Cutter & Buck Inc. announced that it is starting a quarterly dividend and a stock repurchase program.

“This is a significant moment,” said Fran Conley, chief executive officer. “Cutter & Buck's recent performance and strong cash position allow us to reward our shareholders for their confidence in the company.”

“During the last nine months, we generated $24.5 million in free cash flow,”* continued Conley. “At the end of January, we had $42 million in cash and short-term investments. This gives us the ability to return value to the shareholders at the same time that we continue to fund operations; invest in growth opportunities; consider possible acquisitions; and provide for contingencies.”

After considering a number of alternatives, the Board decided on both a dividend and the stock repurchase. The dividend is set at a level consistent with our current expectations of future cash flows, and the stock repurchase program reflects the sustainable benefits of the cash freed up by careful management of inventory and accounts receivable.

“At current prices, the dividend represents an annual yield of approximately 2%,” said Ernie Johnson, CFO. “Over time, this can be a significant value to shareholders. The stock repurchase is an additional way to increase benefits to all shareholders. Those who choose to sell get the price they want, and those who remain shareholders will own a larger portion of the company and its results.”

The Board of Directors approved a dividend of $.05 a share, payable on April 9 to holders of record on March 26. The Board also approved repurchase of up to $6 million in company stock. The repurchases may be made from time to time in the open market or in privately negotiated transactions. The repurchase program may be suspended at any time without notice. The timing of repurchases and the actual number of shares repurchased will depend on market conditions, alternative uses of capital and other factors.

*Cutter & Buck defines free cash flow as cash provided by operating activities less capital expenditures.