Contour cut outlines are a type of marking used to indicate the borders of a color region for a vinyl cutter. Preparing contour cut outline sheets is a common use of Adobe Illustrator in decal and T-shirt shops all over. The actual artwork is usually turned into a black and white image, and a contour cut is laid out in a bright, contrasting color for the computerized vinyl cutter to follow.
Load your artwork into Adobe Illustrator. Convert it to vector format with the LiveTrace functions if you need to; the default "Black & White" setting is nearly ideal for this.
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Remove any excess parts of the artwork by selecting them and deleting them.
Click on the "Layers" palette and click on the icon at the bottom edge of the palette to make a new layer.
Select all of the artwork elements, and copy them to the second layer.
Click on the "Pathfinder" palette, and hold down the "Alt" key while clicking on the "Add Shapes" icon in the leftmost position of the top row. This will convert everything into one shape with a single fill and stroke.
Select the "Swatches" palette and create a new color swatch; consult the manual for your vinyl cutter to see if there's a recommended color for your swatch here, but if there isn't, select CMYK values of 0-10-20-0, which will give a bright orange color. Name this swatch "ContourCut" with no spaces. Computerized vinyl cutters will look for that specific name in the underlying Postscript they use to guide the knife.
Click on the shape on the second layer, and set its interior to "no fill" and set its stroke to the "ContourCut" swatch you just defined. Set the stroke to 1 point.
Click on the "File" menu and save the file as a PDF or EPS file; the exact format will be specified by the manual for your vinyl cutter.