Ashworth, Inc. announced that it will explore a full range of strategic alternatives and options to enhance shareholder value. The company also commented on expected financial results for the fourth quarter ended October 31, 2005 and affirmed its net revenue guidance for fiscal year 2006.

Exploration of Strategic Alternatives

The company has retained Houlihan Lokey Howard & Zukin, an international investment bank, to advise the company in identifying and evaluating strategic alternatives and options. Given the company's growth in its Ashworth and Callaway Golf apparel brands and the development of its multi-channel business model, the company believes it is well positioned to increase shareholder value despite general softness in the golf industry. Management also believes the company's current stock price does not reflect the true value of the company and its prospects. With the assistance of Houlihan Lokey, the company will assess its position in the market and evaluate a wide range of strategies and alternatives to increase future shareholder value. No assurance can be given, however, that any transaction will be entered into or consummated.

Fourth Quarter 2005

Net revenues for the fourth quarter of 2005 are expected to grow approximately 15% to approximately $55 million, up from $48 million in net revenues for the same period a year ago. However, the company warned that it expects a loss of approximately $2.1 million to $2.4 million or 15 cents to 17 cents per diluted share for the fourth quarter ended October 31, 2005.

Gross margins and earnings were adversely impacted by lower than anticipated sales of full-margin products. Gross margins and earnings were also impacted by special promotional programs and by aggressive sales of low-margin product during the quarter as the company was successful in reducing inventories to a level below that of a year ago.

Accounts receivable were below levels of a year ago despite the increase in sales. The company's new Embroidery and Distribution Center also demonstrated increased operating efficiency in the quarter. Long-term debt is below last year's level and the company's commercial banks remain supportive of the company.

The company's selling, general, and administrative expenses were higher due to increased selling and promotional costs and expenses related to Sarbanes Oxley compliance. The SG&A expenses were also impacted by several costs associated with management changes and personnel reductions to improve product, financial and operational performance in 2006.

With the company's new U.S. EDC operating more efficiently and its inventories in line with plans and below last year's levels, the company has now focused many of its domestic initiatives on improving gross margins and reducing promotional expenses in 2006 so as to increase margins and profitability.

2006 Fiscal Year Guidance

Based on increases in 2006 Spring/Summer pre-book orders as compared to a year ago and other current information, the company expects an increase in net revenues for fiscal year 2006 to approximately $210 million to $220 million, up from approximately $205 million in fiscal year 2005. The company also expects improvement in operational execution and financial performance in each of its distribution channels, with resulting contributions to earnings in fiscal year 2006.