz, III and Nantz Communications, Inc. (filed as Exhibit
10(c) to the Companys Form 10-K for the fiscal year ended October 31,
2001 (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 the Companys Form 10-Q for the quarter ended
April 30, 1999 (File No. 0-18553) and incorporated herein by reference).                              
|       
|10(e)*  |  | Employment Agreement effective December 15, 2000 by and between
Ashworth, Inc. and Terence W. Tsang (filed as Exhibit 10(f) to the
Companys Form 10-Q for the quarter ended January 31, 2001 (File No.
0-18553) and incorporated herein by reference).                                                                       
|       
|10(f)*  |  | Founders Stock Option Plan dated November 6, 1992 (filed as Exhibit
10(g) to the Companys Form 10-K for the fiscal year ended October 31,
1993 (File No. 0-18553) and incorporated herein by reference).                                                                                                                     
|       
|10(g)*  |  | Amended and Restated Nonqualified Stock Option Plan dated November 1,
1996 (filed as Exhibit 10(i) to the Companys Form 10-K for the fiscal
year ended October 31, 2000 (File No. 0-18553) and incorporated herein by
reference).                                                                                            
|       
|10(h)*  |  | Amended and Restated Incentive Stock Option Plan dated November 1, 1996
(filed as Exhibit 10(j) to the Companys Form 10-K for the fiscal year
ended October 31, 2000 (File No. 0-18553) and incorporated herein by
reference).                                                                                               

15



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|10(i)*   |  | 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 the
Companys Form S-8 filed on December 12, 2000 (File No. 333-51730) and
incorporated herein by reference).                                             
|-------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        
|10(j)(1) |  | Business Loan Agreement dated June 1, 2000, between the Company and
Bank of America, expiring May 1, 2002 (filed as Exhibit 10(m) to the
Companys Form 10-Q for the quarter ended April 30, 2000 (File No.
0-18553) and incorporated herein by reference).                                              
|        
|10(j)(2) |  | Amendment No. 3, effective as of May 1, 2002 to the Business Loan
Agreement dated June 1, 2000, among Ashworth, Inc., Ashworth Store I,
Inc., Ashworth Store II, Inc., Ashworth International, Inc., Ashworth U.K.
Ltd. and Bank of America, N. A., expiring March 1, 2003.                              
|        
|10(k)*   |  | Change in Control Agreement dated November 1, 2000 by and between
Ashworth, Inc. and Randall L. Herrel, Sr. (filed as Exhibit 10(m) to the
Companys Form 10-K for the fiscal year ended October 31, 2000 (File No.
0-18553) and incorporated herein by reference).                                      
|        
|10(l)*   |  | Change in Control Agreement dated November 1, 2000 by and between
Ashworth, Inc. and Terence W. Tsang (filed as Exhibit 10(n) to the
Companys Form 10-K for the fiscal year ended October 31, 2000 (File No.
0-18553) and incorporated herein by reference).                                            
|        
|10(m)    |  | Promotion Agreement effective November 1, 1999 by and between Ashworth,
Inc. and Fred Couples (filed as Exhibit 10(o) to the Companys Form 10-K
for the fiscal year ended October 31, 2000 (File No. 0-18553) and
incorporated herein by reference).                                                    
|        
|10(n)*   |  | 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(o)*   |  | Offer and Acceptance of Executive Employment effective November 29, 1999
by and between Ashworth, Inc. and Anthony Wilkinson (filed as Exhibit
10(q) to the Companys Form 10-Q for the quarter ended January 31, 2001
(File No. 0-18553) and incorporated herein by reference).                         
|        
|*        |  | Management contract or compensatory plan or arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of Form 10-K and applicable
rules of the Securities and Exchange Commission.                                                                                                           
|        
|(b)      |  | Reports on Form 8-K  NONE                                                                                                                                                                                                                                                                               

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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                                                                                            
|                   
|Date: June 14, 2002 |  | By: /s/ Terence W. Tsang                                                                                 
|                    |  |                                                                                                          
|                    |  | Terence W. Tsang
Executive Vice President,
Chief Operating Officer,
Chief Financial Officer and
Treasurer

17