<PAGE>
Len Cereghino & Co. CLIENT: CUTTER & BUCK
CORPORATE INVESTOR RELATIONS CONTACTS: Harvey N. Jones, CEO
2605 Western Ave., Seattle, WA 98121 Marty Marks, President
(206) 448-1996 (206) 622-4191
NEWS RELEASE
===============================================================================
CUTTER & BUCK REPORTS SECOND QUARTER NET INCOME UP 26%;
PROVIDES OUTLOOK FOR THE SECOND HALF OF FISCAL YEAR 2001
SEATTLE, WA - December 7, 2000 - Cutter & Buck Inc. (Nasdaq: CBUK) today
reported results for the second quarter of fiscal 2001, which ended October 31,
2000.
SECOND QUARTER HIGHLIGHTS:
- Net sales increased 25% to $46.1 million, compared to last
year's $36.9 million
- Gross margins were 44.6%, 81 basis points ahead of the same
quarter last year
- Net income increased 26% to $3.1 million, compared to $2.4
million in the same quarter last year
- Net income per diluted share totaled $0.29, compared to $0.23
last year
SIX MONTHS YEAR-TO-DATE HIGHLIGHTS:
- Net sales increased 29% to $85.1 million, compared to last
year's $66.1 million
- Gross margins were 44.7%, 96 basis points ahead of the same
period last year
- Net income increased 26% to $4.4 million, compared to $3.5
million in the same period last year
- Net income per diluted share totaled $0.42, compared to $0.36
for the same period last year
"We showed strong performance and continued momentum of the Cutter & Buck brand
in the second quarter," stated Harvey Jones, Chairman & CEO. "These results also
reflect new patterns in our revenue make-up. Historically, the golf channel has
been our largest revenue producer followed by corporate sales, specialty retail
and our other channels. During the second quarter, our specialty retail division
achieved the greatest growth, increasing 63% over the same period last year.
Conversely, our golf division saw sales decrease by 2.4% during the second
quarter. We anticipate that our golf channel will achieve 8%-10% annual growth
by fiscal year end, as we expect our new women's sales reps to positively impact
our Spring sales. The corporate division continued to perform well, posting a
38% sales increase over the second quarter last year."
"Our `other' sales channel includes company-owned retail stores, liquidation
sales and e-commerce revenues," continued Jones. "While we are not ready to
predict any new patterns in our revenue make-up for this relatively young
channel, we are pleased with the performance of our company-owned retail stores.
We currently have eleven company-owned retail stores, including the recently
opened Water Tower Place in Chicago. We saw a 6% sales gain at Pacific Place,
our Seattle flagship store, off strong prior first year results. Our four
company-owned stores that were open in the Fall of
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Cutter & Buck Reports Sales Growth
December 7, 2000
Page Two
1999, Seattle, Denver, Florida Mall and Mission Viejo, registered an increase in
holiday season sales, beginning November 1, 2000 through December 3, 2000, of
over 20%, as compared to the same period last year. Sales at the three stores we
opened this Fall in West Palm Beach, Palm Desert and Water Tower Place have
surpassed our initial expectations and they could become some of our best
performing stores. In November, we updated and expanded our website, adding
e-commerce capabilities to provide another opportunity to interact directly with
our consumers and showcase our collections."
"Our preliminary Spring bookings indicate the continued acceptance of our
fashion collections and an improvement in our golf channel penetration over last
season," commented Marty Marks, President & COO. "The gains in our Spring
bookings along with the enthusiastic customer reaction to the Spring line are
encouraging. However, the recent economic uncertainty in the United States could
have an impact on our various markets. As a consequence, we are going to take a
more cautious approach in our outlook for the next 18 months. We are realigning
our business plans to ensure that we can operate on our existing credit
facilities and internally-generated funds for at least the next 18 months."
As a result, the company has provided the following guidance for the balance of
fiscal year 2001:
<TABLE>
<CAPTION>
Fiscal Year 2001 Fy01 3Rd Quarter Fy01 4th Quarter Full Fiscal Year
---------------- ---------------- ---------------- ----------------
($ in thousands, ($ in thousands, ($ in thousands,
except per share data) except per share data) except per share data)
<S> <C> <C> <C>
Net Sales $40,500 to $42,500 $70,000 to $74,000 $195,603 to $201,603
Gross Profit $18,000 to $18,775 $30,500 to $32,300 $86,563 to $89,138
Gross Margin 44.0% to 44.5% 43.5% to 44.0% 44.1% to 44.5%
Operating Profit $1,050 to $1,350 $11,050 to $11,350 $19,330 to $19,930
Income Before Taxes $850 to $1,150 $10,500 to $10,800 $18,404 to $19,004
Net Income $525 to $715 $6,500 to $6,700 $11,398 to $11,788
EPS $0.05 to $0.07 $0.60 to $0.62 $1.07 to $1.11
</TABLE>
Looking ahead to fiscal year 2002 the company has provided the following
guidance:
<TABLE>
<CAPTION>
Fiscal Year 2002 Full Fiscal Year
---------------- ----------------
<S> <C> <C>
Net Sales Growth 20% to 25%
Annual EPS Growth 20% to 25%
</TABLE>
"We are excited about our new Spring collections and the opportunities that
await Cutter & Buck. We invite you to view our fashion lines either by visiting
one of our approved dealers or company-owned retail stores, or online at
www.cutterbuck.com," concluded Jones.
Cutter & Buck's FY 2001 second quarter conference call to discuss FY 2001
results and future prospects will be held today at 1:30 p.m. PST, and is
available live and on-demand at www.cutterbuck.com.
Cutter & Buck Reports Sales Growth
December 7, 2000
Page Three
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STATEMENTS MADE IN THIS NEWS RELEASE 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 AND
PERFORMANCE OF SUPPLIERS AND INDEPENDENT SALES REPRESENTATIVES, THE ABILITY OF
THE COMPANY TO CONTROL COSTS AND EXPENSES, THE ABILITY OF THE COMPANY TO CARRY
OUT SUCCESSFUL DESIGN AND PLANNED PRODUCT AND BRAND MESSAGING/EXTENSION
ACTIVITIES AND TO PENETRATE ITS CHOSEN DISTRIBUTION CHANNELS, COMPETITION,
ACCESS TO CAPITAL, FOREIGN CURRENCY RISKS, RISKS ASSOCIATED WITH OPENING AND
OPERATING RETAIL LOCATIONS, THE EFFICACY OF THE WAREHOUSE MANAGEMENT SYSTEM AS
IT RELATES TO THE COMPANY'S OPERATIONS, TECHNOLOGICAL CHANGE, POLITICAL AND
TRADE RELATIONS AND GENERAL ECONOMIC CONDITIONS PARTICULARLY IN THE U.S. AND
EUROPE. ADDITIONAL INFORMATION ON THESE AND OTHER FACTORS, WHICH COULD AFFECT
THE COMPANY'S FINANCIAL RESULTS, ARE INCLUDED IN ITS 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.
Cutter and Buck designs and markets upscale sportswear and outerwear under the
Cutter & Buck brand. The Company sells its products primarily through golf pro
shops and resorts, corporate sales accounts and better specialty stores. Cutter
& Buck products feature distinctive, comfortable designs, high quality materials
and manufacturing and rich detailing.
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Cutter & Buck Reports Sales Growth
December 7, 2000
Page Four
FINANCIAL HIGHLIGHTS
(UNAUDITED, UNLESS OTHERWISE STATED) ($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED OCTOBER 31, SIX MONTHS ENDED OCTOBER 31,
------------------------------ ----------------------------
2000 1999 2000 1999
-------- -------- ---------- -------
<S> <C> <C> <C> <C>
Net sales $ 46,074 $ 36,890 $ 85,103 $66,080
Cost of sales 25,528 20,740 47,040 37,158
-------- -------- ---------- -------
Gross profit 20,546 16,150 38,063 28,922
Operating expenses
Design and production 970 879 1,975 1,683
Selling and shipping 11,266 8,567 22,267 16,041
General and administrative 3,323 2,964 6,591 5,554
-------- -------- ---------- -------
Total operating expenses 15,559 12,410 30,833 23,278
-------- -------- ---------- -------
Operating income 4,987 3,740 7,230 5,644
Other income (expense) (65) 55 (176) (224)
Income before income taxes 4,922 3,795 7,054 5,420
Income taxes 1,871 1,366 2,681 1,951
-------- -------- ---------- -------
Net income $ 3,051 $ 2,429 $ 4,373 $ 3,469
-------- -------- ---------- -------
-------- -------- ---------- -------
Basic earnings per share $ 0.29 $ 0.24 $ 0.42 $ 0.37
-------- -------- ---------- -------
-------- -------- ---------- -------
Diluted earnings per share $ 0.29 $ 0.23 $ 0.42 $ 0.36
-------- -------- ---------- -------
-------- -------- ---------- -------
Shares used in computation of:
Basic earnings per share 10,454 10,305 10,417 9,340
Diluted earnings per share 10,579 10,500 10,516 9,577
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS OCT. 31, 2000 APRIL 30, 2000 OCT. 31, 1999
------------- -------------- -------------
(AUDITED)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 6,022 $ 7,367 $ 20,625
Accounts receivable 42,401 50,463 29,631
Inventories 45,422 36,740 35,309
Other current assets 7,063 5,626 4,064
----------- ---------- ----------
Total current assets 100,908 100,196 89,629
Furniture and equipment, net 21,749 17,813 13,071
Other assets 750 538 573
----------- ---------- ----------
Total assets $123,407 $118,547 $103,273
----------- ---------- ----------
----------- ---------- ----------
Liabilities & Shareholders' Equity
Current Liabilities:
Short-term borrowings $ 3,091 $ 3,037 $ 2,911
Accounts payable 15,187 12,086 6,214
Accrued liabilities 4,812 6,553 6,617
Current portion of long-term debt 1,372 1,419 943
----------- ---------- ----------
Total current liabilities 24,462 23,095 16,685
Capital lease obligations and long-term debt,
net of current portion 5,531 6,545 5,079
Total shareholders' equity 93,414 88,907 81,509
----------- ---------- ----------
Total liabilities & shareholders' equity $123,407 $118,547 $103,273
----------- ---------- ----------
</TABLE>
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<PAGE>
Cutter & Buck Reports Sales Growth
December 7, 2000
Page Five
SUMMARY OF FALL BOOKINGS (IN THOUSANDS)
<TABLE>
<CAPTION>
Fall 2000 Fall 1999 Percentage
FY 2001 FY 2000 Change Difference
---------- ----------- ----------- ----------
(as of 12/5/00) (as of 12/3/99)
<S> <C> <C> <C> <C>
GOLF $ 33,987 $ 31,626 7.5% $ 2,361
SPECIALTY RETAIL 13,211 7,964 65.9% 5,247
CORPORATE 37,111 25,443 45.9% 11,668
OTHER 4,697 2,121 121.5% 2,576
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TOTAL DOMESTIC FALL BOOKINGS 89,006 67,154 32.5% 21,852
TOTAL INTERNATIONAL FALL BOOKINGS 5,932 4,610 28.7% 1,322
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TOTAL FALL BOOKINGS $ 94,938 $ 71,764 32.3% $ 23,174
---------- ---------- ------
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</TABLE>
SUMMARY OF SPRING BOOKINGS (IN THOUSANDS)
<TABLE>
<CAPTION>
Spring 2001 Spring 2000 Percentage
FY 2001 FY 2000 Change Difference
---------- ----------- ----------- ----------
(as of 12/5/00) (as of 12/3/99)
<S> <C> <C> <C> <C>
GOLF $ 27,001 $ 24,941 8.3% $ 2,060
SPECIALTY RETAIL 9,550 7,579 26.0% 1,971
CORPORATE 6,339 5,236 21.1% 1,103
OTHER 1,470 864 70.1% 606
---------- ---------- ------
TOTAL DOMESTIC SPRING BOOKINGS 44,360 38,620 14.9% 5,740
TOTAL INTERNATIONAL SPRING BOOKINGS 4,812 4,712 2.1% 100
---------- ---------- ------
TOTAL SPRING BOOKINGS $ 49,172 $ 43,332 13.5% $ 5,840
---------- ---------- ------
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</TABLE>
SUMMARY OF NET SALES INVOICED - THREE MONTHS ENDED OCTOBER 31 (IN THOUSANDS)
<TABLE>
<CAPTION>
Percentage
FY 2001 FY 2000 Change Difference
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
GOLF $ 15,017 $ 15,388 -2.4% $ (371)
SPECIALTY RETAIL 7,174 4,399 63.1% 2,775
CORPORATE 17,940 12,988 38.1% 4,952
OTHER 3,772 2,226 69.5% 1,546
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TOTAL DOMESTIC NET SALES 43,903 35,001 25.4% 8,902
TOTAL INTERNATIONAL NET SALES 2,171 1,889 14.9% 282
---------- ---------- ------
TOTAL NET SALES $ 46,074 $ 3,890 24.9% $ 9,184
---------- ---------- ------
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</TABLE>
SUMMARY OF NET SALES INVOICED - SIX MONTHS ENDED OCTOBER 31 (IN THOUSANDS)
<TABLE>
<CAPTION>
Percentage
FY 2001 FY 2000 Change Difference
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
GOLF $ 28,045 $ 26,925 4.2% $ 1,120
SPECIALTY RETAIL 12,138 7,344 65.3% 4,794
CORPORATE 33,309 23,196 43.6% 10,113
OTHER 6,597 4,337 52.1% 2,260
---------- ---------- ------
TOTAL DOMESTIC NET SALES 80,089 61,802 29.6% 18,287
TOTAL INTERNATIONAL NET SALES 5,014 4,278 17.2% 736
---------- ---------- ------
TOTAL NET SALES $ 85,103 $66,080 28.8% $ 19,023
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</TABLE>
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