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<SEC-DOCUMENT>0000936392-05-000057.txt : 20050311
<SEC-HEADER>0000936392-05-000057.hdr.sgml : 20050311
<ACCEPTANCE-DATETIME>20050311172022
ACCESSION NUMBER:		0000936392-05-000057
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20050131
FILED AS OF DATE:		20050311
DATE AS OF CHANGE:		20050311

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ASHWORTH INC
		CENTRAL INDEX KEY:			0000820774
		STANDARD INDUSTRIAL CLASSIFICATION:	MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320]
		IRS NUMBER:				841052000
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-14547
		FILM NUMBER:		05676368

	BUSINESS ADDRESS:	
		STREET 1:		2765 LOKER AVE WEST
		CITY:			CARLSBAD
		STATE:			CA
		ZIP:			92008
		BUSINESS PHONE:		7604386610

	MAIL ADDRESS:	
		STREET 1:		2765 LOKER AVENUE WEST
		CITY:			CARLSBAD
		STATE:			CA
		ZIP:			92008

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CHARTER GOLF INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a06769e10vq.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vq</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>






<P align="center" style="font-size: 14pt"><B>UNITED STATES</B>

<P align="center" style="font-size: 14pt"><B>SECURITIES AND EXCHANGE COMMISSION</B>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<P align="center" style="font-size: 18pt"><B>FORM 10-Q</B>


<P align="center" style="font-size: 12pt"><FONT face="Wingdings">&#254;</FONT> <B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934</B>



<P align="center" style="font-size: 10pt"><B>For the quarterly period ended January&nbsp;31, 2005</B>



<P align="center" style="font-size: 10pt">OR



<P align="center" style="font-size: 12pt"><FONT face="Wingdings">&#111;</FONT> <B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934</B>



<P align="center" style="font-size: 10pt">For the transition period from ________ to ___________



<P align="center" style="font-size: 10pt"><B>Commission file number: 001-14547</B>


<P align="center" style="font-size: 24pt"><B>Ashworth, Inc.</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Delaware</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>84-1052000</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or Other Jurisdiction of<BR>
Incorporation or Organization)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer<BR>
Identification No.)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><B>2765 LOKER AVENUE WEST<BR>
CARLSBAD, CA 92008</B><BR>
(Address of Principal Executive Offices)



<P align="center" style="font-size: 10pt"><B>(760)&nbsp;438-6610</B><BR>
(Telephone No.&nbsp;Including Area Code)


<P align="left" style="font-size: 10pt">Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed
by Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or
for such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days. Yes <FONT face="Wingdings">&#254;</FONT> No <FONT face="Wingdings">&#111;</FONT>


<P align="left" style="font-size: 10pt">Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule&nbsp;12b-2 of
the Exchange Act). Yes <FONT face="Wingdings">&#254;</FONT> No <FONT face="Wingdings">&#111;</FONT>


<P align="left" style="font-size: 10pt">Indicate the number of shares outstanding of each of the issuer&#146;s classes of common stock, as of
the latest practicable date.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">Title
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Outstanding at February&nbsp;28, 2005</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">$.001 par value Common Stock
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">13,768,535</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<p>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>


<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<P align="center" style="font-size: 10pt">INDEX


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="94%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">PAGE</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">Part I. Financial Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Item&nbsp;1. Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#102">Condensed Consolidated Balance Sheets</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#103">Condensed Consolidated Statements of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#104">Condensed Consolidated Statements of Cash Flows</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#105">Notes to Condensed Consolidated Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#106">Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition
and Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">11</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#107">Item&nbsp;3. Quantitative and Qualitative Disclosures About Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">22</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#108">Item&nbsp;4. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">22</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">Part II. Other Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#110">Item&nbsp;1. Legal Proceedings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">23</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#111">Item&nbsp;2. Unregistered Sales of Equity Securities and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">23</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#112">Item&nbsp;3. Defaults Upon Senior Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">23</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#113">Item&nbsp;4. Submission of Matters to a Vote of Security Holders</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">23</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#114">Item&nbsp;5. Other Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">24</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#115">Item&nbsp;6. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">24</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#116">Signatures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">30</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#117">Exhibit&nbsp;Index</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a06769exv10w1.txt">EXHIBIT 10.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a06769exv31w1.txt">EXHIBIT 31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a06769exv31w2.txt">EXHIBIT 31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a06769exv32w1.txt">EXHIBIT 32.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a06769exv32w2.txt">EXHIBIT 32.2</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="101"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>PART I</B>



<P align="center" style="font-size: 10pt"><B>FINANCIAL INFORMATION</B>



<P align="left" style="font-size: 10pt">ASHWORTH, INC. AND SUBSIDIARIES


<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt">
CONDENSED CONSOLIDATED BALANCE SHEETS<BR>
(UNAUDITED)</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>January 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>October 31, 2004</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="center"><DIV style="margin-left:75px; text-indent:-15px"><B>Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,983,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,541,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts
receivable - trade, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,519,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,264,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts
receivable - other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">746,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,055,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Inventories, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,248,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,249,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,882,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,014,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred income tax asset</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,697,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,697,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103,075,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,820,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment, at cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,779,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,396,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less accumulated depreciation and
amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,930,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,865,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total property, plant and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,849,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,531,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,642,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,640,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,885,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,028,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">619,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">467,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">163,070,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">159,486,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="center"><DIV style="margin-left:60px; text-indent:-15px"><B>Liabilities and Stockholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Line of credit payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,500,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current portion of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,497,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,502,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,852,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,959,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income tax payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,157,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Salaries and commissions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,378,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,809,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,954,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,135,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,931,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,062,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt, net of current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,105,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,186,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income tax liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,667,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,667,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">238,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">355,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Capital in excess of par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,634,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,171,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,192,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,109,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accumulated other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,289,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,922,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,129,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101,216,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total liabilities and stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">163,070,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">159,486,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="left" style="font-size: 10pt">See accompanying notes to
unaudited condensed consolidated financial statements.<BR>



<P align="center" style="font-size: 10pt">1
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">ASHWORTH, INC. AND SUBSIDIARIES

<DIV align="left">
<A name="103"></A>
</DIV>


<DIV align="left" style="font-size: 10pt">
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS<BR>
(UNAUDITED)</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three months ended January 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36,513,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,338,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of goods sold</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,878,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,647,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,635,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,691,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general and administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,091,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,405,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">544,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">286,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(533,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(169,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net foreign currency exchange gain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total other expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(406,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before provision for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">223,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">83,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">134,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted-average shares outstanding:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,726,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,302,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,110,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,644,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">See accompanying notes to
unaudited condensed consolidated financial statements.



<P align="center" style="font-size: 10pt">2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">ASHWORTH, INC. AND SUBSIDIARIES




<DIV align="left">
<A name="104"></A>
</DIV>


<DIV align="left" style="font-size: 10pt">CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
(UNAUDITED)</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three months ended January 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash used in operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(4,387,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,018,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from investing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net purchases of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,533,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(989,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,533,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(989,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from financing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Principal payments on capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(45,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Borrowings on line of credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,800,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payments on line of credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,750,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,400,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Principal payments on notes payable and long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,042,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">357,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Change in
restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,995,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">710,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">367,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,104,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net decrease in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,558,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,193,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents, beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,541,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,024,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents, end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,983,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,831,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">See accompanying notes to
unaudited condensed consolidated financial statements.



<P align="center" style="font-size: 10pt">3
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">ASHWORTH, INC. AND SUBSIDIARIES


<DIV align="left">
<A name="105"></A>
</DIV>


<DIV align="left" style="font-size: 10pt">
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)<BR>
JANUARY 31, 2005</DIV>


<P align="left" style="font-size: 10pt"><B>NOTE 1 &#151; Basis of Presentation.</B>




<P align="left" style="margin-left:3%; font-size: 10pt">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.



<P align="left" style="margin-left:3%; font-size: 10pt">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 (the &#147;SEC&#148;). The information included in this Form 10-Q should be read in
conjunction with Management&#146;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&nbsp;31, 2004, filed with the SEC on January&nbsp;28,
2005.



<P align="left" style="margin-left:3%; font-size: 10pt"><B>Shipping and Handling Revenue</B>



<P align="left" style="margin-left:3%; font-size: 10pt">The Company includes payments from its customers for shipping and handling in its net revenues
line item in accordance with Emerging Issues Task Force
(&#147;EITF&#148;) 00-10, <I>Accounting for Shipping
and Handling Fees and Costs</I>.



<P align="left" style="margin-left:3%; font-size: 10pt"><B>Cost of Goods Sold</B>



<P align="left" style="margin-left:3%; font-size: 10pt">The Company includes F.O.B. purchase price, inbound freight charges, duty, buying commissions
and overhead in its cost of goods sold line item. Overhead costs include purchasing and
receiving costs, inspection costs, warehousing costs, internal transfers costs and other costs
associated with the Company&#146;s distribution. The Company does not exclude any of these costs
from cost of goods sold.



<P align="left" style="margin-left:3%; font-size: 10pt"><B>Shipping and Handling Expenses</B>



<P align="left" style="margin-left:3%; font-size: 10pt">Shipping expenses, which consist primarily of payments made to freight companies, are reported
in selling, general and administrative expenses. Shipping expenses for the quarters ended
January&nbsp;31, 2005 and 2004 were $530,000 and $314,000, respectively.



<P align="left" style="margin-left:3%; font-size: 10pt"><B>Reclassifications</B>



<P align="left" style="margin-left:3%; font-size: 10pt">Certain reclassifications have been made to the prior periods&#146; condensed consolidated financial
statements to conform to classifications used in the current period. These reclassifications
had no impact on previously reported results.


<P align="center" style="font-size: 10pt">4
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>NOTE 2 &#151; Inventories.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories consisted of the following at January&nbsp;31, 2005 and October&nbsp;31, 2004:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">January 31,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">October 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Raw materials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">106,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">123,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Finished goods</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,142,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,126,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total inventories, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">59,248,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">49,249,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B>NOTE 3 &#151; Goodwill and Other Intangible Assets.</B>




<P align="left" style="margin-left:3%; font-size: 10pt">The Company accounts for goodwill and intangible assets in accordance with SFAS No.&nbsp;142,
<I>Goodwill and Other Intangible Assets. </I>Under SFAS No.&nbsp;142, goodwill and certain intangible
assets are not amortized but are subject to an annual impairment test. At January&nbsp;31, 2005
and October&nbsp;31, 2004 goodwill totaled $12,642,000 and $12,640,000, respectively. During the
quarter ended January&nbsp;31, 2005, the Company adjusted goodwill by approximately $2,000 for
certain preacquisition contingencies relating to its acquisition of Gekko Brands, LLC on July
7, 2004. The following sets forth the intangible assets, excluding goodwill, by major category:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">January 31, 2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">October 31, 2004</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Accumulated</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Accumulated</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amortization</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Net Book Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amortization</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Net Book Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Indefinite life:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Tradenames</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,700,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,700,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,700,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,700,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Finite life:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Customer lists</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,530,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(131,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,399,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,530,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(72,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,458,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-competes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,372,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(721,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">651,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,372,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(680,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">692,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Customer sales backlog</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(143,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(71,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Trademarks</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,332,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,244,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,299,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,240,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,124,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,239,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,885,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,091,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,063,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,028,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="margin-left:3%; font-size: 10pt">Intangible assets with definite lives are amortized using the straight-line method over periods
ranging from 1 to 7&nbsp;years. During the three months ended January&nbsp;31, 2005 and 2004, aggregate
amortization expense was approximately $176,000 and $54,000, respectively.


<P align="center" style="font-size: 10pt">5
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="margin-left:3%; font-size: 10pt">Amortization expense related to intangible assets at January&nbsp;31, 2005 in each of the next five
fiscal years and beyond is expected to be as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Remainder 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">361,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">420,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">411,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">393,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,185,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B>NOTE 4 &#151; Line of Credit Agreement.</B>




<P align="left" style="margin-left:3%; font-size: 10pt">On July&nbsp;6, 2004, the Company entered into a new business loan agreement with Union Bank of
California, N.A., as the administrative agent, and two other lenders. The new loan agreement
is comprised of a $20,000,000 term loan and a $35,000,000 revolving credit facility, which
expires on July&nbsp;6, 2009 and is collateralized by substantially all of the assets of the Company
other than the Company&#146;s real estate.



<P align="left" style="margin-left:3%; font-size: 10pt">Under this loan agreement, interest on the $20,000,000 term loan is fixed at 5.4% for the term
of the loan. Interest on the revolving credit facility is charged at the bank&#146;s reference
rate. At January&nbsp;31, 2005, the bank&#146;s reference rate was 5.25%. The loan agreement also
provides for optional interest rates based on London interbank offered rates (&#147;LIBOR&#148;) for
periods of at least 30&nbsp;days in increments of $500,000.



<P align="left" style="margin-left:3%; font-size: 10pt">On September&nbsp;3, 2004, the Company entered into the First Amendment to the loan agreement to
amend Section&nbsp;6.12(a), Tangible Net Worth. The loan agreement, as amended, contains certain
financial covenants that include requirements that the Company maintain (1)&nbsp;a minimum tangible
net worth of $74,000,000 plus the net proceeds from any equity securities issued (including net
proceeds from stock option exercises) after the date of the loan agreement for the period
ending October&nbsp;31, 2004, and a minimum tangible net worth of $74,000,000, plus 90% of net
income after taxes (without subtracting losses) earned in each quarterly accounting period
commencing after January&nbsp;31, 2005, plus the net proceeds from any equity securities issued
(including net proceeds from stock option exercises) after the date of the loan agreement, (2)
a minimum earnings before interest, income taxes, depreciation and amortization (&#147;EBITDA&#148;)
determined on a rolling four quarters basis ranging from $16,500,000 at July&nbsp;6, 2004 and
increasing over time to $27,000,000 at October&nbsp;31, 2008 and thereafter, (3)&nbsp;a minimum ratio of
cash and accounts receivable to current liabilities of 0.75:1.00 for fiscal quarters ending
January&nbsp;31 and April&nbsp;30 and 1.00:1.00 for fiscal quarters ending July&nbsp;31 and October&nbsp;31, and
(4)&nbsp;a minimum fixed charge coverage ratio of 1.10:1.00 at April&nbsp;30, 2004 and 1.25:1.00
thereafter. The loan agreement
limits annual lease and rental expense associated with the Company&#146;s new distribution center in
Oceanside, California as well as annual capital expenditures in any single fiscal year on a
consolidated basis in excess of certain amounts allowed for the acquisition of real property
and equipment in connection with the new distribution center. The loan agreement has an
additional requirement where, for any period of 30 consecutive days, the total indebtedness
under the revolving credit facility may not be more than $15,000,000. The loan agreement also
limits the annual aggregate amount the Company may spend to acquire shares of its common stock.
The Company is in compliance with all of the loan agreement&#146;s financial covenants as of
January&nbsp;31, 2005.



<P align="left" style="margin-left:3%; font-size: 10pt">The line of credit under the loan agreement may also be used to finance commercial letters of credit


<P align="center" style="font-size: 10pt">6
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="margin-left:3%; font-size: 10pt">and standby letters of credit. Commercial letters of credit outstanding under this loan
agreement totaled $4,037,000 at January&nbsp;31, 2005 as compared to $4,108,000 outstanding at
October&nbsp;31, 2004. The Company had $8,250,000 outstanding against the revolving credit facility
under this loan agreement at January&nbsp;31, 2005, compared to $2,500,000 outstanding at October
31, 2004. The Company had $18,000,000 outstanding on the term loan under this loan agreement
at January&nbsp;31, 2005 compared to $19,000,000 at October&nbsp;31, 2004. At January&nbsp;31, 2005,
$22,713,000 was available for borrowings against the revolving credit facility under this loan
agreement.


<P align="left" style="font-size: 10pt"><B>NOTE 5 &#151; Net Income Per Share Information.</B>




<P align="left" style="margin-left:3%; font-size: 10pt">Basic net income per share has been computed based on the weighted average number of common
shares outstanding during the period. Diluted net income per share has been computed based on
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
on the requirements SFAS No.&nbsp;128, <I>Earnings Per Share</I>:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Three months ended January 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Numerator</B>:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Numerator for basic and diluted
Income per share - income
available to common stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">83,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">134,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Denominator</B>:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator for basic income
per share - weighted average shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,726,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,302,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of dilutive securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">384,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">342,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator for diluted income
per share - adjusted weighted average
shares and assumed conversions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,110,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,644,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic net income per share</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted net income per share</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="margin-left:3%; font-size: 10pt">For the quarters ended January&nbsp;31, 2005 and 2004, the diluted weighted average shares
outstanding computation excludes 412,000 and 411,000 options whose impact would have an
anti-dilutive effect, respectively.


<P align="left" style="font-size: 10pt"><B>NOTE 6 &#151; Issuance of Common Stock.</B>




<P align="left" style="margin-left:3%; font-size: 10pt">Common stock and capital in excess of par value increased by $463,000 in the three months ended
January&nbsp;31, 2005, of which $357,000 is due to the issuance of 62,866 shares of common stock on
exercise of options and $106,000 is the tax benefit related to the exercise of those options.


<P align="left" style="font-size: 10pt"><B>NOTE 7 &#151; Stock-Based Compensation.</B>




<P align="left" style="margin-left:3%; font-size: 10pt">The Company has elected to follow Accounting Principles Board Opinion (&#147;APB&#148;) No.&nbsp;25,
<I>Accounting for Stock Issued to Employees, </I>and related interpretations in accounting for its
employee stock options. Under APB No.&nbsp;25, because the exercise price of the Company&#146;s employee
stock


<P align="center" style="font-size: 10pt">7
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="margin-left:3%; font-size: 10pt">options equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized. The interim information regarding pro forma net income and
earnings per share is required by SFAS No.&nbsp;123, <I>Accounting for Stock Based Compensation</I>, and
SFAS No.&nbsp;148, <I>Accounting for Stock Based Compensation &#151; Transition and Disclosure</I>. For
purposes of pro forma disclosures, the estimated fair value of the options is amortized to
expense over the vesting period of the options.



<P align="left" style="margin-left:3%; font-size: 10pt">Compensation expense for options issued to non-employees is based on the fair value of each
option estimated at date of grant using the Black-Scholes option-pricing model. The Company
made no such grants to non-employees during the first three months of either fiscal year 2005
or fiscal year 2004.



<P align="left" style="margin-left:3%; font-size: 10pt">For purposes of the following pro forma disclosures required by SFAS No.&nbsp;123, the fair value of
each option granted after fiscal 1995 has been estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average assumptions used for
grants made during the three months ended January&nbsp;31, 2005 and 2004, respectively: risk-free
interest rate of 2.89% to 3.22% in 2005 and 2.37% to 2.63% in 2004; expected volatility of
43.36% in 2005 and 44.48% in 2004; and expected life of 3.6&nbsp;years in 2005 and 3.2&nbsp;years in
2004.



<P align="left" style="margin-left:3%; font-size: 10pt">The Company has not paid any cash or other dividends and does not anticipate paying dividends
in the foreseeable future; therefore, the expected dividend yield is zero for all periods.



<P align="left" style="margin-left:3%; font-size: 10pt">The Company&#146;s pro forma information for stock-based employee compensation is as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Three months ended January 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income, as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">83,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">134,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct: Stock-based employee
compensation expense determined
under fair value based method
for all awards, net of tax
effect</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(279,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(78,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">($</TD>
    <TD align="right">194,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">56,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net income (loss)&nbsp;per
share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic - as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic - pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">($</TD>
    <TD align="right">0.01</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted - as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted - pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">($</TD>
    <TD align="right">0.01</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">Diluted pro forma per share information is calculated by including the additional common
shares issuable upon exercise of outstanding options in the basic weighted average share
calculation unless the effect of their inclusion is antidilutive. For the three months ended
January&nbsp;31, 2005, outstanding options totaled 1,711,000. As these securities were antidilutive,
diluted pro forma net loss per share equaled basic pro forma net loss per share during that
period.



<P align="left" style="font-size: 10pt">The Company did not reflect any stock-based employee compensation expense in the consolidated
financial statements for the periods presented in the above table.



<P align="center" style="font-size: 10pt">8
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt"><B>NOTE 8 &#151; Comprehensive Income.</B>




<P align="left" style="margin-left:3%; font-size: 10pt">The Company includes the cumulative foreign currency translation adjustment as well as the net
unrealized gains and loss on cash flow hedges as components of the comprehensive income in
addition to net income for the period. The following table sets forth the computation of
comprehensive income for the periods presented:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Three months ended January 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">83,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">134,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net unrealized gains on cash flow
hedges, net of tax of $0 and $53,000,
respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effects of foreign currency translation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">367,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,024,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">450,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,238,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B>NOTE 9 &#151; Legal Proceedings.</B>




<P align="left" style="margin-left:3%; font-size: 10pt">On January&nbsp;22, 1999, Milberg Weiss Bershad Hynes &#038; Lerach LLP filed a class action in the
United States District Court for the Southern District of California (&#147;U.S. District Court&#148;) on
behalf of purchasers of the Company&#146;s common stock during the period between September&nbsp;4, 1997
and July&nbsp;15, 1998. The action was subsequently consolidated with two similar suits and
plaintiffs filed their Amended and Consolidated Complaint on December&nbsp;17, 1999. Upon the
Company&#146;s motion, the U.S. District Court dismissed the Complaint with leave to amend on July
18, 2000. On September&nbsp;18, 2000, plaintiffs served their Second Consolidated Amended Complaint
(&#147;Second Amended Complaint&#148;). On November&nbsp;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 alleged that, among other things, during
the class period and in violation of the Securities Exchange Act of 1934, the Company&#146;s
financial statements, as reported, did not conform to generally accepted accounting principles
with respect to revenues and inventory levels. It further alleged that certain Company
executives made false or misleading statements or omissions concerning product demand and that
two former executives engaged in insider trading. On November&nbsp;8, 2004, the U.S. District Court
entered a Final Approval of Settlement. Under the settlement, all claims will be dismissed and
the litigation has been concluded in exchange for a payment of $15.25&nbsp;million, approximately
82% of which was paid by Ashworth&#146;s insurance carriers. As part of the settlement, Ashworth
has adopted
modifications to certain corporate governance policies. Ashworth recorded a pre-tax charge in
the third quarter of fiscal year 2004 of $3&nbsp;million related to settlement of this suit.



<P align="left" style="margin-left:3%; font-size: 10pt">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, liquidity or results of operations of the Company.


<P align="center" style="font-size: 10pt">9
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>NOTE 10 &#151; Segment Information.</B>




<P align="left" style="margin-left:3%; font-size: 10pt">The Company defines its operating segments as components of an enterprise for which separate
financial information is available and regularly reviewed by the Company&#146;s senior management.
The Company has the following three reportable segments: Domestic, Ashworth, U.K., Ltd. and
Other International. The chief operating decision maker evaluates segment performance based
primarily on revenues and income from operations. Interest income and expense, unusual and
infrequent items and income tax expense are evaluated on a consolidated basis and are not
allocated to the Company&#146;s business segments. Segment information is summarized (for the
periods or dates presented) below:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three months January 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,569,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,061,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ashworth, U.K., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,415,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,818,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other International</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,529,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,459,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36,513,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,338,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from operations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(181,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ashworth, U.K., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">346,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(145,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other International</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">379,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">422,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">544,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">286,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,395,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">804,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ashworth, U.K., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">185,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,533,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">989,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation expense:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">972,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">798,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ashworth, U.K., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,049,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">853,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>January 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>October 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">140,896,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">137,605,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ashworth, U.K., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,353,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,430,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other International</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,821,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,451,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">163,070,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">159,486,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long lived assets, at cost:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">79,242,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,805,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ashworth, U.K., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,921,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,789,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">81,163,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">78,594,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Domestic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,642,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,640,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">10
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left">
<A name="106"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS</B>



<P align="left" style="font-size: 10pt"><B>General</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company operates in an industry that is highly competitive and must accurately anticipate
fashion trends and consumer demand for its products. There are many factors that could cause
actual results to differ materially from the projected results contained in certain forward-looking
statements in this report. For additional information, see &#147;Cautionary Statements and Risk
Factors,&#148; below.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because the Company&#146;s business is seasonal, the current balance sheet balances at January&nbsp;31,
2005 may more meaningfully be compared to the balances at January&nbsp;31, 2004, rather than to the
balances at October&nbsp;31, 2004.


<P align="left" style="font-size: 10pt"><B>Critical Accounting Policies</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In response to the SEC&#146;s Release Numbers 33-8040, &#147;Cautionary Advice Regarding Disclosure
About Critical Accounting Policies&#148; and 33-8056, &#147;Commission Statement About Management&#146;s
Discussion and Analysis of Financial Condition and Results of Operations,&#148; 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenue Recognition. </I>Based on its terms of F.O.B. shipping point, where risk of loss and
title transfer to the buyer at the time of shipment, the Company recognizes revenue at the time
products are shipped or, for Company stores, at the point of sale. The Company records sales in
accordance with SEC Staff Accounting Bulletin No.&nbsp;104, <I>Revenue Recognition</I>. Under these
guidelines, revenue is recognized when all of the following exist: persuasive evidence of a sale
arrangement exists, delivery of the product has occurred, the price is fixed or determinable and
payment is reasonably assured. Provisions are made in the period of the sale for estimated product
returns and sales allowances. The Company also includes payments from its customers for shipping
and handling in its net revenues line item in accordance with Emerging Issues Task Force (&#147;EITF&#148;)
00-10, <I>Accounting of Shipping and Handling Fees and Costs</I>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sales Returns and Other Allowances. </I>Management must make estimates of potential future
product returns related to current period product revenues. The Company also makes payments and/or
grants credits to its customers as markdown (buydown)&nbsp;allowances and must make estimates of such
potential future allowances. Management analyzes historical returns and allowances, current
economic trends, changes in customer demand, and sell-through of the Company&#146;s 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. These markdown allowances are reported as a reduction
of the Company&#146;s net revenues. Material differences may result in the amount and timing of the
Company&#146;s revenues for any period if management makes different judgments or utilizes different
estimates. The reserves for sales returns and other allowances amounted to $1.1&nbsp;million at January
31, 2005 compared to $1.3&nbsp;million at October&nbsp;31, 2004 and $0.9&nbsp;million at January&nbsp;31, 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Allowance for Doubtful Accounts. </I>Management must 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 current economic
conditions, historical bad debts and continually evaluating individual customer receivables
considering the customer&#146;s


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<P align="left" style="font-size: 10pt">financial condition. If the financial condition of any significant
customers were to deteriorate, resulting in the impairment of their ability to make payments, material additional allowances for doubtful
accounts may be required. The Company maintains credit insurance to cover many of its major
accounts. The Company&#146;s trade accounts receivable balance was $30.5&nbsp;million, net of allowances for
doubtful accounts of $1.3&nbsp;million, at January&nbsp;31, 2005, as compared to the balance of $39.3
million, net of allowances for doubtful accounts of $1.2&nbsp;million, at October&nbsp;31, 2004. At January
31, 2004, the trade accounts receivable balance was $27.4&nbsp;million, net of allowances for doubtful
accounts of $1.1&nbsp;million.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Inventory. </I>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. The Company&#146;s inventory balance was $59.2&nbsp;million, net of inventory write-downs of $1.1
million, at January&nbsp;31, 2005, as compared to an inventory balance of $49.2&nbsp;million, net of
inventory write-downs of $0.8&nbsp;million, at October&nbsp;31, 2004. At January&nbsp;31, 2004, the inventory
balance was $53.1&nbsp;million, net of inventory write-downs of $0.8&nbsp;million.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Asset Purchase Credits. </I>In November&nbsp;2000, the Company entered into an agreement with a third
party whereby prior seasons&#146; slower selling inventory which was not damaged was exchanged for
future asset purchase credits (&#147;APCs&#148;), which may be utilized by the Company to purchase future
goods and services over a four-year period. The original value of the inventory exchanged (at
cost) was $1.4&nbsp;million resulting in $1.4&nbsp;million in future APCs. In December&nbsp;2003, the Company
amended its agreement with the third party to exchange $0.9&nbsp;million of additional prior seasons&#146;
slower selling inventory (at cost) which was not damaged for an additional $0.9&nbsp;million in future
APCs and an extension of the original November&nbsp;2000 agreement through December&nbsp;1, 2007. 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. The Company purchases products such as
sales fixtures, office and packaging supplies, as well as temporary help, freight and printing
services from such third party suppliers. From time to time, the Company may enter into additional
contracts with such third party suppliers to use the APCs. Management reviews and estimates the
likelihood of fully utilizing the APCs on a periodic basis. If the Company is unable to find
suppliers who agree to accept the APCs in quantities as projected by management, a write-down of
the value of the APCs may be required. At January&nbsp;31, 2005, the Company had $0.6&nbsp;million of the
APCs remaining and management expects to fully utilize them over the remaining life of the contract
through December&nbsp;1, 2007. At January&nbsp;31, 2005, the Company has recorded $0.4&nbsp;million of the APCs
in its &#147;Other Current Assets&#148; line item and $0.2&nbsp;million in its &#147;Other Assets&#148; line item.


<P align="left" style="font-size: 10pt"><B>Off-Balance Sheet Arrangements</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At January&nbsp;31, 2005 and 2004, 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 which rely on
estimation techniques to calculate fair value. 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.


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<P align="left" style="font-size: 10pt"><B>Overview</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company earns revenues and income and generates cash through the design, marketing and
distribution of quality men&#146;s and women&#146;s sports apparel under the Ashworth<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> and
Callaway Golf apparel brands. The Company&#146;s products are sold in the United States, Europe, Canada
and various other international markets to selected golf pro shops, resorts, off-course specialty
shops, upscale department stores, to top specialty-advertising firms for the corporate market as
well as in the Company&#146;s own stores. Nearly all of the Company&#146;s production is through &#147;full
package&#148; purchases of ready-made goods with approximately 88% of its products manufactured in Asian
countries. The Company embroiders a majority of these garments with custom golf course, tournament
and corporate logos for its customers.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2004, the Company completed the acquisition (the &#147;Gekko Acquisition&#148;) of all of the
membership interests in Gekko Brands, LLC (&#147;Gekko&#148;), a leading designer, producer and distributor
of headwear and apparel under The Game<FONT style="font-family: Symbol">&#210;</FONT> and Kudzu<FONT style="font-family: Symbol">&#210;</FONT> brands. Ashworth expects that the
operations of this subsidiary will continue to focus on designing, producing and distributing
headwear and apparel. With the acquisition of Gekko, the Company expands its existing distribution
channels to include colleges and universities, NASCAR/racing markets, and sporting goods dealers
that serve the high school and college markets.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purchase price for the Gekko Acquisition was $24.0&nbsp;million consisting of $23.0&nbsp;million in
cash and a $1.0&nbsp;million promissory note. Up to an additional $6.5&nbsp;million will be paid to the
remaining members of Gekko&#146;s management if the subsidiary achieves specific EBIT and other
operating targets over approximately the next four years or through Ashworth&#146;s fiscal year 2008.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Gekko Acquisition, Ashworth entered into a new secured 5-year bank
facility comprised of a $20.0&nbsp;million term loan and a $35.0&nbsp;million line of credit replacing its
prior $55.0&nbsp;million facility. To finance the cash purchase price of the Gekko Acquisition,
Ashworth utilized the term loan together with part of the new line of credit.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also during the third quarter of fiscal 2004, the Company recorded a pre-tax charge of $3.0
million related to a settlement to conclude the securities class action lawsuit brought in 1999
against the Company and certain current and former directors and officers in the United States
District Court for the Southern District of California. The litigation was brought on behalf of a
class of investors who purchased the Company&#146;s stock in the open market between September&nbsp;4, 1997
and July&nbsp;15, 1998. Under the settlement, all claims have been dismissed and the litigation was
terminated in exchange for a payment of $15.3&nbsp;million, approximately 82% of which was paid by
Ashworth&#146;s insurance carriers. As part of the settlement, Ashworth has adopted modifications to
certain corporate governance policies.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the second quarter of fiscal 2004, the Company completed two transactions relating to
its distribution facilities. In February&nbsp;2004, the Company completed the sale and lease-back of
its old distribution center located in Carlsbad, California. The Company sold the Carlsbad
distribution center for $5.7&nbsp;million and realized a gain on sale of fixed assets of $1.6&nbsp;million.
In April&nbsp;2004, the Company completed the purchase of the new distribution facility in Oceanside,
California for approximately $14.0&nbsp;million. The Company applied the tax deferred gain on sale of
the old facility to reduce the cost basis of the new facility, for tax purposes, utilizing a
tax-deferred exchange under Internal Revenue Code section 1031.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first quarter of fiscal 2005, the Company placed into service its new distribution
center in Oceanside, California and is currently integrating information systems and improving
operational processes.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company includes F.O.B. purchase price, inbound freight charges, duty, buying commissions
and overhead in its cost of goods sold line item. Overhead costs include purchasing and
receiving costs, inspection costs, warehousing costs, internal transfers costs and other costs
associated with the Company&#146;s distribution. The Company does not exclude any of these costs from
cost of goods sold.


<P align="left" style="font-size: 10pt"><B>Results of Operations</B>



<P align="left" style="font-size: 10pt"><U><B>First quarter 2005 compared to First quarter 2004</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated net revenues for the first quarter of fiscal 2005 increased 33.6% to $36.5
million from $27.3&nbsp;million for the same period in 2004. The increase was primarily due to the
addition of Gekko&#146;s net revenues as well as higher revenues from the Company&#146;s retail distribution
channel and international segments. The increases were partially offset by decreases in net
revenues in the corporate, green grass and off-course specialty distribution channels.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net revenues for the domestic segment increased 36.9% to $31.6&nbsp;million for the current quarter
from $23.1&nbsp;million in the first quarter of 2004, primarily due to the acquisition of Gekko, which
contributed $8.6&nbsp;million in net revenues to the consolidated results for the first quarter of 2005.
Net revenues from the Company&#146;s retail distribution channel increased 1.3% or $48,000, primarily
driven by an approximately 20% year-over-year increase in sales of
men&#146;s apparel into the channel, partially offset by a decrease
in sales of women&#146;s apparel into the channel.
Net revenues from the green grass and off-course specialty distribution channel decreased 1.2% or
$163,000 due to generally slow golf industry conditions. Net revenues from the Company&#146;s corporate
distribution channel decreased by 8.6% or $404,000. The decrease in net revenues in the corporate
distribution channel was primarily resulting from a delay in the launch of our 2005
Authentics<FONT style="font-family: Symbol">&#228;</FONT> product line due to planned alterations of the product assortments within the
line.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net revenues for the Company&#146;s U.K. subsidiary increased 21.1% to $3.4&nbsp;million for the current
quarter from $2.8&nbsp;million for the same period of the prior fiscal year. The increase in net
revenues for the Company&#146;s U.K. subsidiary was primarily due to favorable market conditions driven
by strength of market currencies verses the U.S. dollar and favorable foreign currency exchange
rates fluctuations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net revenues for the Company&#146;s other international segment increase 4.8% but remained at
approximately $1.5&nbsp;million in the current quarter compared to the same quarter of the previous
year. The net revenues for the other international segment were affected by an increase in
international licensee and distributor revenues, partially offset by a decrease in revenues from
the Company&#146;s Canadian divisions.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated gross margin for the first quarter of fiscal 2005 increased 100 basis points to
40.1% as compared to 39.1% for the same quarter a year earlier. This improvement was primarily due
to the addition of The Game and Kudzu brands partially offset by increased costs related to the new
distribution center.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated selling, general and administrative (&#147;SG&#038;A&#148;) expenses increased 35.4% to $14.1
million for the first quarter of fiscal 2005 from $10.4&nbsp;million for the same period in fiscal 2004.
As a percent of net revenues, SG&#038;A expenses were 38.6% for the first quarter of fiscal 2005 as
compared to 38.1% for the same period of the prior year. The increase in SG&#038;A is primarily due to
the acquisition of Gekko in July&nbsp;2004 and incremental costs related to the timing of advertising
copy placement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other expense increased to $406,000 for the first quarter of fiscal 2005 from $63,000 in
the first quarter of fiscal 2004. The increase was primarily due to higher interest expense
resulting from increased long-term debt.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The effective income tax rate for the first quarter of fiscal 2005 remained unchanged from the
same period of fiscal year 2004 at 40.0% of pre-tax income.


<P align="left" style="font-size: 10pt"><B>Capital Resources and Liquidity</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s primary sources of liquidity for the next 12&nbsp;months 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. Ashworth&#146;s need for
working capital is seasonal, with the greatest requirements existing from approximately December
through the end of July each year. The Company typically builds up its inventory during this
period to provide product for shipment for the spring/summer selling season.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;6, 2004, the Company entered into a new business loan agreement with Union Bank of
California, N.A., as the administrative agent, and two other lenders. The new loan agreement is
comprised of a $20.0&nbsp;million term loan and a $35.0&nbsp;million revolving credit facility, which expires
on July&nbsp;6, 2009 and is collateralized by substantially all of the assets of the Company other than
the Company&#146;s real estate.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under this loan agreement, interest on the $20.0&nbsp;million term loan is fixed at 5.4% for the
term of the loan. Interest on the revolving credit facility is charged at the bank&#146;s reference
rate. At January&nbsp;31, 2005, the bank&#146;s reference rate was 5.25%. The loan agreement also provides
for optional interest rates based on London interbank offered rates (&#147;LIBOR&#148;) for periods of at
least 30&nbsp;days in increments of $0.5&nbsp;million.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;3, 2004, the Company entered into the First Amendment to the loan agreement to
amend Section&nbsp;6.12(a), Tangible Net Worth. The loan agreement, as amended, contains certain
financial covenants that include requirements that the Company maintain (1)&nbsp;a minimum tangible net
worth of $74.0&nbsp;million plus the net proceeds from any equity securities issued (including net
proceeds from stock option exercises) after the date of the loan agreement for the period ending
October&nbsp;31, 2004, and a minimum tangible net worth of $74.0&nbsp;million, plus 90% of net income after
taxes (without subtracting losses) earned in each quarterly accounting period commencing after
January&nbsp;31, 2005, plus the net proceeds from any equity securities issued (including net proceeds
from stock option exercises) after the date of the loan agreement, (2)&nbsp;a minimum earnings before
interest, income taxes, depreciation and amortization (&#147;EBITDA&#148;) determined on a rolling four
quarters basis ranging from $16.5&nbsp;million at July&nbsp;6, 2004 and increasing over time to $27.0&nbsp;million
at October&nbsp;31, 2008 and thereafter, (3)&nbsp;a minimum ratio of cash and accounts receivable to current
liabilities of 0.75:1.00 for fiscal quarters ending January&nbsp;31 and April&nbsp;30 and 1.00:1.00 for
fiscal quarters ending July&nbsp;31 and October&nbsp;31, and (4)&nbsp;a minimum fixed charge coverage ratio of
1.10:1.00 at April&nbsp;30, 2004 and 1.25:1.00 thereafter. The loan agreement limits annual lease and
rental expense associated with the Company&#146;s new distribution center in Oceanside, California as
well as annual capital expenditures in any single fiscal year on a consolidated basis in excess of
certain amounts allowed for the acquisition of real property and equipment in connection with the
new distribution center. The loan agreement has an additional requirement where, for any period of
30 consecutive days, the total indebtedness under the revolving credit facility may not be more
than $15.0&nbsp;million. The loan agreement also limits the annual aggregate amount the Company may
spend to acquire shares of its common stock. The Company is in compliance with all of the loan
agreement&#146;s financial covenants as of January&nbsp;31, 2005.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The line of credit under the loan agreement 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 $4.0&nbsp;million at January&nbsp;31, 2005 as compared to $4.1&nbsp;million outstanding at
January&nbsp;31, 2004


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<P align="left" style="font-size: 10pt">under the prior loan agreement. The Company had $8.3&nbsp;million outstanding against
the revolving credit facility under this loan agreement at January&nbsp;31, 2005, compared to $3.8&nbsp;million outstanding
at January&nbsp;31, 2004 under the prior agreement. The decrease in outstanding letters of credit is
primarily due to the continued conversion of vendors from letters of credit to open credit terms.
The increase in borrowings against the revolving credit facility is primarily due to a $1.5&nbsp;million
incremental increase in capital expenditures, $1.0&nbsp;million in repayments on the term loan and other
operating cash flow needs. The Company had $18.0&nbsp;million outstanding on the term loan under this
loan agreement at January&nbsp;31, 2005 compared to $19.0&nbsp;million at October&nbsp;31, 2004. At January&nbsp;31,
2005, $22.7&nbsp;million was available for borrowings against the revolving credit facility under this
loan agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the three months ended January&nbsp;31, 2005, cash used in operations was $4.4&nbsp;million as
compared to $2.0&nbsp;million used in operations during the same period of the prior fiscal year. The
increase in cash used in operations was primarily due to higher working capital requirements as the
result of the acquisition of Gekko.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net trade receivables were $30.5&nbsp;million at January&nbsp;31, 2005, a decrease of $8.7&nbsp;million from
the balance at October&nbsp;31, 2004. Because the Company&#146;s business is seasonal, the net receivables
balance may more meaningfully be compared to the balance of $27.4&nbsp;million at January&nbsp;31, 2004,
rather than the year-end balance. The comparison of the first quarter fiscal 2005 balance to the
first quarter fiscal 2004 balance shows an increase of approximately $3.1&nbsp;million. This increase
is due to the addition of the Gekko net trade receivables of $4.1&nbsp;million, partially
offset by a decrease in trade receivables due to more timely collections.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net inventories increased 20.3% to $59.2&nbsp;million at January&nbsp;31, 2005 from $49.2&nbsp;million at
October&nbsp;31, 2004, primarily due to the seasonal nature of the Company&#146;s golf distribution channel
and the Company&#146;s inventory requirements to meet market demand in the spring/summer selling season.
Compared to net inventories of $53.1&nbsp;million at January&nbsp;31, 2004, net inventories at January&nbsp;31,
2005 have increased by 11.6%, primarily due to the addition of Gekko. The Company
believes that its current inventory mix is appropriate to respond to anticipated market demand.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current liabilities increased 13.3% to $32.9&nbsp;million at January&nbsp;31, 2005 from $29.1&nbsp;million at
October&nbsp;31, 2004. Compared to current liabilities of $18.3&nbsp;million at January&nbsp;31, 2004, current
liabilities increased 79.8%, primarily due to the $3.8&nbsp;million in additional current liabilities
from the acquisition of Gekko, the additional $4.2&nbsp;million in the current portion of long-term debt
related to the term loan used to finance part of the Gekko Acquisition and an increase in
borrowings against the line of credit of $4.5&nbsp;million to fund working capital requirements.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;25, 2002, the Company entered into an agreement to purchase the land and building,
to be built to the Company&#146;s specifications, in the Ocean Ranch Corporate Center in Oceanside,
California. The building was constructed with approximately 200,000 square feet of useable office
and warehouse space to warehouse, embroider, finish, package and distribute the Company&#146;s clothing
products and related accessories. On April&nbsp;2, 2004, the Company completed the purchase of the new
distribution center for approximately $14.0&nbsp;million and entered into a secured loan agreement with
a bank to finance $11.7&nbsp;million of the purchase price. The loan is at a fixed interest rate of
5.0% and will be amortized over 30&nbsp;years, but is due and payable on May&nbsp;1, 2014. To fulfill
certain requirements under the mortgage loan agreement, the Company created Ashworth EDC LLC, a
special purpose entity, to be the purchaser and mortgagor. Ashworth EDC LLC is a wholly owned
limited liability company organized under the laws of the State of Delaware and its results and
assets are reported in the condensed consolidated statements included in this report. On November
1, 2004, the new distribution center was placed into service.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first three months of fiscal 2005, the Company incurred capital expenditures of
$2.5


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<P align="left" style="font-size: 10pt">million primarily for computer systems and equipment, new outlet stores and distribution
center equipment. The Company anticipates capital spending of between $2.5&nbsp;million and $3.5&nbsp;million
during the remainder of fiscal 2005, primarily on outlet stores openings, distribution center
related improvements and renovations and upgrades of computer systems and equipment. Management
currently intends to finance the purchase of the additional capital equipment from the Company&#146;s
cash resources, but may use leases or equipment financing agreements if deemed appropriate.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company capitalized interest of $27,000 during the three months ended January&nbsp;31, 2004
related to self-constructed construction in progress for the new distribution center. Construction
of the new distribution center was completed and the self-constructed assets were placed in service
on November&nbsp;1, 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;24, 2004, the Company sold certain property located in Carlsbad, California, used
in its distribution operation for $5.7&nbsp;million and recorded a gain on disposal of fixed assets of
$1.6&nbsp;million. The land, buildings and other assets were reported in the Company&#146;s domestic segment
and were sold as a unit on an &#147;as is&#148; basis. As a result of the sale, the Company paid the $2.6
million balance due on the mortgage relating to the subject property. The Company also entered
into a lease agreement to lease the facility from the new owner. The term of the lease commenced
on February&nbsp;24, 2004 and terminated on December&nbsp;31, 2004. Under the terms of the prior lease
agreement, the Company paid monthly rent of approximately $47,000 plus taxes, insurance and
utilities.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;30, 2004, the Company agreed to a schedule with Key Equipment Finance, a Division of
Key Corporate Capital, Inc. (&#147;KEF&#148;), thereby completing the Master Equipment Lease Agreement, dated
as of June&nbsp;23, 2003, previously entered into by Ashworth and KEF. Under the terms of the schedule,
we will be leasing equipment for our distribution center in Oceanside, California. The aggregate
cost of the equipment is approximately $10.4&nbsp;million. The initial term of the lease is for
ninety-one (91)&nbsp;months beginning on September&nbsp;1, 2004 and the monthly rent payment is $128,800. At
the end of the initial term, the Company will have the option to (1)&nbsp;purchase all, but not less
than all, equipment on the initial term expiration date at a price equal to the greater of (a)&nbsp;the
then fair market sale value thereof, or (b)&nbsp;12% of the total cost of the equipment (plus, in each
case, applicable sales taxes), (2)&nbsp;renew the lease on a month-to-month basis at the same rent
payable at the expiration of the initial lease term, (3)&nbsp;renew the lease for a minimum period of
not less than 12 consecutive months at the then current fair market rental value, or (4)&nbsp;return
such equipment to KEF pursuant to, and in the condition required by, the lease.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is party to an exclusive licensing agreement with Callaway Golf Company which
requires certain minimum royalty payments which began in January&nbsp;2003. The agreement is effective
until December&nbsp;31, 2010 and, at Ashworth&#146;s sole discretion, may be extended for on five-year term
provided that Ashworth meets or exceeds certain minimum requirements for calendar years 2008 and
2009, that Ashworth gives notice of its intention to renew by January&nbsp;1, 2010 and that Ashworth is
not in material breach of the agreement. The revenues from the Callaway Golf apparel product line
have been, and the Company believes will continue to be, sufficient to cover such minimum
guarantees.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock and capital in excess of par value increased by $463,000 in the three months
ended January&nbsp;31, 2005, of which $357,000 is due to the issuance of 62,866 shares of common stock
on exercise of options and $106,000 is the tax benefit related to the exercise of those options.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on current levels of operations, the Company expects that sufficient cash flow will be
generated from operations so that, combined with other financing alternatives available, including
cash on hand, borrowings under its bank credit facility and leasing alternatives, the Company will
be able to meet all of its debt service, capital expenditure and working capital requirements for
at least the next 12&nbsp;months.


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<P align="left" style="font-size: 10pt"><B>Derivatives</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146;s U.K. subsidiary
enters into similar contracts with its bank to hedge against currency fluctuations between the
British pound and the U.S. dollar and the British pound and other European currencies. Realized
gains and losses on these contracts are recognized in operations in the same period as the hedged
transactions. These contracts have maturity dates that do not normally exceed 12&nbsp;months. During
the quarter ended January&nbsp;31, 2005, neither the Company nor any of its subsidiaries had any
outstanding foreign exchange contracts.


<P align="left" style="font-size: 10pt"><B>New Accounting Standards</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2004, the FASB issued SFAS No.&nbsp;151, <I>Inventory Costs, an amendment of ARB No.&nbsp;43,
Chapter&nbsp;4. </I>This statement amends the guidance in ARB No.&nbsp;43, Chapter&nbsp;4, <I>Inventory Pricing</I>, to
clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and
wasted material (spoilage). Paragraph&nbsp;5 of ARB No.&nbsp;43, Chapter&nbsp;4, previously stated that &#147;...under
some circumstances, items such as idle facility expense, excessive spoilage, double freight, and
rehandling costs may be so abnormal as to require treatment as current period charges....&#148; SFAS No.
151 requires that those items be recognized as current-period charges regardless of whether they
meet the criterion of &#147;so abnormal.&#148; In addition, this statement requires that allocation of fixed
production overheads to the costs of conversion be based on the normal capacity of the production
facilities. The provisions of SFAS 151 shall be applied prospectively and are effective for
inventory costs incurred during fiscal years beginning after June&nbsp;15, 2005, with earlier
application permitted for inventory costs incurred during fiscal years beginning after the date
this Statement is issued. The Company anticipates adopting SFAS No.&nbsp;151 effective November&nbsp;1,
2005. The Company&#146;s adoption of SFAS No.&nbsp;151 is not expected to have a material impact on the
Company&#146;s financial position and results of operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;153, <I>Exchanges of Nonmonetary Assets, an amendment
of APB Opinion No.&nbsp;29</I>. The guidance in APB Opinion No.&nbsp;29, <I>Accounting for Nonmonetary
Transactions</I>, is based on the principle that exchanges of nonmonetary assets should be measured
based on the fair value of assets exchanged. The guidance in that Opinion, however, included
certain exceptions to that principle. This Statement amends Opinion 29 to eliminate the exception
for nonmonetary exchanges of similar productive assets that do not have commercial substance. A
nonmonetary exchange has commercial substance if the future cash flows of the entity are expected
to change significantly as a result of the exchange. SFAS No.&nbsp;153 is effective for nonmonetary
exchanges occurring in fiscal periods beginning after June&nbsp;15, 2005. The Company anticipates
adopting SFAS No.&nbsp;153 effective November&nbsp;1, 2005. The Company&#146;s adoption of SFAS No.&nbsp;153 is not
expected to have a material impact on the Company&#146;s financial position and results of operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123 (revised 2004) (&#147;SFAS No.&nbsp;123(R)), <I>Share-Based
Payment</I>. SFAS No.&nbsp;123(R) revises FASB Statement No.&nbsp;123, <I>Accounting for Stock-Based Compensation</I>,
and supersedes APB Opinion No.&nbsp;25, <I>Accounting for Stock Issued to Employees, </I>and its related
implementation guidance. The Statement focuses primarily on accounting for transactions in which
an entity obtains employee services in share-based payment transactions. The Statement requires a
public entity to measure the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award (with limited exceptions). That cost
will be


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<P align="left" style="font-size: 10pt">recognized over the period during which an employee is required to provide service in
exchange for the award &#150; the requisite service period (usually the vesting period). The cost of employee
services received shall be measured at its then current fair value and then remeasured at fair
value at each reporting date through the settlement date. Changes in fair value during the
requisite service period will be recognized as compensation cost over that period. The Statement
is effective as of the beginning of the first interim or annual reporting period that begins after
June&nbsp;15, 2005. The Statement also requires that, as of the required effective date, all public
entities that used the fair-value based method for either recognition or disclosure under Statement
123 shall apply the modified prospective application transition method. For periods before the
required effective date, public entities may elect to apply the modified retrospective application
transition method. The Company anticipates adopting SFAS No.&nbsp;123(R), effective August&nbsp;1, 2005,
using the modified prospective application transition method. Under that method, the provisions of
the Statement apply to new awards and to awards modified, repurchased, or cancelled after the
required effective date. Additionally, compensation cost for the portion of awards for which the
requisite service has not been rendered that are outstanding as of the required effective date
shall be recognized as the requisite service is rendered on or after the required effective date.
Although the Company&#146;s adoption of SFAS No.&nbsp;123(R) could have a material impact on the Company&#146;s
financial position and results of operations, management is still evaluating the potential impact
from adopting this Statement.



<P align="left" style="font-size: 10pt"><B>Cautionary Statements and Risk Factors</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This report contains certain forward-looking statements, including without limitation those
regarding the Company&#146;s plans and expectations for revenue growth, product lines, strategic
alliances, designs and seasonal collections, capital spending, marketing programs, foreign
sourcing, cost controls, inventory levels and availability of working capital. These
forward-looking statements may contain the words &#147;believe,&#148; &#147;anticipate,&#148; &#147;expect,&#148; &#147;estimate,&#148;
&#147;project,&#148; &#147;will be,&#148; &#147;will continue,&#148; &#147;will likely result&#148; or other similar words and phrases.
Readers are cautioned not to place undue reliance on these forward-looking statements. The Company
undertakes no obligation to update any such statements or publicly announce any updates or
revisions to any of the forward-looking statements contained herein. Forward-looking statements
and the Company&#146;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&#146;s business
in general is subject to certain risks that could affect the value of the Company&#146;s common stock.
These risks include, but are not limited to, the following:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">

<TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>Demand for the Company&#146;s products may decrease significantly if
the economy weakens, if the popularity of golf decreases, or if
unusual weather conditions cause a reduction in rounds played.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>Like other apparel manufacturers, the Company must correctly
anticipate and help direct fashion trends within its industry.
The Company&#146;s results of operations would suffer if the Company
fails to develop fashions or styles that are well received in any
season.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>The Company&#146;s results of operations would be adversely affected if
the new Oceanside distribution center does not operate as
anticipated or functionality problems are encountered. Any such
operational problems may cause the Company to incur additional
expense, experience delays in customer shipments, or require the
Company to lease additional distribution space. In addition, the
Company&#146;s results of operations could be negatively impacted if
future sales volume growth does not reach expected levels and the
facility&#146;s additional distribution capacity is not fully utilized,
or if the Company does not achieve projected cost savings from the
new distribution facilities as soon as, or in the amounts,
anticipated.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>The Company is party to a multi-year licensing agreement to
design, source and sell Callaway Golf apparel primarily in the
United States, Europe and Canada. The Company must correctly
anticipate</TD>
</TR>

</TABLE>

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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>the fashion trends and demand for these product lines.
The Company&#146;s results of operations would
suffer if it fails to develop fashions or styles for the Callaway Golf apparel product line
that are well received in any season.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>The market for golf apparel and sportswear is extremely
competitive. The Company has several strong competitors that are
better capitalized. Outside the green grass market, the Company&#146;s
market share is not as significant. Price competition or industry
consolidation could weaken the Company&#146;s competitive position.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>In July&nbsp;2004, the Company acquired Gekko, a
leading designer, producer and distributor of headwear and apparel
under The Game<FONT style="font-family: Symbol">&#210;</FONT> and Kudzu<FONT style="font-family: Symbol">&#210;</FONT> brands. The Company must
successfully integrate the acquisition to realize the expected
growth in new, quality channels of distribution for the
Ashworth<FONT style="font-family: Symbol">&#210;</FONT> and Callaway Golf apparel brands as well as
further growth from The Game and Kudzu brands&#146; sales into the
Company&#146;s current distribution channels. The Company&#146;s results of
operations would be adversely affected if it fails to successfully
integrate the new operations as anticipated or the expected
synergies are not realized.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>The outbreak of Severe Acute Respiratory Syndrome (&#147;SARS&#148;)
affected travel to countries where the Company&#146;s products are
manufactured. Visiting manufacturers in the affected countries is
an important part of the product development process for the
Company. If travel to these countries is again restricted by a
similar outbreak of SARS, the Avian Flu, or other life threatening
communicable diseases, the Company&#146;s product development process
and reputation as a designer and manufacturer of innovative
products may be adversely affected, our international production
and shipments may be limited, and the Company could lose sales.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>The Company&#146;s foreign suppliers&#146; ability to deliver products may
be adversely affected by future changes in tariffs, quotas and
other trade barriers imposed by the foreign countries, as well as
by the United States. Additionally, such changes could result in
increased volumes of products being delivered through domestic
ports resulting in shipping, port and other transportation related
delays. As a direct result of such delays, if any, the Company
could lose sales. In particular, the suppliers for Gekko are
concentrated in China.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>The Company relies on domestic and foreign contractors to
manufacture various products. If these contractors deliver goods
late or fail to meet the Company&#146;s quality standards, the Company
could lose sales and its reputation could suffer.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>The Company&#146;s domestic and foreign suppliers rely on readily
available supplies of raw materials at reasonable prices. If
these raw materials are in short supply or are only available at
inflated prices, the contractors may be unable to deliver the
Company&#146;s products in sufficient quantities or at expected prices
and the Company could lose sales and have lower gross profit
margins.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>An increase in terrorist activities, as well as the continued
conflicts around the world, would likely adversely affect the
level of demand for the Company&#146;s products as customers&#146; and
consumers&#146; attention and interest are diverted from golf and
fashion and become focused on these events and the economic,
political, and public safety issues and concerns associated with
them. Also, such events could adversely affect the Company&#146;s
ability to manage its supply and delivery of product from domestic
and foreign contractors. If such events caused a significant
disruption in domestic or international shipments, the Company&#146;s
ability to fulfill customer orders also would be materially
adversely affected.</TD>
</TR>

</TABLE>

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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>If economic conditions deteriorate, the ability of the Company&#146;s
customers to pay current obligations
may be adversely impacted and the Company may experience an increase in delinquent and
uncollectable accounts.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>The Company is from time to time party to claims and litigation
proceedings. Such matters include the specific litigation
described in this report and other litigation arising in the
ordinary course of business. See &#147;Legal Proceedings,&#148; below.
Such matters are subject to many uncertainties and the Company
cannot predict with any assurances the outcomes and ultimate
financial impact of any such matters. There can be no guarantees
that actions that have been or may be brought against the Company
in the future will be resolved in the Company&#146;s favor or that
insurance carried by the Company will be available or paid to
cover any litigation exposure. Any losses resulting from
settlements or adverse judgments arising out of these claims could
materially and adversely affect the Company&#146;s consolidated
financial position and results of operations.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>Fluctuations in foreign currency exchange rates could affect the
Company&#146;s ability to sell its products in foreign markets and the
value in U.S. dollars of revenues received in foreign currencies.
The Company&#146;s revenues from its international segment may also be
adversely affected by taxation and laws or policies of the foreign
countries in which the Company has operations, as well as laws and
policies of the United States affecting foreign trade, investment
and taxation.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>The Company maintains high levels of inventory to support its
Authentics <SUP style="font-size: 85%; vertical-align: text-top">TM </SUP> program as well as the Callaway
Golf apparel basics. Additional products, greater sales volume,
and customer trends toward increased &#147;at-once&#148; ordering may
require increased inventory. Disposal of excess prior season
inventory is an ongoing part of the Company&#146;s business, and
write-downs of inventories may materially impair the Company&#146;s
financial performance in any period. Particular inventories may
be subject to multiple write-downs if the Company&#146;s initial
reserve estimates for inventory obsolescence or lack of throughput
prove to be too low. These risks increase as inventory increases.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><FONT face="wingdings">&#250;</FONT>&nbsp;&nbsp;</TD>
    <TD>Pursuant to Section&nbsp;404 of the Sarbanes-Oxley Act of 2002, we will
be required to perform an evaluation of our internal controls over
financial reporting and have our auditor attest to such evaluation
as of October&nbsp;31, 2005. We have prepared an internal plan of
action for compliance, including a timeline and scheduled
activities, although as of the date of this filing we have not yet
completed the evaluation. Our auditors have not yet completed
their testing of our internal controls. Compliance with these
requirements has been and continues to be expensive and time
consuming. If we fail to timely complete this evaluation, or if
our auditors cannot timely attest to our evaluation, we could be
subject to regulatory scrutiny and a loss of public confidence in
our internal controls.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In designing and evaluating our internal controls over financial reporting, we recognize that
any internal control or procedure, no matter how well designed and operated, can provide only
reasonable assurance of achieving desired control objectives, and management is required to
apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures. While we believe that our internal controls over financial reporting currently
provide reasonable assurance of achieving their control objectives, no system of internal
controls can be designed to provide absolute assurance of effectiveness. See &#147;Item&nbsp;4. Controls
and Procedures&#148; contained in this report. A material failure of internal controls over
financial reporting could materially impact our reported financial results and the market price
of our stock could significantly decline. Additionally, adverse publicity related to a material
failure of internal controls over financial reporting could have a negative impact on our
reputation and business.</TD>
</TR>

</TABLE>

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</TABLE>

<DIV align="left">
<A name="107"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>



<P align="left" style="font-size: 10pt"><B>Interest Rate Risk</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s debt consists of a term loan, mortgage note, notes payable, capital lease and
line of credit obligations that had a total balance of $38.9&nbsp;million at January&nbsp;31, 2005. The debt
bears interest at fixed rates ranging from 3.5% to 5.4%, which approximates fair value based on
current rates offered for debt with similar risks and maturities. The Company also had $8.3
million outstanding at January&nbsp;31, 2005 on its revolving line of credit with interest charged at a
weighted average rate of 4.21%. Under the loan agreement, borrowings against the revolving line of
credit are charged interest at the bank&#146;s reference rate (prime)&nbsp;or, at the Company&#146;s option, at an
optional interest rate based on LIBOR in increments of $0.5&nbsp;million for periods of at least 30
days. At January&nbsp;31, 2005, the bank&#146;s reference rate was 5.25%. A hypothetical 10% increase in
interest rates during the three months ended January&nbsp;31, 2005 would have resulted in an $8,000
decrease in net income.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For details regarding the Company&#146;s variable and fixed rate debt, see Item&nbsp;2. Management
Discussion and Analysis of Financial Condition and Results of Operations &#150; Capital Resources and
Liquidity.


<P align="left" style="font-size: 10pt"><B>Foreign Currency Exchange Rate Risk</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;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&#146;s products or losses from currency exchange rates. From time to
time the Company enters into short-term foreign exchange contracts with its bank to hedge against
the impact of currency fluctuations between the U.S. dollar and the British pound 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&#146;s U.K. subsidiary enters into
similar contracts with its bank to hedge against currency fluctuations between the British pound
and the U.S. dollar and 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&nbsp;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&#146;s results of operations. During the quarter ended January
31, 2005, neither the Company nor any of its subsidiaries had any outstanding foreign exchange
contracts.

<DIV align="left">
<A name="108"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;4. CONTROLS AND PROCEDURES</B>



<P align="left" style="font-size: 10pt"><B>Evaluation of Disclosure Controls and Procedures</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2005, the Company carried out an evaluation, under the supervision and with
the participation of the Company&#146;s management, including the Company&#146;s Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the Company&#146;s
disclosure controls and procedures pursuant to Exchange Act Rule&nbsp;13a-15. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company&#146;s
disclosure controls and procedures are effective and provide reasonable assurance that information
required to be disclosed by the Company in the reports it files under the Securities Exchange Act
of 1934, as amended, is recorded, processed,


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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">summarized and reported within required time periods.



<P align="left" style="font-size: 10pt"><B>Changes in Internal Control over Financial Reporting</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There was no significant change in the Company&#146;s internal controls over financial reporting
during the Company&#146;s first quarter of fiscal 2005 that has materially affected or is reasonably
likely to materially affect the Company&#146;s internal control over financial reporting.

<DIV align="left">
<A name="109"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>PART II</B>



<P align="center" style="font-size: 10pt"><B>OTHER INFORMATION</B>


<DIV align="left">
<A name="110"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;1. LEGAL PROCEEDINGS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;22, 1999, Milberg Weiss Bershad Hynes &#038; Lerach LLP filed a class action in the
United States District Court for the Southern District of California (&#147;U.S. District Court&#148;) on
behalf of purchasers of the Company&#146;s common stock during the period between September&nbsp;4, 1997 and
July&nbsp;15, 1998. The action was subsequently consolidated with two similar suits and plaintiffs
filed their Amended and Consolidated Complaint on December&nbsp;17, 1999. Upon the Company&#146;s motion,
the U.S. District Court dismissed the Complaint with leave to amend on July&nbsp;18, 2000. On September
18, 2000, plaintiffs served their Second Consolidated Amended Complaint (&#147;Second Amended
Complaint&#148;). On November&nbsp;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 alleged that, among other things, during the class period
and in violation of the Securities Exchange Act of 1934, the Company&#146;s financial statements, as
reported, did not conform to generally accepted accounting principles with respect to revenues and
inventory levels. It further alleged that certain Company executives made false or misleading
statements or omissions concerning product demand and that two former executives engaged in insider
trading. On November&nbsp;8, 2004, the U.S. District Court entered a Final Approval of Settlement.
Under the settlement, all claims were dismissed and the litigation was concluded in exchange for
a payment of $15.25&nbsp;million, approximately 82% of which was paid by Ashworth&#146;s insurance carriers.
As part of the settlement, Ashworth has adopted modifications to certain corporate governance
policies. Ashworth recorded a pre-tax charge of $3&nbsp;million in the third quarter of fiscal year
2004 related to settlement of this suit.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.

<DIV align="left">
<A name="111"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS &#150; None</B>

<DIV align="left">
<A name="112"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;3. DEFAULTS UPON
SENIOR SECURITIES &#150; None.</B>

<DIV align="left">
<A name="113"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS &#150; Not applicable.</B>


<P align="center" style="font-size: 10pt">23
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="114"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;5. OTHER
INFORMATION</B>


<P align="left" style="font-size: 10pt">As previously disclosed and
discussed above under Item&nbsp;1, Legal Proceedings, the Company
entered into that certain Stipulation and Agreement of Settlement in
which the U.S.&nbsp;District Court entered a Final Approval of
Settlement on November&nbsp;8, 2004.


<DIV align="left">
<A name="115"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;6. EXHIBITS</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Exhibits</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3(a)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Incorporation as filed March&nbsp;19, 1987 with the Secretary of State of Delaware,
Amendment to Certificate of Incorporation as filed August&nbsp;3, 1987 and Amendment to Certificate
of Incorporation as filed April&nbsp;26, 1991 (filed as Exhibit&nbsp;3(a) to the Company&#146;s Registration
Statement dated February&nbsp;21, 1992 (File No.&nbsp;33-45078) and incorporated herein by reference)
and Amendment to Certificate of Incorporation as filed April&nbsp;6, 1995 (filed as Exhibit&nbsp;3(a) to
the Company&#146;s Form&nbsp;10-K for the fiscal year ended October&nbsp;31, 1994 (File No.&nbsp;001-14547) and
incorporated herein by reference).</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3(b)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Bylaws of the Company (filed as Exhibit&nbsp;3.1 to the Company&#146;s Current
Report on Form&nbsp;8-K on February&nbsp;23, 2000 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4(a)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen certificate for Common Stock, par value $.001 per share, of the Company (filed as
Exhibit&nbsp;4(a) to the Company&#146;s Registration Statement dated November&nbsp;4, 1987 (File No.
33-16714-D) and incorporated herein by reference).</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4(b)(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen certificate for Options granted under the Amended and Restated Nonqualified Stock
Option Plan dated March&nbsp;12, 1992 (filed as Exhibit&nbsp;4(b) to the Company&#146;s Form&nbsp;10-K for the
fiscal year ended October&nbsp;31, 1993 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4(b)(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen certificate for Options granted under the Founders Stock Option Plan dated
November&nbsp;6, 1992 (filed as Exhibit&nbsp;4(b)(2) to the Company&#146;s Form&nbsp;10-K for the fiscal year
ended October&nbsp;31, 1993 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4(c)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen certificate for Options granted under the Incentive Stock Option Plan dated June&nbsp;15,
1993 (filed as Exhibit&nbsp;4(c) to the Company&#146;s Form&nbsp;10-K for the fiscal year ended October&nbsp;31,
1993 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4(d)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rights Agreement dated as of October&nbsp;6, 1998 and amended on February&nbsp;22, 2000 by and between
Ashworth, Inc. and American Securities Transfer &#038; Trust, Inc. (filed as Exhibit&nbsp;4.1 to the
Company&#146;s Form&nbsp;8-K filed on March&nbsp;14, 2000 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(a)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Personal Services Agreement and Acknowledgement of Termination of Executive Employment
effective December&nbsp;31, 1998 by and between Ashworth, Inc. and Gerald W. Montiel (filed as
Exhibit&nbsp;10(b) to the Company&#146;s Form&nbsp;10-K for the fiscal year ended October&nbsp;31, 1998 (File No.
001-14547) and incorporated herein by reference).</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(b)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment to Personal Services Agreement effective January&nbsp;1, 1999 by and between Ashworth,
Inc. and Gerald W. Montiel (filed as Exhibit&nbsp;10(c) to the Company&#146;s Form&nbsp;10-K for the fiscal
year ended October&nbsp;31, 1998 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">24
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Exhibits</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(c)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Amended and Restated Executive Employment Agreement effective February&nbsp;22, 1999 by and
between Ashworth, Inc. and Randall L. Herrel, Sr. (filed as Exhibit&nbsp;10(a) to the Company&#146;s
Form&nbsp;10-Q for the quarter ended April&nbsp;30, 1999 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(d)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement effective December&nbsp;15, 2000 by and between Ashworth, Inc. and Terence
W. Tsang (filed as Exhibit&nbsp;10(f) to the Company&#146;s Form&nbsp;10-Q for the quarter ended January&nbsp;31,
2001 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(e)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Nonqualified Stock Option Plan dated November&nbsp;1, 1996 (filed as Exhibit
10(i) to the Company&#146;s Form&nbsp;10-K for the fiscal year ended October&nbsp;31, 2000 (File No.
001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(f)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Incentive Stock Option Plan dated November&nbsp;1, 1996 (filed as Exhibit
10(j) to the Company&#146;s Form&nbsp;10-K for the fiscal year ended October&nbsp;31, 2000 (File No.
001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(g)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated 2000 Equity Incentive Plan dated December&nbsp;14, 1999 adopted by the
stockholders on March&nbsp;24, 2000 (filed as Exhibit&nbsp;4.1 to the Company&#146;s Form&nbsp;S-8 filed on
December&nbsp;12, 2000 (File No.&nbsp;333-51730) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(h)(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Credit Agreement dated July&nbsp;6, 2004, between Ashworth, Inc. as Borrower, Union Bank of
California, N.A., as Administrative Agent and Lender, Bank of the West and Columbus Bank and
Trust as Lenders, expiring July&nbsp;6, 2009 (filed as Exhibit&nbsp;10(z)(1) to the Company&#146;s Form&nbsp;10-Q
for the quarter ended July&nbsp;31, 2004 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(h)(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Guaranty Agreement dated July&nbsp;6, 2004 between Ashworth Store I, Inc., Ashworth Store II,
Inc., Ashworth Acquisition Corp, Gekko Brands, LLC, Kudzu, LLC and The Game, LLC as Guarantors
and Union Bank of California, N.A., as Administrative Agent on behalf of Ashworth, Inc. as the
Borrower (filed as Exhibit&nbsp;10(z)(2) to the Company&#146;s Form&nbsp;10-Q for the quarter ended July&nbsp;31,
2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(h)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Security Agreement effective as of July&nbsp;6, 2004 to the Credit Agreement dated July&nbsp;6,
2004, between Ashworth, Inc. as Pledgor, Union Bank of California, N.A., as Administrative
Agent and Lender, Bank of the West and Columbus Bank and Trust as Lenders, expiring July&nbsp;6,
2009(filed as Exhibit&nbsp;10(z)(3) to the Company&#146;s Form&nbsp;10-Q for the quarter ended July&nbsp;31, 2004
(File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(h)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Security Agreement effective as of July&nbsp;6, 2004 to the Credit Agreement dated July&nbsp;6,
2004, between Ashworth Store I, Inc., Ashworth Store II, Inc., Ashworth Acquisition Corp,
Gekko Brands, LLC, Kudzu, LLC and The Game, LLC as Pledgor, Union Bank of California, N.A., as
Administrative Agent and Lender, Bank of the West and Columbus Bank and Trust as Lenders,
expiring July&nbsp;6, 2009 (filed as Exhibit&nbsp;10(z)(4) to the Company&#146;s Form&nbsp;10-Q for the quarter
ended July&nbsp;31, 2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(h)(5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed of Hypothec of Universality of Moveable Property effective as of July&nbsp;6, 2004 to the
Credit Agreement dated July&nbsp;6, 2004, between Ashworth, Inc. as Grantor, Union Bank of
California, N.A., as Administrative Agent and Lender, Bank of the West and Columbus Bank and
Trust as Lenders, expiring July&nbsp;6, 2009 (filed as Exhibit&nbsp;10(z)(5) to the Company&#146;s Form&nbsp;10-Q
for the quarter ended July&nbsp;31, 2004 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">25
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Exhibits</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(h)(6)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Equitable Mortgage Over Securities effective as of July&nbsp;6, 2004 to the Credit Agreement
dated July&nbsp;6, 2004, between Ashworth, Inc. as Mortgagor, Union Bank of California, N.A., as
Security Trustee and Beneficiary, Bank of the West and Columbus Bank and Trust as
Beneficiaries, expiring July&nbsp;6, 2009 (filed as Exhibit&nbsp;10(z)(6) to the Company&#146;s Form&nbsp;10-Q for
the quarter ended July&nbsp;31, 2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(h)(7)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Amendment effective as of September&nbsp;3, 2004 to the Credit Agreement dated
July&nbsp;6, 2004, between Ashworth, Inc. as Borrower, Union Bank of California, N.A., as
Administrative Agent and Lender, Bank of the West and Columbus Bank and Trust as Lenders,
expiring July&nbsp;6, 2009 (filed as Exhibit&nbsp;10(z)(7) to the Company&#146;s Form&nbsp;10-Q for the quarter
ended July&nbsp;31, 2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(i)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Change in Control Agreement dated November&nbsp;1, 2000 by and between Ashworth, Inc. and Randall
L. Herrel, Sr. (filed as Exhibit&nbsp;10(m) to the Company&#146;s Form&nbsp;10-K for the fiscal year ended
October&nbsp;31, 2000 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(j)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Change in Control Agreement dated November&nbsp;1, 2000 by and between Ashworth, Inc. and Terence
W. Tsang (filed as Exhibit&nbsp;10(n) to the Company&#146;s Form&nbsp;10-K for the fiscal year ended October
31, 2000 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(k)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Promotion Agreement effective November&nbsp;1, 1999 by and between Ashworth, Inc. and Fred
Couples (filed as Exhibit&nbsp;10(o) to the Company&#146;s Form&nbsp;10-K for the fiscal year ended October
31, 2000 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(l)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Contract Termination Agreement effective October&nbsp;31, 2002 by and among Ashworth, Inc., James
Nantz, III and Nantz Communications, Inc. (filed as Exhibit&nbsp;10(p) to the Company&#146;s Form&nbsp;10-K
for the fiscal year ended October&nbsp;31, 2002 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(m)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Real Estate Purchase and Sale Agreement and Joint Escrow Instructions effective October&nbsp;25,
2002 by and between Innovative Development Enterprises, Inc. and Ashworth, Inc. (filed as
Exhibit&nbsp;10(q) to the Company&#146;s Form&nbsp;10-K for the fiscal year ended October&nbsp;31, 2002 (File No.
001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(n)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Promotion Agreement effective October&nbsp;31, 2002 by and among Ashworth, Inc., James W. Nantz,
III and Nantz Enterprises, Ltd. (filed as Exhibit&nbsp;10(q) to the Company&#146;s Form&nbsp;10-Q for the
quarter ended January&nbsp;31, 2003 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(o)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Purchase and Installation Agreement dated April&nbsp;10, 2003 between Ashworth, Inc. and Gartner
Storage &#038; Sorter Systems of Pennsylvania (filed as Exhibit&nbsp;10 (r)&nbsp;to the Company&#146;s Form&nbsp;10-Q
for the quarter ended April&nbsp;30, 2003 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(p)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement for Lease dated May&nbsp;1, 2003 by and among Ashworth, Inc., Ashworth U.K. Limited and
Juniper Developments Limited (filed as Exhibit&nbsp;10(s) to the Company&#146;s Form&nbsp;10-Q for the
quarter ended April&nbsp;30, 2003 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(q)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lease dated September&nbsp;1, 2003 by and among Ashworth, Inc., Ashworth U.K. Limited and Juniper
Developments Limited (filed as Exhibit&nbsp;10(t) to the Company&#146;s Form&nbsp;10-Q for the quarter ended
July&nbsp;31, 2003 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(r)(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Master Equipment Lease Agreement dated as of June&nbsp;23, 2003 by and between Key Equipment
Finance and Ashworth, Inc. including Amendment 01, the Assignment of Purchase Agreement and
the Certificate of Authority (filed as Exhibit&nbsp;10(u) to the Company&#146;s Form&nbsp;10-Q for the
quarter ended July&nbsp;31, 2003 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">26
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Exhibits</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(r)(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Equipment Schedule&nbsp;No.&nbsp;01 dated as of August&nbsp;30, 2004 by and between Ashworth, Inc. and
Key Equipment Finance, a Division of Key Corporate Capital, Inc.(filed as Exhibit&nbsp;99.1 to the
Company&#146;s Form&nbsp;8-K on September&nbsp;3, 2004 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(s)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Offer and Acceptance of Executive Employment effective August&nbsp;30, 2001 by and between
Ashworth, Inc. and Gary I. Schneiderman (filed as Exhibit&nbsp;10(u) to the Company&#146;s Form&nbsp;10-K for
the fiscal year ended October&nbsp;31, 2003 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(t)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">License Agreement, effective May&nbsp;14, 2001, by and between Ashworth, Inc. and Callaway Golf
Company (filed as Exhibit&nbsp;10(v) to the Company&#146;s Form&nbsp;10-K for the fiscal year ended October
31, 2003 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(u)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment to License Agreement, effective December&nbsp;16, 2003, by and between Ashworth, Inc.
and Callaway Golf Company (filed as Exhibit&nbsp;10(w) to the Company&#146;s Form&nbsp;10-K for the fiscal
year ended October&nbsp;31, 2003 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(v)(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Purchase and Sale Agreement, dated as of December&nbsp;2, 2003, by and between Ashworth, Inc.
and LBA Inc. (filed as Exhibit&nbsp;10(w)(1) to the Company&#146;s Form&nbsp;10-Q for the quarter ended
January&nbsp;31, 2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(v)(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Amendment to Purchase and Sale Agreement, dated as of January&nbsp;29, 2004, by and
between Ashworth, Inc. and LBA Inc. (filed as Exhibit&nbsp;10(w)(2) to the Company&#146;s Form&nbsp;10-Q for
the quarter ended January&nbsp;31, 2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(v)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assignment and Assumption of Purchase and Sale Agreement, effective February&nbsp;24, 2004, by
and between LBA Inc. and LBA Industrial Fund-Canyon, Inc. (filed as Exhibit&nbsp;10(w)(3) to the
Company&#146;s Form&nbsp;10-Q for the quarter ended January&nbsp;31, 2004 (File No.&nbsp;001-14547) and
incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(v)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lease dated February&nbsp;24, 2004 by and between Ashworth, Inc. and LBA Industrial
Fund-Canyon, Inc. (filed as Exhibit&nbsp;10(w)(4) to the Company&#146;s Form&nbsp;10-Q for the quarter ended
January&nbsp;31, 2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(v)(5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Exchange Agreement and Supplemental Closing Instructions, dated as of December&nbsp;3, 2003, by
and between Ashworth, Inc. and Asset Preservation, Inc. (filed as Exhibit&nbsp;10(w)(5) to the
Company&#146;s Form&nbsp;10-Q for the quarter ended January&nbsp;31, 2004 (File No.&nbsp;001-14547) and
incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(w)(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assignment and Assumption Agreement, effective April&nbsp;1, 2004, by and between Innovative
Development Enterprises, Inc., Ashworth EDC, LLC and Ashworth, Inc. (filed as Exhibit&nbsp;10(x)(1)
to the Company&#146;s Form&nbsp;10-Q for the quarter ended April&nbsp;30, 2004 (File No.&nbsp;001-14547) and
incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(w)(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Grant Deed, effective March&nbsp;30, 2004, by and between Innovative Development Enterprises,
Inc., Ashworth EDC, LLC. (filed as Exhibit&nbsp;10(x)(2) to the Company&#146;s Form&nbsp;10-Q for the quarter
ended April&nbsp;30, 2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(w)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Loan Agreement, effective April&nbsp;2, 2004, by and between Ashworth EDC, LLC and Bank of
America, N.A. (filed as Exhibit&nbsp;10(x)(3) to the Company&#146;s Form&nbsp;10-Q for the quarter ended
April&nbsp;30, 2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(w)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Promissory Note, effective April&nbsp;2, 2004, by and between Ashworth EDC, LLC and Bank of
America, N.A. (filed as Exhibit&nbsp;10(x)(4) to the Company&#146;s Form&nbsp;10-Q for the quarter ended</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">27
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Exhibits</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;30, 2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(w)(5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing,
effective April&nbsp;2, 2004, by and between Ashworth EDC, LLC, PRLAP, Inc. and Bank of America,
N.A. (filed as Exhibit&nbsp;10(x)(5) to the Company&#146;s Form&nbsp;10-Q for the quarter ended April&nbsp;30,
2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(w)(6)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Environmental Indemnity Agreement, effective April&nbsp;2, 2004, by and between Ashworth EDC,
LLC, Ashworth, Inc. and Bank of America, N.A. (filed as Exhibit&nbsp;10(x)(6) to the Company&#146;s Form
10-Q for the quarter ended April&nbsp;30, 2004 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(x)(1)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Membership Interests Purchase Agreement, dated July&nbsp;6, 2004, by and among Ashworth
Acquisition Corp. and the selling members, identified therein (filed as Exhibit&nbsp;99.1 to the
Company&#146;s Form&nbsp;8-K on July&nbsp;21, 2004 (File No.&nbsp;001-14547) and incorporated herein by
reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(x)(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ashworth Acquisition Corp. Promissory Note in favor of W. C. Bradley Co. (filed as Exhibit
99.2 to the Company&#146;s Form&nbsp;8-K on July&nbsp;21, 2004 (File No.&nbsp;001-14547) and incorporated herein
by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(x)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ashworth, Inc. Guaranty of Ashworth Acquisition Corp. Promissory Note in favor of W. C.
Bradley Co. (filed as Exhibit&nbsp;99.3 to the Company&#146;s Form&nbsp;8-K on July&nbsp;21, 2004 (File No.
001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(x)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Lease Agreement, dated July&nbsp;6, 2004, by and between 16 Downing, LLC
as Lessor and Gekko Brands, LLC as Lessee (filed as Exhibit&nbsp;99.4 to the Company&#146;s Form&nbsp;8-K
July&nbsp;21, 2004 (File No.&nbsp;001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(x)(5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ashworth, Inc. Guaranty of Payments under the Amended and Restated Lease Agreement, dated
July&nbsp;6, 2004, by and between 16 Downing, LLC as Lessor and Gekko Brands, LLC as Lessee (filed
as Exhibit&nbsp;99.5 to the Company&#146;s Form&nbsp;8-K on July&nbsp;21, 2004 (File No.&nbsp;001-14547) and
incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(x)(6)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Executive Employment Agreement by and between Gekko Brands, LLC and certain
selling members (filed as Exhibit&nbsp;99.6 to the Company&#146;s Form&nbsp;8-K on July&nbsp;21, 2004 (File No.
001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(y)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Stock Option Agreement for issuance of stock option grants to each of the Company&#146;s
executive officers and non-employee directors on December&nbsp;21, 2004 (filed as Exhibit&nbsp;10.1 to
the Company&#146;s Form&nbsp;8-K on December&nbsp;22, 2004 (File No.&nbsp;001-14547) and incorporated herein by
reference.</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10(z)*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement, effective November&nbsp;1, 2004, by and between Ashworth, Inc. and Per
Gasseholm (filed as Exhibit&nbsp;10.1 to the Company&#146;s Form&nbsp;8-K on October&nbsp;12, 2004 (File No.
001-14547) and incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stipulation and Agreement of
Settlement regarding shareholder class-action lawsuit in which the
U.S. District Court entered a Final Approval of Settlement on
November&nbsp;8, 2004.</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ashworth, Inc. Code of Business Conduct and Ethics adopted October&nbsp;17, 2003 (filed as Exhibit
14 to the Company&#146;s Form&nbsp;10-K for the year ended October&nbsp;31, 2003 (file No.&nbsp;001-14547) and
incorporated herein by reference).</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to Rules&nbsp;13a-14 and 15d-14, as Adopted Pursuant to Section&nbsp;302 of the
Sarbanes-Oxley Act of 2002 by Randall L. Herrel, Sr.</TD>
</TR><TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to Rules&nbsp;13a-14 and 15d-14, as Adopted Pursuant to Section&nbsp;302 of the</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">28
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Exhibits</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sarbanes-Oxley Act of 2002 by Terence W. Tsang.</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as Adopted Pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002 by Randall L. Herrel, Sr.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as Adopted Pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002 by Terence W. Tsang.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P>
<HR noshade size="1" width="18%" align="left" style="border-top: 1px solid #000000">
<DIV align="left" style="font-size: 10pt">*&nbsp;&nbsp;&nbsp; Management contract or compensatory plan or arrangement required to be filed as an Exhibit
pursuant to Item 15(c) of Form 10-K and applicable rules of the Securities and Exchange Commission.
</DIV>

<P align="left" style="font-size: 10pt">&#134;&nbsp;&nbsp;&nbsp; Certain portions of this exhibit have been omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.




<P align="center" style="font-size: 10pt">29
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="116"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>SIGNATURES</B>


<P align="left" style="font-size: 10pt">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.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ASHWORTH, INC</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: March&nbsp;11, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By: /s/ Terence W. Tsang</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="1" valign="top" align="left">
<HR noshade size="1" width="88%" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Terence W. Tsang<BR>
Executive Vice President,<BR>
Chief Financial Officer and
Treasurer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">30
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="117"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>EXHIBIT INDEX</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD><!-- VRule -->
    <TD width="1%">&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
</TR><TR style="font-size: 1px" valign="bottom">
    <TD nowrap align="left" colspan="6" style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>

    <TD nowrap align="left">Exhibit</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>

    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Number</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Description of Exhibit</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>

<TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>

<TD align="left" valign="top" style="border-top: 1px solid #000000">Stipulation
and Agreement of Settlement regarding shareholder class-action
lawsuit in which the U.S.&nbsp;District Court entered a Final
Approval of Settlement on November&nbsp;8, 2004</TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
              <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">31.1
</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">Certification Pursuant to Rules&nbsp;13a-14 and 15d-14, as
Adopted Pursuant to Section&nbsp;302 of The Sarbanes-Oxley
Act of 2002 by Randall L. Herrel, Sr.</TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">31.2
</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">Certification Pursuant to Rules&nbsp;13a-14 and 15d-14, as
Adopted Pursuant to Section&nbsp;302 of The Sarbanes-Oxley
Act of 2002 by Terence W. Tsang.</TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">32.1
</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as
Adopted Pursuant to Section&nbsp;906 of The Sarbanes-Oxley
Act of 2002 by Randall L. Herrel, Sr.</TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">32.2
</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as
Adopted Pursuant to Section&nbsp;906 of The Sarbanes-Oxley
Act of 2002 by Terence W. Tsang.</TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 1px" valign="bottom">
    <TD nowrap align="left" colspan="6" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">31
</DIV>


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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>a06769exv10w1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

BERGER & MONTAGUE, P.C.
TODD S. COLLINS
1622 Locust Street
Philadelphia, PA 19103
(215) 875-3000

KLAFTER & OLSEN LLP
KURT B. OLSEN
2121 K Street, N.W.
Washington, DC 20037
(202) 261-3533

LERACH COUGHLIN STOIA
     GELLER RUDMAN & ROBBINS LLP
WILLIAM S. LERACH (68581)
ARTHUR C. LEAHY (149135)
JEFFREY D. LIGHT (159515)
401 B Street, Suite 1700
San Diego, CA 92101
(619) 231-1058

Lead Counsel for Plaintiffs

                          UNITED STATES DISTRICT COURT
                     FOR THE SOUTHERN DISTRICT OF CALIFORNIA

In re ASHWORTH INC.                MASTER FILE No. 99CV0121 - L (JFS)
SECURITIES LITIGATION

                     STIPULATION AND AGREEMENT OF SETTLEMENT

<PAGE>

                     STIPULATION AND AGREEMENT OF SETTLEMENT

      This Stipulation and Agreement of Settlement (the "Stipulation") is
submitted pursuant to Rule 23 of the Federal Rules of Civil Procedure. Subject
to the approval of the Court, this Stipulation is entered into among Lead
Plaintiffs (as defined in P. B below) and Class Representatives ("Plaintiffs"),
on behalf of themselves and the Class (as hereinafter defined), and defendants
Ashworth Inc. ("Ashworth"), Randall L. Herrel ("Herrel"), Gerald W. Montiel ("G.
Montiel"), A. John Newman ("Newman") ("Defendants" and individually
"Defendant"), by and through their respective counsel.

      WHEREAS:

      A.    Plaintiffs filed a class action complaint against the Defendants and
others on January 22, 1999, alleging violations of the Securities Exchange Act
of 1934.

      B.    Other plaintiffs filed similar complaints. By Orders dated April 30,
1999, the Court consolidated the complaints under the above caption and
appointed the New Hampshire Retirement System ("NHRS"), John Gervais, Debra Kopp
and Tony Le ("Lead Plaintiffs") as lead plaintiffs. The Court also approved Lead
Plaintiffs' choice of lead counsel: Berger & Montague, P.C., Milberg Weiss
Bershad Hynes & Lerach LLP (now Lerach Coughlin Stoia Geller Rudman & Robbins
LLP) and The Olsen Law Firm (now Klafter & Olsen LLP).

      C.    Plaintiffs filed the Consolidated Amended Complaint on December 15,
1999. Plaintiffs then filed the Second Consolidated Amended Complaint (the
"SAC") on September 19, 2000.

      D.    The SAC alleges that the Defendants and others issued false and
misleading public statements and financial results and made misleading filings
with the SEC, which materially overstated Ashworth's financial results.
Plaintiffs alleged that Ashworth falsely claimed that demand for its products,
golf apparel, was increasing and that its gross margins were growing, when, in
fact, Ashworth improperly recorded sales by making consignments, shipping goods
to warehouses, recording as sales goods shipped after the quarter had closed,
giving unrecorded discounts and ultimately selling to liquidators at prices
below cost, without taking adequate reserves or writing

<PAGE>

down its excess inventory. Plaintiffs allege that these and other practices were
in violation of GAAP. Ashworth's fraudulent financial results and other false
statements caused investors to buy Ashworth stock at artificially inflated
prices during the Class Period as defined in P. F below, giving some defendants
a chance to sell off their stock at a profit. On July 15, 1998, Ashworth stated
that its results for the third quarter of 1998 would be below expectations, and
that recent events might also negatively impact the fourth quarter of 1998.
Ashworth's stock declined, causing a loss to some investors who bought Ashworth
shares during the Class Period.

      E.    All defendants moved to dismiss the claims asserted against them in
the SAC. By Order entered December 3, 2001, the Court granted in part and denied
in part defendants' motion dismissing two defendants but allowed the case to
proceed on several allegations against the Defendants.

      F.    The Court certified a Class under Rule 23(b)(3) of the Federal Rules
of Civil Procedure on August 8, 2002. The Class certified by the Court consisted
of all persons who purchased shares of Ashworth common stock and its publicly
traded options during the period of September 4, 1997 through July 15, 1998,
inclusive and who were damaged thereby. However, on further investigation it
became clear that there are no option-holders who purchased during the Class
Period.

      G.    The Class is thus modified to include all persons who purchased
shares of Ashworth common stock during the period of September 4, 1997 through
July 15, 1998 inclusive (the "Class Period"). Excluded from the Class are
Defendants, the officers and directors of Ashworth during the Class Period, the
members of their immediate families, and their legal representatives, heirs,
successors or assigns, and any entity in which Defendants have or during the
Class Period had a controlling interest.

      H.    The Defendants deny any wrongdoing, fault, liability or damage to
Plaintiffs and the Class, deny that they knowingly made material misstatements,
deny that they committed any violation of law, deny that they acted improperly
in any way, believe that they acted properly at all times, and assert that the
Action has no merit. In light, however, of the uncertainty and the risk of the
outcome of any litigation, especially complex securities litigation, and the
difficulties and substantial expense

<PAGE>

and length of time necessary to defend this proceeding through summary judgment
motions, trial, post-trial motions, and appeals, Defendants have decided to
enter into this Stipulation. To eliminate the burden and expense of further
litigation, Defendants wish to settle the Action against them on the terms and
conditions stated in this Stipulation, and to put the Settled Claims (as defined
below) to rest finally and forever, without in any way acknowledging any
wrongdoing, fault, liability or damage to Plaintiffs and the Class. Nothing in
this Stipulation or in the exhibits attached hereto shall in any event be
construed or deemed to be evidence of an admission or concession on the part of
any Defendant with respect to any claim, or of any fault or liability or
wrongdoing or damage whatsoever, or any infirmity in the defenses that the
Defendants have asserted.

      I.    Plaintiffs' counsel conducted a thorough investigation, which
included reviewing hundreds of thousands of documents, taking twelve
depositions, interviewing more than a dozen potential witnesses and consulting
with experts relating to the claims and the underlying `events and transactions
alleged in the SAC. Plaintiffs believe their claims are meritorious. Plaintiffs'
counsel have analyzed the evidence adduced during pretrial discovery and have
researched the applicable law with respect to the claims of Plaintiffs and the
Class against the Defendants and the potential defenses thereto. This
Stipulation shall not be construed or deemed to be a concession by any Plaintiff
of any infirmity in the claims asserted in the Action.

      J.    Plaintiffs, by their counsel, have conducted arm's length
negotiations with counsel for the Defendants, with the assistance of Judge
Nicholas Politan (Ret.), with respect to a compromise and settlement of the
Action with a view to settling the issues in dispute and achieving the best
relief possible consistent with the interests of the Class.

      K.    Based upon their investigation and pretrial discovery as set forth
above, Plaintiffs' counsel have concluded that the terms and conditions of this
Stipulation are fair, reasonable and adequate to Plaintiffs and the Class, and
in their best interests, and have agreed to settle the claims raised in the
Action against the Defendants pursuant to the terms and provisions of this
Stipulation, after considering (1) the substantial benefits that Plaintiffs and
the members of the Class will receive from this Settlement (as defined below),
(2) the attendant risks of litigation, and (3) the desirability of permitting
the Settlement to be consummated as provided by the terms of this Stipulation.

<PAGE>

      NOW THEREFORE, without any admission or concession on the part of
Plaintiffs of any lack of merit of the Action whatsoever, and without any
admission or concession of any liability or wrongdoing or lack of merit in the
defenses whatsoever by the Defendants, it is hereby STIPULATED AND AGREED, by
and among the parties to this Stipulation, through their respective attorneys,
subject to approval of the Court pursuant to Rule 23(e) of the Federal Rules of
Civil Procedure, in consideration of the benefits flowing to the parties hereto
from the Settlement, that all Settled Claims (as defined below) against the
Released Parties (as defined below) shall be compromised, settled, released and
dismissed with prejudice, upon and subject to the following terms and
conditions:

                               CERTAIN DEFINITIONS

      1.    As used in this Stipulation, the following terms shall have the
following meanings:

            (a)   "Administration Costs" means the costs incurred by the Claims
Administrator and Lead Counsel for processing proofs of claim, investing the
Settlement Fund, and distributing the Net Settlement Fund to Class Members and
dealing with Tax Expenses.

            (b)   "Authorized Claimant" means a Class Member who submits a
timely and valid Proof of Claim form to the Claims Administrator and whose claim
is directed to be accepted in the class distribution order.

            (c)   "Claims Administrator" means the firm of Gilardi & Co. LLC,
which shall administer the Settlement.

            (d)   "Class" and "Class Members" mean all persons or entities who
purchased Ashworth common stock between September 4, 1997 and July 15, 1998,
inclusive. Excluded from the Class are any putative Class Members who exclude
themselves by timely submitting a request for exclusion. Also excluded are the
Defendants, the officers and directors of Ashworth during the Class Period and
their immediate families, and any entity in which any Defendant has a
controlling interest, and the legal affiliates, representatives, heirs,
controlling persons, successors or predecessors in interest of any Defendant.

            (e)   "Court" means the United States District Court for the
Southern District of California.

<PAGE>

            (f)   "Effective Date" means the date upon which the Settlement
contemplated by this Stipulation, including implementation of the corporate
governance measures described in Exhibit A, shall become effective, as set forth
in paragraph 29 below.

            (g)   "Insurers" means National Union Fire Insurance Co. of
Pittsburgh, PA and RLI Insurance Company, Ashworth's directors' and officers'
insurers.

            (h)   "Notice" means the Notice of Pendency and Proposed Settlement
of Class Action, which is to be sent to members of the Class substantially in
the form attached hereto as Exhibit 1 to Exhibit B.

            (i)   "Net Settlement Fund" means the Settlement Fund less any Court
awarded attorneys' fees and expenses, less expenses of the Lead Plaintiffs, and
less any Notice and Administration Costs.

            (j)   "Notice Costs" means costs incurred in connection with
preparing, mailing and publishing the Notice and Publication Notice, responding
to nominees' requests for additional copies of the Notice, tallying the number
of opt outs, costs billed to the Claims Administrator by the nominees and
associated correspondence and telephone costs, and related costs.

            (k)   "Notice and Administration Fund" means the fund established
and controlled by Lead Counsel subject to Court oversight which is to be funded
out of the Settlement Amount to pay for Notice Costs and Administration Costs,
which shall be initially funded with $150,000.

            (l)   "Order and Final Judgment" means the proposed order to be
entered approving the Settlement substantially in the form attached hereto as
Exhibit C.

            (m)   "Plaintiffs' Lead Counsel" and "Lead Plaintiffs' Counsel"
means Berger & Montague, P.C., Klafter & Olsen, LLP and Lerach, Coughlin, Stoia
& Robbins, LLP.

            (n)   "Preliminary Approval Order" means the proposed order
preliminarily approving the Settlement and directing notice thereof to the Class
substantially in the form attached hereto as Exhibit B.

            (o)   "Publication Notice" means the summary Notice of Pendency and
Settlement of Proposed Settlement and hearing for publication in the national
edition of The Wall Street Journal substantially in the form attached as Exhibit
3 to Exhibit B.

<PAGE>

            (p)   "Released Parties" means the Defendants, Insurers, and any of
their current, former or future affiliates, partners, joint venturers, agents
(acting in their capacity as agents), employees, attorneys, insurers,
reinsurers, advisors, accountants, associates, legal representatives, heirs,
successors in interest or assigns, and any other individual or entity in which
any of the aforementioned parties has a controlling interest.

            (q)   "Settled Claims" means any and all claims, debts, demands,
liabilities, rights and causes of action of every nature and description
whatsoever (including, but not limited to, any claims for damages, restitution,
interest, attorneys' fees, expert or consulting fees, and any other costs,
expenses or liability whatsoever), whether based on federal, state, local,
statutory or common law or any other law, rule or regulation, whether fixed or
contingent, accrued or unaccrued, liquidated or unliquidated, at law or in
equity, matured or unmatured, whether class or individual in nature, including
both known claims and Unknown Claims (as defined below), based upon or related
to both (i) the purchase of Ashworth common stock during the Class Period; and
(ii) the facts, transactions, events, occurrences, acts, disclosures,
statements, omissions or failures to act which were or could have been alleged
in the Action against any of the Released Parties, except claims to enforce the
Settlement or any of its terms.

            (r)   "Defendants' Claims" means any and all claims, rights,
demands, causes of action or suits by any Released Party against any of the
Plaintiffs, Class Members or their attorneys, which arise out of or relate to
the institution, prosecution, or settlement of the Action, except claims arising
out of or relating to the obligations of the Plaintiffs, Class Members or their
attorneys embodied in this Stipulation or the implementation or enforcement of
this Stipulation or the Settlement of the Action.

            (s)   "Settlement" means the settlement as set forth in this
Stipulation.

            (t)   "Settlement Escrow Account" means the interest-bearing account
established by the Settlement Escrow Agents (as defined below) pursuant to Court
order and subject to Court oversight for the deposit of the Settlement Fund (as
defined below).

            (u)   "Settlement Escrow Agents" means Lead Counsel, counsel for
each of the Insurers, and Ashworth.

<PAGE>

            (v)   "Settlement Fund" means the Settlement Amount as defined in
paragraph 5 together with all interest.

            (w)   "Taxes" means taxes, including any interest and penalties,
owed with respect to the income earned by the Settlement Fund, including any
taxes or tax detriments that may be imposed with respect to any income earned by
the Settlement Fund following the deposit of the Settlement Amount, or portion
thereof, by Ashworth and the Insurers with the Settlement Escrow Agents.

            (x)   "Tax Expenses" means the expenses and costs related to Taxes
incurred in connection with the Settlement, including but not limited to
expenses of tax attorneys and/or accountants and expenses relating to filing, or
failing to file, required tax returns.

            (y)   "Unknown Claims" means (1) any and all Settled Claims that any
Plaintiff or Class Member does not know or suspect to exist in his, her or its
favor at the time of the release of the Released Parties, including, without
limitation, claims that if known by him, her or it might have affected his, her
or its decision(s) to settle with and release the Released Parties or not to
object to the Settlement, and (2) any and all Defendants' Claims which any
Released Party does not know or suspect to exist in his, her or its favor,
including, without limitation, claims that if known by him, her or it might have
affected his, her or its decision(s) with respect to the Settlement, including
claims described in Section 1542 of the California Civil Code.

                         SCOPE AND EFFECT OF SETTLEMENT

      2.    The obligations incurred pursuant to this Stipulation shall be in
full and final disposition of the Action and any and all Settled Claims as
against all Released Parties and any and all Defendants' Claims as against
Plaintiffs, Class Members, or their attorneys.

      3.    (a)    Pursuant to the Order and Final Judgment, upon the Effective
Date of this Settlement, Plaintiffs and all members of the Class on behalf of
themselves, their heirs, executors, administrators, successors and assigns shall
be deemed to, with respect to each and every Settled Claim, release and forever
discharge, and shall forever be enjoined from prosecuting, any Settled Claims
against any of the Released Parties regardless of whether any Class Member
submits a valid and timely Proof of Claim.

<PAGE>

            (b)   Pursuant to the Order and Final Judgment, upon the Effective
Date of this Settlement, Plaintiffs and all Class Members, on behalf of
themselves, their heirs, executors, administrators, successors and assigns,
shall be deemed to have covenanted not to sue and shall be barred and enjoined
from suing on any Settled Claims.

            (c)   The Proof of Claim to be executed by Class Members shall
provide for a release of all Settled Claims against the Released Parties to be
effective on the Effective Date, and shall be substantially in the form of
Exhibit 2 to Exhibit B. Upon the Effective Date, all Class Members on behalf of
themselves, their heirs, executors, administrators, successors and assigns shall
be bound by the release and covenant not to sue as set forth in this Stipulation
and the Order and Final Judgment, whether or not they submit a valid and timely
Proof of Claim.

            (d)   Pursuant to the Order and Final Judgment, upon the Effective
Date of this Settlement, each of the Released Parties, on behalf of himself,
herself or itself and to the fullest extent permitted by law, shall release and
forever discharge each and every one of the Defendants' Claims, and shall
forever be enjoined from prosecuting the Defendants' Claims as against
Plaintiffs, Class Members, or their attorneys.

            (e)   With respect to any and all Settled Claims and Defendants'
Claims, the parties stipulate and agree that, upon the Effective Date, the
Plaintiffs and the Defendants shall have expressly, and all Class Members on
behalf of themselves, their heirs, executors, administrators, successors and
assigns shall be deemed to have, and by operation of the Order and Final
Judgment shall have, waived and relinquished to the fullest extent provided by
law the provisions, rights and benefits of Section 1542 of the California Civil
Code, which provides:

      A general release does not extend to claims which the creditor does not
      know or suspect to exist in his favor at the time of executing the
      release, which if known by him must have materially affected his
      settlement with the debtor.

Also, with respect to any and all Settled Claims, the Plaintiffs and all Class
Members on behalf of themselves, their heirs, executors, administrators,
successors and assigns shall, and with respect to any and all Defendants'
Claims, the Released Parties shall be deemed to, and by operation of the Order
and Final Judgment shall, waive any and all provisions, rights, and benefits
conferred by the law of any state or territory of the United States or any other
jurisdiction, or principle of common law,

<PAGE>

which is similar, comparable or equivalent to Cal. Civ. Code Section 1542. The
Plaintiffs, Class Members and Released Parties may hereafter discover facts in
addition to or different from those which they now know or believe to be true
with respect to the subject matter of the Settled Claims or Defendants' Claims
but hereby stipulate and agree that the Plaintiffs, Class Members and Released
Parties, and all of their heirs, executors, administrators, successors and
assigns, do, and by operation of the Order and Final Judgment shall, upon the
Effective Date, fully, finally and forever settle and release any and all
Settled Claims and Defendants' Claims, respectively, known or unknown, suspected
or unsuspected, contingent or non-contingent, which now exist, or heretofore
have existed upon any theory of law or equity, including, but not limited to,
conduct which is negligent, intentional, with or without malice, or breach of
any duty, law, or rule of any jurisdiction, without regard to subsequent
discovery or existence of such different or additional facts. Plaintiffs and
Defendants acknowledge, and Class Members and Released Parties by operation of
law shall be deemed to have acknowledged, that the inclusion of "Unknown Claims"
in the definition of Settled Claims and Defendants' Claims was separately
bargained for and was a key element of the Settlement of which the releases are
a part.

                          THE SETTLEMENT CONSIDERATION

      4.    In full and final settlement of the Action and the Settled Claims:

            (a)   Defendant Ashworth shall implement specific corporate
governance policies which are set forth in Exhibit A. In the event that Ashworth
fails to do so in accord with the terms of Exhibit A, then Plaintiffs shall have
the right to seek specific performance from the Court.

            (b)   Defendants shall deposit, by August 30, 2004, the sum of
Fifteen Million Two Hundred Fifty Thousand Dollars ($15,250,000.00) (the
"Settlement Amount") paid by Ashworth and the Insurers, which sum constitutes
the entire monetary consideration to be paid by Ashworth and the Insurers by or
on behalf of the Defendants pursuant to the Settlement. Defendants shall not be
responsible for the distribution of the Settlement Fund or the administration
thereof, and shall have no further or other liability or obligations to
Plaintiffs, Plaintiffs' Counsel or any member of the Class with respect to the
Settled Claims except as expressly stated in this Stipulation.

      5.    The Settlement Amount shall be paid by Insurers and Ashworth into an
interest-bearing escrow account, at a nationally chartered bank under the
control of the Settlement Escrow

<PAGE>

Agents until the Effective Date, when the escrow account shall be under the sole
control of Lead Counsel.

      6.    The Settlement Escrow Agents shall promptly cause the Settlement
Amount in excess of the $150,000 used for the Notice and Administration Fund to
be invested in short term instruments backed by the full faith and credit of the
United States Government (or a mutual fund invested solely in such instruments)
and shall collect and reinvest all interest accrued thereon. The funds held in
escrow in an amount of $150,000 (the "Notice and Administration Fund") shall be
used for the payment of Notice and Administration Costs and held in an interest
bearing bank account insured by the FDIC.

      7.    All interest or other income earned by the Settlement Escrow Account
shall become part of the Settlement Fund and shall inure to and be for the
benefit of the Class if the Effective Date occurs. If the Effective Date does
not occur, all such interest shall inure to the benefit of Defendants and shall
be returned to Ashworth and the Insurers in accordance with the provisions of
paragraph 9.

      8.    If the Settlement Amount is not paid into the Settlement Escrow
Account by August 30, 2004, interest shall accrue on any unpaid portion of the
Settlement amount at the 3-month T-Bill rate until paid, and Lead Plaintiffs
shall have the option on seven business days' written notice to terminate the
Settlement, unless Defendants have been unable to deposit the funds due to
Plaintiffs' actions or inaction or cure within that time by the deposit of the
funds.

      9.    Before the Effective Date, any and all Notice Costs to date shall be
approved by Plaintiffs' Lead Counsel and shall be paid out of the Notice and
Administration Fund.

      10.   In the event that this Stipulation is terminated or canceled as
provided herein or in the Supplemental Agreement as defined in paragraph 27, or
the Effective Date otherwise does not occur as provided herein, then the
Settlement Fund net of any Taxes or Tax Expenses incurred to date and the Notice
and Administration Fund net of any Notice Costs or Administration Costs incurred
to date, shall be paid to Ashworth and the Insurers, according to the proportion
of the settlement fund originally deposited in the Settlement Escrow Account by
them.

      11.   All funds held or invested by the Settlement Escrow Agent or held in
the Notice and Administration Fund shall be deemed in custodia legis of the
Court and shall remain subject to the

<PAGE>

jurisdiction of the Court, until such time as such funds shall be distributed,
pursuant to this Stipulation and/or further order(s) of the Court.

      12.   The parties hereto intend that the Settlement Fund be a "qualified
settlement fund" for federal income tax purposes pursuant to Treasury Regulation
section 1.468B-1, and to that end the Parties hereto shall not take a position
in any filing or before any tax authority that is inconsistent with such
treatment.

            (a)   The Claims Administrator and, as reasonably requested and
required by the Claims Administrator, Plaintiffs and the Defendants, shall
jointly and timely make such elections as are necessary to carry out the
provisions of this paragraph, including a "relation back election" as described
in Treas. Reg. Section 1.468B-(j)(2) to the earliest permitted date so as to
enable the Settlement Fund to be treated as a qualified settlement fund from the
earliest date possible. Such election shall be made in compliance with the
procedures and requirements contained in such regulation. It shall be the
responsibility of the Claims Administrator to timely and properly prepare and
deliver the necessary documentation for signature by all necessary parties and
thereafter take all such actions as may be necessary or appropriate to that end.

            (b)   For the purposes of section 468B of the Internal Revenue Code
of 1986, 26 U.S.C. Section 468B, as amended, and the regulations promulgated
thereunder, the "administrator" shall be the Claims Administrator. The Claims
Administrator shall timely and properly file all informational and tax returns
necessary or advisable for the Settlement Fund before and after the Effective
Date, and shall pay from the Settlement Fund any Taxes owed with respect to the
Settlement Fund.

            (c)   The Released Parties shall have no liability or responsibility
for the payment of any Taxes. The Settlement Fund shall indemnify and hold the
Released Parties harmless for any Taxes (including, without limitation, Taxes
payable by reason of any such indemnification).

            (d)   The Parties agree to cooperate with the Claims Administrator,
one another, and their tax attorneys and accountants to the extent reasonably
necessary to carry out the provisions of this paragraph.

      13.   All (a) Taxes or estimated taxes on the income of the Settlement
Fund, including, without limitation, any interest and penalties determined to be
due thereon, or any taxes or tax

<PAGE>

detriments that may be imposed upon Defendants with respect to any income earned
by the Settlement Fund, for any period during which the Settlement Fund does not
qualify as a "qualified settlement fund" for federal or state income tax
purposes, and (b) reasonable expenses and costs incurred in connection with the
taxation of the Settlement Fund, including, without limitation, expenses of tax
attorneys and accountants, mailing and distribution costs and expenses relating
to filing the returns described in paragraph 14(b), shall be paid out of the
Settlement Fund and shall be timely paid by the Claims Administrator without
further order of the Court. The Claims Administrator shall be obligated
(notwithstanding anything herein to the contrary) to withhold from distribution
to Class Members any funds necessary to pay such amounts, including the
establishment of adequate reserves for any Taxes (as well as any amounts that
may be required to be withheld under Treasury Regulation section 1.468B-2).

      14.   All interest earned on the Settlement Fund shall be added to and
become part of the Settlement Fund. Any interest earned by the Notice and
Administration Fund shall be added to that Fund.

      15.   The Settlement Escrow Agents and the Claims Administrator shall not
use or disburse all or any part of the Settlement Fund except as provided by
this Stipulation or an order of the Court.

      16.   The Claims Administrator shall administer the Settlement under
Plaintiffs' Lead Counsel's supervision and subject to the jurisdiction of the
Court. Defendants shall have no responsibility for the administration of the
Settlement and shall have no liability to the Class or Plaintiffs' counsel in
connection with such administration.

      17.   Except as expressly stated in this Stipulation, all payments of
Notice and Administration Expenses, any other fees of Escrow Agents and the
Claims Administrator (other than Tax Expenses), any other cost of administering
the Settlement Fund and/or related expenses, shall be paid by the Notice and
Administration Fund to be established and controlled by Lead Plaintiffs'
Counsel, subject to Court oversight. This fund is to be initially funded with
$150,000 out of the Settlement Amount.

      18.   Except as expressly stated in this Stipulation, there shall be no
liability on the part of Plaintiffs, Plaintiffs' counsel, members of the Class,
Defendants, or Defendants' counsel for Notice

<PAGE>

Costs, Administration Costs, and any other costs of administering the Settlement
Fund and/or related expenses, and attorneys' fees and reimbursement of expenses
awarded by the Court.

                          ATTORNEYS' FEES AND EXPENSES

      19.   Plaintiffs' Lead Counsel will submit an application to the Court for
an award to Plaintiffs' Lead Counsel on their own behalf and on behalf of
Plaintiffs' counsel of record from the Settlement Fund for attorneys' fees and
expenses, including expenses of Lead Plaintiffs, and interest thereon, in an
amount to be set forth in the Notice to the Class. Such attorneys' fees,
expenses and interest as are awarded by the Court shall be payable from the
Settlement Fund to Plaintiffs' Lead Counsel within five days of entry of the
Court's Order with respect to attorneys' fees and expenses, notwithstanding the
existence of any objections thereto or potential for appeal therefrom, provided
the Court has entered the Order and Final Judgment. In the event that such
payment occurs before the Effective Date, then Plaintiffs' Lead Counsel will be
required to reimburse all amounts paid, plus interest, in the event the
Effective Date does not occur. Plaintiffs' Lead Counsel reserve the right to
make additional applications to the Court for reimbursement from the Notice and
Administration Fund for fees and expenses and interest thereon relating to the
administration of the Settlement or any appeals; provided, that no such fees and
expenses, shall be due, owing or payable from the Settlement Fund or the Notice
and Administration Fund unless and until the Effective Date occurs. The Released
Parties shall take no position with respect to any such application.

      20.   The procedures for any allowance or disallowance by the Court of any
applications by Plaintiffs' Lead Counsel for attorneys' fees or expenses or
interest thereon are not part of the Settlement set forth in this Stipulation,
and are to be considered by the Court separately from the Court's consideration
of the fairness, adequacy, and reasonableness of the' Settlement set forth in
this Stipulation. Any order or proceedings related to the fees or expenses or
interest thereon, application, or any appeal from any order relating thereto or
reversal or modification thereof, shall not modify, terminate, or cancel this
Stipulation, or affect or delay the finality of the Order and Final Judgment
approving the Stipulation and the Settlement of the Action.

      21.   The Released Parties shall have no responsibility for, and no
liability whatsoever with respect to the fee and expense and costs application
or the allocation of any fees or expenses or

<PAGE>

interest thereon awarded by the Court or made by Plaintiffs' Lead Counsel among
Plaintiffs' counsel of record.

                      DISTRIBUTION TO AUTHORIZED CLAIMANTS

      22.   The Claims Administrator shall determine each Authorized Claimant's
pro rata share of the "Net Settlement Fund" based upon each Authorized
Claimant's Recognized Claim as defined in the Plan of Allocation described in
the Notice annexed hereto as Exhibit 1 to Exhibit B, or in such other Plan of
Allocation as the Court approves.

      23.   The Plan of Allocation proposed in the Notice is not a necessary
term of this Stipulation, and it is not a condition of this Stipulation that the
Plan of Allocation be approved.

      24.   Each Authorized Claimant shall be allocated a pro rata share of the
Net Settlement Fund based on his or her Recognized Claim compared to the total
Recognized Claims of all accepted claimants as determined by the terms of this
Stipulation as defined in the Plan of Allocation described in the Notice annexed
hereto as Exhibit 1 to Exhibit B, or in such other Plan of Allocation as the
Court approves. The Defendants shall not be entitled to recover any of the
settlement monies after the Effective Date.

      25.   The Claims Administrator shall be responsible for supervising the
administration of the Settlement and disbursement of the Net Settlement Fund,
subject to such supervision and direction of the Court and/or Plaintiffs' Lead
Counsel as may be necessary or appropriate. The procedures governing the
administration of the Settlement shall be as set forth in the Notice to the
Class. Defendants shall have neither the right nor the duty to participate in
the manner in which the Net Settlement Fund is distributed to the Class.

      26.   Upon completing the distribution of the Net Settlement Fund to the
Class, the Claims Administrator shall provide a report to counsel for plaintiffs
and counsel for defendants indicating: (a) the number of Class Members who
received payments; (b) the number of shares for which payments were made (broken
out by categories if different groups of shares received different per share
compensation); and (c) the amount paid per share (broken out by category if
different groups of shares received different per share compensation).

<PAGE>

                             SUPPLEMENTAL AGREEMENT

      27.   Plaintiffs' Lead Counsel and Counsel for the Defendants have
executed a "Supplemental Agreement" setting forth conditions under which this
Stipulation may be withdrawn or terminated by Ashworth if potential Class
Members who purchased in excess of a certain number of shares of common stock
properly exclude themselves from the Class. The Supplemental Agreement shall not
be filed prior to the Settlement Fairness Hearing unless a dispute arises as to
its terms. In the event of a withdrawal from this Stipulation pursuant to the
Supplemental Agreement, this Stipulation shall become null and void and of no
further force and effect except for paragraph 10. Notwithstanding the foregoing,
the Stipulation shall not become null and void as a result of the election by
the Defendants to exercise their option to withdraw from the Stipulation
pursuant to the Supplemental Agreement unless and until the conditions set forth
in the Supplemental Agreement have been satisfied.

                       TERMS OF PRELIMINARY APPROVAL ORDER

      28.   Within ten (10) business days after this Stipulation has been fully
executed, Plaintiffs' Lead Counsel shall apply to the Court for entry of a
Preliminary Approval Order, substantially in the form annexed hereto as Exhibit
B.

                        TERMS OF ORDER AND FINAL JUDGMENT

      29.   If the Settlement contemplated by this Stipulation is approved by
the Court, Plaintiffs' Lead Counsel and Defendants' counsel jointly shall
request that the Court enter an Order and Final Judgment substantially in the
form annexed hereto as Exhibit C.

               EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION

      30.   The Effective Date of Settlement shall be the date when all the
following shall have occurred:

            (a)   entry of the Preliminary Approval Order in all material
respects in the form annexed hereto as Exhibit B;

            (b)   approval by the Court of the Settlement, following notice to
the Class and a hearing, as prescribed by Rule 23 of the Federal Rules of Civil
Procedure;

<PAGE>

            (c)   Defendants' deposit of the Settlement Amount and Ashworth's
implementation of the specific changes in its corporate governance, as set forth
in Exhibit A; and

            (d)   entry by the Court of an Order and Final Judgment, in all
material respects in the form set forth in Exhibit C annexed hereto, and (1) the
expiration of the time to file a notice of appeal from the Order and Final
Judgment pursuant to Rule 4(a)(1)(A) of the Federal Rules of Appellate
Procedure, without any appeal having been taken, or (2) the dismissal of any
appeal or the affirmance of the Order and Final Judgment on appeal, and (3) the
expiration of the time for filing a petition for a writ of certiorari without
the filing of any petition, or (4) the denial of any petition for a writ of
certiorari that was filed and the expiration of the time to seek reconsideration
of such denial, or denial of such request for reconsideration, or, if such
petition is granted, the affirmance of the Order and Final Judgment. In the
event that the Court enters an Alternative Judgment (as defined in paragraph 31
below) and neither the Plaintiffs' Lead Counsel nor the Defendants elect to
terminate this Settlement pursuant to paragraph 31, the date that such
Alternative Judgment becomes final is the same as that provided under this
paragraph for the Order and Final Judgment. Under no circumstances shall an
appeal or petition for a writ of certiorari pertaining solely to the proposed
Plan of Allocation and/or Plaintiffs' Lead Counsel's fee and expense application
or an award thereof delay or preclude the Effective Date.

      31.   Defendants' counsel or Plaintiffs' Lead Counsel shall have the right
to terminate the Settlement and this Stipulation by providing written notice of
their election to do so ("Termination Notice") to all other parties hereto
within thirty (30) days of the date that: (a) the Court declines to enter the
Preliminary Approval Order or enters a preliminary approval order in lieu of the
Preliminary Approval Order that is not substantially in the form of Exhibit B
hereto; (b) the Court refuses to approve this Stipulation or any material part
of it; (c) the Court declines to enter the Order and Final Judgment or enters an
order and final judgment in lieu of the Order and Final Judgment that is not
substantially in the form of Exhibit C hereto (an "Alternative Judgment"); (d)
the Order and Final Judgment is modified or reversed by the Court of Appeals or
the Supreme Court; (e) an Alternative Judgment is modified or reversed by the
Court of Appeals or the Supreme Court, or (f) if permitted by the terms of the
Supplemental Agreement.

<PAGE>

      32.   In the event that this Stipulation is terminated or canceled as
provided herein or in the Supplemental Agreement, or that the Effective Date
does not otherwise occur as provided herein, and the parties, in their sole and
unfettered discretion, do not agree to modify this Stipulation and the
Settlement is not consummated, then:

            (a)   within seven business days after receiving written
notification of such termination, Lead Plaintiffs shall refund to the Settlement
Escrow Account any amounts left in the Notice and Administration Fund after all
expenses are paid. If the Notice and Administration Fund is not adequate to
cover all incurred expenses, Lead Plaintiffs may request funds from the
Settlement Escrow Account to cover all Notice Costs and Administration Costs.

            (b)   the Settlement Escrow Agents shall, within ten (10) business
days after receiving written notification of such termination, cancellation or
prevention, refund to the Insurers and Ashworth in the same proportions as their
original deposit into the Settlement Escrow Account, the Settlement Fund
including all interest and earnings thereon, less any Taxes due with respect to
such income, less Tax Expenses and including any amounts refunded from the
Notice and Administration Fund.

            (c)   The parties will return to the position they occupied
vis-a-vis each other and the Action as of the date of the execution of this
Stipulation except as expressly stated in this Stipulation;

            (d)   This Stipulation and the Settlement shall be null and void and
have no further force or effect, and shall not be referred to, admissible in or
introduced in any other way for any reason in any proceeding.

                           NO ADMISSION OF WRONGDOING

      33.   This Stipulation, whether or not consummated, and any proceedings
taken pursuant to it:

            (a)   shall not be offered against the Defendants as evidence of or
construed as or deemed to be evidence of any presumption, concession, or
admission by any of the Defendants with respect to the truth of any fact alleged
by Plaintiffs or the validity of any claim that had been or could have been
asserted in the Action or in any litigation, or the deficiency of any defense
that has been or

<PAGE>

could have been asserted in the Action or in any litigation, or of any
liability, negligence, fault, or wrongdoing of the Defendants;

            (b)   shall not be offered against the Defendants as evidence of a
presumption, concession or admission of any fault, misrepresentation or omission
with respect to any statement or written document approved or made by any
Defendant, or against the Plaintiffs and the Class as evidence of any infirmity
in the claims of Plaintiffs and the Class;

            (c)   shall not be offered against the Defendants or against the
Plaintiffs or the Class as evidence of a presumption, concession or admission
with respect to any liability, negligence, fault or wrongdoing, or in any way
referred to for any other reason as against any of the parties to this
Stipulation, in any other civil, criminal or administrative action or
proceeding, other than such proceedings as may be necessary to effectuate the
provisions of this Stipulation; provided, however, that if this Stipulation is
approved by the Court, Defendants may refer to it to effectuate the liability
protection granted them hereunder;

            (d)   shall not be construed against the Defendants or the
Plaintiffs and the Class as an admission or concession that the consideration to
be given hereunder represents the amount which could be or would have been
recovered after trial; and

            (e)   shall not be construed as or offered in evidence as an
admission, concession or presumption against Plaintiffs or the Class or any of
them that any of their claims are without merit or that damages recoverable
under the Complaint would not have exceeded the Settlement Fund.

                            MISCELLANEOUS PROVISIONS

      34.   All of the exhibits attached hereto are hereby incorporated by
reference as though fully set forth herein.

      35.   If a case is commenced concerning either of the Insurers or Ashworth
under Title 11 of the United States Code (Bankruptcy), or a trustee, receiver or
conservator is appointed under any similar law, and in the event of the entry of
a final order of a court of competent jurisdiction determining the transfer of
money to the Settlement Fund or any portion thereof by Ashworth or such Insurer
on behalf of the Defendants to be a preference, voidable transfer, fraudulent
transfer or similar transaction, and any portion thereof is required to be
returned, and is, in fact, returned, and such

<PAGE>

amount is not promptly deposited to the Settlement Fund by others, then, at the
election of Plaintiffs' Lead Counsel, the parties shall jointly move the Court
to vacate and set aside both the releases given and the Order and Final Judgment
entered in favor of the Defendants pursuant to this Stipulation. The releases
and Order and Final Judgment shall be null and void, and the parties shall be
restored to their respective positions in the litigation immediately prior to
the execution of this Stipulation. Any cash amounts in the Settlement Fund or
the Net Settlement Fund shall be returned as provided in paragraph 33 above.

      36.   The parties to this Stipulation intend the Settlement to be a final
and complete resolution of all disputes asserted or which could be asserted by
the Plaintiffs and Class Members against the Released Parties with respect to
the Settled Claims. Accordingly, Plaintiffs and Defendants agree not to assert
in any forum or in any statement to the media (whether or not for attribution)
that the litigation was brought by Plaintiffs or defended by Defendants in bad
faith or without a reasonable basis. No Defendant shall deny, based on the
publicly available information at the time, that the Action was filed in good
faith and with an adequate basis in fact. The parties hereto shall assert no
claims of any violation of Rule 11 of the Federal Rules of Civil Procedure
relating to the prosecution, defense, or settlement of the Action. The parties
agree that the amount paid and the other terms of the Settlement were negotiated
at arm's length in good faith by the parties, and reflect a Settlement that was
reached voluntarily, with the assistance of a mediator, after consultation with
experienced and competent legal counsel.

      37.   This Stipulation may not be modified or amended, nor may any of its
provisions be waived except by a writing signed by or on behalf of all parties
hereto or their successors-in-interest.

      38.   The headings herein are used for the purpose of convenience only and
are not meant to have legal effect.

      39.   The administration and consummation of the Settlement as embodied in
this Stipulation shall be under the authority of the Court, and the Court shall
retain jurisdiction for the purpose of entering orders providing for awards of
attorneys' fees and expenses to Plaintiffs' Counsel and enforcing the terms of
this Stipulation.

<PAGE>

      40.   The waiver by one party of any breach of this Stipulation by any
other party shall not be deemed a waiver of any other prior or subsequent breach
of this Stipulation.

      41.   This Stipulation and its exhibits and the Supplemental Agreement
constitute the entire agreement among the parties hereto concerning the
Settlement of the Action, and no representations, warranties, or inducements
have been made by any party hereto concerning this Stipulation and its exhibits
and the Supplemental Agreement and other than those contained and memorialized
in such documents.

      42.   This Stipulation may be executed in one or more counterparts. All
executed counterparts and each of them shall be deemed to be one and the same
instrument provided that counsel for the parties to this Stipulation shall
exchange among themselves original signed counterparts.

      43.   This Stipulation shall be binding upon, and inure to the benefit of,
the successors and assigns of the parties hereto.

      44.   The construction, interpretation, operation, effect and validity of
this Stipulation, and all documents necessary to effectuate it, shall be
governed by the internal laws of the State of California without regard to
conflicts of laws, except to the extent that federal law requires that federal
law governs.

      45.   This Stipulation shall not be construed more strictly against one
party than another merely by virtue of the fact that it, or any part of it, may
have been prepared by counsel for one of the parties. It is recognized that this
Stipulation is the result of arm's-length negotiations between the parties and
all parties have contributed substantially and materially to the preparation of
this Stipulation.

      46.   All counsel and any other person executing this Stipulation and any
of the exhibits hereto, or any related settlement documents, warrant and
represent that they have the full authority to do so and that they have the
authority to take appropriate action required or permitted to be taken pursuant
to the Stipulation to effectuate its terms.

      47.   Plaintiffs' Lead Counsel and Defendants' counsel agree to cooperate
fully with one another in seeking Court approval of the Preliminary Approval
Order, the Stipulation and the

<PAGE>

Settlement, and to promptly agree upon and execute all such other documentation
as may be reasonably required to obtain final approval by the Court of the
Settlement.

      48.   The Court shall retain continuing jurisdiction to enforce the
provisions of this Stipulation, including specifically paragraph 4(a) and
Exhibit A with respect to corporate governance provisions, and with respect to
settlement administration and related matters.

<PAGE>

Dated:  August 20, 2004

BERGER & MONTAGUE, P.C.                    KLAFTER & OLSEN LLP

BY: /s/ Todd S. Collins/EWF                BY: /s/ Kurt B. Olsen
    -----------------------                    -----------------------
    Todd S. Collins, Esquire                   Kurt B. Olsen, Esquire
    1622 Locust Street                         2121 K Street, N.W.
    Philadelphia, PA 19103                     Washington, DC 20037
    (215) 875-3000                             (202) 261-3553

LERACH COUGHLIN STOIA GELLER                   Jeffrey A. Klafter, Esquire
RUDMAN & ROBBINS LLP                           1311 Mamaroneck Avenue, Suite 220
                                               White Plains, NY 10602
                                               (914) 997-5656

BY: /s/ Jeffrey D. Light
    -----------------------
    Jeffrey D. Light, Esquire
    401 B Street, Suite 1700
    San Diego, CA  92101-4297
    (619) 231-1058

                           LEAD COUNSEL FOR PLAINTIFFS

GIBSON DUNN & CRUTCHER LLP                     COOLEY GODWARD LLP

BY: /s/ Elizabeth W. Brem                  BY: /s/ Koji Fukumura
    -----------------------                    -----------------------
    Wayne W. Smith, Esquire                    Koji Fukumura, Esquire
    Stephanie A. Baren, Esquire                4401 Eastgate Mall
    Elizabeth W. Brem, Esquire                 San Diego, CA 92121
    4 Park Plaza, Suite 1500                   (858) 550-6000
    Irvine, CA  92614-8557
    (949) 451-3800

ATTORNEYS FOR DEFENDANTS ASHWORTH, INC.        ATTORNEYS FOR DEFENDANT
RANDALL L. HERREL, SR.,                         A. JOHN NEWMAN
AND GERALD W. MONTIEL

<PAGE>

                                    EXHIBIT A

      The Company agrees to adoption of the following corporate governance
provisions all of which are subject to a "sunset" provision whereby after six
(6) years following the Effective Date of the Settlement, the Company may depart
from the foregoing standards if, and then only to the extent that, the Board of
Directors - in the good faith exercise of its fiduciary duties - determines that
changes to the foregoing policies are needed to ensure continued protection of
shareholder value:

      1.    The Company's outside auditors are prohibited from performing work
not intrinsically related to audit work, except Tax Return Services and
SEC-Related Work (collectively, "Other Non-Audit Services"). These Other
Non-Audit Services shall be put out to bid if the estimated fees associated with
such Other Non-Audit Services exceed 50% of the audit fee. This procedure shall
be approved and monitored by the Audit Committee. Except as expressly permitted
by the first sentence of this paragraph, the outside auditors shall be
prohibited from handling individual tax services for Ashworth Directors and
Officers or consulting services of any kind for Ashworth and its Officers and
Directors.

      2.    The outside auditors' engagement partner and concurring partner will
rotate off of the client team every five (5) years.

      3.    The Company will make clear, through the Audit Committee's review
and approval processes of the auditors' engagement, that the auditors' scope of
services will include an assessment of the Company's internal controls.

      4.    The Company shall implement and maintain a robust internal audit
function. The internal auditor shall be appointed by the Board or the Audit
Committee, and report to the Audit Committee at least semi-annually. The
internal auditor shall monitor the Company's internal control environment,
revenue recognition practices, and accounting practices. The internal audit
function may be outsourced under the supervision of the Audit Committee, but may
not be performed by the Company's outside auditors.

      5.    At least quarterly, the Company's CFO shall report directly to the
Board as to the Company's financial condition and prospects, all reasons for any
material increase in expenses and liabilities, or material decreases in revenues
or earnings.

      6.    The CEO and CFO shall be initially responsible for drafting the
Company's revenue recognition policy, which shall be reviewed and (if indicated)
revised by the Board within six (6) months after settlement of the Litigation.
Upon Board approval, the CFO shall ensure that the Company's revenue recognition
policy is distributed to each employee who records or reviews the recording of
revenue. Any questions or disputes regarding the policy, or its application,
shall be directed to the Company's CFO, who shall inform the CEO. The dispute
and its resolution shall be documented and forwarded to the Audit Committee.

      7.    The Company will establish a mechanism whereby employees can
directly and confidentially communicate any improper activity at the Company
relating to the Company's accounting process. For this purpose, the Company may
employ an outside, independent organization to which employees may direct their
communications. The Company will display notices in prominent places in the work
area(s) informing employees of the existence of this mechanism and relevant
contact information. In addition, the Chief Executive Officer and/or the Chief
Financial Officer shall inform employees of the existence of this mechanism on a
bi-annual basis corresponding to the Company's fiscal year.

      8.    The Company will commit to have a minimum of eight (8) Directors, on
its Board, of whom at all times at least seven (7) will be Independent Directors
as defined under NASDAQ listing requirements.

<PAGE>

      9.    The Company will adopt a policy effective twelve (12) months after
settlement of the Litigation, to implement the following:

      -     No non-employee Director may serve as a Director of more than three
            (3) other public companies;

      -     No non-employee Director who has full-time employment may serve as a
            Director of more than two (2) other public companies; and

      -     Non-employee Directors not meeting these requirements may complete
            their current terms.

      -     The Chief Executive Officer may serve as a Director of one (1) or
            two (2) other public companies, provided that the Ashworth Board of
            Directors expressly approves each Director position.

      10.   No Independent Director shall serve more than fifteen (15) years as
a Director of the Company.

      11.   The Company will maintain the policy, outlined below, for Directors,
the CEO and President, the Executive Vice President, Chief Financial Officer
("CFO") and Chief Operating Officer and the Senior Vice President ("SVP") levels
of executive management. Under the Company's policy, such persons are required
to retain stock acquired on option exercise equaling a value of at least 50% of
their net after-tax profits on each exercise of options granted on or after
March 24, 2004 until the following individual ownership goals are achieved:

      -     each Director - three (3) times the annual retainer;

      -     the CEO - two (2) times the annual base salary;

      -     the CFO - one and a half (1.5) times the annual base salary;

      -     the SVP - one (1) times the annual base salary.

      12.   The Company will implement the position of Lead Independent
Director.

      13.   The Company will adopt a proposal whereby the independent directors
of the Board shall hold an executive session at least twice a year at which the
CEO is not present.

      14.   The Company will maintain a Nominating/Corporate Governance
Committee of the Board, which shall consider candidates to fill vacant Board
positions, and shall consider policies relating to the composition and
governance of the Board and its officers and directors, including committee
structure and size, share ownership, and the retirement and resignation of
officers and directors.

      15.   The Nominating/Corporate Governance, Compensation and Audit
Committees of the Board shall each be comprised solely of independent directors,
each of which committees shall not be composed of fewer than three (3) members.

      16.   The Board's committees shall each have standing authorization, in
their reasonable discretion, to retain legal and other advisors of their choice
at Company expense, which advisors shall report directly to the committee.

<PAGE>

      17.   The Company will adopt a policy that all stock option plans, now and
in the future, must be clear, understandable and approved by the shareholders.
The Company also agrees to fully comply with relevant GAAP and SEC requirements
as to any mandatory expensing of options in the future.

      18.   No corporate officer or director may directly or indirectly "short"
Company stock or engage in "put" or "call" transactions involving Company stock.
No officer or director may enter into any securities transaction by which he or
she would directly or indirectly profit from a decline in the price of Ashworth
stock.

      19.   The Company will publicly disclose all future officer and Director
purchases and sales on its website and in SEC filings within two (2) business
days of the relevant transaction and will prohibit derivative transactions for
officers and Directors as to the Company's stock. The sole exception to this
policy, however, is that the Company need not treat bona fide pledges in
connection with a traditional margin account as "sales".
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>a06769exv31w1.txt
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<PAGE>

                                                                    EXHIBIT 31.1

I, Randall L. Herrel, Sr., Chairman, President and Chief Executive Officer of
Ashworth, Inc., certify that:

      1.    I have reviewed this report on Form 10-Q of Ashworth, Inc.;

      2.    Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this report;

      4.    The registrant's other certifying officer and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:

                  (a) Designed such disclosure controls and procedures, or
                  caused such disclosure controls and procedures to be designed
                  under our supervision, to ensure that material information
                  relating to the registrant, including its consolidated
                  subsidiaries, is made known to us by others within those
                  entities, particularly during the period in which this report
                  is being prepared;

                  (b) Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

                  (c) Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

      5.    The registrant's other certifying officer and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of the registrant's board of directors (or persons
            performing the equivalent functions):

                  (a) All significant deficiencies and material weaknesses in
                  the design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

                  (b) Any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal control over financial reporting.

Date:  March 11, 2005

                                /s/Randall L. Herrel, Sr.
                                Randall L. Herrel, Sr.
                                Chairman, President and Chief Executive Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>a06769exv31w2.txt
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<PAGE>

                                                                    EXHIBIT 31.2

I, Terence W. Tsang, Executive Vice President, Chief Operating Officer and Chief
Financial Officer of Ashworth, Inc., certify that:

      1.    I have reviewed this report on Form 10-Q of Ashworth, Inc.;

      2.    Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this report;

      4.    The registrant's other certifying officer and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:

                  (a) Designed such disclosure controls and procedures, or
                  caused such disclosure controls and procedures to be designed
                  under our supervision, to ensure that material information
                  relating to the registrant, including its consolidated
                  subsidiaries, is made known to us by others within those
                  entities, particularly during the period in which this report
                  is being prepared;

                  (b) Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

                  (c) Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

      5.    The registrant's other certifying officer and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of the registrant's board of directors (or persons
            performing the equivalent functions):

                  (a) All significant deficiencies and material weaknesses in
                  the design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

                  (b) Any fraud, whether or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal control over financial reporting.

Date:  March 11, 2005

                               /s/Terence W. Tsang

                               Terence W. Tsang
                               Executive Vice President, Chief Financial Officer
                               and Treasurer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>5
<FILENAME>a06769exv32w1.txt
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<PAGE>

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Randall L. Herrel, Sr., in my capacity as Chairman, President and Chief
Executive Officer of Ashworth, Inc. (the "Registrant"), do hereby certify in
accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

      1. the Quarterly Report of the Registrant, on Form 10-Q for the quarter
ended January 31, 2005 (the "Report"), to which this certification is attached
as an exhibit fully complies with the requirements of Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934; and

      2. the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Registrant.

Dated: March 11, 2005            /s/Randall L. Herrel, Sr.
                                 Randall L. Herrel, Sr.,
                                 Chairman, President and Chief Executive Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>6
<FILENAME>a06769exv32w2.txt
<DESCRIPTION>EXHIBIT 32.2
<TEXT>
<PAGE>

                                                                    EXHIBIT 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Terence W. Tsang, in my capacity as Executive Vice-President, Chief Operating
Officer, Chief Financial Officer and Treasurer of Ashworth, Inc. (the
"Registrant"), do hereby certify in accordance with 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of
my knowledge:

      1. the Quarterly Report of the Registrant, on Form 10-Q for the quarter
ended January 31, 2005 (the "Report"), to which this certification is attached
as an exhibit fully complies with the requirements of Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934; and

      2. the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Registrant.

Dated: March 11, 2005            /s/Terence W. Tsang
                                 Terence W. Tsang
                                 Executive Vice-President, Chief Financial
                                 Officer and Treasurer
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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