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U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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Form 10-Q

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended October 31, 2000

or

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File No. 0-26608

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CUTTER & BUCK INC.(Exact Name of Registrant as Specified in Its Charter)

Washington(State or Other Jurisdiction of
Incorporation or Organization)

91-1474587(I.R.S. Employer
Identification No.)


2701 First Avenue, Suite 500
Seattle, WA 98121(Address of Principal Executive Offices, Including Zip Code)

(206) 622-4191(Registrant's Telephone Number, Including Area Code)

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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 /x/  No / /

The
number of shares of Common Stock of the registrant outstanding as of December 14, 2000 was 10,436,932.

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## 

CUTTER & BUCK INC.
Quarterly Report on Form 10-Q
For the Quarter Ended October 31, 2000

Index

|                             |         |    |                                                                                       |  | Page
|---------------------------- | ------- | -- | ------------------------------------------------------------------------------------- |  | ----
|PART IFINANCIAL INFORMATION |         |   
|                             | Item 1. |    | Financial Statements (unaudited):                                                     |  |     
|                             |         |    | Condensed Consolidated Balance Sheets                                                 |  | 3   
|                             |         |    | Condensed Consolidated Statements of Income                                           |  | 4   
|                             |         |    | Condensed Consolidated Statements of Cash Flows                                       |  | 5   
|                             |         |    | Notes to Condensed Consolidated Financial Statements                                  |  | 6   
|                             | Item 2. |    | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 8   
|PART IIOTHER INFORMATION    |         |   
|                             | Item 1. |    | Legal Proceedings                                                                     |  | 14  
|                             | Item 2. |    | Changes in Securities and Use of Proceeds                                             |  | 14  
|                             | Item 3. |    | Defaults Upon Senior Securities                                                       |  | 14  
|                             | Item 4. |    | Submission of Matters to a Vote of Security Holders                                   |  | 15  
|                             | Item 5. |    | Other Information                                                                     |  | 15  
|                             | Item 6. |    | Exhibits and Reports on Form 8-K                                                      |  | 15  
|SIGNATURES                   |         | 16
|                             |         |    |                                                                                       |  |     

2

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## 

PART IFINANCIAL INFORMATION

Item 1.  Financial Information

CUTTER & BUCK INC.

Condensed Consolidated Balance Sheets

|                                                |                                                                                                                                                  | April 30,
2000                             |            | October 31,
2000 |            
|----------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ---------- | ---------------- | -----------
|
|ASSETS                                          |                                                                                                                                                  |                                            |            |                  |            
|Current Assets:                                 |                                                                                                                                                  |                                            |            |                  |            
|                                                | Cash                                                                                                                                             |                                            | $          | 7,366,612        |            
|                                                | Accounts receivable, net of allowances for doubtful accounts and returns of $2,351,024 at April 30, 2000 and $2,539,284 at October 31, 2000      |                                            |            | 50,462,713       |            
|                                                | Inventories                                                                                                                                      |                                            |            | 36,739,933       |            
|                                                | Deferred income taxes                                                                                                                            |                                            |            | 2,178,165        |            
|                                                | Prepaid expenses and other current assets                                                                                                        |                                            |            | 3,447,789        |            
|                                                |                                                                                                                                                  |                                            |            |                  |            
|                                                |                                                                                                                                                  | Total current assets                       |            |                  | 100,195,212
|Furniture and equipment, net                    |                                                                                                                                                  |                                            | 17,813,391 |                  |            
|Deferred income taxes                           |                                                                                                                                                  |                                            | 136,090    |                  |            
|Other assets                                    |                                                                                                                                                  |                                            | 401,992    |                  |            
|                                                |                                                                                                                                                  |                                            |            |                  |            
|                                                |                                                                                                                                                  | Total assets                               |            | $                | 118,546,685
|                                                |                                                                                                                                                  |                                            |            |                  |            
|LIABILITIES AND SHAREHOLDERS' EQUITY            |                                                                                                                                                  |                                            |            |                  |            
|Current liabilities:                            |                                                                                                                                                  |                                            |            |                  |            
|                                                | Short-term borrowings                                                                                                                            |                                            | $          | 3,036,551        |            
|                                                | Accounts payable                                                                                                                                 |                                            |            | 12,086,335       |            
|                                                | Accrued liabilities                                                                                                                              |                                            |            | 3,129,393        |            
|                                                | Income taxes payable                                                                                                                             |                                            |            | 3,423,068        |            
|                                                | Current portion of capital lease obligations and long-term debt                                                                                  |                                            |            | 1,418,828        |            
|                                                |                                                                                                                                                  |                                            |            |                  |            
|                                                |                                                                                                                                                  | Total current liabilities                  |            |                  | 23,094,175 
|Capital lease obligations, less current portion |                                                                                                                                                  |                                            | 2,259,505  |                  |            
|Long-term debt, less current portion            |                                                                                                                                                  |                                            | 4,285,714  |                  |            
|Commitments                                     |                                                                                                                                                  |                                            |            |                  |            
|Shareholders' equity:                           |                                                                                                                                                  |                                            |            |                  |            
|                                                | Preferred stock, no par value, 6,000,000 shares authorized; none issued and outstanding                                                          |                                            |            |                 |            
|                                                | Common stock, no par value: 25,000,000 shares authorized; 10,344,672 issued and outstanding at April 30, 2000 and 10,463,174 at October 31, 2000 |                                            |            | 62,645,047       |            
|                                                | Deferred compensation                                                                                                                            |                                            |            | (210,484         | )          
|                                                | Retained earnings                                                                                                                                |                                            |            | 26,804,933       |            
|                                                | Accumulated other comprehensive loss                                                                                                             |                                            |            | (332,205         | )          
|                                                |                                                                                                                                                  |                                            |            |                  |            
|                                                |                                                                                                                                                  | Total shareholders' equity                 |            |                  | 88,907,291 
|                                                |                                                                                                                                                  |                                            |            |                  |            
|                                                |                                                                                                                                                  | Total liabilities and shareholders' equity |            | $                | 118,546,685
|                                                |                                                                                                                                                  |                                            |            |                  |            

See
accompanying notes.

3

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CUTTER & BUCK INC.

Condensed Consolidated Statements of Income

(Unaudited)

|                           |                                                            | Three Months Ended           |            | Six Months Ended |           
|-------------------------- | ---------------------------------------------------------- | ---------------------------- | ---------- | ---------------- | ----------
|
|Net sales                  |                                                            | $                            | 36,890,403 |                  | $         
|Cost of sales              |                                                            |                              | 20,740,628 |                  |           
|                           |                                                            |                              |            |                  |           
|Gross profit               |                                                            |                              | 16,149,775 |                  |           
|Operating expenses:        |                                                            |                              |            |                  |           
|                           | Design and production                                      |                              |            | 878,526          |           
|                           | Selling and shipping                                       |                              |            | 8,567,053        |           
|                           | General and administrative                                 |                              |            | 2,964,095        |           
|                           |                                                            |                              |            |                  |           
|                           |                                                            | Total operating expenses     |            |                  | 12,409,674
|                           |                                                            |                              |            |                  |           
|Operating income           |                                                            |                              | 3,740,101  |                  |           
|Other income (expense):    |                                                            |                              |            |                  |           
|                           | Factor commission and interest expense, of interest income |                              |            | (6,042           | )         
|                           | License and royalty income, net of other expense           |                              |            | 60,870           |           
|                           |                                                            |                              |            |                  |           
|                           |                                                            | Total other income (expense) |            |                  | 54,828    
|                           |                                                            |                              |            |                  |           
|Income before income taxes |                                                            |                              | 3,794,929  |                  |           
|Income taxes               |                                                            |                              | 1,366,200  |                  |           
|                           |                                                            |                              |            |                  |           
|Net income                 |                                                            | $                            | 2,428,729  |                  | $         
|                           |                                                            |                              |            |                  |           
|                           | Basic earnings per share                                   |                              | $          | 0.24             |           
|                           |                                                            |                              |            |                  |           
|                           | Diluted earnings per share                                 |                              | $          | 0.23             |           
|                           |                                                            |                              |            |                  |           
|                           | Shares used in computation of:                             |                              |            |                  |           
|                           |                                                            | Basic earnings per share     |            |                  | 10,305,483
|                           |                                                            |                              |            |                  |           
|                           |                                                            | Diluted earnings per share   |            |                  | 10,500,273
|                           |                                                            |                              |            |                  |           

See
accompanying notes.

4

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CUTTER & BUCK INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

|                                                                                  |                                                            | Six Months Ended                          |           
|--------------------------------------------------------------------------------- | ---------------------------------------------------------- | ----------------------------------------- | ----------
|
|Operating activities                                                              |                                                            |                                           |           
|Net Income                                                                        |                                                            | $                                         | 3,468,810 
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                            |                                           |           
|                                                                                  | Depreciation and amortization                              |                                           |           
|                                                                                  | Deferred income taxes                                      |                                           |           
|                                                                                  | Amortization of deferred compensation                      |                                           |           
|                                                                                  | Changes in assets and liabilities:                         |                                           |           
|                                                                                  |                                                            | Receivables, net                          |           
|                                                                                  |                                                            | Inventories                               |           
|                                                                                  |                                                            | Prepaid expenses and other current assets |           
|                                                                                  |                                                            | Accounts payable and accrued liabilities  |           
|                                                                                  |                                                            | Income taxes payable                      |           
|                                                                                  |                                                            |                                           |           
|Net cash provided by operating activities                                         |                                                            |                                           | 1,516,138 
|Investing activities                                                              |                                                            |                                           |           
|Purchases of furniture and equipment                                              |                                                            |                                           | (5,309,812
|Increase in trademarks, patents and marketing rights                              |                                                            |                                           | (147,950  
|                                                                                  |                                                            |                                           |           
|Net cash used in investing activities                                             |                                                            |                                           | (5,457,762
|Financing activities                                                              |                                                            |                                           |           
|Net repayments of short term borrowings                                           |                                                            |                                           | (9,135,885
|Principal payments under capital lease obligations                                |                                                            |                                           | (162,347  
|Issuance of common stock                                                          |                                                            |                                           | 29,111,189
|                                                                                  |                                                            |                                           |           
|Net cash provided by (used in) financing activities                               |                                                            |                                           | 19,812,957
|Effects of foreign exchange rate changes on cash                                  |                                                            |                                           | (6,797    
|                                                                                  |                                                            |                                           |           
|Net increase (decrease) in cash                                                   |                                                            |                                           | 15,864,536
|Cash, beginning of period                                                         |                                                            |                                           | 4,760,259 
|                                                                                  |                                                            |                                           |           
|Cash, end of period                                                               |                                                            | $                                         | 20,624,795
|                                                                                  |                                                            |                                           |           
|Supplemental information:                                                         |                                                            |                                           |           
|Cash paid during the period for interest                                          |                                                            | $                                         | 243,113   
|                                                                                  |                                                            |                                           |           
|Cash paid during the period for income taxes                                      |                                                            | $                                         | 2,632,129 
|                                                                                  |                                                            |                                           |           
|Noncash financing and investing activities:                                       |                                                            |                                           |           
|                                                                                  | Equipment acquired with capital leases                     |                                           | $         
|                                                                                  |                                                            |                                           |           
|                                                                                  | Deferred compensation for the issuance of restricted stock |                                           | $         
|                                                                                  |                                                            |                                           |           

See
accompanying notes.

5

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CUTTER & BUCK INC.

Notes to Condensed Consolidated Financial Statements

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Cutter & Buck Inc. (the "Company") in accordance
with generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's
management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. The Company's revenues are seasonal, and therefore the results of operations
for the six months ended October 31, 2000 may not be indicative of the results for the full fiscal year. For further information, refer to the consolidated financial statements and footnotes
thereto for the year ended April 30, 2000, included in the Company's filing on Form 10-K.

Note 2. Earnings Per Share

Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average
number of common shares and equivalents
outstanding. Common share equivalents included in the computation represent shares issuable upon assumed exercise of outstanding stock options except when the effect of their inclusion would be
antidilutive.

The
following table sets forth the computation of basic and diluted earnings per share:

|                                            |                                                                                     | Three Months Ended
October 31, |         | Six Months Ended
October 31,
|------------------------------------------- | ----------------------------------------------------------------------------------- | ------------------------------ | ------- | ----------------------------
|
|Numerator:                                  |                                                                                     |                                |         |                             
|                                            | Numerator for basic and diluted earnings per sharenet income                       |                                | $       | 2,428,729                   
|Denominator:                                |                                                                                     |                                |         |                             
|                                            | Denominator for basic earnings per shareweighted average common shares outstanding |                                |         | 10,305,483                  
|Effect of dilutive securities stock options |                                                                                     |                                | 194,790 |                             
|                                            | Denominator for diluted earnings
per share                                          |                                |         | 10,500,273                  
|Basic earnings per share                    |                                                                                     | $                              | 0.24    |                             
|Diluted earnings per share                  |                                                                                     | $                              | 0.23    |                             

Note 3. Comprehensive Income

The components of the Company's total comprehensive income were:

|                                         |  | Three Months Ended
October 31, |           | Six Months Ended
October 31, |  
|---------------------------------------- |  | ------------------------------ | --------- | ---------------------------- | -
|
|Net income                               |  | $                              | 2,428,729 |                              | $
|Foreign currency translation adjustments |  |                                | (40,255   | )                            |  
|                                         |  |                                |           |                              |  
|Comprehensive income                     |  | $                              | 2,388,474 |                              | $
|                                         |  |                                |           |                              |  

6

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Note 4. Debt

The Company had a $40 million line of credit with Washington Mutual Bank d/b/a Western Bank ("Western Bank") which expired on August 1, 2000. The
Company renegotiated the line of credit and on July 28, 2000 entered into a new loan agreement for a $55 million line of credit. The line of credit may be increased to $65 million
during fiscal 2002 providing the Company meets certain performance criteria in fiscal 2001. Western Bank has included Bank of America, N.A. in the arrangement as co-lender. The revolving
line of credit is to be used for general corporate purposes. Interest on borrowings is charged and payable monthly at either the Prime rate or the LIBOR rate plus 1.75%, each as defined in the loan
agreement, at the borrower's election. The line of credit expires on August 1, 2002 and is collateralized by a security interest in the Company's inventory, accounts receivable, furniture and
equipment, contract rights and general intangibles. The loan agreement contains certain restrictive covenants covering minimum working capital and tangible net worth, as well as a maximum
debt-to-equity ratio and maximum capital expenditures. The Company was in compliance with these covenants at October 31, 2000. At October 31, 2000, letters of
credit outstanding against this line of credit totaled approximately $29.0 million and there were no working capital advances.

The
Company's Dutch subsidiary had a loan agreement with Cooperatieve Rabobank "Huizen" B.A. ("Rabobank") for a $3.8 million line of credit, which was used for international
letters of credit and working capital advances. Interest on borrowings was charged and payable quarterly at a variable rate (6.75% at October 31, 2000). The line of credit expired on
September 30, 2000. At October 31, 2000, letters of credit which remained outstanding against this line of credit totaled approximately $0.4 million and working capital advances
totaled approximately $3.1 million. On November 3, 2000, the Company amended its $55 million line of credit agreement with Western Bank to allocate $5 million for use
solely by the Dutch subsidiary. The allocated amount is to be used by the subsidiary for the same purposes and is subject to the same terms and performance criteria described above.

The
Company also has a $5 million term credit facility with Western Bank. As of October 31, 2000, $4.3 million remained outstanding against the term credit
facility. The term loan bears interest at a fixed annual rate of 6.6% with interest payable monthly and annual principal payments of $714,286 due on August 1 of years 2000 through 2004. The
final principal payment of $1,428,570 is due in August 2005. The term loan is also collateralized by a security interest in the Company's inventory, accounts receivable, furniture and
equipment, and contract rights.

Note 5. Shareholders' Equity

The Company issued 15,250 shares pursuant to the exercise of stock options.

Note 6. Income Taxes

Income taxes are provided at an effective rate of 38%, which exceeds the expected Federal statutory rate of 35%, primarily due to state income taxes.

Note 6. Litigation

The Company is party to routine litigation incidental to its business. Management believes the ultimate resolution of these matters will not have a material
adverse effect on its financial position and results of operations.

7

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## 

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

Statements made in this filing that are not historical facts are forward looking information that involve risks and uncertainties.
Forward-looking statements typically are identified by the use of such terms as "may," "will," "expect," "believe," "anticipate," "estimate," "plan" and similar words, although some forward-looking
statements are expressed differently, and certainly all the statements in the section entitled "Business Outlook" are forward-looking. Forward-looking statements reflect our current expectations and
are inherently uncertain. You should be aware that our actual growth and results could differ materially from those contained in any forward-looking statements due to a number of factors, which
include, but are not limited to the following: style changes and product acceptance, relations with and performance of suppliers and independent sales representatives, the ability of the Company to
control costs and expenses, the ability of the Company to carry out successful design and planned product and brand messaging/extension activities and to penetrate its chosen distribution channels,
competition, access to capital, foreign currency risks, risks associated with opening and operating retail locations, the efficacy of the warehouse management system as it related to the Company's
operations, technological change, political and trade relations and general economic conditions in the U.S. and Europe. You should not place undue reliance on these forward-looking
statements.

OVERVIEW

Cutter & Buck is a lifestyle brand with broad demographic appeal, targeted to men and women who seek updated classic American styles with the latest
textile and fashion innovations. We sell our distinctive sportswear, fashion and outerwear products primarily through golf pro shops and resorts, corporate accounts, specialty retail and selected
department stores, international, and other channels including Company-owned retail stores.

We
have grown sales in our three largest channels of distribution over the last five years through an increase in the number of accounts and an increase in the average annual net
sales per account. The increase in the number of accounts is primarily due to the growth in the size of our direct sales force. We have increased average annual net sales per account by offering more
product styles and increasing the average annual net sales per style. We believe the increased purchasing levels by our customers also reflect strong cooperative working relationships in the area of
fixturing and merchandising our coordinated product line, and growing consumer recognition of our brand. We recognize our revenue at the time the product is shipped to the account, and there is no
right to return other than for defective products.

As
our sales volume has increased, we have continued to invest in management and systems to strengthen our sales and marketing efforts. We have also expanded our customer support,
embroidery services and distribution center operations. These actions have resulted in an increase in operating expenses as a percentage of net sales. With the increase in our sales volume, our
negotiating leverage to purchase product at lower unit costs has increased, and as a result we have experienced improvements in gross margin.

Our
flagship retail store is located in Seattle, Washington and we have eight additional stores in Denver, Mission Viejo, Orlando, Atlanta, Portland, Las Vegas, West Palm Beach and
Palm Desert. We expect to open two to three stores in selected metropolitan markets during the remainder of fiscal 2001.

8

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Results of Operations



Net SalesDuring the second quarter of fiscal 2001 net sales increased $9.2 million or 24.9% to
$46.1 million from $36.9 million in the same period of the prior year. The detail of net sales by distribution channel is as follows:

Three Months Ended October 311999

2000

Increase/
(Decrease)

Percent
ChangeIn Thousands, except percent changeGolf

$
15,388

$
15,017

$
(371
)
(2.4
)%Corporate


12,988


17,940


4,952

38.1Specialty retail


4,399


7,174


2,775

63.1International


1,889


2,171


282

14.9Other


2,226


3,772


1,546

69.5$
36,890

$
46,074

$
9,184

24.9
%


Net
sales to the golf distribution channel in the second quarter of fiscal 2001 decreased $0.4 million, or approximately 2.4%, to $15.0 million from $15.4 million
in the second quarter of fiscal 2000. Golf sales represent approximately 32.6% of our net sales in the quarter. The decrease in golf sales during the second quarter of fiscal 2001 is primarily
attributable to the timing of shipments for our Fall season product line and an increased workload for our sales representatives. Orders for the Fall season are historically shipped during the first
two quarters of the fiscal year. For fiscal 2001 ,however, a higher
percentage of Fall season orders were shipped in the first quarter compared to fiscal 2000. We have hired additional sales representatives to showcase our women's golf lines beginning with the Spring
season product line, in order to improve overall sales effectiveness in this channel.

Net
sales through the corporate distribution channel increased $5.0 million, or approximately 38.1%, to $17.9 million in the second quarter of fiscal 2001 from
$13.0 million in the second quarter of fiscal 2000. The increase in corporate sales during the second quarter of fiscal 2001 represented approximately 53.9% of the total increase in net sales
for the quarter. This increase is primarily attributable to the increased size and effectiveness of our corporate channel sales force, increases in product styles and inventory levels of our CLASSICS
products, relationships with a greater number of promotional products companies that resell Cutter & Buck apparel to corporate accounts and our growing brand strength.

Specialty
retail sales increased $2.8 million or approximately 63.1% to $7.2 million in the second quarter of fiscal 2001 from $4.4 million in the second quarter
of fiscal 2000. Specialty retail sales represent approximately 15.6% of our net sales in the quarter. This increase is primarily attributable to the increase in the number of specialty stores
purchasing Cutter & Buck products. International sales which include our wholly-owned European subsidiary, distributors and licensees increased approximately $0.3 million over the same
period last year. Sales to our "other" distribution channel, including liquidation and company-owned retail, increased from $2.2 million in the second quarter of fiscal 2000 to
$3.8 million in the second quarter of fiscal 2001. As a percentage of net sales, sales to our "other" distribution channel increased from 6.0% to 8.2% for the second quarters of fiscal 2000 and
2001, respectively.

Cost of SalesIn the second quarter of fiscal 2001, our cost of sales was 55.4% of net sales, compared to 56.2% in the
second quarter of fiscal 2000. The decrease in cost of sales as a percentage of net sales is due to higher production volumes which has given us the ability to expand our international sourcing and
has enhanced our negotiating leverage to purchase product at lower unit costs. Additionally, our sales mix has changed as a result of the growth in sales from company-owned retail stores and increased
sales in our women's line, which both have higher margins.

9

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Design and Production ExpenseDesign and production expenses were up approximately $0.1 million in the second
quarter of fiscal 2001 compared to the second quarter of fiscal 2000. Although design and production expenses increased, we were able to leverage these expenses over a growing revenue base as they
decreased as a percentage of net sales from 2.4% in the second quarter of fiscal 2000 to 2.1% in
the second quarter of fiscal 2001. The dollar increase was primarily attributable to increased management and staffing costs to support our expanding sportswear collection, staffing costs to support
our offshore sourcing activities and increased embroidery development costs for the golf and corporate distribution channels, and our corporate social responsibility initiative.

Selling and Shipping ExpenseSelling and shipping expenses increased by $2.7 million, or 31.5%, to
$11.3 million in the second quarter of fiscal 2001 from $8.6 million in the same period in the prior year, and increased as a percentage of net sales to 24.5% from 23.2%. The increase in
selling expenses was attributable to increased salaries and commissions, increased customer service staffing and trade advertising and fixturing. The increase in shipping expenses was due to increased
warehouse staffing expense, facilities costs and packaging supplies costs directly associated with the Company's increased sales volumes and higher levels of inventory, as well as costs associated
with implementation of phase three of our warehouse management system. The store level operating expenses associated with the company-owned retail stores are also included in selling and shipping
expenses and reflect expenses associated with nine retail locations during the second quarter of fiscal 2001 compared to two in the second quarter of fiscal 2000.

General and Administrative ExpenseGeneral and administrative expenses increased by approximately $0.4 million,
or 12.1%, to $3.3 million in the second quarter of fiscal 2001 from $3.0 million in the second quarter of fiscal 2000. Although general and administrative expenses increased, we were
able to leverage these expenses over a growing revenue base as they decreased as a percentage of net sales from 8.0% in the second quarter of fiscal 2000 to 7.2% in the second quarter of fiscal 2001.
The dollar increase during the second quarter of fiscal 2001 was attributable to increased management and staffing for our retail operations and e-business initiative, increased
depreciation and rent expense associated with information technology initiatives and corporate facilities and increased insurance, travel, communications and supplies expense.

Operating IncomeAs a result of the above items, operating income increased by approximately $1.2 million, or
33.3%, to $5.0 million in the second quarter of fiscal 2001 from $3.7 million in the second quarter of fiscal 2000. Operating income as a percentage of net sales increased from 10.1% in
the second quarter of fiscal 2000 to 10.8% in the second quarter of fiscal 2001.

Income TaxesWe recorded approximately $1.9 million of income tax expense in the second quarter of fiscal 2001
compared to $1.4 million in the second quarter of fiscal 2000 reflecting the increase in the profitability of the Company and the effective tax rate. Income taxes are recorded at an effective
rate of 36% and 38% for the second quarters of fiscal 2000 and fiscal 2001, respectively.

10

---

Results of Operations



Net SalesDuring the first six months of fiscal 2001 net sales increased $19.0 million or 28.8% to
$85.1 million from $66.1 million in the same period of the prior year. The detail of net sales by distribution channel is as follows:

Six Months Ended October 311999

2000

Increase/
(Decrease)

Percent
ChangeIn Thousands, except percent changeGolf

$
26,925

$
28,045

$
1,120

4.2
%Corporate


23,196


33,309


10,113

43.6Specialty retail


7,344


12,138


4,794

65.3International


4,278


5,014


736

17.2Other


4,337


6,597


2,260

52.1$
66,080

$
85,103

$
19,023

28.8
%


Net
sales to the golf distribution channel increased $1.1 million, or approximately 4.2%, to $28.0 million in the first six months of fiscal 2001 from
$26.9 million in the first six months of fiscal 2000. Golf sales represented approximately 33.0% of our net sales for the period. The growth in net sales to the golf distribution channel is
primarily attributable to an increase in the number of golf pro shops purchasing Cutter & Buck products and increasing brand awareness. The increase in the number of our golf pro
shop customers is primarily due to the growth in the size of our golf pro shop sales force that exclusively sells Cutter & Buck products.

Net
sales through the corporate distribution channel increased $10.1 million, or approximately 43.6%, to $33.3 million in the first six months of fiscal 2001 from
$23.2 million in the first six months of fiscal 2000. The increase in corporate sales during the first six months of fiscal 2001 represented approximately 53.2% of the total increase in net
sales for the period. This increase is primarily attributable to the increased size and effectiveness of our corporate channel sales force, increases in product styles and inventory levels of our
CLASSICS products, relationships with a greater number of promotional products companies that resell Cutter & Buck apparel to corporate accounts and our growing brand strength.

Specialty
retail sales increased $4.8 million or approximately 65.3% to $12.1 million in the first six months of fiscal 2001 from $7.3 million in the second
quarter of fiscal 2000. Specialty retail sales represent approximately 14.3% of our net sales in the period. This increase is primarily attributable to the increase in the number of specialty stores
purchasing Cutter & Buck products and an increase in the average annual net sales per specialty store account. International sales which include our wholly-owned European subsidiary,
distributors and licensees increased approximately $0.7 million over the same period last year. Sales to our "other" distribution channel, including liquidation and company-owned retail,
increased from $4.3 million in the first six months of fiscal 2000 to $6.6 million in the first six months of fiscal 2001. As a percentage of net sales, sales to our "other" distribution
channel increased from 6.6% to 7.8% for the first six months of fiscal 2000 and 2001, respectively.

Cost of SalesIn the first six months of fiscal 2001, our cost of sales was 55.3% of net sales, compared to 56.2% in
the first six months of fiscal 2000. The decrease in cost of sales as a percentage of net sales is due to higher production volumes which has given us the ability to expand our international sourcing
and has enhanced our negotiating leverage to purchase product at lower unit costs. Additionally, our sales mix has changed as a result of the growth in sales from company-owned retail stores and
increased sales in our women's line, which both have higher margins.

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Design and Production ExpenseDesign and production expenses were up approximately $0.3 million in the first six
months of fiscal 2001 compared to the first six months of fiscal 2000. Although design and production expenses increased, we were able to leverage these expenses over a growing revenue base as they
decreased as a percentage of net sales from 2.5% in the first six months of fiscal 2000 to 2.3% in the first six months of fiscal 2001. The dollar increase was primarily attributable to increased
management and staffing costs to support our expanding sportswear collection, staffing costs to support our
offshore sourcing activities, increased embroidery development costs for the golf and corporate distribution channels, and our corporate social responsibility initiative.

Selling and Shipping ExpenseSelling and shipping expenses increased by approximately $6.2 million, or 38.8%, to
$22.3 million in the first six months of fiscal 2001 from $16.0 million in the same period in the prior year, and increased as a percentage of net sales to 26.2% from 24.3%. The increase
in selling expenses was attributable to increased salaries and commissions, increased customer service staffing and trade advertising and fixturing. The increase in shipping expenses was due to
increased warehouse staffing expense, facilities costs and packaging supplies costs directly associated with the Company's increased sales volumes and higher levels of inventory, as well as costs
associated with implementation of phase two and three of our warehouse management system. The store level operating expenses associated with the company-owned retail stores are also included in
selling and shipping expenses and reflect expenses associated with nine retail locations during the first six months of fiscal 2001 compared to two in the first six months of fiscal 2000.

General and Administrative ExpenseGeneral and administrative expenses increased by $1.0 million, or 18.7%, to
$6.6 million in the first six months of fiscal 2001 from $5.6 million in the first six months of fiscal 2000. Although general and administrative expenses increased, we were able to
leverage these expenses over a growing revenue base as they decreased as a percentage of net sales from 8.4% in the first six months of fiscal 2000 to 7.7% in the first six months of fiscal 2001. The
dollar increase during the first six months of fiscal 2001 was attributable to increased management and staffing for our retail operations and e-business initiative, increased depreciation
and rent expense associated with information technology initiatives and corporate facilities and increased insurance, travel, communications, and supplies expense.

Operating IncomeAs a result of the above items, operating income increased by $1.6 million, or 28.1%, to
$7.2 million in the first six months of fiscal 2001 from $5.6 million in the first six months of fiscal 2000. Operating income as a percentage of net sales remained constant at 8.5% for
the first six months of fiscal 2000 and 2001.

Income TaxesWe recorded approximately $2.7 million of income tax expense in the first six months of fiscal 2001
compared to $2.0 million in the first six months of fiscal 2000 reflecting the increase in the profitability of the Company and the effective tax rate. Income taxes are recorded at an effective
rate of 36% and 38% for the first six months of fiscal 2000 and fiscal 2001, respectively.

Liquidity and Capital Resources

Our primary need for funds is to finance increased working capital to support sales growth and to fund capital expenditures.

Net
cash provided by operating activities for the six months ended October 31, 2000 was approximately $5.8 million compared to approximately $1.5 million for the
six months ended October 31, 1999. Net cash provided by operating activities for the six months ended October 31, 2000 resulted from cash generated from profitable operations, a
reduction in accounts receivable of $8.0 million, an increase in accounts payable and accrued liabilities of $2.9 million and depreciation and amortization. Cash used in operating
activities resulted from increases in inventory of $8.9 million, increases in prepaid expenses and other current assets and income tax payments. Approximately $3.7 million of the
increase in inventory relates to FASHION merchandise and $1.9 million relates to CLASSICS merchandise. The balance of the

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increase relates primarily to embroidery work in process, our footwear product category and retail store locations. Inventory in Europe decreased by approximately $0.5 million. The overall
increase in inventory was designed to support our planned sales volume during fiscal 2001. For the six months ended October 31, 1999, net cash provided by operating activities resulted from net
income, a decrease in accounts receivable of $2.9 million and decreases in prepaid expenses and other current assets and depreciation and amortization. These increases were partially offset by
increases in inventory of $6.7 million and income tax payments.

Net
cash used in investing activities was approximately $6.6 million for the six months ended October 31, 2000 and was primarily due to purchases of capital equipment.
Capital expenditures during this period included $0.6 million for in-store fixtures and concept shops, $2.0 million for equipment and leasehold improvements associated with
Company-owned retail stores, $1.6 million for the distribution center and warehouse management system and $2.4 million for computer hardware and software, leasehold improvements, and
other furniture and equipment. For the six months ended October 31, 1999, net cash used in investing activities was approximately $5.5 million. Capital expenditures during the first six
months of fiscal 2000 included $1.7 million for in-store fixtures, concept shops and a new trade show booth, $1.7 million for equipment and leasehold improvements associated
with company-owned retail specialty stores, $0.7 million for the distribution center and $1.4 million for computer hardware and software, leasehold improvements and other furniture and
equipment.

Net
cash used by financing activities for the six months ended October 31, 2000 was approximately $0.6 million compared to net cash provided by financing activities of
approximately $19.8 million during
the six months ended October 31, 1999. During the six months ended October 31, 2000, net cash used by financing activities was primarily due to repayment of net short term borrowings and
principal payments under capital lease obligations of $0.8 million and cash generated from the sale of common stock under the employee stock purchase plan and the exercise of stock options of
$0.2 million. During the six months ended October 31, 1999, the Company generated $29.1 million through the sale of common stock, the exercise of stock options and the purchase of
common stock under the employee stock purchase plan. This was partially offset by the repayment of $9.1 million of short-term borrowings.

We
have a loan agreement with Washington Mutual Bank d/b/a Western Bank for a $55 million line of credit. Our Dutch subsidiary, Cutter & Buck (Europe) B.V., had a loan
agreement with Cooperatieve Rabobank "Huizen" B.A., or Rabobank, for a $4.0 million line of credit, which has been replaced by a loan agreement with Washington Mutual Bank d/b/a/ Western Bank.
These lines of credit are more fully described in footnote four ("Debt") to the Company's financial statements on page seven hereof.

PART IIOTHER INFORMATION

Item 1.  Legal Proceedings

The Company is party to routine litigation incidental to its business. Management believes the ultimate resolution of these matters will not have a material
adverse effect on its financial position and results of operations.

Item 2.  Changes in Securities and Use of Proceeds

None

Item 3.  Defaults Upon Senior Securities

None

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Item 4.  Submission of Matters to a Vote of Security Holders

The Company's Annual Meeting of Shareholders was held on September 22, 2000. Out of the Company's 10,421,682 shares of Common Stock entitled to vote at
the meeting, 9,524,600 were represented, either in person or by proxy.

Proposal Number 1Election of Class II DirectorsNominee

For

AgainstHarvey N. Jones

9,041,482

254,168Michael S. Brownfield

9,042,307

253,343Proposal Number 2Adoption of the 2000 Stock Incentive PlanVotesFor

8,664,748Against

419,142Withheld

62,742Broker Non-Votes

149,018Proposal Number 3Ratification of Appointment of AuditorsVotesFor

9,259,512Against

8,099Withheld

28,039


Item 5.  Other Information

We provided guidance with regard to the balance of fiscal 2001 and fiscal 2002 in our press release dated December 7, 2000.

Item 6.  Exhibits and Reports on Form 8-K

a)  Exhibits

Exhibit Number

Description10.17

Amended and Restated Loan Agreeement dated November 3, 2000 between Cutter & Buck, Inc. and Washington Mutual Bank d/b/a Western Bank, and supporting documents99.1

Press Release dated December 7, 2000


b)  Reports
on Form 8-K

None

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SIGNATURES

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.

|                         |  | CUTTER & BUCK INC.
|------------------------ |  | ------------------
|                         |  | (Registrant)      
|Dated: December 15, 2000 |  | By:               

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