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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, 2001

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, 2001 was 10,567,589.

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CUTTER & BUCK INC.
Quarterly Report on Form 10-Q
For the Quarter Ended October 31, 2001

Index

|                             |         |    |                                                                                       |  | Page
|---------------------------- | ------- | -- | ------------------------------------------------------------------------------------- |  | ----
|PART IFINANCIAL INFORMATION |         |   
|                             | Item 1. |    | Financial Statements (unaudited):                                                     |  |     
|                             |         |    | Condensed Consolidated Balance Sheets                                                 |  | 3   
|                             |         |    | Condensed Consolidated Statements of Operations                                       |  | 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 |  | 9   
|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                                   |  | 14  
|                             | Item 5. |    | Other Information                                                                     |  | 14  
|                             | Item 6. |    | Exhibits and Reports on Form 8-K                                                      |  | 14  
|SIGNATURES                   |         | 15

2

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PART IFINANCIAL INFORMATION

Item 1.  Financial Information

CUTTER & BUCK INC.        Condensed Consolidated Balance Sheets

|                                                |                                                                                                                                                  | October 31,
2001                           |            | April 30,
2001 |            
|----------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ---------- | -------------- | -----------
|
|ASSETS                                          |                                                                                                                                                  |                                            |            |                |            
|Current assets:                                 |                                                                                                                                                  |                                            |            |                |            
|                                                | Cash and cash equivalents                                                                                                                        |                                            | $          | 8,135,357      |            
|                                                | Accounts receivable, net of allowances for doubtful accounts and returns of $4,495,992 at October 31, 2001 and $3,320,416 at April 30, 2001      |                                            |            | 28,796,917     |            
|                                                | Inventories                                                                                                                                      |                                            |            | 48,211,839     |            
|                                                | Deferred income taxes                                                                                                                            |                                            |            | 3,350,725      |            
|                                                | Prepaid expenses and other current assets                                                                                                        |                                            |            | 5,301,065      |            
|                                                |                                                                                                                                                  |                                            |            |                |            
|                                                |                                                                                                                                                  | Total current assets                       |            |                | 93,795,903 
|Furniture and equipment, net                    |                                                                                                                                                  |                                            | 21,438,166 |                |            
|Deferred income taxes                           |                                                                                                                                                  |                                            | 763,321    |                |            
|Other assets                                    |                                                                                                                                                  |                                            | 971,596    |                |            
|                                                |                                                                                                                                                  |                                            |            |                |            
|                                                |                                                                                                                                                  | Total assets                               |            | $              | 116,968,986
|                                                |                                                                                                                                                  |                                            |            |                |            
|LIABILITIES AND SHAREHOLDERS' EQUITY            |                                                                                                                                                  |                                            |            |                |            
|Current liabilities:                            |                                                                                                                                                  |                                            |            |                |            
|                                                | Short-term borrowings                                                                                                                            |                                            | $          | 3,072,832      |            
|                                                | Accounts payable                                                                                                                                 |                                            |            | 6,313,063      |            
|                                                | Accrued liabilities                                                                                                                              |                                            |            | 3,120,093      |            
|                                                | Current portion of capital lease obligations and long-term debt                                                                                  |                                            |            | 2,882,648      |            
|                                                | Other current liabilities                                                                                                                        |                                            |            | 276,333        |            
|                                                |                                                                                                                                                  |                                            |            |                |            
|                                                |                                                                                                                                                  | Total current liabilities                  |            |                | 15,664,969 
|Capital lease obligations, less current portion |                                                                                                                                                  |                                            | 5,332,960  |                |            
|Long-term debt, less current portion            |                                                                                                                                                  |                                            | 2,857,142  |                |            
|Other liabilities                               |                                                                                                                                                  |                                            | 528,573    |                |            
|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; 10,567,589 issued and outstanding at October 31, 2001 and 10,539,512 at April 30, 2001 |                                            |            | 64,338,215     |            
|                                                | Deferred compensation                                                                                                                            |                                            |            | (627,175       | )          
|                                                | Retained earnings                                                                                                                                |                                            |            | 29,379,681     |            
|                                                | Accumulated other comprehensive loss                                                                                                             |                                            |            | (505,379       | )          
|                                                |                                                                                                                                                  |                                            |            |                |            
|                                                |                                                                                                                                                  | Total shareholders' equity                 |            |                | 92,585,342 
|                                                |                                                                                                                                                  |                                            |            |                |            
|                                                |                                                                                                                                                  | Total liabilities and shareholders' equity |            | $              | 116,968,986
|                                                |                                                                                                                                                  |                                            |            |                |            

See
accompanying notes.

3

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CUTTER & BUCK INC        Condensed Consolidated Statements of Operations        (Unaudited)

|                                  |                                                                | Three months ended       |            | Six months ended |           
|--------------------------------- | -------------------------------------------------------------- | ------------------------ | ---------- | ---------------- | ----------
|
|Net sales                         |                                                                | $                        | 42,899,701 |                  | $         
|Cost of sales                     |                                                                |                          | 25,950,589 |                  |           
|                                  |                                                                |                          |            |                  |           
|Gross profit                      |                                                                |                          | 16,949,112 |                  |           
|Operating expenses:               |                                                                |                          |            |                  |           
|                                  | Design and production                                          |                          |            | 1,168,911        |           
|                                  | Selling and shipping                                           |                          |            | 11,455,703       |           
|                                  | General and administrative                                     |                          |            | 3,623,941        |           
|                                  |                                                                |                          |            |                  |           
|                                  |                                                                | Total operating expenses |            |                  | 16,248,555
|                                  |                                                                |                          |            |                  |           
|Operating income (loss)           |                                                                |                          | 700,557    |                  |           
|Other income (expense):           |                                                                |                          |            |                  |           
|                                  | Factor commission and interest expense, net of interest income |                          |            | (416,158         | )         
|                                  | License and royalty income, net of other expense               |                          |            | 90,851           |           
|                                  |                                                                |                          |            |                  |           
|                                  |                                                                | Total other expense      |            |                  | (325,307  
|                                  |                                                                |                          |            |                  |           
|Income (loss) before income taxes |                                                                |                          | 375,250    |                  |           
|Income taxes (benefits)           |                                                                |                          | 150,100    |                  |           
|                                  |                                                                |                          |            |                  |           
|Net income (loss)                 |                                                                | $                        | 225,150    |                  | $         
|                                  |                                                                |                          |            |                  |           
|Basic earnings (loss) per share   |                                                                | $                        | 0.02       |                  | $         
|                                  |                                                                |                          |            |                  |           
|Diluted earnings (loss) per share |                                                                | $                        | 0.02       |                  | $         
|                                  |                                                                |                          |            |                  |           
|Shares used in computation of:    |                                                                |                          |            |                  |           
|                                  | Basic earnings (loss) per share                                |                          |            | 10,567,589       |           
|                                  |                                                                |                          |            |                  |           
|                                  | Diluted earnings (loss) per share                              |                          |            | 10,587,786       |           
|                                  |                                                                |                          |            |                  |           

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 (loss)                                                                        |                                                            | ($                                        | 1,126,729  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                                            |                                           |            
|                                                                                         | Depreciation and amortization                              |                                           |            
|                                                                                         | Deferred income taxes                                      |                                           |            
|                                                                                         | Amortization of deferred compensation                      |                                           |            
|                                                                                         | Deferred gain on sale and leaseback of capital assets      |                                           |            
|                                                                                         | Noncash compensation expense                               |                                           |            
|                                                                                         | 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                                                |                                                            |                                           | 19,387,793 
|Investing activities                                                                     |                                                            |                                           |            
|Purchases of furniture and equipment                                                     |                                                            |                                           | (1,386,886 
|Increase in trademarks, patents and marketing rights                                     |                                                            |                                           | (113,898   
|                                                                                         |                                                            |                                           |            
|Net cash used in investing activities                                                    |                                                            |                                           | (1,500,784 
|Financing activities                                                                     |                                                            |                                           |            
|Net repayments of short term borrowings                                                  |                                                            |                                           | (16,429,449
|Principal payments under capital lease obligations                                       |                                                            |                                           | (1,497,864 
|Issuance of common stock                                                                 |                                                            |                                           | 116,116    
|                                                                                         |                                                            |                                           |            
|Net cash used in financing activities                                                    |                                                            |                                           | (17,811,197
|Effects of foreign exchange rate changes on cash                                         |                                                            |                                           | (12,911    
|                                                                                         |                                                            |                                           |            
|Net increase (decrease) in cash                                                          |                                                            |                                           | 62,901     
|Cash and cash equivalents, beginning of period                                           |                                                            |                                           | 8,072,456  
|                                                                                         |                                                            |                                           |            
|Cash and cash equivalents, end of period                                                 |                                                            | $                                         | 8,135,357  
|                                                                                         |                                                            |                                           |            
|Supplemental information:                                                                |                                                            |                                           |            
|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 accounting principles generally accepted in the United States 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, 2001 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, 2001, included in the Company's filing on Form 10-K.

Note 2.  Recently Issued Pronouncements

In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting For The
Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and
for long-lived assets to be disposed of and supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of." SFAS No. 144 also
modifys previous accounting treatment under APB Opinion No. 30, "Reporting the Results of OperationsReporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions." However, SFAS No. 144 retains the fundamental provisions of SFAS No. 121 for (a) recognition and
measurement of the impairment of long-lived assets to be held and used and (b) measurement of long-lived assets to be disposed of by sale. SFAS No. 144 is
effective for fiscal years beginning after December 15, 2001 or the first quarter of our fiscal 2003, with early adoption encouraged. We do not believe the adoption of this pronouncement will
have a material impact on our consolidated results of operations.

Note 3.  Earnings (Loss) Per Share

Basic earnings (loss) per share is based on the weighted average number of common shares outstanding. Diluted earnings (loss) 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.

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

|                                                                       |                                                                                            | Three Months ended
October 31 |        | Six Months ended
October 31
|---------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ----------------------------- | ------ | ---------------------------
|
|Numerator:                                                             |                                                                                            |                               |        |                            
|                                                                       | Numerator for basic and diluted earnings (loss) per sharenet income (loss)                |                               | $      | 225,150                    
|Denominator:                                                           |                                                                                            |                               |        |                            
|                                                                       | Denominator for basic earnings (loss) per shareweighted average common shares outstanding |                               |        | 10,567,589                 
|Effect of dilutive securities stock options (excluded for loss period) |                                                                                            |                               | 20,197 |                            
|                                                                       | Denominator for diluted earnings (loss) per share                                          |                               |        | 10,587,786                 
|Basic earnings (loss) per share                                        |                                                                                            | $                             | 0.02   |                            
|Diluted earnings (loss) per share                                      |                                                                                            | $                             | 0.02   |                            

Note 4.  Income Taxes

The Company recorded approximately $0.2 million of income tax expense in the second quarter of fiscal 2002 compared to $1.9 million in the second
quarter of fiscal 2001. The effective rate for income taxes in the second quarter of fiscal 2002 and 2001 was 40% and 38%, respectively. The effective rate increased as the Company opened retail
stores in additional states, thereby increasing state income taxes.

Note 5.  Comprehensive Income (Loss)

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

|                                         |  | Three Months ended
October 31 |         | Six Months ended
October 31 |  
|---------------------------------------- |  | ----------------------------- | ------- | --------------------------- | -
|
|Net income (loss)                        |  | $                             | 225,150 |                             | $
|Foreign currency translation adjustments |  |                               | 13,375  |                             |  
|                                         |  |                               |         |                             |  
|Comprehensive income (loss)              |  | $                             | 238,525 |                             | $
|                                         |  |                               |         |                             |  

Note 6.  Debt

In July 2000, the Company entered into a loan agreement with Washington Mutual Bank d/b/a Western Bank (Western Bank) for a $55 million line of
credit, replacing the Company's previous line of credit. 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

7

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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, 2001. At October 31, 2001, letters of credit outstanding against this line of credit totaled approximately $12.1 million and there were no
working capital advances outstanding.

In
November 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,
replacing the subsidiary's previous line of credit. 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. At October 31, 2001 letters of credit outstanding against this line of credit totaled approximately $0.5 million and working capital advances totaled approximately
$3.1 million at an interest rate of 6.4%.

The
Company also has a $5 million term credit facility with Western Bank. As of October 31, 2001, $5 million had been advanced 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 in August of 2003 and 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 7.  Shareholders' Equity

The Company sold 24,639 shares under its employee stock purchase plan and pursuant to the exercise of stock options.

Note 8.  Subsequent Event

On December 11, 2001, the company announced that it would record a pre-tax nonrecurring charge in the second half of fiscal 2002 in the range of
$10 million to $12 million. We expect to record an income tax benefit in fiscal 2002 of approximately 30% of the non-recurring charge which would result in an after-tax charge in the
range of $7.0 million to $8.5 million. The largest component of the non-recurring charge relates to costs associated with transitioning from a direct operating business in Europe to
distributor relationships in key European markets. The next largest component of the non-recurring charge relates to the write down of assets of three under-performing Company-owned retail stores to
fair value. The remainder of the non-recurring charge relates to the consolidation of our separate men's and women's golf sales forces to obtain better economics and the write down of inventory from
the discontinuation of our golf shoe business.

8

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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. 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, 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, risks associated with the Company's entry into new markets or distribution channels, technological change, political and trade relations
and the overall level of consumer spending on apparel and global economic conditions, the events of September 11, 2001, additional threatened terrorist attacks and the ongoing military actions.
Additional information on these and other factors that could affect the Company's financial results is set forth below and in our Securities and Exchange Commission filings. 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. You should not place undue reliance
on these forward-looking statements. The Company assumes no obligation to update any forward-looking statements as a result of new information, future events or developments, except as required by the
Securities laws.

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 stores,
international, and other channels including Company-owned retail stores.

Net
sales for the second quarter ended October 31, 2001 decreased approximately $3.2 million or 6.9% from $46.1 million to $42.9 million. During the
quarter, net sales to our golf, corporate and international distribution channels decreased. This decrease was partially offset by increased sales to our specialty retail and "other" distribution
channels. The decrease in net sales to our golf and corporate distribution channels is due to adverse economic conditions which were compounded by the events of September 11. The decrease in
net sales to our international distribution channel is due to the slowing global economy and the strength of the US dollar relative to the foreign currencies of our international customers. The
increase in net sales to our specialty retail distribution channel is primarily due to a timing change in Fall shipments from the first quarter to the second quarter. Net sales to our "other"
distribution channel includes sales from Company-owned retail stores and liquidation sales and increased due to the increase in the number of Company-owned retail stores and a small increase in
liquidation sales.

Gross
margin for the second quarter of fiscal 2002 decreased to 39.5% from 44.6% in the same period of the prior year. This was due to higher liquidation losses and higher off-price
discounts, both of which were driven by the competitive retail environment. We recognize our revenue at the time the product is shipped to the account, and there is no right of return other than for
defective products.

Our
flagship retail store is located in Seattle, Washington and as of October 31, 2001 we had thirteen additional stores in selected metropolitan markets. We do not plan to
open additional stores during fiscal 2002.

On
December 11, 2001, the company announced that it would record a pre-tax nonrecurring charge in the second half of fiscal 2002 in the range of $10 million
to $12 million. We expect to record

9

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an income tax benefit in fiscal 2002 of approximately 30% of the non-recurring charge which would result in an after-tax charge in the range of $7 million to $8.5 million. The largest
component of the non-recurring charge relates to costs associated with transitioning from a direct operating business in Europe to distributor relationships in key European markets. The
next largest component of the non-recurring charge relates to the write down of assets of three under-performing Company-owned retail stores to fair value. The remainder of the
non-recurring charge relates to the consolidation of our separate men's and women's golf sales forces to obtain better economics and the write down of inventory from the discontinuation of
our golf shoe business.

Results of Operations



Net SalesDuring the second quarter of fiscal 2002 net sales decreased $3.2 million or 6.9% to
$42.9 million from $46.1 million in the same period of the prior year. The detail of net sales by distribution channel is as follows:

|                 |  | Three Months Ended
October 31 |       
|---------------- |  | ----------------------------- | ------
|
|Golf             |  | $                             | 12,479
|Corporate        |  |                               | 14,717
|Specialty retail |  |                               | 8,774 
|International    |  |                               | 1,911 
|Other            |  |                               | 5,019 
|                 |  |                               |       
|                 |  | $                             | 42,900
|                 |  |                               |       

In
the second quarter of fiscal 2002, net sales to the golf distribution channel decreased by $2.5 million or 16.9% to $12.5 million from $15 million in the same
period of the prior year. Net sales to the corporate channel decreased by $3.2 million or 18.0% to $14.7 million from $17.9 million in the same period of the prior year. The
decrease in net sales to these two distribution channels was due to adverse economic conditions which were compounded by the events of September 11. Net sales to our specialty retail
distribution channel increased $1.6 million or 22.3% to $8.8 million from $7.2 million in
the same period of the prior year. The increase in this channel is due to a timing change in Fall shipments from the first quarter to the second quarter. Net sales to our international distribution
channel decreased by approximately $0.3 million or 12.0% to $1.9 million from $2.2 million in the same period of the prior year. The decrease in this channel is primarily due to
the slowing global economy. Net sales to our "other" distribution channel, which includes sales from Company-owned retail stores and liquidation sales, increased 33.1% or $1.2 million to
$5 million from $3.8 million in the same period of the prior year. This increase is primarily due to an increase in the number of Company-owned retail stores from nine in the second
quarter of fiscal 2001 to fourteen in the second quarter of fiscal 2002.

Gross MarginIn the second quarter of fiscal 2002, gross margin decreased to 39.5% of net sales, compared to 44.6% in
the same period of the prior year. This was due to higher liquidation losses and higher off-price discounts, both of which were driven by the competitive retail environment.

Design and Production ExpenseDesign and production expenses increased approximately $0.2 million or 23.4% to
$1.2 million from $0.9 million in the same period of the prior year and increased as a percentage of net sales to 2.7% from 2.1%. The increase was primarily attributable to increased
personnel and sample costs to support the continued development of our women's fashion line.

10

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Selling and Shipping ExpenseSelling and shipping expenses increased by $0.2 million, or 1.7%, to
$11.5 million from $11.3 million in the same period of the prior year, and increased as a percentage of net sales to 26.7% from 24.5%. Selling expenses decreased for the quarter
primarily due to decreased commissions and salary costs as well as travel costs. This decrease in selling expenses was more than offset by increases in shipping expenses and store-level operating
expenses. The increase in shipping expenses was primarily due to increased facilities costs and depreciation expenses associated with the distribution center. The store level operating expenses
associated with Company-owned retail stores included in selling and shipping expenses reflect expenses associated with fourteen retail locations during the second quarter of fiscal 2002 compared to
nine in the second quarter of fiscal 2001.

General and Administrative ExpenseGeneral and administrative expenses increased by $0.3 million or 8.3%, to
$3.6 million from $3.3 million in the same period of the prior year, and increased as a percentage of net sales to 8.4% from 7.3%. The increase during the second quarter of fiscal 2002
was primarily due to increased rent and depreciation expense for corporate facilities increased salary and depreciation expense associated with information techonology initiatives, increased excise
taxes on capital leases and increased property taxes.

Operating IncomeAs a result of the above items, operating income decreased $4.3 million to $0.7 million
in the second quarter of fiscal 2002 compared to $5 million in the second quarter of fiscal 2001.

Income TaxesWe recorded approximately $0.2 million of income tax expense in the second quarter of fiscal 2002
compared to $1.9 million in the second quarter of fiscal 2001. The effective rate for income taxes in the first quarter of fiscal 2002 and 2001 was 40% and 38% respectively. The effective rate
increased as the Company opened retail stores in additional states, thereby increasing state income taxes.

Results of Operations



Net SalesDuring the first six months of fiscal 2002 net sales decreased $4.5 million or 5.3% to
$80.6 million from $85.1 million in the same period of the prior year. The detail of net sales by distribution channel is as follows:

|                 |  | Six Months Ended
October 31 |       
|---------------- |  | --------------------------- | ------
|
|Golf             |  | $                           | 24,813
|Corporate        |  |                             | 29,419
|Specialty retail |  |                             | 13,039
|International    |  |                             | 4,008 
|Other            |  |                             | 9,351 
|                 |  |                             |       
|                 |  | $                           | 80,630
|                 |  |                             |       

In
the first six months of fiscal 2002, net sales to the golf distribution channel decreased by $3.2 million or 11.5% to $24.8 million from $28 million in the
same period of the prior year. Net sales to the corporate channel decreased by $3.9 million or 11.7% to $29.4 million from $33.3 million in the same period of the prior year. The
decrease in net sales to these two distribution channels was due to adverse economic conditions which were compounded by the events of September 11. Net sales to our specialty retail
distribution channel increased $0.9 million or 7.4% to $13 million from $12.1 million in the same period of the prior year. As a result of the adverse economic conditions, our
specialty retail

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distribution channel had a small decline in average order size. However, an increase in the number of specialty retail sales accounts during the first half of the year offset the decline in average
order size resulting in an increase in net sales to this channel. Net sales to our international distribution channel decreased by approximately $1 million or 20.1% to $4 million from
$5 million in the same period of the prior year. The decrease in this channel is primarily due to the slowing global economy. Net sales to our "other" distribution channel, which includes sales
from Company-owned retail and liquidation sales, increased 41.7% or $2.8 million to $9.4 million from $6.6 million in the same period of the prior year. This increase is primarily
due to an increase in the number of Company-owned retail stores from nine in the first six months of fiscal 2001 to fourteen in the first six months of fiscal 2002.

Gross MarginIn the first six months of fiscal 2002, gross margin decreased to 41.5% from 44.7% in the same period of
the prior year. This was due to higher liquidation losses and higher off-price discounts, both of which were driven by the competitive retail environment.

Design and Production ExpenseDesign and production expenses increased approximately $0.5 million or 28.1% to
$2.4 million from $1.9 million in the same period of the prior year, and increased as a percentage of net sales to 3.0% from 2.2%. The increase was primarily attributable to increased
personnel and sample costs to support the continued development of our women's fashion line.

Selling and Shipping ExpenseSelling and shipping expenses increased by $1.6 million, or 7.4%, to
$23.9 million from $22.3 million in the same period in the prior year, and increased as a percentage of net sales to 29.7% from 26.2%. Selling expenses decreased primarily due to a
decrease in commission, salary and travel expense. This decrease was more than offset by increased shipping expenses and store operating expenses. The increase in shipping expenses was primarily due
to higher warehouse staffing expense, facilities costs and depreciation expenses associated with the distribution center. The store level operating expenses associated with Company-owned retail stores
are included in selling and shipping expenses and reflect expenses associated with fourteen retail locations during the first six months of fiscal 2002 compared to nine in the first six months of
fiscal 2001.

General and Administrative ExpenseGeneral and administrative expenses increased by $1.6 million or 23.3% to
$8.2 million from $6.7 million in the same period of the prior year, and increased as a percentage of net sales to 10.2% from 7.8%. The increase during the first six months of fiscal
2002 was primarily due to increased amortization of deferred compensation, increased rent and depreciation expense associated with corporate facilities and information techonology initiatives, and
increased bad debt expense relating to credit exposures.

Operating IncomeAs a result of the above items, operating income decreased by $8.3 million to an operating loss
of $1.1 million in the first six months of fiscal 2002 compared to operating income of $7.2 million in the first six months of fiscal 2001.

Income TaxesWe recorded approximately $0.8 million of income tax benefit in the first six months of fiscal 2002
compared to income tax expense of $2.7 million in the first six months of fiscal 2001. The effective rate for income taxes in the first six months of fiscal 2002 and 2001 was 40% and 38%
respectively. The effective rate increased as the Company opened retail stores in additional states, thereby increasing state income taxes.

Liquidity and Capital Resources

Net cash provided by operating activities for the six months ended October 31, 2001 was approximately $19.4 million compared to approximately
$5.8 million for the six months ended October 31, 2000. Net cash provided by operating activities for the six months ended October 31, 2001 resulted primarily from net reductions
of accounts receivable of $19.9 million, a decrease in inventory

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of $5.4 million and depreciation and amortization of $3.3 million. These amounts were partially offset by a loss from operations of $1.1 million and the timing of payments for
certain payables. Approximately $0.6 million of the decrease in inventory relates to Fashion merchandise, $5 million relates to Classics merchandise, and the balance of the decrease
relates primarily to footwear and accessories and embroidery work in process. We reduced our inventory purchases beginning in the second quarter of fiscal 2002 and planned for inventory levels to
trend down in this quarter as well as for the remainder of the fiscal year. For the six months ended October 31, 2000, net cash provided by operating activities resulted from cash generated
from profitable operations, a net reduction in accounts receivable of $8 million, an increase in accounts payable and accrued liabilities of $2.9 million and depreciation and
amortization of $2.5 million. These amounts were partially offset by inventory purchases of $8.9 million, increases in prepaid expenses and other current assets and income tax payments.

Net
cash used in investing activities was approximately $1.5 million for the six months ended October 31, 2001 and was primarily due to the purchases of capital
equipment. Capital expenditures during this period included $0.2 million for in-store fixtures and concept shops, $0.3 million for computer hardware and software,
$0.5 million for equipment and leasehold improvements associated with Company-owned retail stores and $0.3 million for the distribution center and warehouse management system. Net cash
used in investing activities for the six months ended October 31, 2000 was $6.6 million 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.

Net
cash used in financing activities for the six months ended October 31, 2001 was approximately $17.8 million. This resulted from net repayments of
$16.4 million in short-term borrowings and payments of approximately $1.5 million under capital lease obligations. Net cash used in financing activities for the
six months ended October 31, 2000 was approximately $0.6 million. This was primarily due to net repayments of short term borrowings of $0.4 million and payments of approximately
$0.3 million under capital lease obligations, partially offset by cash generated from the sale of common stock under the employee stock purchase plan of $0.2 million.

We
are a party to a loan agreement with Washington Mutual Bank d/b/a Western Bank for a $55 million line of credit. This line of credit is more fully described in footnote six
(Debt) to the Company's financial statements.

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PART IIOTHER INFORMATION

Item 1.  Legal Proceedings

As previously described, the Company is a party to a lawsuit related to labor issues in Saipan, Does v. The Gap, Inc. That lawsuit has been settled,
subject to court approval. The hearing for preliminary approval of the settlement is currently scheduled for February 28, 2002.

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

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

None

Item 5.  Other Information

None

Item 6.  Exhibits and Reports on Form 8-K



Exhibit
Number

DescriptionNone






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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 17, 2001 |  | By:                           

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