<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, 1997
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)
Washington 91-1474587
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) 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)
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, 1997 was 5,223,177.
Page 1 of 14
<PAGE>
CUTTER & BUCK INC.
Quarterly Report on Form 10-Q
For the Quarter Ended October 31, 1997
INDEX
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements (unaudited):
Condensed Balance Sheets 3
Condensed Statements of Operations 4
Condensed Statements of Cash Flows 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
<TABLE>
<CAPTION>
CUTTER & BUCK INC.
BALANCE SHEETS
ASSETS
April 30, October 31,
1997 1997
---------- -----------
(unaudited)
<S> <C> <C>
Current Assets:
Cash $7,441,717 $6,339,401
Accounts receivable, net of allowances for doubtful
accounts, and returns and allowances of $428,561
and $891,097 respectively 14,419,108 12,947,516
Inventories 12,489,410 13,357,058
Deferred income taxes 284,000 284,000
Prepaid expenses and other current assets 1,426,983 1,315,415
---------- ----------
Total current assets 36,061,218 34,243,390
Furniture and equipment 2,646,018 3,005,406
Other assets 252,923 257,017
---------- ----------
Total assets $38,960,159 $37,505,813
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,481,380 $1,686,742
Accrued liabilities 740,746 1,007,447
Income taxes payable 887,632 148,660
Current portion of capital lease obligations 140,545 148,637
---------- ----------
Total current liabilities 6,250,303 2,991,486
Capital lease obligations 522,547 486,120
Shareholders' equity:
Common stock, no par value: 25,000,000 shares
authorized; 5,156,397 issued and outstanding at
April 30, 1997 and 5,223,177 at October 31, 1997 29,750,791 29,982,622
Retained earnings 2,507,935 4,143,041
Currency translation adjustment (71,417) (97,456)
---------- ----------
Total shareholders' equity 32,187,309 34,028,207
---------- ----------
Total liabilities and shareholders' equity $38,960,159 $37,505,813
---------- ----------
---------- ----------
</TABLE>
See accompanying notes.
Page 3
<PAGE>
<TABLE>
<CAPTION>
CUTTER & BUCK INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
----------------------------- ----------------------------
October 31, October 31, October 31, October 31,
1996 1997 1996 1997
------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
Net sales $12,290,179 $17,349,588 $20,289,818 $29,727,619
Cost of sales 7,493,843 10,204,620 12,513,907 17,622,289
------------- ------------- -------------- ------------
Gross profit 4,796,336 7,144,968 7,775,911 12,105,330
Operating expenses:
Design and production 365,088 604,317 701,335 1,022,790
Selling and handling 2,221,617 3,196,228 3,933,537 5,881,185
General and administrative 912,829 1,558,075 1,626,150 2,697,246
------------- ------------- -------------- ------------
Total operating expenses 3,499,534 5,358,620 6,261,022 9,601,221
------------- ------------- -------------- ------------
Operating income 1,296,802 1,786,348 1,514,889 2,504,109
Other income (expense):
Factor commissions and
interest expense net
of interest income (119,061) (41,602) (230,606) (52,683)
License, royalty income and other 61,138 15,090 157,359 28,680
------------- ------------- -------------- ------------
Total other income (expense) (57,923) (26,512) (73,247) (24,003)
------------- ------------- -------------- ------------
Income before income taxes 1,238,879 1,759,836 1,441,642 2,480,106
Income taxes (374,000) (600,000) (435,000) (845,000)
------------- ------------- -------------- ------------
Net income $864,879 $1,159,836 $1,006,642 $1,635,106
------------- ------------- -------------- ------------
------------- ------------- -------------- ------------
Net income per share $0.22 $0.21 $0.26 $0.30
------------- ------------- -------------- ------------
------------- ------------- -------------- ------------
Shares used in computation
of net income per share 3,940,313 5,528,719 3,940,763 5,516,390
------------- ------------- -------------- ------------
------------- ------------- -------------- ------------
</TABLE>
See accompanying notes.
Page 4
<PAGE>
CUTTER & BUCK INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
---------------------------
October 31, October 31,
1996 1997
------------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $1,006,642 $1,635,106
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 407,270 694,420
Changes in assets and liabilities:
Receivables, net (2,654,310) 1,785,683
Inventories (2,781,402) (867,648)
Prepaid expenses and other current assets (146,989) (1,046)
Accounts payable and accrued liabilities 1,293,767 (2,527,937)
Income taxes payable (34,400) (738,972)
------------- -----------
Net cash provided by (used for) operating activities (2,909,422) (20,394)
INVESTING ACTIVITIES
Purchases of furniture and equipment (829,012) (802,861)
Increase in trademarks and patents (25,655) (93,451)
------------- -----------
Net cash used in investing activities (854,667) (896,312)
FINANCING ACTIVITIES
Proceeds from loan from bank 2,365,953 0
Payments under capital lease obligations (55,742) (77,311)
Net decrease in advances from factor 112,829 (314,091)
Issuance of common stock, net of offering costs 10,730 231,831
------------- -----------
Net cash provided by (used for) financing activities 2,433,770 (159,571)
Effects of foreign exchange rate changes on cash 0 (26,039)
------------- -----------
Net decrease in cash (1,330,319) (1,102,316)
Cash, beginning of period 2,010,047 7,441,717
------------- -----------
Cash, end of period $679,728 $6,339,401
------------- -----------
------------- -----------
SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest $95,585 $43,144
------------- -----------
------------- -----------
Cash paid during the period for income taxes $275,400 $1,584,500
------------- -----------
------------- -----------
Noncash financing and investing activities:
Equipment acquired with capital leases $745,138 $48,976
------------- -----------
------------- -----------
</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, 1997 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, 1997, included in the Company's filing on Form
10-K.
2. NET INCOME PER SHARE
Net income per share has been computed by dividing net income by the
weighted average number of common shares and equivalents outstanding. Common
share equivalents included in the computation represent shares issuable upon
assumed exercise of stock options and warrants except when the effect of their
inclusion would be antidilutive.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements, the Company does not expect to report a material change in
primary earnings per share disclosure.
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,
nonrecourse basis. Accounts receivable consisted of the following:
April 30, 1997 October 31, 1997
-------------- ----------------
Unmatured receivables:
Nonrecourse $ 2,704,702 $ 2,461,789
With recourse 13,765 330,472
Matured receivables 213,019 363,809
Advances (562,551) (248,460)
------------- --------------
Due from factor 2,368,935 2,907,610
Non-factored receivables 12,478,734 10,931,003
Allowance for doubtful accounts and reserve
for sales returns and allowances (428,561) (891,097)
------------ --------------
$ 14,419,108 $ 12,947,516
------------ --------------
------------ --------------
4. LINE OF CREDIT
The Company has a loan agreement with Washington Mutual Bank d/b/a Western
Bank ("Western Bank") for a $20.0 million line of credit, replacing the
Company's previous line of credit. The Western Bank line of credit is to be
used for international letters of credit, working capital
Page 6
<PAGE>
4. LINE OF CREDIT (CONTINUED)
advances and other corporate purposes. Interest on borrowings is charged and
payable monthly at Western Bank's prime rate. The line of credit is
collateralized by a security interest in the Company's inventory, accounts
receivable, 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.
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, 1997, letters of credit outstanding
against this line of credit totaled $5,881,520 and there were no working capital
advances.
5. SHAREHOLDERS' EQUITY
The Company has four stock incentive plans that provide for the granting
of options to employees, officers and directors and the granting of options
and shares of restricted stock to employees, officers, consultants or
advisors of the Company related to 875,313 shares of Common Stock. 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. 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, 1997, 535,600 options to purchase shares of common stock were
outstanding under these plans, 247,313 of which were exercisable. No shares
of restricted stock have been granted. At October 31, 1997, 269,399 shares
under these plans remained available for future grant.
Page 7
<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 TO PENETRATE ITS CHOSEN DISTRIBUTION CHANNELS,
COMPETITION, FOREIGN CURRENCY RISKS AND THE EFFECT OF INTEREST RATES, POLITICAL
AND TRADE RELATIONS AND GENERAL ECONOMIC CONDITIONS.
OVERVIEW
The Company designs, sources and markets updated, traditional men's
sportswear and outerwear. It distributes its products predominantly through
golf pro shops and resorts, better men's specialty stores and direct corporate
sales accounts. The Company continues to emphasize the golf distribution
channel because it believes this is an effective way to build brand identity and
to reach its target market of men who are sports-minded and want 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 brand awareness and its expanded
product line by selling into the corporate channel, which is targeted at 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 men's 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, when sales are lowest.
RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1997 COMPARED WITH THREE MONTHS ENDED
OCTOBER 31, 1996
NET SALES increased 41.2% in the three months ended October 31, 1997 to
$17,349,588 from $12,290,179 in the three months ended October 31, 1996. For
the second quarter of fiscal 1998 compared to the second quarter of fiscal 1997,
net sales in the United States to the golf distribution channel increased
$579,311 to $7,254,651, net sales to the specialty store channel increased
$1,647,270 to $3,337,552 and net sales to the corporate channel increased
$2,172,393 to $4,609,058. Other sales, including sales to the liquidation and
international channels, increased $660,435 to $2,148,327 for the three months
ended October 31, 1997 compared to the same three month period of the previous
year.
GROSS PROFIT increased in the three months ended October 31, 1997 to
$7,144,968 from $4,796,336 in the three months ended October 31, 1996. Gross
profit as a percentage of net sales was 41.2% for the second quarter of fiscal
1998 compared to 39.0% for the second quarter of fiscal 1997. The increase in
gross profit margin in the second quarter of fiscal 1998 was primarily due to
the Company's ability to negotiate lower production costs based on higher
volumes, and due to reduced embroidery costs related to the Company's in-house
embroidery operation and lower costs of expediting fall season merchandise due
to more orderly shipments.
Page 8
<PAGE>
OPERATING EXPENSES increased to $5,358,620 in the three months ended
October 31, 1997 from $3,499,534 in the three months ended October 31, 1996, and
increased as a percentage of net sales to 30.9% in the second quarter of fiscal
1998 from 28.5% in the second quarter of fiscal 1997. The increase in operating
expenses when expressed as a percentage of net sales reflects a higher level of
fixed costs (such as increased warehousing costs) to support higher sales
volumes. Selling and handling expenses increased by $974,611, making up 52.4%
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 the higher sales volume and larger sales force. The
Company also has increased its advertising expenditures and incurred additional
handling expenses associated with operating its own warehouse facility in
Seattle and supporting the increase in sales volume. General and administrative
expenses increased by $645,246, making up 34.7% 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.
OTHER INCOME . Net interest and factor commission expense was $41,602 in
the quarter ended October 31, 1997 compared to $119,061 in the quarter ended
October 31, 1996. Factor commission expense increased to $80,505 in the second
quarter of fiscal 1998 from $25,286 in the second quarter of fiscal 1997 due to
higher sales volume. The Company had net interest income of $38,903 in the
second quarter of fiscal 1998 compared to net interest expense of $93,775 in the
second quarter of fiscal 1997. The increase in net interest income is due to
interest earned for the three months ended October 31, 1997 on invested cash
balances made possible by the receipt of proceeds from the Company's Common
Stock offering in October 1996. License, royalty income and other decreased to
$15,090 for the three months ended October 31, 1997 from $61,138 for the three
months ended October 31, 1996. License and royalty income earned under
licensing contracts totaled $53,775 for the three months ended October 31, 1997
and $61,138 for the three months ended October 31, 1996. The decline in license
and royalty income was primarily due to the Company's termination of its license
for Big and Tall merchandise effective June 1997 which now allows the Company to
design and market Cutter & Buck Big and Tall clothing directly. The Company
experienced a loss on foreign currency transactions of $38,685 in the quarter
ended October 31, 1997 compared to none in the quarter ended October 31, 1996.
INCOME TAXES. The Company recorded $600,000 of income tax expense in the
three months ended October 31, 1997 and $374,000 in the three months ended
October 31, 1996. As of April 30, 1997, all net operating loss carryforwards
from prior years had been used to offset taxable income.
As a result of the foregoing factors, the Company had NET INCOME of
$1,159,836 for the three months ended October 31, 1997 compared to $864,879 for
the three months ended October 31, 1996.
SIX MONTHS ENDED OCTOBER 31, 1997 COMPARED WITH SIX MONTHS ENDED OCTOBER
31, 1996
NET SALES increased 46.5% in the six months ended October 31, 1997 to
$29,727,619 from $20,289,818 in the six months ended October 31, 1996. For the
first half of fiscal 1998 compared to the first half of fiscal 1997, net sales
in the United States to the golf distribution channel increased $2,305,522 to
$13,099,935, net sales to the specialty store channel increased $1,364,500 to
$4,470,936 and net sales to the corporate channel increased $4,315,802 to
$8,303,964. Other sales, including sales to the liquidation and international
channels, increased $1,451,977 to $3,852,784 for the six months ended October
31, 1997 compared to the same six month period of the previous year.
Page 9
<PAGE>
GROSS PROFIT increased in the six months ended October 31, 1997 to
$12,105,330 from $7,775,911 in the six months ended October 31, 1996. Gross
profit as a percentage of net sales was 40.7% for the first half of fiscal 1998
compared to 38.3% for the first half of fiscal 1997. The increase in gross
profit margin in the first half of fiscal 1998 was primarily due to the
Company's ability to negotiate lower production costs based on higher volumes,
and due to reduced embroidery costs related to the Company's in-house embroidery
operation and lower costs of expediting fall season merchandise due to more
orderly shipments. In the first half of fiscal 1997, the Company incurred
additional expenses to assure timely deliveries during the Company's transition
to its new distribution facility as well as start-up expenses associated with an
in-house embroidery operation and the Company's new European operations.
OPERATING EXPENSES increased to $9,601,221 in the six months ended October
31, 1997 from $6,261,022 in the six months ended October 31, 1996, and increased
as a percentage of net sales to 32.3% in the first half of fiscal 1998 from
30.9% in the first half of fiscal 1997. The increase in operating expenses when
expressed as a percentage of net sales reflects a higher level of fixed costs
(such as increased warehousing costs) to support higher sales volumes. Selling
and handling expenses increased by $1,947,648, making up 58.3% 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 higher sales volumes and a larger sales force. The Company
has also increased its advertising expenditures and incurred additional handling
expenses associated with operating its own warehouse facility in Seattle and
supporting the increase in sales volume. General and administrative expenses
increased by $1,071,096, making up 32.1% 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.
OTHER INCOME . Net interest and factor commission expense, was $52,683 in
the six months ended October 31, 1997 compared to $230,606 in the six months
ended October 31, 1996. Factor commission expense increased to $107,220 in the
first half of fiscal 1998 from $67,444 in the first half of fiscal 1997 due to
higher sales volume. The Company had net interest income of $54,537 in the
first half of fiscal 1998 compared to net interest expense of $163,162 in the
first half of fiscal 1997. The increase in net interest income is due to
interest earned for the six months ended October 31, 1997 on invested cash
balances made possible by the receipt of proceeds from the Company's Common
Stock offering in October 1996. License, royalty income and other decreased to
$28,680 for the six months ended October 31, 1997 from $157,359 for the six
months ended October 31, 1996. License and royalty income earned under
licensing contracts totaled $106,919 for the six months ended October 31, 1997
and $157,359 for the six months ended October 31, 1996. The decline in license
and royalty income was primarily due to the Company's termination of its license
for Big and Tall merchandise effective June 1997 which now allows the Company to
design and market Cutter & Buck Big and Tall clothing directly. The Company
experienced a loss on foreign currency transactions of $78,239 in the six months
ended October 31, 1997 compared to none in the six months ended October 31,
1996.
INCOME TAXES. The Company recorded $845,000 of income tax expense in the
six months ended October 31, 1997 and $435,000 in the six months ended October
31, 1996. As of April 30, 1997, all net operating loss carryforwards from prior
years had been used to offset taxable income.
As a result of the foregoing factors, the Company had NET INCOME of
$1,635,106 for the six months ended October 31, 1997 compared to $1,006,642 for
the six months ended October 31, 1996.
Page 10
<PAGE>
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,
1997 was funded primarily by profitable operating activities.
Net cash used for operating activities was $20,394 for the six months ended
October 31, 1997 compared to $2,909,422 for the six months ended October 31,
1996. 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. The increase in inventory primarily relates to planned sales volume
in the third quarter and purchases of products with multi-season appeal. The
reduction in accounts payable and accrued liabilities is due in part to
increased reliance on offshore factories for inventory purchases which are paid
using letters of credit payable at sight and therefore require faster settlement
than typical open accounts payable terms. For the six months ended October 31,
1996, cash was used to support increases in inventory, accounts receivable and
prepaid expenses, which were offset in part by increases in accounts payable and
accrued liabilities.
Net cash used in investing activities of $896,312 for the six months ended
October 31, 1997 was primarily attributable to investments in warehouse
equipment and leasehold improvements totaling $280,698, in-store fixtures of
$206,395, other furniture and equipment totaling $315,768 and investments in
trademarks of $93,451. For the six months ended October 31, 1996, net cash used
in investing activities was $854,667 and was primarily attributable to purchases
of in-store fixtures totaling $398,036, investments in warehouse equipment and
leasehold improvements totaling $300,501 and purchases of other furniture and
equipment totaling $130,475.
Net cash used for financing activities for the six months ended October 31,
1997 was $159,571 compared to net cash provided by financing activities of
$2,433,770 during the six months ended October 31, 1996. During the six months
ended October 31, 1997, the Company sold 66,780 shares under its employee stock
purchase plan and pursuant to the exercise of stock options, generating $231,831
and decreased its borrowing from the factor by $314,091. For the six months
ended October 31, 1996, cash provided by financing activities of $2,433,770 was
primarily due to bank borrowing on the Company's line of credit totaling
$2,365,953.
The Company has a loan agreement with Washington Mutual Bank d/b/a Western
Bank for a $20 million line of credit, which is more fully described in footnote
four to the Company's financial statements on page six hereof.
Page 11
<PAGE>
PART II - OTHER INFORMATION
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
The Company's Annual Meeting of Shareholders was held on September 26,
1997. Out of the Company's 5,206,555 shares of Common Stock entitled to vote at
the meeting, 4,989,359 were represented, either in person or by proxy.
Proposal Number 1 - Amendments to Restated Articles of
Incorporation to Establish a
Classified Board of Directors
Votes
------
For 2,720,065
Against 1,262,067
Abstain 63,763
Broker non-votes 943,464
Proposal Number 2 - Election of Directors
Nominee For Against
-------- ----- --------
Michael S. Brownfield 4,981,459 800
Frances M. Conley 4,965,909 16,350
Harvey N. Jones 4,982,059 7,300
Larry C. Mounger 4,981,359 900
Martin J. Marks 4,981,559 700
James C. Towne 4,981,459 800
Proposal Number 3 - Cutter & Buck Inc. 1997 Stock Incentive Plan
Votes
------
For 2,995,155
Against 1,009,798
Abstain 47,398
Broker non-votes 937,008
Page 12
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders (continued)
Proposal Number 4 - Ratification of Appointment of Auditors
Votes
-----
For 4,965,801
Against 4,068
Abstain 19,490
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
There were no reports on Form 8-K filed during the second quarter
ended October 31, 1997
Page 13
<PAGE>
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, 1997 By /s/ Stephen S. Lowber
----------------------
Stephen S. Lowber
Vice-President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Page 14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 6,339,401
<SECURITIES> 0
<RECEIVABLES> 12,947,516
<ALLOWANCES> (891,097)
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0
0
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</TABLE>
