CATO CORP 10-K

Item 9A. Controls and Procedures: Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures We carried out an evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures as of January 30, 2021. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of January 30, 2021, our disclosure controls and procedures, as defined in Rule 13a-15(e), under the Securities Exchange Act of 1934 (the “Exchange Act”), were effective to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we carried out an evaluation of the effectiveness of our internal control over financial reporting as of January 30, 2021 based on the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of January 30, 2021. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of January 30, 2021, as stated in its report which is included herein. Changes in Internal Control Over Financial Reporting No change in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a -15(f)) has occurred during the Company’s fiscal quarter ended January 30, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Item 9B. Other Information: On March 24, 2021, the Compensation Committee of the Company approved a discretionary bonus to all associates eligible under the Company’s 2018 Incentive Compensation Plan, including the Company’s named executive officers. The Committee granted the discretionary bonus to help retain key associates and in recognition of their hard work throughout the unprecedented events of fiscal 2020. The discretionary bonus will equal 20% of the bonus target previously established unde r the 2018 Incentive Compensation Plan for eligible associates and the named executive officers. The amount of the bonus for the named executive officers is shown below: Name Title Discretionary Bonus John P. D. Cato Chairman, President and Chief Executive Officer $391,839 John R Howe Executive Vice President, Chief Financial Officer $69,783 Gordon D. Smith Executive Vice President, Chief Real Estate and Store Development Officer $54,921 64 PART III Item 10. Directors, Executive Officers and Corporate Governance: Information contained under the captions “Election of Directors,” “Meetings and Committees” and “Corporate Governance Matters” in the Registrant’s Proxy Statement for its 2021 annual stockholders’ meeting (the “2021 Proxy Statement”) is incorporated by reference in response to this Item 10. The information in response to this Item 10 regarding executive officers of the Company is contained in Item 3A, Part I hereof under the caption “Executive Officers of the Registrant.” 65 Item 11. Executive Compensation: Information contained under the captions “2020 Executive Compensation,” “Fiscal Year 2020 Director Compensation,” “Corporate Governance Matters-Compensation Committee Interlocks and Insider Participation” in the Comp any’s 2021 Proxy Statement is incorporated by reference in response to this Item. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters: Equity Compensation Plan Information The following table provides information about stock options outstanding and shares available for future awards under all of the Company’s equity compensation plans. The information is as of January 30, 2021. (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (1) (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (1) (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (2) Plan Category Equity compensation plans approved by security holders - - 3,979,491 Equity compensation plans not approved by security holders - - - Total - - 3,979,491 (1) There are no outstanding stocking options, warrants or stock appreciation rights. (2) Includes the following: Under the Company’s stock incentive plan, referred to as the 2018 Incentive Compensation Plan, 3,961,473 shares are available for grant. Under this plan, non- qualified stock options may be granted to key associates. Under the 2013 Employee Stock Purchase Plan, 18,018 shares are available. Eligible associates may participate in the purchase of designated shares of the Company’s common stock. The purchase price of this stock is equal to 85% of the lower of the closing price at the beginning or the end of each semi-annual stock purchase period. Information contained under “Security Ownership of Certain Beneficial Owners and Management” in the 2021 Proxy Statement is incorporated by reference in response to this Item. Item 13. Certain Relationships and Related Transactions, and Director Independence: Information contained under the caption “Certain Relationships and Related Person Transactions,” “Corporate Governance Matters-Director Independence” and “Meetings and Committees” in the 2021 Proxy Statement is incorporated by reference in response to this Item. Item 14. Principal Accountant Fees and Services: Information contained under the captions “Ratification of Independent Registered Public Accounting Firm-Audit Fees” and “-Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Service by the Independent Registered Public Accounting Firm” in the 2021 Proxy Statement is incorporated by reference in response to this Item. 66 PART IV Item 15. Exhibits and Financial Statement Schedules: (a) The following documents are filed as part of this report: (1) Financial Statements: Page Report of Independent Registered Public Accounting Firm .................................................................... 35 Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019 ................................................ 37 Consolidated Balance Sheets at January 30, 2021 and February 1, 2020 ................................................. 38 Consolidated Statements of Cash Flows for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019 ................................................................................................................................ 39 Consolidated Statements of Stockholders’ Equity for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019 .................................................................................................... 40 Notes to Consolidated Financial Statements ............................................................................................. 41 (2) Financial Statement Schedule: The following report and financial statement schedule is filed herewith: Schedule II — Valuation and Qualifying Accounts ................................................................................. 70 All other schedules are omitted as the required information is inapplicable or the information is presented in the Consolidated Financial Statements or related Notes thereto. (3) Index to Exhibits: The following exhibits listed in the Index below are filed with this report or, as noted, incorporated by reference herein. The Company will supply copies of the following exhibits to any shareholder upon receipt of a written request addressed to the Corporate Secretary, The Cato Corporation, 8100 Denmark Road, Charlotte, NC 28273 and the payment of $.50 per page to help defray the costs of handling, copying and postage. In most cases, documents incorporated by reference to exhibits to our registration statements, reports or proxy statements filed by the Company with the Securities and Exchange Commission are available to the public over the Internet from the SEC’s web site at http://www.sec.gov. 67 Exhibit Number Description of Exhibit 3.1 Registrant's Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Form 10-Q of the Registrant for the quarter ended May 2, 2020. 3.2 Registrant’s Amended and Restated By Laws, incorporated by reference to Exhibit 3.2 to Form 10-Q of the Registrant for the quarter ended May 2, 2020. 4.1 Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, incorporated by reference to Exhibit 4.1 to Form 10-K of the Registrant for the year ended February 1, 2020. 10.2* 2013 Employee Stock Purchase Plan, incorporated by reference to Exhibit 4.1 to Form S-8 of the Registrant filed May 31, 2013 (SEC file No. 333-188990). 10.3* 2013 Incentive Compensation Plan, incorporated by reference to Exhibit 4.1 to Form S-8 of the Registrant filed May 31, 2013 (SEC file No. 333-188993). 10.4* 2018 Incentive Compensation Plan, incorporated by reference to Exhibit 99.1 to Form S -8 of the Registrant filed June 1, 2018 (SEC file No. 333-225350). 10.5* Form of Agreement , dated as of August 29, 2003, between the Registrant and Wayland H. Cato, Jr., incorporated by reference to Exhibit 99(c) to Form 8-K of the Registrant filed on July 22, 2003. 10.6* Form of Agreement, dated as of August 29, 2003, between the Registrant and Edgar T. Cato, incorporated by reference to Exhibit 99(d) to Form 8 -K of the Registrant filed on July 22, 2003. 10.7* Retirement Agreement between Registrant and Wayland H. Cato, Jr. dated August 29, 2003 incorporated by reference to Exhibit 10.1 to Form 10-Q of the Registrant for quarter ended August 2, 2003. 10.8* Retirement Agreement between Registrant and Edgar T. Cato dated August 29, 2003, incorporated by reference to Exhibit 10.2 to Form 10-Q of the Registrant for the quarter ended August 2, 2003. 10.9* Letter Agreement between the Registrant and John R. Howe dated as of August 28, 2008, incorporated by Reference to Exhibit 99.1 to Form 8-K of the Registrant filed September 3, 2008. 10.10* Deferred Compensation Plan effective July 28, 2011, incorporated by reference to Exhibit 10.1 to Form 8-K of the Registrant filed on July 19, 2011. 10.11 Credit Agreement, dated as of August 22, 2003, among the Registrant, the guarantors party thereto, the banks party thereto and Branch Banking and Trust Company, as Agent, as amended through and including the Eighth Amendment dated May 24, 2019, incorporated by reference to Exhibit 10.11 to Form 10-K of the Registrant for the ye ar ended February 1, 2020. 10.12 Ninth Amendment dated June 2, 2020, of Credit Agreement, dated as of August 22, 2003, among the Registrant the guarantors party thereto, the banks party thereto and Branch Banking and Trust Company, as Agent, incorporated by reference to Exhibit 10.11 to Form 10-Q of the Registrant for the quarter ended May 2, 2020. 21.1** Subsidiaries of Registrant . 68 23.1** Consent of Independent Registered Public Accounting Firm. 31.1** Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer. 31.2** Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer. 32.1** Section 1350 Certification of Chief Executive Officer. 32.2** Section 1350 Certification of Chief Financial Officer. 101.1** The following materials from Registrant’s Annual Report on form 10-K for the fiscal year ended January 30, 2021, formatted in Inline XBRL: (i) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019; (ii) Consolidated Balance Sheets at January 30, 2021 and February 1, 2020; (iii) Consolidated Statements of Cash Flows for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019; (iv) Consolidated Statements of Stockholders’ Equity for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019; and (v) Notes to Consolidated Financial Statements. 104.1 Cover Page Interactive Data File (Formatted in Inline XBRL and contained in the Interactive Data Files submitted as Exhibit 101.1**). * Management contract or compensatory plan required to be filed under Item 15 of this report and Item 601 of Regulation S-K. ** Filed or submitted electronically herewith. Item 16. Form 10-K Summary: None. 69 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Cato has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The Cato Corporation By /s/ JOHN P. D. CATO By /s/ JOHN R. HOWE John P. D. Cato Chairman, President and Chief Executive Officer John R. Howe Executive Vice President Chief Financial Officer By /s/ JEFFREY R. SHOCK Jeffrey R. Shock Senior Vice President Controller Date: March 29, 2021 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 29, 2021 by the following persons on behalf of the Registrant and in the capacities indicated: /s/ JOHN P. D. CATO John P. D. Cato (President and Chief Executive Officer (Principal Executive Officer) and Director) /s/ BAILEY W. PATRICK Bailey W. Patrick (Director) /s/ JOHN R. HOWE John R. Howe (Executive Vice President Chief Financial Officer (Principal Financial Officer)) /s/ THOMAS B. HENSON Thomas B. Henson (Director) /s/ JEFFREY R. SHOCK Jeffrey R. Shock (Senior Vice President Controller (Principal Accounting Officer)) /s/ BRYAN F. KENNEDY III Bryan F. Kennedy III (Director) /s/ THOMAS E. MECKLEY Thomas E. Meckley (Director) /s/ D. HARDING STOWE D. Harding Stowe (Director) /s/ THERESA J. DREW Theresa J. Drew (Director) /s/ PAMELA L. DAVIES Pamela L. Davies (Director) 70 Schedule II VALUATION AND QUALIFYING ACCOUNTS (in thousands) Allowance for Customer Self Insurance Credit Losses(a) Reserves(b) Balance at February 3, 2018 $ 1,148 $ 11,623 Additions charged to costs and expenses 897 17,932 Additions (reductions) charged to other accounts 210 (c) 214 Deductions (1,413) (d) (18,803) Balance at February 2, 2019 $ 842 $ 10,966 Additions charged to costs and expenses 700 16,687 Additions (reductions) charged to other accounts 188 (c) (635) Deductions (1,004) (d) (16,483) Balance at February 1, 2020 $ 726 $ 10,535 Additions charged to costs and expenses 435 15,500 Additions (reductions) charged to other accounts 171 (c) (205) Deductions (727) (d) (14,855) Balance at January 30, 2021 $ 605 $ 10,975 (a) Deducted from trade accounts receivable. (b) Reserve for Workers' Compensation, General Liability and Healthcare. (c) Recoveries of amounts previously written off. (d) Uncollectible accounts written off.