Ashworth, Inc. has reached a tentative settlement to conclude a 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's stock in the open market between September 4, 1997 and July 15, 1998.
Under the settlement, all claims will be dismissed and the litigation will be terminated in exchange for a payment of $15.25 million, approximately 82% of which will be paid by Ashworth's insurance carriers. As part of the settlement, Ashworth also agreed to adopt modifications to certain corporate governance policies. Ashworth expects to record a pretax charge in its third quarter of fiscal year 2004 of approximately $3 million related to settlement of this suit.
“Although the Company was fully prepared to defend the litigation, the Company decided to settle in order to put this 5-1/2 year old case behind us and allow management to focus on running and growing the business,” said Terence W. Tsang, Ashworth Executive Vice President, Chief Financial Officer and Chief Operating Officer. “This settlement will put the shareholder litigation behind us.”
The Company entered into the settlement agreement solely for the purpose of settling this litigation and believes that settling this matter at this time is in the best interest of shareholders as it avoids further protracted litigation. The terms of the agreement, which are subject to final court approval and notice to class members, includes no admission of liability or wrongdoing by the Company or other defendants.
