Cutter & Buck Inc. announced results of its second quarter ended October 31, 2004. For the quarter ended October 31, we had the following results:

                                    2004                 2003
    In millions, except percentage
     and per share data
    Net Sales                           $35.5               $34.7
    Gross Profit                        $17.1               $16.2
    Gross Margin                        48.2%               46.7%
    Net Income                           $2.9                $2.1
    Earnings Per Share                  $0.26               $0.19

The pre-tax income of our wholesale business was $4.9 million in the second quarter, up $0.3 million over the second quarter of last year, and was $10.0 million for the first six months of fiscal 2005, up $2.1 million over the first six months of last year (see Table B in this press release for a reconciliation to GAAP figures). Our strong gross margins are the primary contributor to these year-over-year increases.

“We are continuing to see the results of the Company executing our business strategy,” said Bill Swint, Interim CEO. “Our focus has been on improving our operations along with strengthening the upscale positioning of the Cutter & Buck brand. We are pleased with the second quarter results.”

Sales for the quarter in all of our channels showed increases over the comparable periods last year except for our “Other” channel, which includes e-Commerce, liquidation and sales not categorized elsewhere. Overall, our business has been getting stronger thanks to the improved economy and the dedicated efforts of the entire Cutter & Buck team. Our Golf unit continues to be a challenge, however. Revenues for the quarter and year-to-date include sales made at the Ryder Cup tournament, a bi-annual event, so the prior year comparative sales do not include sales from this tournament. If the Ryder Cup revenues were excluded from this year’s Golf results, we would have reported a decrease in year-over-year sales of approximately 6% for the quarter and a decrease of approximately 16% for the six-month period.

As mentioned in our first quarter earnings release, we are very focused on our men’s golf business and continue to take steps that we believe will improve its performance over time. We have undertaken extensive market research, listened to our customers across the country and worked hard with our designers to create more of the fresh new products that Cutter & Buck is known for. However, because of the long lead times in the apparel industry, it could be six to twelve months before we see the impact of these efforts.

In the near term, we are pleased with the success of our “Annika by Cutter & Buck” women’s line, which has been well received both nationally and internationally. We expect to build on this success in future seasons with new styles and an increased marketing campaign. We are also pleased with the results of our Corporate unit, which has grown sales approximately 6% in each of the last two quarters.

Our gross margins continued to be strong in the second quarter at 48.2%. While we expect our gross margins to remain strong as compared to last year, they will be impacted as we liquidate inventory as part of our normal business cycle in the next two quarters. We expect that our gross margins in FY 2005 will be between 45% and 48%.

Operating expenses, excluding depreciation and restatement-related expenses for the quarter, increased $0.7 million year-over-year. Year to date, these expenses are essentially flat versus the prior year period. We are incurring expenses for our marketing initiatives, information system upgrades and replacements, and documentation and testing of our internal controls required by Section 404 of the Sarbanes-Oxley Act of 2002. We expect these expenses to continue throughout the remainder of fiscal 2005, resulting in quarterly year-over-year increases for the balance of the fiscal year.

Our balance sheet remains solid, with a cash balance of $42.6 million and $79.5 million of working capital at the end of the second quarter. We generated $6.7 million in free cash flow (defined as cash provided by operating activities less purchases of fixed assets) during the first six months of this fiscal year. Accounts receivable was at 48 days sales outstanding at the end of the quarter, down from 50 days last year and the days sales in inventory ratio was 123 days, down from 130 days year-over-year.

As we have stated previously, until a permanent CEO is in place and has had the opportunity to work with the board on setting the company’s strategic direction, we plan to maintain our operating flexibility, and to generally maintain our current direction, cash balances and capital structure.

The company also announced that it was close to naming a new CEO. The search for a new CEO began in July with the announcement that Fran Conley would step down in September. Since then, the board, with the assistance of an outside consultant, has identified, reviewed and selected a short list of candidates to be interviewed. The Board is in final discussions with the lead candidate.

The company further announced that Jim McGehee, Executive Vice President and Manager of the SBU (Strategic Business Unit) Group, has decided to leave the company, effective at the end of the year. Jim joined Cutter & Buck in February 1990 and has been an important contributor to the growth and success of the Cutter & Buck brand. In light of the ongoing discussions concerning the retention of a new CEO, the Company has elected to defer any decision on Jim’s replacement until the Company’s new CEO is in place and has had an opportunity to evaluate the Company’s management team and structure.

“We wish Jim every success in his future endeavors,” said Bill Swint, Interim President and CEO.

The board of directors has approved a dividend of $0.07 a share, payable on January 7, 2005 to shareholders of record on December 23, 2004. During the second quarter, we purchased 81,600 shares of our common stock at an average price of $11.23. Since the inception of our stock repurchase program, we have repurchased a total of 155,226 shares of our common stock at an average price of $10.78. We still have $4.3 million available in the program for share repurchases at times and prices that we believe are advantageous for our shareholders.

                                Three Months Ended        Six Months Ended
                                Oct. 31,   Oct. 31,      Oct. 31,    Oct. 31,
                                  2004      2003           2004       2003
    (in thousands)
    Net income as
     reported                   $2,915    $2,091         $6,165    $3,190
    Income (loss) from
     discontinued retail
     operations                     --        --                    (146)
    Income tax expense           1,792       866          3,588     1,420
    Pre-tax expense of
     closed European
     operations                   (35)        24           (15)        72
    Restatement expenses           268     1,678            281     3,350
    Ongoing wholesale
     business income before
     tax                        $4,940    $4,659        $10,019    $7,886


             Table C: Summary of Net Sales by Strategic Business Unit

    Three Months Ended October 31,

                              2004         2003         $ change   % change
    In thousands
    Golf                    $10,022       $9,872         $150       1.5%
    Corporate                14,559       13,762          797        5.8
    Specialty Retail          8,350        8,257           93        1.1
    International               729          660           69       10.5
    Other                     1,878        2,196        (318)     (14.5)
    Total                   $35,538      $34,747         $791       2.3%