<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    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, 1998
                                                       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


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

<TABLE>
      <S>                                                <C>
                Washington                                   91-1474587
      (State or Other Jurisdiction of                     (I.R.S. Employer
      Incorporation or Organization)                     Identification No.)
</TABLE>

                          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)


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 10, 1998 was 5,522,738.


                                 Page 1 of 15
<PAGE>

                               CUTTER & BUCK INC.

                          Quarterly Report on Form 10-Q
                     For the Quarter Ended October 31, 1998


                                      Index
<TABLE>
<CAPTION>
                                                                                   Page
                                                                                   ----
<S>      <C>        <C>                                                            <C>
PART I - FINANCIAL INFORMATION                                                     

         Item 1.    Financial Statements (unaudited):

                    Condensed Balance Sheets                                        3

                    Condensed Statements of Income                                  4

                    Condensed Statements of Cash Flows                              5

                    Notes to Condensed Financial Statements                         6

         Item 2.    Management's Discussion and Analysis of Financial               9
                    Condition and Results of Operations


PART II - OTHER INFORMATION

         Item 1.    Legal Proceedings                                              14

         Item 2.    Changes in Securities                                          14

         Item 3.    Defaults Upon Senior Securities                                14

         Item 4.    Submission of Matters to a Vote of Security Holders            14

         Item 5.    Other Information                                              14

         Item 6.    Exhibits and Reports on Form 8-K                               15


SIGNATURES                                                                         15
</TABLE>


                                     Page 2
<PAGE>

PART I - FINANCIAL INFORMATION
Item 1.  Condensed Financial Statements

                               CUTTER & BUCK INC.
                                 BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                         April 30,            October 31,
                                                                           1998                  1998
                                                                       ------------          -------------
                                                                                              (unaudited)
<S>                                                                    <C>                   <C>
Current Assets:
  Cash                                                                 $ 7,589,731           $ 5,055,345
  Accounts receivable, net of allowances for doubtful                                                   
    accounts and returns and allowances of $1,187,813 at                                                
    April 30, 1998 and $1,581,951 at October 31, 1998                   20,216,721            19,174,735
  Inventories                                                           13,247,892            18,662,276
  Deferred income taxes                                                    782,545               782,545
  Prepaid expenses and other current assets                              1,502,634             2,473,183
                                                                       -----------           -----------
      Total current assets                                              43,339,523            46,148,084
                                                                                                        
Furniture and equipment                                                  4,568,515             6,547,558
Other assets                                                               236,329               337,569
                                                                       -----------           -----------
      Total assets                                                     $48,144,367           $53,033,211
                                                                       -----------           -----------
                                                                       -----------           -----------
                                                                                                        
                      LIABILITIES AND SHAREHOLDERS' EQUITY                                              
                                                                                                        
Current liabilities:                                                                                    
  Accounts payable                                                     $ 5,110,405           $ 4,667,765
  Accrued liabilities                                                    1,606,994             2,333,805
  Income taxes payable                                                   1,498,720               830,684
  Loan payable to bank                                                     486,913             1,019,530
  Current portion of capital lease obligations                             194,040               223,253
                                                                       -----------           -----------
      Total current liabilities                                          8,897,072             9,075,037
                                                                                                        
Capital lease obligations                                                  626,682             1,058,081
                                                                                                        
Shareholders' equity:                                                                                   
  Common stock, no par value: 25,000,000 shares                                                         
    authorized; 5,250,796 issued and outstanding at                                                     
    April 30, 1998 and 5,521,488 at October 31, 1998                    30,577,648            32,269,060
  Retained earnings                                                      8,168,003            10,626,563
  Accumulated other comprehensive income                                  (125,038)                4,470
                                                                       -----------           -----------
      Total shareholders' equity                                        38,620,613            42,900,093
                                                                       -----------           -----------
      Total liabilities and shareholders' equity                       $48,144,367           $53,033,211
                                                                       -----------           -----------
                                                                       -----------           -----------
</TABLE>

                             See accompanying notes.


                                     Page 3
<PAGE>

                               CUTTER & BUCK INC.
                              STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  Three months ended                      Six months ended
                                            ------------------------------         --------------------------------
                                            October 31,        October 31,         October 31,        October 31,  
                                                1997               1998                1997              1998      
                                            ------------       -----------         -----------     ----------------
<S>                                         <C>                <C>                 <C>             <C>             
Net sales                                   $ 17,349,588       $ 25,993,442        $ 29,727,619      $ 43,756,937  
Cost of sales                                 10,204,620         15,054,145          17,622,289        25,205,330  
                                            ------------       ------------        ------------      ------------  
Gross profit                                   7,144,968         10,939,297          12,105,330        18,551,607  
Operating expenses:                                                                                                
  Design and production                          604,317            858,624           1,022,790         1,460,552  
  Selling and handling                         3,196,228          5,296,162           5,881,185         9,284,906
  General and administrative                   1,558,075          2,238,337           2,697,246         4,099,560
                                            ------------       ------------        ------------      ------------  
    Total operating expenses                   5,358,620          8,393,123           9,601,221        14,845,018  
                                            ------------       ------------        ------------      ------------  
                                                                                                                   
Operating income                               1,786,348          2,546,174           2,504,109         3,706,589  
                                                                                                                   
Other income (expense):                                                                                            
  Factor commission and                                                                                            
    interest expense, net                                                                                          
    of interest income                           (41,602)           (45,499)            (52,683)          (45,532) 
  License and royalty income,                                                                                      
    net of other expense                          15,090             93,732              28,680           174,503  
                                            ------------       ------------        ------------      ------------  
    Total other income                           (26,512)            48,233             (24,003)          128,971  
                                            ------------       ------------        ------------      ------------  
                                                                                                                   
Income before income taxes                     1,759,836          2,594,407           2,480,106         3,835,560  
Income taxes                                    (600,000)          (930,000)           (845,000)       (1,377,000) 
                                            ------------       ------------        ------------      ------------  
                                                                                                                   
Net income                                  $  1,159,836       $  1,664,407        $  1,635,106      $  2,458,560  
                                            ------------       ------------        ------------      ------------  
                                            ------------       ------------        ------------      ------------  
                                                                                                                   
  Basic net income per share                $       0.22       $       0.30        $       0.31      $       0.45  
                                            ------------       ------------        ------------      ------------  
                                            ------------       ------------        ------------      ------------  
                                                                                                                   
  Diluted net income per share              $       0.21       $       0.29        $       0.30      $       0.43  
                                            ------------       ------------        ------------      ------------  
                                            ------------       ------------        ------------      ------------  
                                                                                                                   
                                                                                                                   
  Shares used in computation of:                                                                                   
    Basic net income per share                 5,256,575          5,504,182           5,235,699         5,419,736  
                                            ------------       ------------        ------------      ------------  
                                            ------------       ------------        ------------      ------------  
                                                                                                                   
    Diluted net income per share               5,528,719          5,681,054           5,495,046         5,667,792  
                                            ------------       ------------        ------------      ------------  
                                            ------------       ------------        ------------      ------------  
</TABLE>

                             See accompanying notes.


                                     Page 4
<PAGE>

                               CUTTER & BUCK INC.
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                         Six months ended
                                                                ---------------------------------
                                                                October 31,           October 31,
                                                                   1997                   1998   
                                                                -----------           -----------
<S>                                                             <C>                   <C>        
OPERATING ACTIVITIES                                                                              
Net Income                                                      $ 1,635,106           $ 2,458,560 
Adjustments to reconcile net income to net                                                        
  cash provided by (used in) operating activities:                                                
    Depreciation and amortization                                   694,420               943,026 
    Changes in assets and liabilities:                                                            
      Receivables, net                                            1,785,683             1,094,975 
      Inventories                                                  (867,648)           (5,414,384)
      Prepaid expenses and other current assets                      (1,046)             (970,549)
      Accounts payable and accrued liabilities                   (2,527,937)              284,171 
      Income taxes payable                                         (738,972)             (668,036)
                                                                -----------           ----------- 
Net cash used in operating activities                               (20,394)           (2,272,237)
                                                                                                  
INVESTING ACTIVITIES                                                                              
Purchases of furniture and equipment                               (802,861)           (2,343,314)
Increase in trademarks and patents                                  (93,451)             (111,145)
                                                                -----------           ----------- 
Net cash used in investing activities                              (896,312)           (2,454,459)
                                                                                                  
FINANCING ACTIVITIES                                                                              
Proceeds from loan from bank                                              0               532,617 
Payments under capital lease obligations                            (77,311)             (108,238)
Net decrease in advances from factor                               (314,091)              (52,989)
Issuance of common stock, net of offering costs                     231,831             1,691,412 
                                                                -----------           ----------- 
Net cash provided by (used in) financing activities                (159,571)            2,062,802 
                                                                                                  
Effects of foreign exchange rate changes on cash                    (26,039)              129,508 
                                                                -----------           ----------- 
Net decrease in cash                                             (1,102,316)           (2,534,386)
Cash, beginning of period                                         7,441,717             7,589,731 
                                                                -----------           ----------- 
Cash, end of period                                             $ 6,339,401           $ 5,055,345 
                                                                -----------           ----------- 
                                                                -----------           ----------- 
                                                                                                  
SUPPLEMENTAL INFORMATION:                                                                         
Cash paid during the period for interest                        $    43,144           $   170,245 
                                                                -----------           ----------- 
                                                                -----------           ----------- 
                                                                                                  
Cash paid during the period for income taxes                    $ 1,584,500           $ 2,045,036 
                                                                -----------           ----------- 
                                                                -----------           ----------- 
                                                                                                  
Noncash financing and investing activities:                                                       
  Equipment acquired with capital leases                        $    48,976           $   568,850 
                                                                -----------           ----------- 
                                                                -----------           ----------- 
</TABLE>

                             See accompanying notes.


                                     Page 5
<PAGE>

NOTES TO CONDENSED FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION

     The accompanying unaudited financial statements have been prepared by 
Cutter & Buck Inc. ("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 three months ended October 31, 1998 may not be indicative of the results 
for the full fiscal year. For further information, refer to the financial 
statements and footnotes thereto for the year ended April 30, 1998, included 
in the Company's filing on Form 10-K.

2.   NET INCOME PER SHARE

     Basic net income per share is based on the weighted average number of 
common shares outstanding. Diluted net income 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 and warrants except when the 
effect of their inclusion would be antidilutive.

3.   ACCOUNTS RECEIVABLE

     Pursuant to the terms of factoring agreements, the Company assigns a 
portion of its qualifying accounts receivable to factors on a preapproved, 
non-recourse basis and a portion on a recourse basis. The Company is 
permitted to receive advances from the European factor against uncollected 
amounts factored. Accounts receivable consisted of the following:

<TABLE>
<CAPTION>
                                                April 30, 1998       October 31, 1998
                                                --------------       ----------------
   <S>                                        <C>                  <C>
   Unmatured receivables:
     Nonrecourse                               $  2,622,705           $  1,841,719
     With recourse                                1,945,238              1,374,258
   Matured receivables                              290,112                132,309
   Advances                                        (751,214)              (698,225)
                                               ------------           ------------
       Due from factor                            4,106,841              2,650,061
   Non-factored receivables                      17,297,693             18,106,625
   Allowance for doubtful accounts 
     and reserve for sales returns 
     and allowances                              (1,187,813)            (1,581,951)
                                               ------------           ------------
                                               $ 20,216,721           $ 19,174,735
                                               ------------           ------------
                                               ------------           ------------
</TABLE>


                                     Page 6
<PAGE>

4.   LINE OF CREDIT

     The Company has a loan agreement with Washington Mutual Bank d/b/a 
Western Bank ("Western Bank") for a $30.0 million revolving line of credit 
and a $5.0 million term credit facility. The Western Bank revolving line of 
credit is to be used for international letters of credit, working capital 
advances of up to $25.0 million and fixed asset purchases of up to $5.0 
million. Interest on borrowings is charged and payable monthly at The Wall 
Street Journal Prime rate or an alternative fixed rate of LIBOR plus 2.0%. 
The first $10.0 million of direct debt is granted on an unsecured basis. 
Direct debt in excess of $10.0 million is secured by a first lien perfected 
security interest in the Company's inventory and accounts receivable. 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 a maximum ratio of long term funded debt to earnings. Western Bank 
and Republic Business Credit Corp., the Company's factor in the United 
States, have entered into an intercreditor agreement allocating between them 
priority as to the Company's assets in which both financial institutions have 
a security interest. At October 31, 1998, letters of credit outstanding 
against this line of credit totaled $17,147,684 and there were no working 
capital advances.

The Company's European subsidiary has a loan agreement with Cooperatieve 
Rabobank "Huizen" B.A. ("Rabobank") for a $1.8 million line of credit. The 
line of credit with Rabobank is to be used for international letters of 
credit and working capital advances. Interest on borrowings is charged and 
payable quarterly at a variable rate (4.95% at October 31, 1998). The line of 
credit is secured by the Company's European inventory, an irrevocable standby 
letter of credit issued by Western Bank of $1.6 million and subordination of 
$2.2 million of intercompany debt. At October 31, 1998, letters of credit 
outstanding against this line of credit totaled $230,532 and working capital 
advances totaled $1,019,530.

5.   SHAREHOLDERS' EQUITY

     The Company has four stock incentive plans that provide for the granting 
of options to employees, officers and directors of the Company to purchase up 
to 875,313 shares of Common Stock and the granting of shares of restricted 
stock to these individuals as well as consultants or advisors of the Company. 
Options granted under the 1991 plan provide for 50% vesting on the first 
anniversary from the date of grant and 25% vesting on each of the second and 
third anniversaries. Options granted under the 1995 employee plan generally 
provide for vesting over a four-year period with vesting at 25% each year. 
Options granted under the 1995 director plan become exercisable six months 
after the date of grant. Options or shares granted under the 1997 stock 
incentive plan are subject to terms established by the Compensation Committee 
of the Board of Directors and generally provide for vesting of options over a 
four-year period with vesting at 25% each year. Options granted under these 
plans expire after 10 years and have been granted at fair market value on the 
date of grant. At October 31, 1998, options to purchase 479,369 shares of 
common stock were outstanding under these plans, of which options to purchase 
128,483 shares were exercisable. At October 31, 1998, 118,901 shares under 
these plans remained available for future grant.

     In August 1998, the Company established a stock bonus plan whereby 
officers and key employees may be granted restricted stock. The plan provides 
for the issuance of not more than 25,000 shares of restricted stock which 
vest while the participant is an employee of the Company over a two-year 
period, with 25% of such shares vesting every six months from the date of 
grant. As of October 31, 1998, 6,799 shares of restricted stock have been 
granted, leaving 18,201 shares available for future grant.


                                     Page 7
<PAGE>

6.   REPORTING COMPREHENSIVE INCOME

     As of May 1, 1998, the Company adopted Statement of Financial Accounting 
Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130 
establishes new rules for the reporting and display of comprehensive income 
and its components; however, the adoption of this statement had no impact on 
the Company's net income or shareholders' equity. SFAS No. 130 requires 
unrealized gains or losses on the Company's foreign currency translation 
adjustments to be included in comprehensive income. For quarterly reporting 
purposes, the following table sets forth the components of comprehensive 
income:


<TABLE>
<CAPTION>
                                                    Three months ended           Six months ended
                                                         October 31,                 October 31,
                                                    -------------------          ----------------
                                                     1997           1998          1997          1998
                                                  ----------     ----------    -----------   ----------
<S>                                               <C>            <C>           <C>           <C>
Net income                                        $ 1,159,836    $ 1,664,407   $ 1,635,106   $ 2,458,560
                                                  ----------     ----------    -----------   ----------
                                                  ----------     ----------    -----------   ----------
Foreign currency translation adjustments               20,931        119,734       (26,039)      129,508
                                                  ----------     ----------    -----------   ----------
Comprehensive income                              $ 1,180,767    $ 1,784,141   $ 1,609,067   $ 2,588,068
                                                  ----------     ----------    -----------   ----------
                                                  ----------     ----------    -----------   ----------
</TABLE>


                                     Page 8
<PAGE>

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. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN ANY
FORWARD LOOKING INFORMATION. SPECIFICALLY, THERE ARE A NUMBER OF IMPORTANT
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
ANTICIPATED BY ANY FORWARD LOOKING INFORMATION. THOSE FACTORS INCLUDE, BUT ARE
NOT LIMITED TO, STYLE CHANGES AND PRODUCT ACCEPTANCE, RELATIONS WITH 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 EXTENSION ACTIVITIES AND TO PENETRATE ITS CHOSEN
DISTRIBUTION CHANNELS, COMPETITION, FOREIGN CURRENCY RISKS, RISKS ASSOCIATED
WITH OPENING AND OPERATING A RETAIL LOCATION, THE SUCCESSFUL IMPLEMENTATION OF
THE COMPANY'S YEAR 2000 COMPLIANCE INITIATIVE, POLITICAL AND TRADE RELATIONS 
AND GENERAL ECONOMIC CONDITIONS. FINALLY, THERE MAY BE OTHER FACTORS NOT 
MENTIONED ABOVE OR INCLUDED IN THE COMPANY'S SEC FILINGS THAT MAY CAUSE ACTUAL 
RESULTS TO DIFFER MATERIALLY FROM ANY FORWARD-LOOKING INFORMATION.

OVERVIEW
     The Company designs, sources and markets updated, traditional sportswear 
and outerwear. It distributes its products primarily through golf pro shops 
and resorts, corporate sales accounts and better specialty stores. The 
Company continues to emphasize the golf distribution channel because it 
believes this is an effective venue to build brand identity and to reach its 
target consumers who are sports-minded and want high-quality casual clothing 
that reflects an active lifestyle. The Company has found golf pro shops to be 
receptive to its distinctive product, merchandising approach and sales 
support. The Company continues to leverage a growing awareness of the Cutter 
& Buck brand and its expanded product line by selling into the corporate 
channel, which is targeted to Fortune 1000 companies.

     Historically, the Company has experienced its lowest level of net sales 
and profitability in its first and third quarters, ending July 31 and January 
31, respectively. Correspondingly, the Company's highest level of sales and 
profitability have been achieved in its second and fourth quarters, ending 
October 31 and April 30, respectively. This seasonality has resulted 
primarily from the timing of shipments to golf pro shops and specialty stores 
due to seasonal fluctuations in consumer demand, the timing and amount of 
orders from key customers, the timing of sales of seasonal remainder 
merchandise and availability of product. This pattern of sales affects 
working capital requirements and liquidity, as the Company generally must 
finance higher levels of inventory during the first and third quarters in 
advance of sales taking place in the second and fourth quarters.


RESULTS OF OPERATIONS
     THREE MONTHS ENDED OCTOBER 31, 1998 COMPARED WITH THREE MONTHS ENDED
OCTOBER 31, 1997
     NET SALES increased 49.8% in the three months ended October 31, 1998 to 
$25,993,442 from $17,349,588 in the three months ended October 31, 1997. For 
the second quarter of fiscal 1999 compared to the second quarter of fiscal 
1998, net sales to the golf distribution channel increased 73.0% or 
$5,753,520 to $13,631,720, net sales to the corporate channel increased 67.5% 
or $3,109,360 to $7,718,419, and net sales to the specialty store channel 
increased 3.6% or $160,273 to $3,497,826. Other sales, including sales to the 
liquidation and international channels, decreased 17.0% or $379,299 to 
$1,145,477, for the three months ended October 31, 1998 compared to the same 
three month period of the previous year primarily due to reduced liquidation 
sales. Net sales in the golf distribution channel through the Company's 
European subsidiaries included in the golf figures increased 68.7% or $428,468
to $1,052,017.


                                     Page 9
<PAGE>

     GROSS PROFIT increased in the three months ended October 31, 1998 to 
$10,939,297 from $7,144,968 in the three months ended October 31, 1997. Gross 
profit as a percentage of net sales was 42.1% for the second quarter of 
fiscal 1999 compared to 41.2% for the second quarter of fiscal 1998. The 
increase in gross profit margin in the second quarter of fiscal 1999 was 
primarily due to the Company's ability to negotiate lower production costs 
based on higher volumes.

     OPERATING EXPENSES increased to $8,393,123 in the three months ended 
October 31, 1998 from $5,358,620 in the three months ended October 31, 1997, 
and increased as a percentage of net sales to 32.3% in the second quarter of 
fiscal 1999 from 30.9% in the second quarter of fiscal 1998. The increase in 
operating expenses when expressed as a percentage of net sales reflects 
increased investments in senior management, brand promotion and distribution, 
systems, staffing and facilities in support of the Company's growth. Selling 
and handling expenses increased by $2,099,934 making up 69.2% of the overall 
increase in operating expenses. The majority of the increase in selling and 
handling expenses was due to increased sales commissions, staffing costs and 
travel related to a higher sales volume and a larger sales force. The Company 
also has increased its advertising expenditures and has incurred additional 
handling expenses associated with expanding its warehouse facility in Seattle 
and supporting the increase in sales volume. General and administrative 
expenses increased by $680,262 making up 22.4% of the overall increase in 
operating expenses. The majority of the increase in general and 
administrative expenses was due to increased staffing costs, professional 
fees and other operating costs to support expanded operations and open a 
retail store. Design and production expenses increased by $254,307 primarily 
due to the costs associated with expansion of the Company's sportswear 
collections, including the addition of a women's line of apparel and shoe 
product extension along with expenses associated with developing additional 
manufacturing sources.

     OTHER INCOME. Net interest and factor commission expense was $45,499 in 
the quarter ended October 31, 1998 compared $41,602 in the quarter ended 
October 31, 1997. The increase in this net expense is primarily due to 
increased bank borrowing by the Company's European subsidiary and reduced net 
interest income earned on invested cash balances. License and royalty income 
earned under licensing contracts totaled $93,732 for the three months ended 
October 31, 1998 compared to $53,775 for the three months ended October 31, 
1997. The increase in license and royalty income was primarily due to 
increased sales volume of the Company's existing licensees. The Company 
experienced no significant gain or loss on foreign currency transactions in 
the quarter ended October 31, 1998 compared to a loss of $38,685 in the 
quarter ended October 31, 1997.

     INCOME TAXES. The Company recorded $930,000 of income tax expense in the 
three months ended October 31, 1998 and $600,000 in the three months ended 
October 31, 1997. Tax expense has been recorded at statutory rates.

     As a result of the foregoing factors, the Company had net income of 
$1,664,407 for the three months ended October 31, 1998 compared to $1,159,836 
for the three months ended October 31, 1997.


                                     Page 10
<PAGE>

RESULTS OF OPERATIONS
     SIX MONTHS ENDED OCTOBER 31, 1998 COMPARED WITH SIX MONTHS ENDED OCTOBER
31, 1997
     NET SALES increased 47.2% in the six months ended October 31, 1998 to 
$43,756,937 from $29,727,619 in the six months ended October 31, 1997. For 
the first half of fiscal 1999 compared to the first half of fiscal 1998, net 
sales to the golf distribution channel increased 57.5% or $8,358,739 to 
$22,899,718, net sales to the corporate channel increased 63.1% or $5,238,747 
to $13,542,713 and net sales to the specialty store channel increased 13.6% 
or $606,546 to $5,077,483. Other sales, including sales to the liquidation 
and international channels, decreased 7.2% or $174,714 to $2,237,023 for the 
six months ended October 31, 1998 compared to the same six month period of 
the previous year primarily due to reduced liquidation sales. Net sales in the 
golf distribution channel through the Company's European subsidiaries included 
in the golf figures increased 59.0% or $850,186 to $2,291,231.

     GROSS PROFIT increased in the six months ended October 31, 1998 to 
$18,551,607 from $12,105,330 in the six months ended October 31, 1997. Gross 
profit as a percentage of net sales was 42.4% for the first half of fiscal 
1999 compared to 40.7% for the first half of fiscal 1998. The increase in 
gross profit margin in the first half of fiscal 1999 was primarily due to the 
Company's ability to negotiate lower production costs based on higher 
volumes.

     OPERATING EXPENSES increased to $14,845,018 in the six months ended 
October 31, 1998 from $9,601,221 in the six months ended October 31, 1997, 
and increased as a percentage of net sales to 33.9% in the first half of 
fiscal 1999 from 32.3% in the first half of fiscal 1998. The increase in 
operating expenses when expressed as a percentage of net sales reflects 
increased investments in senior management, brand promotion and distribution, 
systems, staffing and facilities in support of the Company's growth. Selling 
and handling expenses increased by $3,403,721 making up 64.9% of the overall 
increase in operating expenses. The majority of the increase in selling and 
handling expenses was due to increased sales commissions, staffing costs and 
travel related to a higher sales volume and a larger sales force. The Company 
also has increased its advertising expenditures and has incurred additional 
handling expenses associated with expanding its warehouse facility in Seattle 
and supporting the increase in sales volume. General and administrative 
expenses increased by $1,402,314 making up 26.7% of the overall increase in 
operating expenses. The majority of the increase in general and 
administrative expenses was due to increased staffing costs, professional 
fees and other operating costs to support expanded operations. Design and 
production expenses increased by $437,762 primarily due to the costs 
associated with expansion of the Company's sportswear collections, including 
the addition of a women's line of apparel along with expenses associated with 
developing additional manufacturing sources.

     OTHER INCOME. Net interest and factor commission expense was $45,532 in 
the six months ended October 31, 1998 compared $52,683 in the six months 
ended October 31, 1997. The reduction in this net expense is primarily due to 
increased interest income earned on invested cash balances, mainly in the 
first quarter of fiscal 1999. License and royalty income earned under 
licensing contracts totaled $174,503 for the six months ended October 31, 
1998 compared to $106,919 for the six months ended October 31, 1997. The 
increase in license and royalty income was primarily due to increased sales 
volume of the Company's existing licensees. The Company experienced no 
significant gain or loss on foreign currency transactions in the six months 
ended October 31, 1998 compared to a loss of $78,239 in the six months ended 
October 31, 1997.

                                     Page 11
<PAGE>

     INCOME TAXES. The Company recorded $1,377,000 of income tax expense in 
the six months ended October 31, 1998 and $845,000 in the six months ended 
October 31, 1997. Tax expense has been recorded at statutory rates.

     As a result of the foregoing factors, the Company had net income of 
$2,458,560 for the six months ended October 31, 1998 compared to $1,635,106 
for the six months ended October 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES
     The Company's primary need for funds is to finance working capital 
associated with growth in sales volume, specifically accounts receivable and 
finished goods inventory. Working capital for the six months ended October 
31, 1998 was funded primarily by profitable operations and collections of 
accounts receivable.

     Net cash used for operating activities was $2,272,237 for the six months 
ended October 31, 1998 compared to $20,394 for the six months ended October 
31, 1997. For the six months ended October 31, 1998, cash was primarily 
provided by net income and by a net decrease in accounts receivable of 
$1,094,975. These were offset by an increase in inventory of $5,414,384 and 
an increase in prepaid expenses of $970,549. The reduction in accounts 
receivable is primarily seasonal in nature. The increase in inventory 
primarily relates to planned sales volume in the third quarter and the need 
for the Company to have a sufficient stock of products with multi-season 
appeal to service the Corporate sales channel and other expedited business. 
For the six months ended October 31, 1997, cash was primarily provided by net 
income and by a net decrease in accounts receivable of $1,785,683 which were 
offset by an increase in inventory of $867,648, a reduction in accounts 
payable and accrued liabilities of $2,527,937 and a reduction in income taxes 
payable of $738,972.

     Net cash used in investing activities of $2,454,459 for the six months 
ended October 31, 1998 was primarily attributable to investments in warehouse 
leasehold improvements and equipment totaling $332,000, in-store fixtures of 
$781,000, computer systems and equipment totaling $508,000, other furniture, 
equipment and leasehold improvements totaling $723,000 and investments in 
trademarks of $111,000. For the six months ended October 31, 1997, net cash 
used in investing activities was $896,312 and was primarily attributable to 
purchases of in-store fixtures totaling $206,000, investments in warehouse 
equipment and leasehold improvements totaling $281,000 and purchases of other 
furniture and equipment totaling $316,000 and investments in trademarks of 
$93,000.

     Net cash provided by financing activities for the six months ended 
October 31, 1998 was $2,062,802 compared to net cash used of $159,571 during 
the six months ended October 31, 1997. During the six months ended October 
31, 1998, the Company sold 270,692 shares under its employee stock purchase 
plan and pursuant to the exercise of stock options and warrants, generating 
$1,691,412, increased its borrowing from banks by $532,617 and decreased its 
borrowing from the factor by $52,989. For the six months ended October 31, 
1997, cash used for financing activities of $159,571 was primarily due to 
$231,831 generated by the sale of 66,780 shares of Common Stock under its 
employee stock purchase plan and pursuant to the exercise of stock options, 
offset by decreased borrowing from the factor totaling $314,091 and principal 
payments on capital leases totaling $77,311.

     The Company has a loan agreement with Washington Mutual Bank d/b/a 
Western Bank for a $35.0 million line of credit and a loan agreement with 
Cooperatieve Rabobank "Huizen" B.A., for a $1.8 million line of credit which 
are more fully described in footnote four to the Company's financial 
statements on page seven hereof.


                                     Page 12
<PAGE>

YEAR 2000
      The Company recognizes the need to ensure that its systems, 
applications and hardware will recognize and process transactions for the 
year 2000 and beyond. With the recent hire of a Chief Information Officer, 
the Company has developed and is implementing a company-wide plan which 
includes identifying all issues related to the impact of year 2000 on its 
internal systems, testing these systems and addressing deficiencies before 
March 31, 1999. The Company expects to successfully implement the systems and 
programming changes necessary to address year 2000 issues with respect to its 
internal systems and believes that the total cost of such actions will be 
approximately $100,000. The Company estimates that it has completed 
approximately 65% of this effort and all costs incurred to date have been 
expensed. Due to the nature of the Company's business, its operations 
generally do not include significant systems relying on embedded technology 
such as microcontrollers which are difficult to evaluate and repair.

     The Company has a fully integrated, real-time management information 
system that is specifically designed for the apparel industry. The system 
runs on a UNIX platform with IBM's RISC 6000 hardware. The Company has 
received assurances from the vendors for these systems that they are year 
2000 compliant. The Company is developing a complete testing program for both 
systems to verify compliance and will complete this testing by March 1999. In 
the event these systems fail the testing program, the Company's existing 
information technology staff will arrange for the assistance of outside 
professionals to remedy the deficiencies. Although the Company is not 
presently aware of any material operational issues or costs associated with 
preparing its internal systems for the year 2000, there can be no assurance 
that there will not be a delay in, or increased costs associated with, the 
implementation of the necessary systems and changes to address all year 2000 
issues.

     The Company is in the process of identifying and working with its 
significant suppliers, customers and financial institutions to ensure that 
those parties have appropriate plans to remediate year 2000 issues when their 
systems may affect the Company's systems or otherwise impact operations. The 
Company has received assurances from the majority of its significant 
suppliers, but cannot definitively determine that all major suppliers will 
reach a year 2000-ready status that will ensure no disruption of business. 
Although the Company has no reason to conclude that any specific supplier 
represents a risk, the most reasonably likely worst-case scenario would 
entail production disruption due to the inability of a number of its 
suppliers to obtain raw materials or components, or encounter transportation 
or communications problems affecting delivery of products to the Company. The 
Company is unable to quantify such a scenario, but it could potentially 
result in a material adverse impact on results of operations, liquidity or 
financial position of the Company. Contingency plans for suppliers and 
systems are under development and are expected to be complete by May, 1999.


                                     Page 13
<PAGE>

PART II - OTHER INFORMATION

<TABLE>
<S>       <C>
Item 1    Legal Proceedings

          None

Item 2    Changes in Securities

          None

Item 3    Defaults Upon Senior Securities

          None

Item 4    Submission of Matters to a Vote of Security Holders
</TABLE>

     The Company's Annual Meeting of Shareholders was held on September 23, 
1998. Out of the Company's 5,427,756 shares of Common Stock entitled to vote 
at the meeting, 4,788,848 were represented, either in person or by proxy.

          Proposal Number 1 -  Election of Directors
<TABLE>
<CAPTION>
          NOMINEE                         FOR               AGAINST
          -------                         ---               -------
          <S>                       <C>                     <C>
          Frances M Conley          4,768,888                19,960
          Larry C. Mounger          4,764,738                24,110
</TABLE>

         Proposal Number 2 -  Ratification of Appointment of Auditors

<TABLE>
<CAPTION>
                                        VOTES
                                        -----
          <S>                       <C>
          For                       4,748,875
          Against                       3,623
          Withheld                     36,350
</TABLE>

Item 5.   Other Information

          None


                                     Page 14
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

          a)   Exhibits

          Exhibit 10.16  Stock Bonus Plan, filed herewith

          Exhibit 10.17  Lease dated August 11, 1998 between Pine Street 
          Development L.L.C. and Cutter & Buck Inc., filed herewith

          Exhibit 10.18  Lease dated April 15, 1998 between Whitmac Company and
          Cutter & Buck Inc., filed herewith


          b)   Reports on Form 8-K

               On November 20, 1998, the Company filed a Form 8-K covering the
               adoption of a Shareholder Rights Plan. The terms of the Rights
               Plan provide for a dividend of one Right for each outstanding
               share of Cutter & Buck Inc. Common Stock to holders of record at
               the close of business on December 7, 1998. The Rights will
               generally become exercisable if an acquiring party accumulates
               20% or more of Cutter & Buck's voting stock, or if a party
               announces an offer to acquire 20% or more of Cutter & Buck's
               voting stock. The Rights will expire on December 7, 2008. Each
               Right will entitle the holder (other than the acquiring party) to
               buy, at a 50% discount, Preferred Stock having an economic value
               equal to one full share of the Company's Common Stock. In
               addition, upon the occurrence of certain events, holders of the
               Rights will be entitled to purchase shares in an "acquiring
               entity" at half of their market value.




                                   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, 1998               By  /s/ Stephen S. Lowber
                --                       --------------------------------------
                                                  Stephen S. Lowber
                                                  Vice-President and
                                                  Chief Financial Officer
                                                  (Principal Financial and
                                                  Accounting Officer)


                                     Page 15