-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B6uh5H5PzEArHY4ePiHfF35Mqq8VNCjMYQndbWqaS8+DRw1nHoOZ7fvd07yr9aOz 3cjNjLtYhI7ti8wF12cBPw== 0001104659-05-044533.txt : 20050916 0001104659-05-044533.hdr.sgml : 20050916 20050916164423 ACCESSION NUMBER: 0001104659-05-044533 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20050916 DATE AS OF CHANGE: 20050916 GROUP MEMBERS: DANIEL J. DONOGHUE GROUP MEMBERS: DISCOVERY GROUP I, LLC GROUP MEMBERS: MICHAEL R. MURPHY FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DISCOVERY EQUITY PARTNERS LP CENTRAL INDEX KEY: 0001258542 IRS NUMBER: 300075082 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: US BANC PIPER JSFFRAY DISCOVERY GP I LLC STREET 2: 233 SOUTH WACKER DRIVE SUITE 3620 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129202135 SUBJECT COMPANY: 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: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-41392 FILM NUMBER: 051089401 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 SC 13D 1 a05-16340_1sc13d.htm SC 13D

	UNITED STATES	OMB APPROVAL
	SECURITIES AND EXCHANGE COMMISSION	OMB Number: 3235-0145
	Washington, D.C. 20549	Expires: December 31, 2005
	SCHEDULE 13D	Estimated average burden hours per response. . 11

Under the Securities Exchange Act of 1934
(Amendment No. )*

Ashworth, Inc.

(Name of Issuer)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

04516H101

(CUSIP Number)

Daniel J. Donoghue

Michael R. Murphy

Discovery Equity Partners, L.P.

Hyatt Center

24^th Floor

71 South Wacker Drive

Chicago, Illinois 60606

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

September 8, 2005

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ý

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

^* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 04516H101

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Discovery Equity Partners, L.P.

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Illinois

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power None.

			8.	Shared Voting Power 804,389

			9.	Sole Dispositive Power None.

			10.	Shared Dispositive Power 804,389

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 804,389

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 5.8%

	14.	Type of Reporting Person (See Instructions) PN

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Discovery Group I, LLC

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power None.

			8.	Shared Voting Power 940,529

			9.	Sole Dispositive Power None.

			10.	Shared Dispositive Power 940,529

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 940,529

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 6.7%

	14.	Type of Reporting Person (See Instructions) OO

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Daniel J. Donoghue

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization United States of America

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power None.

			8.	Shared Voting Power 940,529

			9.	Sole Dispositive Power None.

			10.	Shared Dispositive Power 940,529

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 940,529

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 6.7%

	14.	Type of Reporting Person (See Instructions) IN

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Michael R. Murphy

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) AF

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization United States of America

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power None.

			8.	Shared Voting Power 940,529

			9.	Sole Dispositive Power None.

			10.	Shared Dispositive Power 940,529

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 940,529

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 6.7%

	14.	Type of Reporting Person (See Instructions) IN

Item 1.	Security and Issuer
	This statement relates to the common stock, par value $.001 per share (the “Common Stock”), of Ashworth Inc., a Delaware corporation (the “Company”), which has its principal executive offices at 2765 Loker Avenue West, Carlsbad, California 92008.
Item 2.	Identity and Background
	This statement is being jointly filed by the following persons (the “Reporting Persons”):
	Discovery Equity Partners, L.P. (“Discovery Partners”) is an Illinois limited partnership primarily engaged in the business of investing in securities.
	Discovery Group I, LLC, the general partner of Discovery Partners (“Discovery Group”), is a Delaware limited liability company primarily engaged in the business of investing in securities.
	Daniel J. Donoghue is a Managing Member of Discovery Group, which is his principal occupation.
	Michael R. Murphy is a Managing Member of Discovery Group, which is his principal occupation.
	Both Mr. Donoghue and Mr. Murphy are United States citizens.
	The principal business address and principal offices of Discovery Partners and Discovery Group and the business address for Mr. Donoghue and Mr. Murphy is Hyatt Center, 24^th Floor, 71 South Wacker Drive, Chicago, Illinois 60606
	During the past five years, none of the Reporting Persons have been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws.
Item 3.	Source and Amount of Funds or Other Consideration
	The total purchase price for the 940,529 shares of Common Stock beneficially owned by Discovery Group and Messrs. Donoghue and Murphy was $7,778,409.99. The total purchase price for the 804,389 shares of Common Stock beneficially owned by Discovery Partners was $6,658,391.25. The source of such funds was assets of Discovery Partners and another private investment partnership of which Discovery Group is an investment manager (the “Other Partnership”) that are available for investment, including the proceeds of margin loans under margin loan facilities maintained in the ordinary course of business by Discovery Partners and the Other Partnership on customary terms and conditions.

Item 4.	Purpose of Transaction
	The Reporting Persons acquired beneficial ownership of the shares reported herein as part of their investment activities. The Reporting Persons first reported their beneficial ownership of more than 5% of the outstanding Common Stock in a Schedule 13G first filed with the Securities and Exchange Commission on September 28, 2004.
	The Reporting Persons intend to review and evaluate their investment in the Common Stock on an ongoing basis and may, depending upon their evaluation of the business and prospects of the Company, or such other considerations as they may deem relevant, determine to increase, decrease, or dispose of their holdings of Common Stock. As a part of such review and evaluation, the Reporting Persons may hold discussions with the Company’s management, directors and other shareholders.
	Discovery Group, in the exercise of its responsibilities as an institutional investor in the Company, on September 8, 2005 sent a letter (the “Letter”) to the Company’s board of directors recommending, for the reasons set forth in the Letter, that the board of directors fill at least one of its three currently vacant director positions with an individual representative of at least one large current shareholder of the Company. The description of the Letter contained in this Schedule 13D is qualified in its entirety by reference to the Letter, which is included as Exhibit 2 to this Schedule 13D and is incorporated by reference herein.
	Except as otherwise described in this Item 4, the Reporting Persons do not have present plans or proposals that relate to or would result in any of the following (although the Reporting Persons reserve the right to develop such plans or proposals or any other plans relating to the Company and to take action with respect thereto): (i) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (ii) an extraordinary corporate transaction, such as a merger, reorganization, or liquidation, involving the Company or any of its subsidiaries; (iii) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (iv) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (v) any material change in the present capitalization or dividend policy of the Company; (vi) any other material change in the Company’s business or corporate structure; (vii) changes in the Company’s certificate of incorporation, bylaws, or instruments corresponding thereto or other actions that may impede the acquisition of control of the Company by any person; (viii) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (ix) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (x) any action similar to any of those enumerated above.

Item 5.	Interest in Securities of the Issuer
	The information concerning percentages of ownership set forth below is based on 13,985,239 shares of Common Stock reported outstanding as of July 31, 2005 in the Company’s most recent Quarterly Report on Form 10-Q, for the period ended July 31, 2005.
	Discovery Partners owns beneficially and of record 804,389 shares of Common Stock, which represents 5.8 % of the outstanding Common Stock.
	Discovery Group beneficially owns 940,529 shares of Common Stock, which represents 6.7 % of the outstanding Common Stock.
	Mr. Donoghue beneficially owns 940,529 shares of Common Stock, which represents 6.7 % of the outstanding Common Stock.
	Mr. Murphy beneficially owns 940,529 shares of Common Stock, which represents 6.7 % of the outstanding Common Stock.
	Given that Discovery Group is the sole general partner of Discovery Partners and an investment manager of the Other Partnership, which owns less than 5% of the outstanding shares of Common Stock, and Messrs. Donoghue and Murphy are the sole managing members of Discovery Group, all Reporting Persons share beneficial ownership of all of the shares reported by each of them, except that Discovery Partners does not share, and hereby disclaims, beneficial ownership of the shares owned by the Other Partnership.
	The transactions in Common Stock effected by the Reporting Persons during the past 60 days are set out in Exhibit 3 hereto.
	No person other than Discovery Partners and the Other Partnership is known to any Reporting Person to have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of, any of the shares of Common Stock reported herein.
Item 6.	Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
	There are no contracts, arrangements, understandings or relationships (legal or otherwise) between or among any of the Reporting Persons and any other person with respect to any securities of the Company other than the governing documents of Discovery Partners, Discovery Group, and the Other Partnership and the margin loan facilities referred to under Item 3 above.

Item 7.	Material to Be Filed as Exhibits
	Exhibit 1: Joint Filing Agreement dated as of September 16, 2005, by and among Discovery Equity Partners, L.P.; Discovery Group I, LLC; Daniel J. Donoghue; and Michael R. Murphy.
	Exhibit 2: Letter dated September 8, 2005 from Discovery Group I, LLC to Ashworth, Inc.
	Exhibit 3: List of transactions by Reporting Persons in the Company’s common stock during the 60-day period preceding this filing.

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

	September 16, 2005
	Date


	DISCOVERY GROUP I, LLC, for itself and as general partner of DISCOVERY EQUITY PARTNERS, L.P.


	/s/ Michael R. Murphy
	Signature

	Michael R. Murphy, Managing Member
	Name/Title

	/s/ Daniel J. Donoghue
	Signature

	Daniel J. Donoghue
	Name/Title

	/s/ Michael R. Murphy
	Signature

	Michael R. Murphy
	Name/Title

Exhibit Index

Exhibit 1		Joint Filing Agreement dated as of September 16, 2005, by and among Discovery Equity Partners, L.P.; Discovery Group I, LLC; Daniel J. Donoghue; and Michael R. Murphy.
Exhibit 2		Letter dated September 8, 2005 from Discovery Group I, LLC to Ashworth, Inc.
Exhibit 3		List of transactions by Reporting Persons in the Company’s common stock during the 60-day period preceding this filing.

EX-1 2 a05-16340_1ex1.htm EX-1

Exhibit 1

JOINT FILING AGREEMENT

Discovery Equity Partners, L.P., an Illinois limited partnership, Discovery Group I, LLC, a Delaware limited liability company, Daniel J. Donoghue, and Michael R. Murphy hereby agree to file jointly the statement on Schedule 13D to which this Agreement is attached, and any amendments thereto which may be deemed necessary.

It is understood and agreed that each of the parties hereto is responsible for the timely filing of such statement and any amendments thereto, and for the completeness and accuracy of the information concerning such party contained therein, but such party is not responsible for the completeness or accuracy of information concerning the other party unless such party knows or has reason to believe that such information is inaccurate.

It is understood and agreed that a copy of this Agreement shall be attached as an exhibit to the statement on Schedule 13D, and any amendments thereto, filed on behalf of each of the parties hereto.

	September 16, 2005
	Date


	DISCOVERY GROUP I, LLC,
	for itself and as general partner of
	DISCOVERY EQUITY PARTNERS, L.P.


	By	/s/ Michael R. Murphy
		Michael R. Murphy
		Managing Member


	/s/ Daniel J. Donoghue
	Daniel J. Donoghue


	/s/ Michael R. Murphy
	Michael R. Murphy

EX-2 3 a05-16340_1ex2.htm EX-2

Exhibit 2

[Discovery Equity Partners letterhead]

September 8, 2005

Mr. Randall L. Herrel

Chairman of the Board of Directors

President and Chief Executive Officer

Ashworth, Inc.

2765 Loker Avenue West

Carlsbad, CA 92008

Dear Mr. Herrel:

As one of the largest shareholders of Ashworth, we would like to offer our perspective on the recent series of troubling events at the Company. We would also like to suggest that, with the Company in such a state of turmoil, increased shareholder participation on the Board of Directors is both timely and appropriate.

Our fund owns 940,529 shares or approximately 6.8% of Ashworth. We have always maintained a constructive dialogue with management, which we appreciate. We do not want to be perceived a “dissident” shareholder. However, please consider the events of the past few months that precipitated this letter:

• June 1, 2005 Three of Ashworth’s eight Board members resigned. You provided no explanation as to the reasons for their departure other than citing “personal reasons” and offering that it is not unusual for Directors to resign from public companies. We maintain that this mass exodus was highly unusual for any public company and was certainly unexpected at Ashworth. Mr. Hecht, one of the departing directors, was just reelected earlier this year and in the 14A filing of February 18, 2005, he is said to have “indicated his willingness to serve an additional three year term.” Similarly, in the 14A filing of February 17, 2004, Ms. Hofer and Mr. Matthews, the other two departing directors, made that same representation. We can only conclude that these Directors uncovered something so acutely disturbing at Ashworth that they felt no alternative than to abandon their recent promises to provide governance and stakeholder stewardship. The fact that none of these Directors has been replaced as of the date of this letter suggests that the underlying issues leading to their resignations are thwarting your efforts to recruit qualified replacements.

• July 7, 2005 Ashworth’s Chief Financial Officer resigned. We consider his announcement abrupt and without warning given that no replacement had been identified even by the time of his departure on July 29, 2005. Again, the fact that the position remains open as of this time invites many questions.

• September 1, 2005 You reported to the owners of this Company a large third quarter 2005 operating loss. This news came as a great surprise because in the second quarter 2005 earnings release (May 26, 2005) you told us that you “remain optimistic about the

remainder of the year and the prospects for 2006.” At that time, you also provided updated guidance of $.76-.82 in earnings per share for 2005. Now you tell us that this year’s earnings are more likely to be $.12-.15 per share. Particularly alarming is the deterioration in inventory management and expense controls leading to this earnings disappointment.

Clearly, something has gone terribly wrong inside the Company. Several Directors and the Chief Financial Officer seem to have seen this coming. On your September 2, 2005 earnings conference call you gave the distinct impression that you are struggling to replace these important Company officials, which suggests that there is more trouble ahead.

In order to restore confidence among all the owners of Ashworth, we urge you to increase shareholder representation on the Board by nominating a new representative from at least one large shareholder. Currently, the Board’s collective ownership is a mere 3% of Ashworth’s outstanding stock, (only 0.6% excluding options). If any other large shareholders have expressed interest in serving in a director capacity, we would support their candidacy. If no other shareholder has stepped forward in this regard, we would be willing to lend a qualified member of our Group. We would decline any Directors’ fees. We would serve with the understanding that our contribution would be to bring a particular focus to the Board’s obvious need to consider all alternatives to restore the significant diminution in shareholder value that has occurred over the past few months.

Respectfully submitted,

DISCOVERY GROUP I, LLC


/s/ Daniel J. Donghue
Daniel J. Donoghue, Managing Member


/s/ Michael R. Murphy
Michael R. Murphy, Managing Member


cc:	Mr. Stephen G. Carpenter, Director
	Mr. John M. Hanson, Jr., Director
	Mr. James B. Hayes, Director
	Mr. James G. O’Conner, Director
	c/o Ms. Halina Balys, Corporate Secretary
	Ashworth, Inc.
	2765 Loker Avenue West
	Carlsbad, CA 92008

EX-3 4 a05-16340_1ex3.htm EX-3

Exhibit 3

The Reporting Persons engaged in the following transactions in shares of the Company during the past 60 days. All transactions involved purchases of shares on the Nasdaq National Market System.

Discovery Group I, LLC transactions				Portion of
				Discovery Group I,
				LLC transactions
				allocable to
				Discovery Equity
				Partners, LP

Date	Type	Price	Shares	Shares
7/19/2005	purchase	8.0689	25,000	23,750

7/20/2005	purchase	8.15	25,000	23,750

7/25/2005	purchase	8.15	8,236	7,824

7/29/2005	purchase	8.2302	16,764	15,925

8/1/2005	purchase	8.25	7,583	7,204

8/2/2005	purchase	8.2455	3,317	3,150

8/3/2005	purchase	8.2146	4,100	3,895

8/4/2005	purchase	8.1489	8,500	8,075

8/8/2005	purchase	8.1379	5,000	4,750

8/9/2005	purchase	8.1908	2,787	2,650

8/10/2005	purchase	8.2294	106	101

8/11/2005	purchase	8.2219	2,107	1,790

8/17/2005	purchase	8.175	800	760

8/22/2005	purchase	8.21	5,820	5,529

8/23/2005	purchase	8.2023	1,680	1,600

8/24/2005	purchase	8.1828	2,300	2,185

8/26/2005	purchase	8.18	9,400	8,930

8/31/2005	purchase	8.1265	2,000	1,900

-----END PRIVACY-ENHANCED MESSAGE-----

Under the Securities Exchange Act of 1934 (Amendment No. )*

Under the Securities Exchange Act of 1934
(Amendment No. )*