UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment
No. 1)
| |
|
|
| þ |
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended October 31, 2005
| |
|
|
| o |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the transition
period from
to
Commission file number: 001-14547
Ashworth, Inc.
| |
|
|
| Delaware
|
|
84-1052000 |
| (State or other jurisdiction of
|
|
(I.R.S. Employer |
| incorporation or organization)
|
|
Identification No.) |
2765 LOKER AVENUE WEST, CARLSBAD, CA 92008
(Address of Principal Executive Office, including Zip Code)
(760) 438-6610
(Registrant’s Telephone Number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: common stock, $.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of Registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in
Rule 12b-2 of the Exchange Act (Check one).
| |
|
|
|
|
Large accelerated filer o
|
|
Accelerated filer
þ
|
|
Non-accelerated filer o |
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the
Exchange Act. Yes o No þ
The aggregate market value of the Registrant’s common stock held by non-affiliates based upon
the last reported sales price of its common stock on April 30, 2005 as reported on the NASDAQ
National Market was $108,244,884.
There were 14,267,467 shares of common stock, $.001 par value, outstanding at the close of
business on January 31, 2006.
EXPLANATORY NOTE
On February 1, 2006, Ashworth, Inc. (the “Company”) filed its Annual Report on Form 10-K for
the year ended October 31, 2005, with the Securities and Exchange Commission. Because Ashworth has
determined that it will not file its Proxy Statement within 120 days following the last day of its
last fiscal year, the Company is providing Items 10, 11, 12, 13, and 14 of Part III in this Form
10-K/A filing. Except as set forth in Part III below, no other changes are made to the Company’s
Annual Report on Form 10-K for the fiscal year ended October 31, 2005.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Directors of the Company
| |
|
|
|
|
|
|
|
|
| |
|
Director |
|
Term to |
| Class I Directors |
|
Since |
|
Expire |
| |
John M. Hanson, Jr., age 66
|
|
|
1994 |
|
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
Mr. Hanson is a certified public accountant. He was
a stockholder and officer of the accounting firm,
John M. Hanson & Co., from 1968 until 1998, at which
time he retired. He now practices as a tax
specialist for a limited number of clients. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James B. Hayes, age 68
|
|
|
2004 |
|
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
In July 2001, Mr. Hayes retired as President and CEO
of Junior Achievement, Inc., a not-for-profit
organization providing economic education for young
people in the U.S. and throughout the world. Mr.
Hayes served as Chairman of Junior Achievement’s
national board of directors from 1991 to 1993 and as
a board member from 1987 to 1995. Prior to 1995,
Mr. Hayes had a 35-year career in magazine
publishing. He was Publisher of FORTUNE Magazine
from 1986 to 1994. Mr. Hayes also served as
Publisher of DISCOVER Magazine from 1984 to 1986;
Advertising Sales Director of MONEY Magazine from
1982 to 1984; and held a number of executive
positions with SPORTS ILLUSTRATED for 23 years from
1959 to 1982. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randall L. Herrel, Sr., age 55
|
|
|
1996 |
|
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
Mr. Herrel has served as the Company’s Chairman of
the Board of Directors since April 2001 and has been
a Director, President and the Chief Executive
Officer of the Company since December 1996. From
1994 to 1996, Mr. Herrel served as President and
Chief Operating Officer of Quiksilver, Inc., a young
men’s and women’s apparel company. Mr. Herrel
joined Quiksilver in 1989 and also served at various
times as Chief Financial Officer, Chief Operating
Officer, Treasurer and Secretary. |
|
|
|
|
|
|
|
|
1
Directors of the Company, continued:
| |
|
|
|
|
|
|
|
|
| |
|
Director |
|
Term to |
| |
|
Since |
|
Expire |
| Class II Directors |
|
|
|
|
| |
Detlef Adler, age 47
|
|
|
2006 |
|
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
Mr. Adler is CEO of Seidensticker, which is a
supplier of woven shirts to the Company and owns
713,800 shares of the Company’s common stock as of
February 24, 2006. Mr. Adler has been with
Seidensticker since 1994 and served as the CFO from
1994 to 1996 when he was named the CEO. From 1989
to 1994, he served as the Director of Finance for
Goldwell AG, which at the time was a subsidiary of
Kao Corp. Japan. He was responsible for the
finance-related function of all international
subsidiaries for Goldwell. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen G. Carpenter, age 66
|
|
|
1999 |
|
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
Mr. Carpenter was a commercial banker for 36 years
and has been retired since 1998. He was with
California United Bank and served as Chairman and
CEO from 1994 to 1998 and President and Chief
Executive Officer from 1992 to 1994. Prior to 1992,
Mr. Carpenter served as Vice Chairman of Security
Pacific Bank for three years. He also served as a
director of the Los Angeles Board of the Federal
Reserve Bank of San Francisco. He presently serves on the board of
California United Bank. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class III Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James G. O’Connor, age 63
|
|
|
2005 |
|
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
In January 2005, Mr. O’Connor retired from his
position as Ford Motor Company Group Vice President
for North America Marketing, Sales and Service. Mr.
O’Connor was responsible for overseeing Ford,
Lincoln-Mercury and Ford Customer Service divisions,
Dealer Development, Ford Performance Group, Global
Marketing and export markets around the world. From
1998 to 2002, he was Ford Motor Company Vice
President and President of Ford Division responsible
for the marketing, sales and distribution of all
Ford brand cars and trucks in the U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Richardson, age 60
|
|
|
2005 |
|
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Mr. Richardson is the Senior Vice President,
Controller and Chief Accounting Officer of Qwest
Communications International (“Qwest”), a world wide
provider of a variety of telecommunications
services. Mr. Richardson joined Qwest in April 2003.
From October 2002 to April 2003, Mr. Richardson was
an independent consultant. In October 2002 Mr.
Richardson retired from Goodyear Tire & Rubber
Company (“Goodyear”), a worldwide manufacturer of
tires, engineered products and chemicals where he
served as the Vice President of Finance for its
North American Tire business unit from 1999 to 2002.
Mr. Richardson held general management and
financial positions within the Goodyear operations
in Great Britain and Ohio from 1967 to 1999. Mr.
Richardson holds a Certified Public Accountant
license from the State of Ohio (inactive) and
received a B.B.A. degree from Ohio University in
1967. |
|
|
|
|
|
|
|
|
2
Executive Officers of the Company
Set forth below are the names and business backgrounds of the executive officers of the
Company, other than Randall L. Herrel, Sr. whose position and business background are described
above.
Gary I. (‘Sims’) Schneiderman, age 44
Executive Vice President — Sales, Marketing and Customer Service
Mr. Schneiderman joined the Company in September 2001 and served as Vice President of Sales
for Ashworth and Callaway Golf apparel Retail Sales until January 2004 when he was promoted to
Senior Vice President of Sales and had the added responsibility for Callaway Golf apparel Green
Grass Sales. In September 2005, Mr. Schneiderman was promoted to Executive Vice President of
Sales, Marketing and Customer Service. Prior to joining the Company, Mr. Schneiderman was with
Tommy Hilfiger USA where he served in a number of capacities including as National Sales Manager
for men’s sportswear. Prior to 1990, he served as a Regional Sales Manager for Pincus Brothers
Maxwell Tailored Clothing from 1985 to 1990.
Peter E. Holmberg, age 54
Executive Vice President — Merchandising, Design and Production
Mr. Holmberg joined the Company in July 1998 and served as the Director of Corporate Sales
until December 1999. He served as Vice President of Corporate Sales from December 1999 to August
2001 when he was promoted to Senior Vice President of Sales and had the added responsibility of
Ashworth Green Grass Sales. Mr. Holmberg then served as the Senior Vice President of Merchandising
and Design from May 2005 until September 2005 when he was promoted to Executive Vice President of
Merchandising, Design and Production. Prior to joining the Company, Mr. Holmberg served as
National Corporate Sales Manager for Cutter & Buck, Inc. from 1995 to 1998 and as Regional Manager
and Buyer for Patrick James, Inc. from 1992 to 1995. Mr. Holmberg was the proprietor of The
Country Gentleman, an upscale retail store in Bellevue, Washington, from 1975 to 1992.
Winston E. Hickman, age 63
Executive Vice President and Chief Financial Officer
Mr. Hickman joined the Company on February 23, 2006. Mr. Hickman most recently served as
Executive Vice President and Chief Financial Officer of REMEC, Inc., a NASDAQ-listed designer and
manufacturer of advanced wireless subsystems used in commercial and defense communications
applications. Mr. Hickman joined REMEC in 2003 from privately-held Paradigm Wireless System, Inc.
where, beginning in 2000, he was an investor, Chief Financial Officer and a member of the board of
directors. Mr. Hickman has also served as board member, Chief Financial Officer, and financial
advisor to a number of public and private companies. Mr. Hickman served as Chief Financial Officer
of Pacific Scientific Company, a NYSE-listed company with sales in excess of $300 million. Prior
to Pacific Scientific, he held senior financial positions at Rockwell International, Allied-Signal,
and Vans, Inc. He currently serves as a member of the board of directors of SRS Labs, Inc., a
NASDAQ-listed company, where he is Chairman of the Audit Committee. Mr. Hickman holds an M.B.A.
from the University of Southern California and a B.A. from California State University, Long Beach.
Communicating with the Board of Directors
Stockholders may communicate with the Board of Directors, its Committees, Mr. James B. Hayes,
its lead independent director, or any other member of the Board of Directors by sending a letter
care of our Corporate Secretary at 2765 Loker Avenue West, Carlsbad, CA 92008. The Board of
Directors’ policy is to have all stockholder communications compiled by the Corporate Secretary and
forwarded directly to the Board, the Committee or the director as indicated in the letter. All
letters will be forwarded to the appropriate party. The Board of Directors reserves the right to
revise this policy in the event that this process is abused, becomes unworkable or otherwise does not efficiently serve
the purpose of the policy.
3
Meetings and Committees of the Board of Directors
The Company has standing Audit, Compensation and Human Resources, and Corporate Governance and
Nominating Committees.
The Audit Committee
The Audit Committee represents the Board of Directors in assessing the independence and
objectivity of the Company’s independent public accountants, the integrity of management, the
appropriateness of accounting policies and procedures and the adequacy of disclosures to
stockholders. In this regard, the Audit Committee assists the Board of Directors by reviewing the
financial information disclosure, the internal controls established by management, and the internal
and external audit process. It is the Audit Committee’s responsibility to select and retain the
independent auditors to audit the financial statements of the Company and its divisions and
subsidiaries. The Audit Committee currently consists of Messrs. Hanson (Chairman), Carpenter,
O’Connor and Richardson. The Audit Committee has been established in accordance with Securities
and Exchange Commission (the “SEC”) rules and regulations, and all the members of the Audit
Committee are independent as independence for audit committee members is defined under the
Nasdaq Stock Market, Inc (“NASDAQ”) listing standards. The Audit Committee and the Board
of Directors has determined that each of Mr. John M. Hanson, Jr., the Audit Committee Chairman, and
Mr. John W. Richardson qualifies as an “audit committee financial expert” within the meaning of SEC
rules and regulations. The Audit Committee has the authority to retain legal and other advisors of
its choice, at the Company’s expense, which advisors report directly to the Committee. In March
2005, the Audit Committee amended its charter primarily to conform with changes in SEC rules and
regulations and the NASDAQ listing standards. The Audit Committee Charter as amended on March 23,
2005 is accessible via the Company’s website at
www.ashworthinc.com under the heading, “Investor
Info.”
The Compensation and Human Resources Committee
The Compensation and Human Resources Committee assists the Board of Directors in discharging
its responsibilities relating to the compensation for executive officers and outside directors and
has the authority to administer the Company’s equity incentive plans. This Committee currently
consists of Messrs. O’Connor (Chairman), Adler, Hayes and Richardson, all of whom are independent
directors as independence is defined under the NASDAQ listing standards. The Compensation and
Human Resources Committee has the authority to retain legal and other advisors of its choice, at
the Company’s expense, which advisors report directly to the Committee. The Compensation and Human
Resources Committee Charter as amended by the Board of Directors on March 23, 2005 is accessible
via the Company’s website at www.ashworthinc.com under the heading, “Investor Info.”
Compensation Committee Interlocks and Insider Participation
The members of the Compensation and Human Resources Committee, Messrs. O’Connor, Adler, Hayes
and Richardson, are not current or former officers or employees of the Company. There are no
Compensation and Human Resources Committee interlocks between the Company and other entities
involving Ashworth’s executive officers and directors.
The Corporate Governance and Nominating Committee
The Board of Directors established the Corporate Governance and Nominating Committee in
January 2004. The purpose of the Committee is to assist the Board by identifying qualified
individuals to become directors of the Company, to consider and recommend to the Board the director
nominees for each annual meeting of stockholders and to fill vacancies on the Board, to consider
and recommend to the
4
Board the composition of the Board, its committees and the chairpersons thereof, to monitor
and assess the effectiveness of the Board and its committees, and to perform a leadership role in
shaping and implementing the Company’s corporate governance policies. The Company has adopted
several corporate governance policies among which are policies specifying the minimum number of
independent and total directors, limiting each director’s service to a maximum number of public
company boards, limiting the length of service for non-employee directors, appointing a lead
independent director and designating stock ownership levels for the Company’s directors and listed
executive officers. The Corporate Governance and Nominating Committee currently consists of
Messrs. Carpenter (Chairman), Adler, Hanson and Hayes, all of whom are independent directors as
independence is defined under the NASDAQ listing standards. The Corporate Governance and
Nominating Committee has the authority to retain legal and other advisors of its choice, at the
Company’s expense, which advisors report directly to the Committee. The Corporate Governance and
Nominating Committee Charter as amended by the Board of Directors on March 23, 2005 is accessible
via the Company’s website at www.ashworthinc.com under the heading, “Investor Info.”
The Corporate Governance and Nominating Committee considers stockholder nominations for
candidates for membership on the Board when properly submitted in accordance with the Company’s
bylaws. The Corporate Governance and Nominating Committee will review and evaluate such
stockholder nominations in the same manner as it evaluates all other nominees.
The Company’s bylaws provide that nominations for the election of directors may be made by any
stockholder entitled to vote in the election of directors; provided, however, that a stockholder
may nominate a person for election as a director at a meeting only if written notice of such
stockholder’s intent to make such nomination has been given to the Company’s Secretary in
accordance with the Company’s bylaws. Each
notice must set forth: (i) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (ii) the class and number of shares of the
Company’s stock which are beneficially owned by the stockholder and a representation that the
stockholder is a holder of record of stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting and nominate the person or persons specified
in the notice; (iii) a description of all arrangements or understandings between the stockholder
and each nominee and any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (iv) such other information
regarding each nominee proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the
nominee been nominated, or intended to be nominated, by the Board; and (v) the consent of each
nominee to serve as a director of the Company if so elected.
In addition to stockholder nominations, the Corporate Governance and Nominating Committee may
utilize a variety of methods for identifying potential nominees for directors, including
considering potential candidates who come to their attention through current officers, directors,
professional search firms or other persons. Once a potential nominee has been identified, the
Corporate Governance and Nominating Committee evaluates whether the nominee has the appropriate
skills and characteristics required to become a director in light of the then current make-up of
the Board of Directors. This assessment includes an evaluation of the nominee’s judgment and
skills, such as experience at a strategy/policy setting level, financial sophistication, leadership
and objectivity, all in the context of the perceived needs of the Board of Directors at that point
in time. The Board of Directors believes that, at a minimum, all members of the Board should have
the highest professional and personal ethics and values. In addition, each member of the Board
must be committed to increasing stockholder value and should have enough time to carry out his or
her responsibilities as a member of the Board.
5
The Executive Committee
The purpose of the Executive Committee is to act on behalf of the Board of Directors of the
Company between Board meetings, to provide additional support and resources to management of the
Company in the nature of that provided by the Board, and to provide for closer, more regular
communication between the Board and management of the Company between regular meetings of the
Board. In June 2005, the Board elected to suspend the Executive Committee.
During fiscal year 2005, the Board of Directors met in person six times, met telephonically
three times and took action twice by written consent in lieu of a meeting. During fiscal year
2005: the Audit Committee met in person seven times and met telephonically 12 times; the
Compensation and Human Resources Committee met in person three times, met telephonically twice and
took action once by written consent in lieu of a meeting; the Corporate Governance and Nominating
Committee met in person seven times and met telephonically four times; and the Executive Committee
met twice in person. During fiscal year 2005, each of the directors attended at least 75% of the
aggregate number of the Board of Directors’ meetings and meetings of the Committees on which they
served.
Policy Regarding Director Attendance at Annual Meetings
The Company encourages director attendance at its annual meetings and requests that directors
make reasonable efforts to attend such meetings. The Company’s 2005 Annual Meeting of Stockholders
was attended by all of the members of the then-current Board of Directors.
Compliance with Section 16(a) of the Exchange Act
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the rules
promulgated thereunder and the requirements of NASDAQ, executive officers and directors of the
Company and persons who beneficially own more than 10% of the common stock of the Company are
required to file with the Securities and Exchange Commission and NASDAQ and furnish to the Company
reports of ownership and change in ownership with respect to all equity securities of the Company.
Based solely on its review of the copies of such reports received by the Company during or
with respect to the fiscal year ended October 31, 2005 and/or written representations from such
reporting persons, the Company believes that its officers, directors and 10% stockholders complied
with all Section 16(a) filing requirements applicable to such individuals, except that Mr.
Schneiderman inadvertently filed a late Form 4 to report one stock option grant on September 12,
2005. Mr. Schneiderman has now reported the transaction.
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that applies to all directors
and employees, including the Company’s principal executive, financial and accounting officers. The
Code of Business Conduct and Ethics is posted on the Company website at
www.ashworthinc.com. The Company intends to satisfy the requirements under Item 5.05 of
Form 8-K regarding disclosure of amendments to, or waivers from, provisions of our Code of Business
Conduct and Ethics that apply to our directors and principal executive, financial and accounting
officers by posting such information on the Company’s website.
Compensation of Directors
During fiscal 2005, directors who are not employees of the Company each received annual cash
compensation of $15,000, plus $1,000 for in-person attendance and $500 for telephonic attendance at
each Board meeting or Committee meeting that is not in conjunction with a Board meeting. In
December 2005, non-employee directors also received an annual grant of an option to purchase 10,000
shares of the Company’s common stock, vesting quarterly, over a 12-month period, at 2,500 shares
for each quarter during which they serve or served as directors. In addition, each director who
served as the
6
Audit
Committee chairman or the Compensation and Human Resources Committee chairman received
additional annual cash compensation of $6,000 and $3,000, respectively. Each director who served
as an Audit or Compensation and Human Resources Committee chairman received an additional annual
grant of an option to purchase 5,000 shares. All options have an exercise price equal to the
common stock’s fair market value on the date of grant. All directors receive reimbursement of
expenses for attendance at each Board meeting and an annual $1,000 allowance for Ashworth® apparel.
No other arrangement exists pursuant to which any director of the Company was compensated during
the Company’s last fiscal year for any service provided as a director. Effective November 1, 2005,
the Compensation and Human Resources Committee modified the non-employee director compensation to
the following: 1) each non-employee director receives $30,000 in annual cash compensation plus
$1,000 for in-person attendance and $500 for telephonic attendance at each Board meeting or
Committee meeting that is not in conjunction with a Board meeting, 2) an option to purchase 10,000
shares of the Company’s common stock, vesting quarterly, over a 12-month period, at 2,500 shares
for each quarter during which they serve or served as directors, 3) each non-employee director who
serves as the Audit Committee chairman, the Compensation and Human Resources Committee chairman,
the Corporate Governance and Nominating Committee chairman or the Lead Director receives additional
annual cash compensation of $10,000, $7,500, $5,000 and $5,000, respectively plus an option to
purchase 5,000 shares of the Company’s common stock, vesting quarterly, over a 12-month period, at
1,250 shares for each quarter during which they serve or served as a committee chairman or Lead
Director.
7
Item 11. EXECUTIVE COMPENSATION.
The following information sets forth the total compensation for the Company’s named executive
officers for fiscal year 2005, as well as the total compensation paid to each such individual for
the two previous fiscal years.
Summary Compensation Table
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Annual Compensation |
|
Long Term Compensation |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
Payouts |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
Long-Term |
|
|
| |
|
Fiscal |
|
|
|
|
|
|
|
|
|
Other Annual |
|
Underlying |
|
Incentive |
|
All Other |
| Name and Principal Position |
|
Year |
|
Salary |
|
Bonus |
|
Compensation |
|
Options |
|
Plan Payouts |
|
Compensation |
| |
|
|
|
|
|
|
|
($ |
) |
|
|
($ |
) |
|
|
($ |
) |
|
|
(# |
) |
|
|
($ |
) |
|
|
($ |
) |
Randall L. Herrel, Sr. |
|
|
2005 |
|
|
|
422,074 |
|
|
|
0 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,209 |
(1) |
Chief Executive Officer and |
|
|
2004 |
|
|
|
387,231 |
|
|
|
150,000 |
|
|
|
— |
|
|
|
17,713 |
(2) |
|
|
0 |
|
|
|
4,209 |
(1) |
President |
|
|
2003 |
|
|
|
376,443 |
|
|
|
75,000 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,209 |
(1) |
Gary I. Schneiderman |
|
|
2005 |
|
|
|
216,701 |
|
|
|
85,000 |
(3) |
|
|
80,891 |
(4) |
|
|
20,000 |
(5) |
|
|
0 |
|
|
|
0 |
|
Executive Vice President – |
|
|
2004 |
|
|
|
187,338 |
|
|
|
123,769 |
(6) |
|
|
— |
|
|
|
4,015 |
(2) |
|
|
0 |
|
|
|
0 |
|
Sales, Marketing and Customer Service |
|
|
2003 |
|
|
|
166,308 |
|
|
|
78,769 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Peter E. Holmberg |
|
|
2005 |
|
|
|
197,716 |
|
|
|
0 |
|
|
|
— |
|
|
|
20,000 |
(5) |
|
|
0 |
|
|
|
0 |
|
Executive Vice President – |
|
|
2004 |
|
|
|
191,812 |
|
|
|
20,000 |
|
|
|
— |
|
|
|
6,755 |
(2) |
|
|
0 |
|
|
|
0 |
|
Merchandising, Design and
Production |
|
|
2003 |
|
|
|
190,731 |
|
|
|
15,000 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Peter S. Case (7) |
|
|
2005 |
|
|
|
188,558 |
|
|
|
0 |
|
|
|
— |
|
|
|
20,000 |
(5) |
|
|
0 |
|
|
|
0 |
|
Former Executive Vice |
|
|
2004 |
|
|
|
156,365 |
|
|
|
30,000 |
|
|
|
— |
|
|
|
3,543 |
(2) |
|
|
0 |
|
|
|
0 |
|
President,Chief Financial Officer and Treasurer |
|
|
2003 |
|
|
|
150,481 |
|
|
|
20,000 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Per B. Gasseholm (8) |
|
|
2005 |
|
|
|
229,661 |
|
|
|
15,000 |
|
|
|
— |
|
|
|
30,000 |
(5) |
|
|
0 |
|
|
|
5,993 |
(9) |
Former Executive Vice |
|
|
2004 |
|
|
|
0 |
|
|
|
0 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
President and Chief Operating Officer |
|
|
2003 |
|
|
|
0 |
|
|
|
0 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Terence W. Tsang (10) |
|
|
2005 |
|
|
|
189,322 |
|
|
|
0 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,440 |
(11) |
Former Executive Vice |
|
|
2004 |
|
|
|
259,189 |
|
|
|
85,000 |
|
|
|
— |
|
|
|
11,951 |
(2) |
|
|
0 |
|
|
|
4,340 |
(12) |
President, Chief Financial and Accounting Officer
and Treasurer |
|
|
2003 |
|
|
|
253,973 |
|
|
|
35,000 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,248 |
(13) |
| |
|
|
|
| (1) |
|
Includes $1,138 premium payment made for life insurance and $3,071 premium
payment made for disability insurance. |
| |
| (2) |
|
Option grant made in fiscal year 2004 based upon performance for fiscal year
2003. |
| |
| (3) |
|
Mr. Schneiderman was paid a retention bonus in September 2005 pursuant to an
employment agreement. |
| |
| (4) |
|
Includes a payment of $45,000 for the purchase of a golf club membership plus $25,039 for the
gross-up of applicable income taxes. Upon termination of his
employment, Mr. Scheiderman is required to reimburse the golf club
membership cost (current market value at the time of sale minus the
club fee) to the Company. |
| |
| (5) |
|
Option grant made on offer of employment or promotion. |
8
| |
|
|
(6)
|
|
Mr. Schneiderman’s bonus in fiscal 2004 consists of $78,769 earned for calendar year
2003 and $45,000 earned for fiscal year 2004. |
|
|
|
(7)
|
|
Mr. Case joined the Company in June 2000 and was promoted to Executive Vice
President, Chief Financial Officer and Treasurer in September 2005. Mr. Case resigned
effective February 1, 2006. |
|
|
|
(8)
|
|
Mr. Gasseholm joined the Company on November 1, 2004 and served as Executive Vice
President and Chief Operations Officer until his resignation effective September 16, 2005. |
|
|
|
(9)
|
|
Premium payment made for life insurance. |
|
|
|
(10)
|
|
Mr. Tsang resigned effective July 29, 2005. |
|
|
|
(11)
|
|
Includes $2,188 premium payment made for life insurance and $2,250 premium payment
made for disability insurance. |
|
|
|
(12)
|
|
Includes $2,188 premium payment made for life insurance and $2,152 premium payment
made for disability insurance. |
|
|
|
(13)
|
|
Includes $2,188 premium payment made for life insurance and $2,060 premium payment
made for disability insurance. |
Fiscal Year 2005 Stock Option Grants
The following table provides information regarding stock options granted under the Company’s
equity incentive plans during fiscal year 2005 to the named executive officers in the Summary
Compensation Table.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value at Assumed |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Rate of Stock |
|
| Individual Grants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Appreciation |
|
| |
|
Number of |
|
|
|
|
|
|
% of Total |
|
|
|
|
|
|
|
|
|
|
For Option Term |
|
| |
|
Securities |
|
|
|
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Underlying |
|
|
|
|
|
|
Granted to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Options |
|
|
|
|
|
|
Employees in |
|
|
Exercise or |
|
|
Expiration |
|
|
|
|
|
|
|
| Name |
|
Granted |
|
|
|
|
|
|
Fiscal Year |
|
|
Base Price |
|
|
Date |
|
|
5% |
|
|
10% |
|
|
|
|
(# |
) |
|
|
|
|
|
|
(%) |
|
|
($/sh) |
|
|
|
|
|
|
($) |
|
|
|
($) |
|
Randall L. Herrel, Sr. |
|
|
45,000 |
(1) |
|
|
|
|
|
|
15.0 |
|
|
|
10.75 |
|
|
|
12/21/14 |
|
|
|
304,228 |
|
|
|
770,973 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter E. Holmberg |
|
|
15,000 |
(1) |
|
|
|
|
|
|
5.0 |
|
|
|
10.75 |
|
|
|
12/21/14 |
|
|
|
101,409 |
|
|
|
256,991 |
|
Peter E. Holmberg |
|
|
20,000 |
(2) |
|
|
|
|
|
|
6.7 |
|
|
|
6.87 |
|
|
|
10/18/15 |
|
|
|
86,410 |
|
|
|
218,980 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary I. Schneiderman |
|
|
18,000 |
(1) |
|
|
|
|
|
|
6.0 |
|
|
|
10.75 |
|
|
|
12/21/14 |
|
|
|
121,691 |
|
|
|
308,389 |
|
Gary I. Schneiderman |
|
|
20,000 |
(2) |
|
|
|
|
|
|
6.7 |
|
|
|
7.03 |
|
|
|
09/12/15 |
|
|
|
88,423 |
|
|
|
224,080 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter S. Case |
|
|
5,000 |
(1) |
|
|
|
|
|
|
1.7 |
|
|
|
10.75 |
|
|
|
12/21/14 |
|
|
|
33,801 |
|
|
|
85,658 |
|
Peter S. Case |
|
|
20,000 |
(2) |
|
|
|
|
|
|
6.7 |
|
|
|
6.87 |
|
|
|
10/18/15 |
|
|
|
86,410 |
|
|
|
218,980 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terence W. Tsang |
|
|
30,000 |
(1) |
|
|
|
|
|
|
10.0 |
|
|
|
10.75 |
|
|
|
12/21/14 |
|
|
|
202,819 |
|
|
|
513,982 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per B. Gasseholm |
|
|
30,000 |
(2) |
|
|
|
|
|
|
10.0 |
|
|
|
8.44 |
|
|
|
11/01/14 |
|
|
|
159,236 |
|
|
|
403,536 |
|
| |
| (1) These options were granted on 12/21/04 based on performance for fiscal year 2004. |
| |
| (2) These options were granted on an offer of employment or promotion. |
9
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Number of Securities |
|
Value of Unexercised |
| |
|
|
|
|
|
|
|
|
|
Underlying Unexercised |
|
In-The-Money Options |
| |
|
Shares Acquired |
|
|
Value |
|
|
Options at Fiscal Year-End |
|
at Fiscal Year-End |
| Name |
|
on Exercise |
|
|
Realized |
|
|
Exercisable/Unexercisable |
|
Exercisable/Unexercisable |
| |
|
(#) |
|
|
($) |
|
|
(#) |
|
($) |
Randall L. Herrel, Sr.(1) |
|
|
1,000 |
|
|
|
900 |
|
|
246,213 / 0 |
|
1,174,938 / 0 |
Peter E. Holmberg |
|
|
34,000 |
|
|
|
252,538 |
|
|
35,755 / 20,000 |
|
91,110 / 137,400 |
Gary I. Schneiderman |
|
|
15,000 |
|
|
|
65,250 |
|
|
47,015 / 0 |
|
30,250 / 0 |
Peter S. Case |
|
|
17,181 |
|
|
|
98,672 |
|
|
7,362 / 20,000 |
|
0 / 137,400 |
Terence W. Tsang (2) |
|
|
83,697 |
|
|
|
238,592 |
|
|
53,010 / 0 |
|
697,701 / 115,315 |
Per B. Gasseholm |
|
|
0 |
|
|
|
0 |
|
|
0 / 0 |
|
0 / 0 |
| |
| |
|
|
(1)
|
|
After the Company’s fiscal year-end, on December 28, 2005, Mr. Herrel exercised
options for 99,000 shares and held 70,000 of those shares. The value realized on exercise
of the options was $225,910. |
|
|
|
(2)
|
|
After the Company’s fiscal year-end, on November 23, 2005, Mr. Tsang exercised
options for 53,010 shares. The value realized on exercise of the options was $89,568. |
Executive Employment Agreements, Termination of Employment and Change-in-Control Arrangements
The Company entered into executive employment agreements with Randall L. Herrel, Sr., the
Chief Executive Officer and President, Winston E. Hickman, the Executive Vice President and Chief
Financial Officer, Peter S. Case, former Executive Vice President, Chief Financial Officer and
Treasurer, Peter E. Holmberg, the Executive Vice President of Merchandising, Design and Production,
Gary I. “Sims” Schneiderman, the Executive Vice President of Sales, Marketing and Customer Service,
and Terence W. Tsang, former Executive Vice President, Chief Financial and Accounting Officer and
Treasurer. Messrs. Case and Tsang resigned from the Company effective February 1, 2006 and July
29, 2005, respectively.
The employment agreement with Mr. Herrel provides for a base salary of not less than $325,000
and bonuses to be determined by the Board of Directors on the basis of merit and the Company’s
financial success and progress. No bonus or stock options were awarded to Mr. Herrel under the
fiscal 2005 bonus plan. For achieving certain objectives as set forth in the fiscal 2004 bonus
plan, Mr. Herrel was awarded bonuses totaling $150,000 as well as options to purchase 45,000
shares. A $75,000 bonus as well as an option to purchase 17,713 shares were awarded to Mr. Herrel
in December 2003, because the Company achieved the goals set forth in the fiscal 2003 bonus plan.
The agreement with Mr. Herrel also provides for a monthly automobile allowance and for the Company
to maintain a life insurance policy for $1,000,000, the beneficiary of which may be named by Mr.
Herrel. The agreement with Mr. Herrel includes severance payments, ranging from one to two times
his then annual base salary, upon termination of employment under specific circumstances, including
death, termination without cause, or change of control. In addition, if Mr. Herrel dies or is
terminated without cause or in connection with a change of control, all of his unvested stock
options will immediately vest.
On February 23, 2006, the Company entered into an employment agreement with Winston E.
Hickman. The agreement with Mr. Hickman provides for: a base salary of $300,000; a target bonus
of 50% of base salary, with the actual payment subject to the Board of Directors’ discretion; the
10
grant of options to purchase 50,000 shares of the Company’s common stock, with half of the options
vesting on each of the first two anniversaries of Mr. Hickman’s employment with the Company; and
coverage under the Company’s benefits programs. If Mr. Hickman is terminated without cause or
resigns under certain specified circumstances, the severance provisions of his employment agreement
grant him: a lump sum payment of either one-half or all of his then current annual salary,
depending on the circumstances of his termination or resignation; a pro rata bonus; and immediate
vesting of a pro rata number of stock options.
On September 16, 2005, the Company entered into an employment agreement with Peter S. Case,
which terminated in connection with his resignation effective on February 1, 2006. The agreement
provided for a base salary of $225,000 and bonuses to be determined by the Board of Directors on
the basis of merit and the Company’s financial success and progress up to a maximum of 50% of the
base salary, and a monthly automobile allowance. Mr. Case was also awarded options to purchase
20,000 shares of the Company’s stock with vesting on the first anniversary of the date of grant.
No bonus was awarded to Mr. Case under the fiscal 2005 bonus plan. The agreement also provided
that if a Qualifying Termination (as defined in the agreement) had occurred within two years of the
effective date of the agreement, Mr. Case would have been entitled to severance payments equal to
his then annual base salary, immediate vesting of the options awarded under the agreement, and
continued insurance benefits for up to one year.
On September 16, 2005, the Company entered into an employment agreement with Peter E.
Holmberg. The agreement provides for a base salary of $225,000 and bonuses to be determined
periodically at the discretion of the Board of Directors on the basis of merit and the Company’s
financial success and progress up to a maximum of 50% of the base salary, and a monthly automobile
allowance. Mr. Holmberg was also awarded options to purchase 20,000 shares of the Company’s stock
with vesting on the first anniversary of the date of grant. No bonus was awarded to Mr. Holmberg
under the fiscal 2005 bonus plan. The agreement also provides that if a Qualifying Termination (as
defined in the agreement) occurs within two years of the effective date of the agreement, Mr.
Holmberg will be entitled to severance payments equal to his then annual base salary, immediate
vesting of the options awarded under the agreement, and continued insurance benefits for up to one
year.
On September 7, 2005, the Company entered into an employment agreement and a change in control
agreement with Gary I. “Sims” Schneiderman. The employment agreement with Mr. Schneiderman
provides for: a minimum base salary of $300,000; bonuses to be determined by the Board of Directors
on the basis of merit and the Company’s financial success and progress up to a maximum of 82.5% of
his base salary; three guaranteed minimum non-compete/retention payments of $85,000 on September
12, 2005, $85,000 on November 24, 2005 and $40,000 following the close of final accounting records
for 2006; stock options to purchase 20,000 shares for each of fiscal years 2005, 2006 and 2007; a
monthly automobile allowance and a club membership. The agreement also provides that if a
Qualifying Termination (as defined in the agreement) occurs, Mr. Schneiderman will be entitled to
receive severance payments equal to 12 months of his then annual base salary, an additional cash
payment of $50,000, payment of insurance premiums for a period of 12 months, and immediate vesting
of all options.
On November 1, 2004, the Company entered into an executive employment agreement with Per
Gasseholm. The agreement with Mr. Gasseholm provided for a base annual salary of not less than
$250,000 and bonuses to be determined by the Board of Directors on the basis of merit and the
Company’s financial success and progress. Under the agreement, Mr. Gasseholm was awarded options
to purchase 30,000 shares which were to vest over three years. The Company also maintained a
$1,000,000 life insurance policy for Mr. Gasseholm. The agreement with Mr. Gasseholm provided for
severance
11
payments equal to six months of his then annual base salary upon termination of
employment by the
Company without cause, payable over six months. Mr. Gasseholm separated from the Company in
September 2005. As of October 31, 2005, the Company recorded a severance liability of
approximately $200,000 to cover future payments to which Mr. Gasseholm is entitled to under the
agreement.
On December 15, 2000, the Company entered into an executive employment agreement with Terence
Tsang, which terminated in connection with his resignation effective on July 29, 2005. The
executive employment agreement provided for at-will employment with an annual base salary of no
less than $230,000 and bonuses to be determined by the Board of Directors on the
basis of merit and the Company’s financial success and progress. The agreement with Mr. Tsang also
provided for severance payments equal to nine months of his then annual salary upon termination of
employment under specific circumstances. The Company also maintained a $1,000,000 life insurance
policy for Mr. Tsang.
Additionally, the Company entered into change in control agreements with the following
executives: Randall L. Herrel, Sr., Winston E. Hickman, Peter S. Case, Peter E. Holmberg, Gary I.
“Sims” Schneiderman, and Terence W. Tsang. The change in control agreements with Messrs. Case and
Tsang terminated due to their resignations from the Company. Upon a qualifying termination in
connection with a change in control, as defined in each agreement, the executive would be entitled
to severance payments (generally equal to the executive’s highest base salary with the Company in
the prior three years, except that Mr. Herrel, and Mr. Tsang if his agreement were still in effect,
would receive an amount equal to twice the sum of his highest base salary for the prior three years
and his average bonus for the prior two years, and Mr. Hickman would receive an amount equal to one
and a half times his highest base salary for the prior three years), grossed up for applicable
excise taxes imposed by Section 4999 of the Internal Revenue Code of 1986, as amended. In
addition, Mr. Herrel’s and Mr. Hickman’s change in control agreements (and Mr. Tsang’s agreement if
it were still in effect) provides for the immediate vesting of all unexercised stock options and
the continuation of insurance benefits for up to two years (except for Mr. Hickman who is only
entitled to the continuation of insurance benefits for up to eighteen months).
Effective
as of February 28, 2006, the employment and change in control agreements for each of the
then-current executive officers were amended to comply with Section 409A of the Internal Revenue
Code, as amended.
On December 12, 2005, the Compensation and Human Resources Committee of the Board of Directors
of Ashworth, Inc. approved (with the consent of the affected executives) the 10% base salary
reduction requested by the Board for each of the above executives then employed by the Company,
effective December 19, 2005.
Performance Graph
Set forth below is a line graph comparing the yearly percentage change in the cumulative total
stockholder returns on the Company’s common stock over a five-year period with the cumulative total
return of the Nasdaq Stock Market (U.S. Companies) and the stocks of companies in the same Standard
Industrial Classification as the Company (SIC 2300-2399). The graph assumes that $100.00 was
invested on October 31, 2000 in the Company’s common stock and each index and that all dividends
were reinvested. The comparisons in the graph are required by the Securities and Exchange
Commission and are not intended to forecast nor are they necessarily indicative of possible future
performance of the Company’s common stock.
12
COMPARISON
OF YEAR CUMULATIVE TOTAL RETURN*
AMONG ASHWORTH, INC, THE NASDAQ
STOCK MARKET (U.S.) INDEX
AND SIC CODE 2300 - 2399
| |
* |
|
$100 invested on 12/31/00 in stock or index-including reinvestment of dividends. Fiscal year ending October 31. |
|
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
The following table sets forth certain information regarding the beneficial ownership of
common stock of the Company as of January 31, 2006 (unless otherwise noted) by: (i) each person
known by the Company to own beneficially more than 5% of the Company’s outstanding shares of common
stock, (ii) each of the Company’s directors and director nominees, (iii) the Company’s Named
Executive Officers, and (iv) all directors and executive officers of the Company as a group.
Unless otherwise noted, each person listed below has sole voting power and sole investment power
with respect to shares shown as owned by him, her or it. Information as to beneficial ownership is
based upon statements furnished to the Company or filed with the Securities and Exchange Commission
by such persons.
13
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent |
|
| |
|
Shares |
|
|
Options(2) |
|
|
Total |
|
|
Owned |
|
(3) |
|
| Name and Address (1) |
|
(#) |
|
|
(#) |
|
|
(#) |
|
|
(%) |
|
| |
Detlef H. Adler(4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stephen G. Carpenter |
|
|
17,500 |
(5) |
|
|
63,750 |
|
|
|
81,250 |
|
|
|
* |
|
Peter S. Case |
|
|
9,868 |
(6) |
|
|
7,362 |
|
|
|
17,230 |
|
|
|
* |
|
John M. Hanson, Jr. |
|
|
52,200 |
(7) |
|
|
93,750 |
|
|
|
145,920 |
|
|
|
1.0 |
|
Per B. Gasseholm(8) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
James B. Hayes |
|
|
2,000 |
|
|
|
29,583 |
|
|
|
31,583 |
|
|
|
* |
|
Randall L. Herrel, Sr. |
|
|
105,500 |
|
|
|
147,213 |
|
|
|
252,713 |
|
|
|
1.8 |
|
Peter E. Holmberg |
|
|
15,000 |
|
|
|
35,755 |
|
|
|
50,755 |
|
|
|
* |
|
James G. O’Connor |
|
|
10,000 |
(9) |
|
|
19,583 |
|
|
|
29,583 |
|
|
|
* |
|
John M. Richardson |
|
|
— |
|
|
|
1,375 |
|
|
|
1,375 |
|
|
|
* |
|
Gary I. Schneiderman |
|
|
500 |
|
|
|
47,015 |
|
|
|
47,515 |
|
|
|
* |
|
Terence W. Tsang (10) |
|
|
36,000 |
|
|
|
0 |
|
|
|
36,000 |
|
|
|
* |
|
All executive officers and
directors as a group (12 persons) |
|
|
248,568 |
|
|
|
445,386 |
|
|
|
693,954 |
|
|
|
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors
Inc. 1299 Ocean Avenue |
|
|
1,208,985 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
Santa Monica, CA 90401 |
|
|
|
|
|
|
— |
|
|
|
1,208,985 |
|
|
|
8.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Magnetar Capital Partners LLC 1603
Orrington Avenue 13th |
|
|
1,002,993 |
(12) |
|
|
|
|
|
|
|
|
|
|
|
|
Floor Evanston, IL 60210 |
|
|
|
|
|
|
— |
|
|
|
1,002,993 |
|
|
|
7.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discovery Group I, LLC 233 South
Wacker Drive Suite 3620 Chicago, |
|
|
1,002,700 |
(13) |
|
|
|
|
|
|
|
|
|
|
|
|
IL 60606 |
|
|
|
|
|
|
— |
|
|
|
1,002,700 |
|
|
|
7.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disciplined Growth Investors, Inc.
100 South Fifth St. Suite 2100
Minneapolis, MN 55402 |
|
|
957,475 |
(14) |
|
|
— |
|
|
|
957,475 |
|
|
|
6.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Knightspoint Partners II, L.P. 787
Seventh Avenue, 9th Floor,
New York, NY 10019 |
|
|
927,119 |
(15) |
|
|
15,000 |
|
|
|
942,119 |
|
|
|
6.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seidensticker (Overseas) Limited
Room 728, Ocean Center 5 Canton
Road Tsimshatsui Kowloon, Hong
Kong |
|
|
713,800 |
(16) |
|
|
— |
|
|
|
713,800 |
|
|
|
5.0 |
|
| |
| |
|
|
(1)
|
|
Unless otherwise indicated, the address for each stockholder is the same as the
address of the Company. |
14
| |
|
|
(2)
|
|
Represents shares of common stock that may be acquired pursuant to currently
exercisable stock options or stock options exercisable within 60 days of January 31, 2006. |
|
|
|
(3)
|
|
Applicable percentage of ownership is based upon 14,267,467 shares of common stock
outstanding as of January 31, 2006, together with applicable stock options for such
stockholder. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment power with respect to
shares. Shares of common stock subject to options currently exercisable or exercisable
within 60 days after January 31, 2006 are deemed outstanding for computing the percentage of
ownership of the person holding such stock options, but are not deemed outstanding for
computing the percentage ownership of any other person. |
|
|
|
(4)
|
|
Mr. Adler was appointed to the Board effective January 1, 2006. |
|
|
|
(5)
|
|
The shares are owned by the Stephen G./Jannell S. Carpenter Trust. Stephen G.
Carpenter and Jannell S. Carpenter have shared voting and investment powers. |
|
|
|
(6)
|
|
Mr. Case was appointed as Executive Vice President, Chief Financial Officer and
Treasurer effective September 16, 2005. The shares are owned by the Peter S. Case Revocable
Trust. Mr. Case has sole voting and investment powers. Mr. Case resigned effective
February 1, 2006. |
|
|
|
(7)
|
|
32,500 of these shares are owned by 7296 LTD, a family partnership. Mr. John M.
Hanson, Jr. is the General Partner of 7296 LTD and has sole voting and investment powers.
Mr. Hanson has direct ownership of the remaining 19,700 shares with sole voting and
investment powers. |
|
|
|
(8)
|
|
Mr. Gasseholm resigned effective September 16, 2005. |
|
|
|
(9)
|
|
The shares are owned by the James G. O’Connor Revocable Trust. Mr. O’Connor has
sole voting and investment powers. |
|
|
|
(10)
|
|
Mr. Tsang resigned effective July 29, 2005. |
|
|
|
(11)
|
|
This information is based upon a Schedule 13G/A filed by Dimensional Fund
Advisors Inc. with the Securities and Exchange Commission on February 6, 2006. As of
December 31, 2005, Dimensional Fund Advisors Inc. has sole voting and investment power of
the 1,208,985 shares that it beneficially owns, and, as a company registered under the
Investment Advisors Act of 1940, disclaims beneficial ownership of these shares. |
|
|
|
(12)
|
|
This information is based upon a Schedule 13G filed by Magnetar Capital Partners
LLC, Supernova Management LLC, and Alec N. Litowitz, as a group, with the Securities and
Exchange Commission on February 14, 2006. As of December 31, 2005, Magnetar Capital
Partners LLC, Supernova Management LLC, and Alec N. Litowitz had the shared voting and
investment power of the 1,002,993 shares reported as beneficially owned. |
|
|
|
(13)
|
|
This information is based upon a Schedule 13G/A filed by Discovery Group I, LLC,
Discovery Equity Partners, L.P., Daniel J. Donoghue and Michael R. Murphy, as a group, with
the Securities and Exchange Commission on November 7, 2005. As of November 4, 2005,
Discovery Group I, LLC, Daniel J. Donoghue and Michael R. Murphy had the shared voting and
investment power of the 1,002,700 shares reported as beneficially owned. As of such date,
Discovery Equity Partners, L.P. was the beneficial owner of 863,370 shares for which
Discovery Group I, LLC, Daniel J. Donoghue and Michael R. Murphy had the shared voting and
investment power. |
|
|
|
(14)
|
|
This information is based upon a Schedule 13G/A filed by Disciplined Growth
Investors, Inc. with the Securities and Exchange Commission on February 1, 2006. As of
December 31, 2005, Disciplined Growth Investors, Inc. had the sole voting and investment
power of the 957,475 shares reported as beneficially owned. |
|
|
|
(15)
|
|
This information is based upon a Schedule 13D filed with the Securities and
Exchange Commission on January 23, 2006. This Schedule 13D was filed jointly by
Knightspoint Partners II, L.P., Knightspoint Capital Management II LLC, Knightspoint
Partners, LLC, Michael Koeneke, David Meyer, Starboard Value and Opportunity Master Fund
Ltd., Parche, LLC, Admiral Advisors, LLC, Ramius Capital Group, LLC, C4S & Co., LLC, Peter
A. Cohen, Jeffrey M. Solomon, Morgan B. Stark, Thomas W. Strauss, Black Sheep |
15
| |
|
|
|
|
Partners, LLC
and Brian Black (collectively, the “Knightspoint Group”). In addition, although they do not
affirm their membership in the group that is composed of, and affirmed by, the Knightspoint
Group, each of Michael Glazer, H. Michael Hecht, Peter M. Weil and Andrea Weiss
(collectively, the “Other Reporting Persons” and, together with the Knightspoint Group, the
“Reporting Persons”) filed the Schedule 13D. Each Other Reporting Person disclaims
beneficial ownership of Common Stock held by the Knightspoint Group and, similarly, the
Knightspoint Group disclaims beneficial ownership of Common Stock held by the Other
Reporting Persons. As of January 13, 2006, the Reporting Persons own an aggregate of
942,119 shares of which, the Knightspoint Group owns an aggregate of 919,119 shares and the
Other Reporting Persons own an aggregate of 23,000 shares. |
|
|
|
(16)
|
|
This information is based upon a Schedule 13G filed by Seidensticker (Overseas)
Limited with the Securities and Exchange Commission on February 21, 2001 and additional
information provided to the Company by Seidensticker (Overseas) Limited. Seidensticker
(Overseas) Limited has sole voting and investment power for all shares. |
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company leases its Phenix City, Alabama distribution facility from 16 Downing, LLC, a
related party owned by certain members of Gekko Brands, LLC’s management. Total payments under the
operating lease for this facility made during the years ended October 31, 2005 and 2004 were
$400,000 and $128,000, respectively. The lease agreement requires monthly payments of $33,000
through June 6, 2012.
Seidensticker (Overseas) Limited, a supplier of inventoried products to us, owned
approximately 5% of our outstanding common stock at October 31, 2005. The President and Chief
Executive Officer of Seidensticker (Overseas) Limited, Detlef Adler, was elected to the Company’s
Board of Directors effective January 1, 2006. During the years ended October 31, 2005, 2004 and
2003, we purchased approximately $5,800,000, $4,000,000 and $3,900,000 of products from
Seidensticker. We believe that the terms upon which we purchased the inventoried products from
Seidensticker are no less favorable than the terms of similar arrangements with unrelated third
parties.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Set forth below are the aggregate fees paid or accrued for professional services rendered to
the Company by KPMG LLP (“KPMG”), its independent auditor for fiscal year 2004 and Moss Adams LLP
(“Moss Adams”) its independent auditor for fiscal year 2005.
| |
|
|
|
|
|
|
|
|
| |
|
Fiscal Years Ended October 31, |
|
| |
|
2005 |
|
|
2004 |
|
Audit Fees — KPMG(1) |
|
$ |
287,700 |
|
|
$ |
292,866 |
|
Audit Fees — Moss Adams(1) |
|
|
455,616 |
|
|
|
0 |
|
Audit-related Fees — KPMG(2) |
|
|
0 |
|
|
|
55,470 |
|
Audit-related Fees — Moss Adams(2) |
|
|
12,000 |
|
|
|
0 |
|
Tax Fees(3) |
|
|
0 |
|
|
|
95,903 |
|
All Other Fees — KPMG(4) |
|
|
0 |
|
|
|
105,250 |
|
Total Fees |
|
$ |
755,316 |
|
|
$ |
549,529 |
|
|
|
|
|
|
|
|
| |
|
|
(1)
|
|
Audit fees represent fees billed for professional services rendered by the
Company’s independent auditor for the audits of our annual financial statements and
internal control over financial reporting, review of the interim financial statements
included in our quarterly reports on Form 10-Q, and statutory audits and other SEC filings. |
16
| |
|
|
|
|
|
(2)
|
|
Audit-related fees consisted primarily of accounting consultation and employee
benefit plan audits. |
|
|
|
(3)
|
|
For fiscal year 2004, tax fees paid to KPMG primarily included tax compliance
fees of $63,573 and tax consulting fees of $32,330. For fiscal year 2005, the Company
retained an outside consultant to provide the tax compliance and tax consulting services. |
|
|
|
(4)
|
|
Due diligence fees paid to KPMG LLP with respect to the acquisition of Gekko
Brands, LLC. |
Policy on Audit Committee Pre-approval of Audit and Permissible Non-audit Services of
Independent Auditor
Consistent with policies of the Securities and Exchange Commission regarding auditor
independence and the Audit Committee Charter, the Audit Committee has the responsibility for
appointing, setting compensation and overseeing the work of the independent auditor. The Audit
Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the
independent auditor. Pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget. The Audit Committee may also pre-approve particular
services on a case-by-case basis. In assessing requests for services by the independent auditor,
the Audit Committee considers whether such services are consistent with the auditor’s independence,
whether the independent auditor is likely to provide the most effective and efficient service based
upon its familiarity with the Company, and whether the service could enhance the Company’s ability
to manage or control risk or improve audit quality.
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(b) Exhibits
The following are exhibits filed with this report.
| 10.1 |
|
Second Amended And Restated Executive Employment Agreement with the Company’s President and
Chief Executive Officer, Randall L. Herrel, Sr. effective February 28, 2006. |
| |
| 10.2 |
|
Amended And Restated Change In Control Agreement with the Company’s President and Chief
Executive Officer, Randall L. Herrel, Sr. effective February 28, 2006. |
| |
| 10.3 |
|
Amended And Restated Employment Agreement with the Company’s Executive Vice President of
Merchandising, Design and Production, Peter E. Holmberg effective February 28, 2006. |
| |
| 10.4 |
|
Amended And Restated Change in Control Agreement with the Company’s Executive Vice President
of Merchandising, Design and Production, Peter E. Holmberg effective February 28, 2006. |
| |
| 10.5 |
|
Amended And Restated Employment Agreement with the Company’s Executive Vice President of
Sales, Marketing and Customer Service, Gary I. Schneiderman effective February 28, 2006. |
| |
| 10.6 |
|
Amended And Restated Change in Control Agreement with the Company’s Executive Vice President
of Sales, Marketing and Customer Service, Gary I. Schneiderman effective February 28, 2006. |
| |
| 10.7 |
|
Employment Letter with the Company’s Executive Vice President and Chief Financial Officer,
Winston E. Hickman effective February 23, 2006. |
| |
| 10.8 |
|
Agreement re Change in Control with the Company’s Executive Vice President and Chief
Financial Officer, Winston E. Hickman effective February 23, 2006. |
| |
| 31.1 |
|
Certification Pursuant to Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 by Randall L. Herrel, Sr. |
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| |
|
|
|
|
|
|
| |
|
ASHWORTH, INC.
(Registrant) |
|
|
|
|
|
|
|
|
|
Date: February 28, 2006
|
|
BY:
|
|
/s/ Randall L. Herrel, Sr. |
|
|
|
|
|
|
|
|
|
| |
|
Randall L. Herrel, Sr. |
|
|
| |
|
Chairman, President and Chief Executive Officer |
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
| |
|
|
|
|
| Signature |
|
Title |
|
Date |
| |
/s/ Randall L. Herrel, Sr.
Randall L. Herrel, Sr.
|
|
Chairman, President,
Chief Executive Officer and
Director (Principal Executive
Officer and Acting Principal
Financial Officer)
|
|
February 28, 2006 |
|
|
|
|
|
/s/ Detlef H. Adler
Detlef H. Adler
|
|
Director
|
|
February 28, 2006 |
|
|
|
|
|
/s/ Stephen G. Carpenter
Stephen G. Carpenter
|
|
Director
|
|
February 28, 2006 |
|
|
|
|
|
/s/ John M. Hanson, Jr.
John M. Hanson, Jr.
|
|
Director
|
|
February 28, 2006 |
|
|
|
|
|
/s/ James B. Hayes.
James B. Hayes
|
|
Director
|
|
February 28, 2006 |
|
|
|
|
|
/s/ James G. O’Connor
James G. O’Connor
|
|
Director
|
|
February 28, 2006 |
|
|
|
|
|
/s/ John W. Richardson
John W. Richardson
|
|
Director
|
|
February 28, 2006 |
18
EXHIBIT INDEX
| |
|
|
| Exhibit Number |
|
Description of Exhibit |
10.1
|
|
Second Amended And Restated Executive Employment
Agreement with the Company’s President and Chief
Executive Officer, Randall L. Herrel, Sr. effective February 28, 2006. |
|
|
|
10.2
|
|
Amended And Restated Change In Control Agreement
with the Company’s President and Chief Executive
Officer, Randall L. Herrel, Sr. effective February 28, 2006. |
|
|
|
10.3
|
|
Amended And Restated Employment Agreement with
the Company’s Executive Vice President of
Merchandising, Design and Production, Peter E.
Holmberg effective February 28, 2006. |
|
|
|
10.4
|
|
Amended And Restated Change in Control Agreement
with the Company’s Executive Vice President of
Merchandising, Design and Production, Peter E.
Holmberg effective February 28, 2006. |
|
|
|
10.5
|
|
Amended And Restated Employment Agreement with
the Company’s Executive Vice President of Sales,
Marketing and Customer Service, Gary I. Schneiderman
effective February 28, 2006. |
|
|
|
10.6
|
|
Amended And Restated Change in Control Agreement
with the Company’s Executive Vice President of Sales,
Marketing and Customer Service, Gary I. Schneiderman
effective February 28, 2006. |
|
|
|
10.7
|
|
Employment Letter with the Company’s Executive Vice
President and Chief Financial Officer, Winston E.
Hickman effective February 23, 2006. |
|
|
|
10.8
|
|
Agreement re Change in Control with the Company’s
Executive Vice President and Chief Financial Officer,
Winston E. Hickman effective February 23, 2006. |
|
|
|
31.1
|
|
Certification Pursuant to Rules 13a-14 and 15d-14, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 by Randall L. Herrel, Sr. |
19
